Interim Financial Report 2020
August 2020
INTERIM FINANCIAL REPORT 2020
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 2020
Unit: RMBItem30 June 202031 December 2019CURRENT ASSETS:
Monetary funds19,301,761,154.6619,306,529,473.33 Accounts receivable2,297,695,446.742,525,083,311.03 Accounts receivable financial1,418,702,732.26442,915,861.70 Prepayments731,403,235.76603,573,549.08 Other receivables3,129,061,804.472,216,654,598.66 Dividend receivable13,000,000.0013,000,000.00 Inventories5,701,570,848.394,774,430,110.81 Non-current assets due within one year6,010,580,174.266,974,539,613.30 Other current assets8,558,407,649.138,108,707,394.70Total current assets47,149,183,045.6744,952,433,912.61 Long-term receivables763,545,520.111,200,575,810.95 Long-term equity investments3,767,254,464.703,606,339,023.74 Other non-current financial assets147,445,653.55147,445,653.55 Investment property5,198,377,514.705,082,362,293.11 Fixed assets38,215,983,514.5134,439,935,032.69 Construction in progress598,051,166.875,476,122,928.95 Right-of-use assets149,450,409.35152,141,882.05 Intangible assets1,659,117,513.781,781,061,904.51 Goodwill5,969,626.575,969,626.57 Long-term prepaid expenses50,949,493.9348,203,408.71 Deferred income tax assets960,555,695.05892,442,631.04 Other non-current assets368,196,053.27173,875,826.67Total non-current assets51,884,896,626.3953,006,476,022.54Total assets99,034,079,672.0697,958,909,935.15
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
Item30 June 202031 December 2019 Short-term borrowings38,554,311,235.0036,883,156,014.19 Derivative financial liabilities Bills payable2,747,606,761.171,515,048,206.00 Accounts payable4,244,906,425.304,351,087,581.98 Contract liabilities1,230,606,297.46968,082,063.13 Employee benefits payable231,418,118.45190,229,883.52 Taxes payable383,277,519.38311,554,116.73 Other payables2,453,998,030.512,594,249,626.54 Including: Interest payable149,518,233.84208,189,699.15 Dividend payable610,109,667.16 Non-current liabilities due within one year6,936,859,454.995,662,958,920.03 Other current liabilities150,686,164.01222,402,500.00Total current liabilities56,933,670,006.2752,698,768,912.12 Long-term borrowings7,009,361,701.929,140,339,693.56 Bonds payable1,628,134,192.591,258,270,909.49 Lease liabilities60,271,769.9059,697,128.65 Long-term payables2,748,780,858.473,321,535,538.94 Provisions325,259,082.28325,259,082.28 Deferred income1,692,501,835.301,771,013,335.11 Deferred income tax liabilities1,411,125.59 Other non-current liabilities2,384,489,390.183,042,841,328.86Total non-current liabilities15,848,798,830.6418,920,368,142.48TOTAL LIABILITIES72,782,468,836.9171,619,137,054.60
II. Financial Statements (Cont’d)
1. Consolidated Balance Sheet (Cont
’d)
INTERIM FINANCIAL REPORT 2020
X Financial Report
Item30 June 202031 December 2019 Share capital2,984,208,200.002,904,608,200.00 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 reserves5,264,000,531.305,086,686,427.30 Less: Treasury shares226,860,000.00 Other comprehensive income-979,734,467.41-879,452,135.10 Surplus reserves1,212,009,109.971,212,009,109.97 General risk provisions74,122,644.2074,122,644.20 Retained profit9,114,386,653.709,306,269,617.38Total equity attributable to owners of the Company24,907,632,671.7625,169,743,863.75 Minority interest1,343,978,163.391,170,029,016.80Total owners’ equity26,251,610,835.1526,339,772,880.55TOTAL LIABILITIES AND OWNERS’ EQUITY99,034,079,672.0697,958,909,935.15Legal 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 FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company
Unit: RMBItem30 June 202031 December 2019CURRENT ASSETS:
Monetary funds7,082,756,804.829,001,257,324.52 Bills receivable1,618,500,000.003,254,460,000.00 Accounts receivable953,020,387.8139,204,670.00 Accounts receivable financing245,133,081.69189,873,567.14 Prepayments200,265,805.92722,472,479.01 Other receivables13,615,203,417.4313,975,590,537.58 Inventories1,036,370,683.92696,487,727.53 Non-current assets due within one year20,557,909.14129,546,826.00 Other current assets78,459,437.0880,815,659.84Total current assets24,850,267,527.8128,089,708,791.62NON-CURRENT ASSETS:
Long-term receivables418,750,862.51418,750,862.51 Long-term equity investments23,695,209,348.9423,629,780,317.87 Investment in other equity instruments3,000,000.00 Other non-current financial assets147,445,653.55147,445,653.55 Fixed assets3,809,789,595.983,901,007,932.88 Construction in progress336,462,019.25350,623,821.42 Intangible assets440,462,302.74446,430,156.00 Deferred income tax assets426,746,817.16426,711,909.98 Other non-current assets110,930,000.00110,930,000.00Total non-current assets29,385,796,600.1329,434,680,654.21Total assets54,236,064,127.9457,524,389,445.83CURRENT LIABILITIES:
Short-term borrowings12,202,091,264.3711,601,509,632.09 Bills payable9,145,715,195.579,890,041,170.20 Accounts payable809,163,079.28833,526,295.40 Contract liabilities3,421,108,987.132,096,436,345.90 Employee benefits payable78,493,509.0371,040,017.13 Taxes payable71,924,808.2276,872,851.56 Other payables4,392,332,152.346,426,648,847.95 Including: Interest payable109,263,749.98127,278,083.35 Dividend payable610,109,667.16 Non-current liabilities due within one year2,709,973,345.323,695,934,663.30 Other current liabilities301,864,166.67932,402,500.00Total current liabilities33,132,666,507.9335,624,412,323.53
INTERIM FINANCIAL REPORT 2020
X Financial Report
Item30 June 202031 December 2019NON-CURRENT LIABILITIES:
Long-term borrowings350,692,035.94150,692,035.94 Bonds payable439,943,750.0089,070,000.00 Long-term payables751,402,372.221,167,426,124.98 Provisions325,259,082.28325,259,082.28 Deferred income39,900,252.9142,070,840.27 Other non-current liabilities1,792,083,342.672,789,283,340.67Total non-current liabilities3,699,280,836.024,563,801,424.14TOTAL LIABILITIES36,831,947,343.9540,188,213,747.67OWNERS’ EQUITY:
Share capital2,984,208,200.002,904,608,200.00 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 reserves5,099,821,539.194,953,557,435.19 Less: Treasury shares226,860,000.00 Surplus reserves1,199,819,528.061,199,819,528.06 Retained profit881,627,516.74812,690,534.91Total owners’ equity17,404,116,783.9917,336,175,698.16TOTAL LIABILITIES AND OWNERS’ EQUITY54,236,064,127.9457,524,389,445.83Legal 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 FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
3. Consolidated Income Statement
Unit: RMBItemJanuary to June 2020January to June 2019I. Total revenue13,599,805,765.8613,348,648,113.70Including: Revenue13,599,805,765.8613,348,648,113.70II. Total operating costs13,331,852,506.5512,989,921,141.46Including: Operating costs10,185,300,033.319,754,097,799.82 Taxes and surcharges107,048,098.21134,488,545.06 Sales and distribution expenses652,742,420.35590,584,957.47 General and administrative expenses491,987,245.33562,417,399.25 Research and development expense548,557,146.89431,483,716.06 Finance expenses1,346,217,562.461,516,848,723.80
Including: Interest expenses1,439,500,160.771,576,756,279.30 Interest income276,115,018.97213,994,280.22Plus: Other income133,433,974.4538,831,290.64
Investment income (“-” denotes loss)136,893,482.97-9,467,172.97Including: Investment income from associates and joint ventures122,749,789.02-9,467,172.97 Gain on change in fair value (“-” denotes loss)-9,246,743.86-1,883,064.80 Credit impairment loss (“-” denotes loss)-257,855,903.60-62,440,283.34 Loss on impairment of assets (“-” denotes loss)-163,717.7683,464,107.59 Gain on disposal of assets (“-” denotes loss)-4,705,886.8922,823,551.43III. Operating profit (“-” denotes loss)266,308,464.62430,055,400.79Plus: Non-operating income642,400,117.78237,472,592.97Less: Non-operating expenses9,007,544.185,050,128.19IV. Total profit (“-” denotes total loss)899,701,038.22662,477,865.57Less: Income tax expenses237,960,188.15125,877,819.62V. Net profit (“-” denotes net loss)661,740,850.07536,600,045.95(I) Classification according to the continuity of operation
1. Net profit from continuing operations
(“-” denotes net loss)661,740,850.07536,600,045.95
2. Net profit from discontinued operations
(“-” denotes net loss)(II) Classification according to ownership
1. Net profit attributable to shareholders
of the Company516,326,703.48509,795,572.29
2. Profit or loss of minority interest145,414,146.5926,804,473.66VI. Net other comprehensive income after tax-108,564,087.60-16,016,688.20Net other comprehensive income after tax attributable to shareholders of the Company-108,564,087.60-16,016,688.20(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-108,564,087.60-16,016,688.20Translation differences of financial statements denominated in foreign currency-108,564,087.60-16,016,688.20
INTERIM FINANCIAL REPORT 2020
X Financial Report
ItemJanuary to June 2020January to June 2019VII. Total comprehensive income553,176,762.47520,583,357.75
Total comprehensive income attributable to shareholders of the Company407,762,615.88493,778,884.09Total comprehensive income attributable to minority interest145,414,146.5926,804,473.66IIX. Earnings per share:
(I) Basic earnings per share0.0510.013(II) Diluted earnings per share0.0510.013
Legal 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 FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
4. Income statement of the Company
Unit: RMBItemJanuary to June 2020January to June 2019I. Revenue3,847,193,657.532,696,012,416.10
Less: Operating costs3,028,473,472.422,103,287,151.64 Taxes and surcharges20,730,087.4222,384,520.78 Sales and distribution expenses124,148,775.8995,933,113.16 General and administrative expenses159,106,436.16160,401,795.91 Research and development expense128,662,995.77122,265,471.50 Finance expenses380,567,325.04851,438,574.25 Including: Interest expenses803,815,024.421,297,180,410.46
Interest income512,123,486.08524,005,473.68Plus: Other income4,164,682.462,180,872.36 Investment income (“-” denotes loss)682,669,031.071,010,553,143.57Including: Investment income from associates and joint ventures-1,660,968.93-12,799,856.43 Impairment loss of credit (“-” denotes loss)15,237,901.51-844,738.21 Impairment loss of assets (“-” denotes loss) Gains from assets disposal (“-” denotes loss)16,102,859.3022,416,169.42II. Operating profit (“-” denotes loss)723,679,039.17374,607,236.00Plus: Non-operating income54,685,565.6177,943,339.00Less: Non-operating expenses1,252,862.974,195,926.11III. Total profit (“-” denotes total loss)777,111,741.81448,354,648.89Less: Income tax expenses-34,907.18-96,575,704.73IV. Net profit (“-” denotes net loss)777,146,648.99544,930,353.62
(1) Net profit from continuing operations
(“-” denotes net loss)777,146,648.99544,930,353.62
(2) Net profit from discontinued operations
(“-” denotes net loss)VI. Total comprehensive income777,146,648.99544,930,353.62VII. Earnings per share:
(I) Basic earnings per share(II) Diluted earnings per share
Legal Representative:Financial controller:Head of the financial department:
Chen HongguoDong LianmingZhang Bo
INTERIM FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement
Unit: RMBItemJanuary to June 2020January to June 2019I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services14,322,440,708.6014,748,713,123.70 Tax rebates received1,619,978.70660,483.85 Cash received relating to other operating activities1,563,110,217.952,298,196,240.97Subtotal of cash inflows from operating activities15,887,170,905.2517,047,569,848.52 Cash paid for goods and services11,303,287,012.6911,576,281,103.39 Cash paid to and for employees550,988,794.51674,527,204.40 Payments of taxes and surcharges622,011,647.051,096,901,907.86 Cash paid relating to other operating activities1,083,849,666.321,000,088,741.18Subtotal of cash outflows from operating activities13,560,137,120.5714,347,798,956.83Net cash flows from operating activities2,327,033,784.682,699,770,891.69II. Cash flow from investing activities:
Cash received from investment income1,200,000.00Net cash received from disposal of fixed assets, intangible assets and other long-term assets85,956,320.00111,235,000.00Net cash received from disposal of subsidiaries and other business units217,547,669.15 Cash received relating to other investing activities129,197,968.06Subtotal of cash inflows from investing activities433,901,957.21111,235,000.00Cash paid for purchase of fixed assets, intangible assets and other long-term assets143,811,622.89376,939,086.06 Cash paid on investments19,266,800.001,639,194,479.24 Cash paid relating to other investing activities176,000,000.00189,628,400.00Subtotal of cash outflows from investing activities339,078,422.892,205,761,965.30Net cash flows from investing activities94,823,534.32-2,094,526,965.30
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
ItemJanuary to June 2020January to June 2019III. Cash flows from financing activities:
Cash received from investments294,820,000.00Including: Cash received from by subsidiaries
from minority investment67,960,000.00 Cash received from borrowings15,228,878,371.9922,550,704,467.77 Cash received relating to other financing activities1,356,957,000.003,479,693,527.06Subtotal of cash inflows from financing activities16,880,655,371.9926,030,397,994.83 Cash repayments of amounts borrowed14,282,539,084.6818,763,676,782.15Cash paid for dividend and profit distribution
or interest payment1,710,006,370.471,591,133,614.29Including: Dividend and profit paid by subsidiaries
to minority shareholders8,375,000.00 Cash paid relating to other financing activities3,982,494,113.946,456,564,308.43Subtotal of cash outflows from financing activities19,975,039,569.0926,811,374,704.87Net cash flows from financing activities-3,094,384,197.10-780,976,710.04IV. Effect of foreign exchange rate changes on cash
and cash equivalents-4,518,518.54-196,762,227.50V. Net increase in cash and cash equivalents-677,045,396.64-372,495,011.15
Plus: Balance of cash and cash equivalents
at the beginning of the period2,890,328,027.402,381,558,242.52VI. Balance of cash and cash equivalents as
at the end of the period2,213,282,630.762,009,063,231.37Legal 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 FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company
Unit: RMBItemJanuary to June 2020January to June 2019
1. Cash flows from operating activities:
Cash received from sales of goods and rendering of services4,646,172,812.154,975,401,290.02 Cash received relating to other operating activities155,230,403.66974,266,183.30Subtotal of cash inflows from operating activities4,801,403,215.815,949,667,473.32 Cash paid for goods and services2,208,540,497.88949,039,632.39 Cash paid to and for employees174,694,134.98232,441,602.15 Payments of taxes and surcharges58,848,554.3685,040,472.23 Cash paid relating to other operating activities450,670,347.73643,575,724.57Subtotal of cash outflows from operating activities2,892,753,534.951,910,097,431.34Net cash flows from operating activities1,908,649,680.864,039,570,041.98II. Cash flows from investing activities:
Cash received from investments217,547,669.15 Cash received from investment income682,430,000.00Net cash received from disposal of fixed assets, intangible assets and other long-term assets85,956,320.0055,735,000.00 Cash received relating to other investing activities129,197,968.06Subtotal of cash inflows from investing activities1,115,131,957.2155,735,000.00Cash paid for purchase of fixed assets, intangible assets
and other long-term assets5,310,913.0017,933,778.78 Cash paid on investments1,147,500,000.00 Cash paid relating to other investing activities39,500,000.00Subtotal of cash outflows from investing activities5,310,913.001,204,933,778.78Net cash flows from investing activities1,109,821,044.21-1,149,198,778.78
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
ItemJanuary to June 2020January to June 2019III. Cash flows from financing activities:
Cash received from investments226,860,000.00 Cash received from borrowings9,807,671,284.376,360,366,283.77 Cash received relating to other financing activities794,457,000.001,997,263,889.00Subtotal of cash inflows from financing activities10,828,988,284.378,357,630,172.77 Cash repayments of amounts borrowed9,591,880,585.585,237,801,785.71Cash paid for dividend and profit distribution or interest payment327,204,654.73774,396,836.69 Cash paid relating to other financing activities2,963,023,405.215,593,391,883.99Subtotal of cash outflows from financing activities12,882,108,645.5211,605,590,506.39Net cash flows from financing activities-2,053,120,361.15-3,247,960,333.62IV. Effect of foreign exchange rate changes on cash
and cash equivalents86,290.3414,127.62V. Net increase in cash and cash equivalents965,436,654.26-357,574,942.80Plus: Balance of cash and cash equivalents as at the beginning of the period136,328,721.71607,805,063.02VI. Balance of cash and cash equivalents as
at the end of the period1,101,765,375.97250,230,120.22Legal 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 FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont
’d)
7. Consolidated statement of changes in owners
’ equity
Amount for the reporting period
Unit: RMB
ItemJanuary to June 2020
Equity attributable to owners of the Company
Other equity instruments
Share capitalPreferencesharesPerpetualbondsOthers
Capital
reservesLess:
Treasury shares
Othercomprehensive
incomeSpecial
reservesSurplusreservesGeneral risk
provisionsRetained profitOthersSubtotal
MinorityinterestTotal
owners
’
equity
I. Balance as at the end of the prior year2,904,608,200.004,477,500,000.002,988,000,000.005,086,686,427.30-879,452,135.101,212,009,109.9774,122,644.209,306,269,617.3825,169,743,863.751,170,029,016.8026,339,772,880.55II. Balance as at the beginning of the year2,904,608,200.004,477,500,000.002,988,000,000.00–5,086,686,427.30–-879,452,135.10–1,212,009,109.9774,122,644.209,306,269,617.38–25,169,743,863.751,170,029,016.8026,339,772,880.55III. Changes in the period (“-” denotes decrease)79,600,000.00–––177,314,104.00226,860,000.00-100,282,332.31–––-191,882,963.68–-262,111,191.99173,949,146.59-88,162,045.40
(I) Total comprehensive income-100,282,332.31516,326,703.48416,044,371.17145,414,146.59561,458,517.76(II) Capital paid in and reduced by owners79,600,000.00177,314,104.00226,860,000.00––––––30,054,104.00 36,910,000.00 66,964,104.00
1. Ordinary shares paid by shareholders79,600,000.00177,314,104.00256,914,104.00 36,910,000.00 293,824,104.00
2. Amount of share-based payments
recognised in owners’ equity226,860,000.00-226,860,000.00-226,860,000.00
(III) Profit distribution-708,209,667.16-708,209,667.16-8,375,000.00-716,584,667.16
1. Distribution to owners (or shareholders)-708,209,667.16-708,209,667.16-8,375,000.00-716,584,667.16
IV. Balance as at the end of the period2,984,208,200.004,477,500,000.002,988,000,000.00–5,264,000,531.30226,860,000.00-979,734,467.41–1,212,009,109.9774,122,644.209,114,386,653.70–24,907,632,671.761,343,978,163.3926,251,610,835.15
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
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
ItemJanuary to June 2019
Equity attributable to owners of the Company
Other equity instruments
Share capitalPreference
sharesPerpetual
bondsOthers
Capital
reservesLess:
Treasury shares
Othercomprehensive
incomeSpecial
reservesSurplusreservesGeneral risk
provisionsRetained profitOthersSubtotal
MinorityinterestTotal
owners
’
equity
I. Balance as at the end of the prior year2,904,608,200.004,477,500,000.002,988,000,000.005,091,449,915.14-736,520,181.013,257,998.471,148,888,912.1164,123,919.239,107,422,690.8525,048,731,454.79822,959,773.3025,871,691,228.09II. Balance as at the beginning of the year2,904,608,200.004,477,500,000.002,988,000,000.00–5,091,449,915.14–-736,520,181.013,257,998.471,148,888,912.1164,123,919.239,107,422,690.85–25,048,731,454.79822,959,773.3025,871,691,228.09III. Changes in the period (“-” denotes decrease)––––-4,763,487.84–-142,931,954.09-3,257,998.4763,120,197.869,998,724.97198,846,926.53–121,012,408.96347,069,243.50468,081,652.46
(I) Total comprehensive income-142,931,954.091,656,566,584.881,513,634,630.7971,201,958.491,584,836,589.28(II) Capital paid in and reduced by owners––––-4,763,487.84–––––––-4,763,487.84295,129,785.01290,366,297.17
1. Ordinary shares paid by shareholders–439,447,225.77439,447,225.77
2. Others-4,763,487.84-4,763,487.84-144,317,440.76-149,080,928.60
(III) Profit distribution––––––––63,120,197.869,998,724.97-1,457,719,658.35–-1,384,600,735.52-19,262,500.00-1,403,863,235.52
1. Transfer to surplus reserves63,120,197.86-63,120,197.86––
2. Transfer to general risk provision9,998,724.97-9,998,724.97––
3. Distribution to owners (or shareholders)-1,384,600,735.52-1,384,600,735.52-19,262,500.00-1,403,863,235.52
(IV) Transfer of owners’ equity-4,881,991.84-4,881,991.84-4,881,991.84
1. Others-4,881,991.84-4,881,991.84-4,881,991.84
(V) Special reserves1,623,993.371,623,993.371,623,993.37
1. Appropriation1,623,993.371,623,993.371,623,993.37
IV. Balance as at the end of the period2,904,608,200.004,477,500,000.002,988,000,000.00–5,086,686,427.30–-879,452,135.10–1,212,009,109.9774,122,644.209,306,269,617.38–25,169,743,863.751,170,029,016.8026,339,772,880.55
Legal Representative:Financial controller:Head of the financial department:
Chen HongguoDong LianmingZhang Bo
INTERIM FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont
’d)
8. Statement of changes in owners
’ equity of the Company
Amounts for the period
Unit: RMB
ItemJanuary to June 2020
Other equity instruments
Share capitalPreferencesharesPerpetualbondsOthers
Capital
reserves
Less:
Treasury shares
Othercomprehensive
incomeSpecial reservesSurplus reservesRetained profitOthers
Total
owners
’ equity
I. Balance as at the end of the prior year2,904,608,200.004,477,500,000.002,988,000,000.004,953,557,435.191,199,819,528.06812,690,534.9117,336,175,698.16II. Balance as at the beginning of the year2,904,608,200.004,477,500,000.002,988,000,000.00–4,953,557,435.19–––1,199,819,528.06812,690,534.91–17,336,175,698.16III. Changes in the period (“-” denotes decrease)79,600,000.00–––146,264,104.00226,860,000.00–––68,936,981.83–67,941,085.83
(I) Total comprehensive income777,146,648.99777,146,648.99(II) Capital paid in and reduced by owners79,600,000.00–––146,264,104.00226,860,000.00–––––-995,896.00
1. Ordinary shares paid by shareholders79,600,000.00146,264,104.00226,860,000.00-995,896.00
(III) Profit distribution-708,209,667.16–-708,209,667.16
1. Distribution to owners (or shareholders)-708,209,667.16-708,209,667.16
IV. Balance as at the end of the period2,984,208,200.004,477,500,000.002,988,000,000.005,099,821,539.19226,860,000.001,199,819,528.06881,627,516.7417,404,116,783.99
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
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
ItemJanuary to June 2019
Other equity instruments
Share capitalPreferencesharesPerpetualbondsOthers
Capital
reserves
Less:
Treasury shares
Othercomprehensive
incomeSpecial reservesSurplus reservesRetained profitOthers
Total
owners
’ equity
I. Balance as at the end of the prior year2,904,608,200.004,477,500,000.002,988,000,000.004,953,557,435.191,136,699,330.201,629,209,489.7218,089,574,455.11II. 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)63,120,197.86-816,518,954.81-753,398,756.95
(I) Total comprehensive income631,201,978.57631,201,978.57(III) Profit distribution63,120,197.86-1,447,720,933.38-1,384,600,735.52
1. Transfer to surplus reserves63,120,197.86-63,120,197.86
2. Distribution to owners (or shareholders)-1,384,600,735.52-1,384,600,735.52
IV. Balance as at the end of the period2,904,608,200.004,477,500,000.002,988,000,000.004,953,557,435.191,199,819,528.06812,690,534.9117,336,175,698.16
Legal Representative:Financial controller:Head of the financial department:
Chen HongguoDong LianmingZhang Bo
INTERIM FINANCIAL REPORT 2020
X Financial Report
III. General Information of the CompanyThe predecessor of Shandong Chenming Paper Holdings Limited (hereinafter referred to as the“Company”) was ShandongShouguang Paper Mill Corporation, which was changed as a joint stock company with limited liability through offeringto specific investors in May 1993. In December 1996, with approval by Lu Gai Zi [1996] No. 270) issued by the People’sGovernment of Shandong Province and Zheng Wei [1996] No. 59 of the Securities Committee of the State Council, theCompany was changed as a joint stock company with limited liability established by share offer.In May 1997, with approval by Zheng Wei Fa [1997] No. 26 issued by the Securities Committee of the State Council, theCompany issued 115,000,000 domestic listed foreign shares (B shares) under public offering, which were listed and traded onShenzhen Stock Exchange from 26 May 1997.In September 2000, with approval by Zheng Jian Gong Si Zi [2000] No. 151 issued by the China Securities RegulatoryCommission, the Company issued an additional 70,000,000 RMB ordinary shares (A shares), which were listed and traded onShenzhen Stock Exchange from 20 November 2000.In June 2008, with approval by the Stock Exchange of Hong Kong Limited, the Company issued 355,700,000 H shares. At thesame time, 35,570,000 H shares were allocated to the National Council for Social Security Fund by our relevant state-ownedshareholder and converted into overseas listed foreign shares (H shares) for the purpose of reducing the number ofstate-owned shares. The additional H shares issued were listed and traded on Hong Kong Stock Exchange on 18 June 2008.As at 30 June 2020, the total share capital of the Company was 2,984,608,200 shares. For details, please refer to Note VII. 37.The Company established a corporate governance structure comprising the general meeting, the board of directors and thesupervisory committee, and has human resources department, information technology department, corporate managementdepartment, legal affairs department, financial management department, capital management department, securitiesinvestment department, procurement department, audit department, and other departments.The Company and its subsidiaries (hereinafter referred to as the“Group”) are principally engaged in, among other things,processing and sale of paper products (including machine-made paper and paper board), paper making raw materials andmachinery; generation and sale of electric power and thermal power; forestry, saplings growing, processing and sale oftimber; manufacturing, processing and sale of wood products; and manufacturing and sale of laminated boards and fortifiedwooden floorboards, hotel service, equipment financial and operating leasing, magnesite mining, processing and sales of talc.The financial statements and notes thereto were approved by the board of directors of the Company (the“Board”) on 10August 2020.Subsidiaries of the Company newly included in the scope of consolidation in the reporting period totalled 2. For details,please refer to Note IX“Equity in other entities”. The scope of consolidation of the Company during the year had 2 companiesincluded and 2 companies excluded. For details, please refer to 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
IV. Basis of Preparation of the Financial Statements (Cont’d)
1. Basis of preparation (Cont
’d)The Company’s financial statements have been prepared on an accrual basis in accordance with the ASBEs. Except forcertain financial instruments, the financial statements are prepared under the historical cost convention. Held-for-salenon-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.V. Significant Accounting Policies and Accounting EstimatesSpecific accounting policies and accounting estimates are indicated as follows:
The Company and its subsidiaries are principally engaged in machine-made paper, electricity and heat, constructionmaterials, paper making chemical products, financial leasing, hotel management and other operations. The Company and itssubsidiaries formulated certain specific accounting policies and accounting estimates for the transactions and matters suchas revenue recognition, determination of performance progress and R&D expenses based on their actual production andoperation characteristics pursuant to the requirements under the relevant accounting standards for business enterprises. Fordetails, please refer to this Note V. 32“Revenue”.
1. Statement of compliance with the Accounting Standards for Business Enterprises
These financial statements have been prepared in conformity with the ASBEs, which truly and fully reflect the financialposition of the consolidated entity and the Company as at 30 June 2020 and relevant information such as the operatingresults and cash flows of the consolidated entity and the Company for the first half of 2020.
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.
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 FINANCIAL REPORT 2020
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 FINANCIAL REPORT 2020
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. 17“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.
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
6. Preparation of consolidated financial statements
(1) Scope of consolidation
The scope of consolidation of the consolidated financial statements is determined on the basis of control. Theterm“control”refers to the fact that the Company has power over the investee and is entitled to variable returnsfrom its involvement with the investee and the ability to use its power over the investee to affect the amount ofthose returns. A subsidiary is an entity controlled by the Company (including an enterprise, a separable part of aninvestee, a structured entity, etc.).
(2) Basis for preparation of the consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial statements of theCompany and its subsidiaries and other relevant information. In preparing the consolidated financial statements,the accounting policies and accounting periods of the Company and its subsidiaries shall be consistent, andintra-company significant transactions and balances are eliminated.A subsidiary and its business acquired through a business combination involving entities under common controlduring the reporting period shall be included in the scope of the consolidation of the Company from the dateof being controlled by the ultimate controlling party, and its operating results and cash flows from the date ofbeing controlled by the ultimate controlling party are included in the consolidated income statement and theconsolidated cash flow statement, respectively.For a subsidiary and its business acquired through a business combination involving entities not under commoncontrol during the reporting period, its income, expenses and profits are included in the consolidated incomestatement, and cash flows are included in the consolidated cash flow statement from the acquisition date to theend of the reporting period.The shareholders’equity of the subsidiaries that is not attributable to the Company is presented undershareholders’equity in the consolidated balance sheet as minority interest. The portion of net profit or loss ofsubsidiaries for the period attributable to minority interest is presented in the consolidated income statementunder the“profit or loss of minority interest”. When the amount of loss attributable to the minority shareholders ofa subsidiary exceeds the minority shareholders’ portion of the opening balance of owners’equity of the subsidiary,the excess amount shall be allocated against minority interest.
(3) Accounting treatment for loss of control over subsidiaries
For the loss of control over a subsidiary due to disposal of a portion of the equity investment or other reasons,the remaining equity is measured at fair value on the date when the control is lost. The difference arising fromthe sum of consideration received for disposal of equity interest and the fair value of remaining equity interestover the sun of the share of the carrying amount of net assets of the former subsidiary calculated continuouslyfrom the purchase date based on the shareholding percentage before disposal and the goodwill is recognised asinvestment income in the period when the control is lost.Other comprehensive income related to equity investment in the former subsidiary shall be transferred to currentprofit or loss at the time when the control is lost, except for other comprehensive income arising from changes innet assets or net liabilities due to remeasurement of defined benefit plan by the investee.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
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. The joint arrangements of theGroup comprise joint operations and joint ventures.
(1) Joint operations
Joint operations refer to a joint arrangement during which the Group is entitled to relevant assets and obligationsof this arrangement.The Group recognises the following items in relation to its interest in a joint operation and accounts for them inaccordance with the relevant ASBEs:
A. the assets held solely by it and assets held jointly according to its share;B. the liabilities assumed solely by it and liabilities assumed jointly according to its share;C. the revenue from sale of output from joint operations;D. the revenue from sale of output from joint operations according to its share;E. the fees solely incurred by it and fees incurred from joint operations according to its share.
(2) Joint ventures
Joint ventures refer to a joint arrangement during which the Company only is entitled to net assets of thisarrangement.The Group accounts for its investments in joint ventures in accordance with the requirements relating toaccounting treatment using equity method for long-term equity investments.
8. Standards for recognising cash and cash equivalents
Cash refers to cash on hand and deposits readily available for payment purpose. Cash equivalents refer to short-termand highly liquid investments held by the Group which are readily convertible into known amount of cash and which aresubject to insignificant risk of value change.
9. Foreign currency operations and translation of statements denominated in foreign currency
(1) Foreign currency operations
The foreign currency operations of the Group are translated into the functional currency at the prevailing spotexchange rate on the date of exchange, i.e. usually the middle price of RMB exchange rate published by thePeople’s Bank of China on that date in general and the same hereinafter.On the balance sheet date, foreign currency monetary items shall be translated at the spot exchange rate onthe balance sheet date. The exchange difference arising from the difference between the spot exchange rateon the balance sheet date and the spot exchange rate upon initial recognition or the last balance sheet date willbe recognised in profit or loss for the period. The foreign currency non-monetary items measured at historicalcost shall still be measured by the functional currency translated at the spot exchange rate on the date of thetransaction. Foreign currency non-monetary items measured at fair value are translated at the spot exchangerate on the date of determination of the fair value. The difference between the amounts of the functional currencybefore and after the translation will be recognised in profit or loss for the period.
INTERIM FINANCIAL REPORT 2020
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)
(2) Translation of financial statements denominated in foreign currency
When translating the financial statements denominated in foreign currency of overseas subsidiaries, assets andliabilities on the balance sheet are translated at the spot exchange rate prevailing at the balance sheet date;owner’s equity items except for“retained profit”are translated at the spot exchange rates at the dates on whichsuch items arose.Income and expenses items in the income statement are translated at the average exchange rate for the period inwhich the transaction occurred.All items in the cash flow statements shall be translated at the average exchange rate for the period in whichthe cash flow transaction occurred. Effects arising from changes of exchange rate on cash shall be presentedseparately as the“effect of foreign exchange rate changes on cash and cash equivalents”item in the cash flowstatements.The differences arising from translation of financial statements shall be included in the“other comprehensiveincome” item in owners’ equity in the balance sheet.On disposal of foreign operations and loss of control, exchange differences arising from the translation of financialstatements denominated in foreign currencies related to the disposed foreign operations which has been includedin owners’equity in the balance sheet, shall be transferred to profit or loss in whole or in proportionate share in theperiod in which the disposal took place.
10. Financial instruments
A financial instrument is a contract that gives rise to a financial asset of one party and a financial liability or equityinstrument of another party.
(1) Recognition and derecognition of financial instruments
Financial asset or financial liability will be recognised when the Group became one of the parties under a financialinstrument contract.Financial asset that satisfied any of the following criteria shall be derecognised:
the contract right to receive the cash flows of the financial asset has terminated;the financial asset has been transferred and meets the derecognition criteria for the transfer of financialasset as described below.A financial liability (or a part thereof) is derecognised only when the present obligation is discharged in full orin part. If an agreement is entered between the Group (debtor) and a creditor to replace the existing financialliabilities with new financial liabilities, and the contractual terms of the new financial liabilities are substantiallydifferent from those of the existing financial liabilities, the existing financial liabilities shall be derecognised and thenew financial liabilities shall be recognised.Conventionally traded financial assets shall be recognised and derecognised at the trading date.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(2) Classification and measurement of financial assets
The Group classifies the financial assets according to the business model for managing the financial assets andcharacteristics of the contractual cash flows as follows: financial assets measured at amortised cost, financialassets measured at fair value through other comprehensive income, and financial assets measured at fair valuethrough profit or loss.Financial assets measured at amortised costA financial asset is measured at amortised cost if it meets both of the following conditions and is not designatedat fair value through other comprehensive income:
The Group’s business model for managing such financial assets is to collect contractual cash flows;The contractual terms of the financial asset stipulate that cash flows generated on specific dates are solelypayments of principal and interest on the principal amount outstanding.Subsequent to initial recognition, such financial assets are measured at amortised cost using the effective interestmethod. A gain or loss on a financial asset that is measured at amortised cost and is not part of a hedgingrelationship shall be recognised in profit or loss for the current period when the financial asset is derecognised,amortised using the effective interest method or with impairment recognised.Financial assets measured at fair value through other comprehensive incomeA financial asset is classified as measured at fair value through other comprehensive income if it meets both of thefollowing conditions and is not designated at fair value through profit or loss:
The Group’s business model for managing such financial assets is achieved both by collecting collect contractualcash flows and selling such financial assets;The contractual terms of the financial asset stipulate that cash flows generated on specific dates are solelypayments of principal and interest on the principal amount outstanding.Subsequent to initial recognition, such financial assets are subsequently measured at fair value. Interest calculatedusing the effective interest method, impairment losses or gains and foreign exchange gains and losses arerecognised in profit or loss for the current period, and other gains or losses are recognised in other comprehensiveincome. On derecognition, the cumulative gain or loss previously recognised in other comprehensive income isreclassified from other comprehensive income to profit or loss.
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(2) Classification and measurement of financial assets (Cont
’d)Financial assets measured at fair value through profit or lossThe Group classifies the financial assets other than those measured at amortised cost and measured at fair valuethrough other comprehensive income as financial assets measured at fair value through profit or loss. Uponinitial recognition, the Group irrevocably designates certain financial assets that are required to be measured atamortised cost or at fair value through other comprehensive income as financial assets measured at fair valuethrough profit or loss in order to eliminate or significantly reduce accounting mismatch.Upon initial recognition, such financial assets are measured at fair value. Except for those held for hedgingpurposes, gains or losses (including interests and dividend income) arising from such financial assets arerecognised in the profit or loss for the current period.The business model for managing financial assets refers to how the Group manages its financial assets in order togenerate cash flows. That is, the Group’s business model determines whether cash flows will result from collectingcontractual cash flows, selling financial assets or both. The Group determines the business model for managingfinancial assets on the basis of objective facts and specific business objectives for managing financial assetsdetermined by key management personnel.The Group assesses the characteristics of the contractual cash flows of financial assets to determine whetherthe contractual cash flows generated by the relevant financial assets on a specific date are solely payments ofprincipal and interest on the principal amount outstanding. The principal refers to the fair value of the financialassets at the initial recognition. Interest includes consideration for the time value of money, for the credit riskassociated with the principal amount outstanding during a particular period of time and for other basic lendingrisks, costs and profits. In addition, the Group evaluates the contractual terms that may result in a change in thetime distribution or amount of contractual cash flows from a financial asset to determine whether it meets therequirements of the above contractual cash flow characteristics.All affected financial assets are reclassified on the first day of the first reporting period following the change in thebusiness model where the Group changes its business model for managing financial assets; otherwise, financialassets shall not be reclassified after initial recognition.Financial assets other than accounts receivable without a significant financing component are measured at fairvalue upon initial recognition. For financial assets measured at fair value through profit or loss, relevant transactioncosts are directly recognised in profit or loss for the current period. For other categories of financial assets,relevant transaction costs are included in the amount initially recognised. Accounts receivable without significantfinancing component are initially recognised based on the transaction price expected to be entitled by the Group.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(3) Classification and measurement of financial liabilities
At initial recognition, financial liabilities of the Group are classified as financial liabilities measured at fair valuethrough profit or loss and financial liabilities measured at amortised cost. For financial liabilities not classifiedas measured at fair value through profit or loss, relevant transaction costs are included in the amount initiallyrecognised.Financial liabilities measured at fair value through profit or lossFinancial liabilities measured at fair value through profit or loss comprise held-for-trading financial liabilities andfinancial liabilities designated at fair value through profit or loss upon initial recognition. Such financial liabilitiesare subsequently measured at fair value, and the gains or losses from the change in fair value and the dividend orinterest expenses related to the financial liabilities are included in the profit or loss of the current period.Financial liabilities measured at amortised costOther financial liabilities are subsequently measured at amortised cost using the effective interest rate method,and the gains or losses arising from derecognition or amortisation are recognised in profit or loss for the currentperiod.Classification between financial liabilities and equity instrumentsA financial liability is a liability if:
it has a contractual obligation to pay in cash or other financial assets to other parties.it has a contractual obligation to exchange financial assets or financial liabilities under potential adverse
condition with other parties. it is a non-derivative instrument contract which will or may be settled with the entity’s own equityinstruments, and the entity will deliver a variable number of its own equity instruments according to suchcontract. it is a derivative instrument contract which will or may be settled with the entity’s own equity instruments,except for a derivative instrument contract that exchanges a fixed amount of cash or other financial assetwith a fixed number of its own equity instruments.Equity instruments are any contract that evidences a residual interest in the assets of an entity after deducting allof its liabilities.If the Group cannot unconditionally avoid the performance of a contractual obligation by paying cash or deliveringother financial assets, the contractual obligation meets the definition of financial liabilities.Where a financial instrument must or may be settled with the Group’s own equity instruments, the Group’s ownequity instruments used to settle such instrument should be considered as to whether it is as a substitute for cashor other financial assets or for the purpose of enabling the holder of the instrument to be entitled to the remaininginterest in the assets of the issuer after deducting all of its liabilities. For the former, it is a financial liability of theGroup; for the latter, it is the Group’s own equity instruments.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(4) Derivative financial instruments
The Group’s derivative financial instruments are mainly forward foreign exchange contracts, which are initiallyrecognised at fair value on the date a derivative contract is entered into and are subsequently measured at theirfair value. A derivative financial instrument is recognised as an asset when the fair value is positive and as aliability when the fair value is negative. Any gain or loss arising from changes in fair value and not complying withthe accounting requirements on hedging shall be recognised in profit or loss for current period.
(5) Fair value of financial instruments
The methods for determining the fair value of the financial assets or financial liabilities are set out in Note V. 10.
(6) Impairment of financial assets
The Group makes provision for impairment based on expected credit losses (ECLs) on the following items:
Financial assets measured at amortised cost;Debt investments measured at fair value through other comprehensive income;
Measurement of ECLs
ECLs are the weighted average of credit losses of financial instruments weighted by the risk of default. Creditlosses refer to the difference between all contractual cash flows receivable according to the contract anddiscounted according to the original effective interest rate and all cash flows expected to be received, i.e. thepresent value of all cash shortages.The Group takes into account reasonable and well-founded information such as past events, current conditionsand forecasts of future economic conditions, and calculates the probability-weighted amount of the present valueof the difference between the cash flows receivable from the contract and the cash flows expected to be receivedweighted by the risk of default.The Group measures ECLs of financial instruments at different stages. If the credit risk of the financial instrumentdid not increase significantly upon initial recognition, it is at the first stage, and the Group makes provision forimpairment based on the ECLs within the next 12 months; if the credit risk of a financial instrument increasedsignificantly upon initial recognition but has not yet incurred credit impairment, it is at the second stage, and theGroup makes provision for impairment based on the lifetime ECLs of the instrument; if the financial instrumentincurred credit impairment upon initial recognition, it is at the third stage, and the Group makes provision forimpairment based on the lifetime ECLs of the instrument.For financial instruments with low credit risk on the balance sheet date, the Group assumes that the credit risk didnot increase significantly upon initial recognition, and makes provision for impairment based on the ECLs withinthe next 12 months.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(6) Impairment of financial assets (Cont
’d)
Measurement of ECLs(Cont’d)Lifetime ECLs represent the ECLs resulting from all possible default events over the expected life of a financialinstrument. The 12-month ECLs are the ECLs resulting from possible default events on a financial instrumentwithin 12 months (or a shorter period if the expected life of the financial instrument is less than 12 months) afterthe balance sheet date, and is a portion of lifetime ECLs.The maximum period to be considered when estimating ECLs is the maximum contractual period over which theGroup is exposed to credit risk, including renewal options.For the financial instruments at the first and second stages and with low credit risks, the Group calculates theinterest income based on the book balance and the effective interest rate before deducting the impairmentprovisions. For financial instruments at the third stage, interest income is calculated based on the amortised costafter deducting impairment provisions made from the book balance and the effective interest rate.For bills receivable, accounts receivable and contract assets, regardless of whether there is a significant financingcomponent, the Group always makes provision for impairment at an amount equal to lifetime ECLs.When the Group is unable to assess the information of ECLs for an individual financial asset at a reasonable cost,it classifies bills receivable and accounts receivable into portfolios based on the credit risk characteristics, andcalculates the ECLs on a portfolio basis. The basis for determining the portfolios is as follows:
A. Bills receivable
Bills receivable portfolio 1: Bank acceptance billsBills receivable portfolio 2: Commercial acceptance billsB. Accounts receivable
Accounts receivable portfolio 1: Factoring receivablesAccounts receivable portfolio 2: Receivables from non-related party customersAccounts receivable portfolio 3: Due from related party customersFor bills receivable classified as a portfolio, the Group refers to the historical credit loss experience, combinedwith the current situation and the forecast of future economic conditions, to calculate the ECLs based on defaultrisk exposure and lifetime ECL rate.For accounts receivable classified as a portfolio, the Group refers to the historical credit loss experience,combined with the current situation and the forecast of future economic conditions, to prepare a comparison tableof the ageing/overdue days of accounts receivable and the lifetime ECL rate to calculate the ECLs.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(6) Impairment of financial assets (Cont
’d)Other receivablesThe Group classifies other receivables into portfolios based on credit risk characteristics, and calculates the ECLson a portfolio basis. The basis for determining the portfolios is as follows:
Other receivables portfolio 1: Amount due from government authoritiesOther receivables portfolio 2: Amount due from related partiesOther receivables portfolio 3: Other receivablesFor other receivables classified as a portfolio, the Group calculates the ECLs based on default risk exposure andthe ECL rate over the next 12 months or the entire lifetime.Long-term receivablesThe Group’s long-term receivables include finance lease receivables and deposits receivable.The Group classifies the finance lease receivables, deposits receivable and other receivables into portfolios basedon the credit risk characteristics, and calculates the ECLs on a portfolio basis. The basis for determining theportfolios is as follows:
A. Finance lease receivables
Finance lease receivables portfolio 1: Receivables not past dueFinance lease receivables portfolio 2: Overdue receivablesB. Other long-term receivablesOther long-term receivables portfolio 1: Deposits receivableOther long-term receivables portfolio 2: Other receivablesFor deposits receivable and other receivables, the Group refers to the historical credit loss experience, combinedwith the current situation and the forecast of future economic conditions, and calculates the ECLs based ondefault risk exposure and lifetime ECL rate.Except for those of finance lease receivables and deposits receivable, the ECLs of other receivables and long-termreceivables classified as a portfolio are measured based on default risk exposure and ECL rate over the next 12months or the entire lifetime.Debt investments and other debt investmentsFor debt investments and other debt investments, the Group measures the ECLs based on the nature of theinvestment, the types of counterparty and risk exposure, and default risk exposure and ECL rate within the next12 months or the entire lifetime.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(6) Impairment of financial assets (Cont
’d)
Assessment of significant increase in credit riskIn assessing whether the credit risk of a financial instrument has increased significantly upon initial recognition,the Group compares the risk of default of the financial instrument at the balance sheet date with that at the dateof initial recognition to determine the relative change in risk of default within the expected lifetime of the financialinstrument.In determining whether the credit risk has increased significantly upon initial recognition, the Group considersreasonable and well-founded information, including forward-looking information, which can be obtained withoutunnecessary extra costs or efforts. Information considered by the Group includes:
The debtor’s failure to make payments of principal and interest on their contractually due dates;An actual or expected significant deterioration in a financial instrument’s external or internal credit rating (if any);An actual or expected significant deterioration in the operating results of the debtor;Existing or expected changes in the technological, market, economic or legal environment that have a significantadverse effect on the debtor’s ability to meet its obligation to the Group.Depending on the nature of the financial instruments, the Group assesses whether there has been a significantincrease in credit risk on either an individual basis or a collective basis. When the assessment is performed on acollective basis, the financial instruments are grouped based on their common credit risk characteristics, such aspast due information and credit risk ratings.The Group determines that the credit risk on a financial asset has increased significantly if it is more than 30 dayspast due.
Credit-impaired financial assets
At balance sheet date, the Group assesses whether financial assets measured at amortised cost and debtinvestments measured at fair value through other comprehensive income are credit-impaired. A financial asset iscredit-impaired when one or more events that have an adverse effect on the estimated future cash flows of thefinancial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observableevents:
Significant financial difficulty of the issuer or debtor;A breach of contract by the debtor, such as a default or delinquency in interest or principal payments;For economic or contractual reasons relating to the debtor’s financial difficulty, the Group having granted to thedebtor a concession that would not otherwise consider;It becoming probable that the debtor will enter bankruptcy or other financial reorganisation;The disappearance of an active market for that financial asset because of financial difficulties of the issuer ordebtor.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(6) Impairment of financial assets (Cont
’d)Presentation of provisions for ECLsECLs are remeasured at each balance sheet date to reflect changes in the financial instrument’s credit risk uponinitial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit or loss forthe current period. For financial assets measured at amortised cost, the provisions of impairment is deductedfrom the carrying amount of the financial assets presented in the balance sheet; for debt investments at fair valuethrough other comprehensive income, the Group makes provisions of impairment in other comprehensive incomewithout reducing the carrying amount of the financial asset.Write-offsThe book balance of a financial asset is directly written off to the extent that there is no realistic prospect ofrecovery of the contractual cash flows of the financial asset (either partially or in full). Such write-off constitutesderecognition of such financial asset. This is generally the case when the Group determines that the debtor doesnot have assets or sources of income that could generate sufficient cash flows to repay the amounts subject tothe write-off. However, financial assets that are written off could still be subject to enforcement activities in orderto comply with the Group’s procedures for recovery of amounts due.If a write-off of financial assets is later recovered, the recovery is credited to profit or loss in the period in whichthe recovery occurs.
(7) Transfer of financial assets
Transfer of financial assets refers to the transfer or delivery of financial assets to another party other than theissuer of such financial assets (the transferee).If the Group transfers substantially all the risks and rewards of ownership of the financial asset to the transferee,the financial asset shall be derecognised. If the Group retains substantially all the risks and rewards of ownershipof a financial asset, the financial asset shall not be derecognised.If the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset,it accounts for the transaction as follows: if the Group does not retain control, it derecognises the financial assetand recognises any resulting assets or liabilities; if the control over the financial asset is not waived, the relevantfinancial asset is recognised according to the extent of its continuing involvement in the transferred financial assetand the relevant liability is recognised accordingly.
(8) Offset of financial assets and financial liabilities
If the Group owns the legitimate rights of offsetting the recognised financial assets and financial liabilities, whichare enforceable currently, and the Group plans to realise the financial assets or to clear off the financial liabilitieson a net amount basis or simultaneously, the net amount of financial assets and financial liabilities shall bepresented in the balance sheet upon offsetting. Otherwise, financial assets and financial liabilities are presentedseparately in the balance sheet without offsetting.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. Bills receivable
Method for determining the ECLs of bills receivableThe Company measures the loss provisions for bills receivable in accordance with the ECLs amount for the entireperiod. Based on the credit risk characteristics of bills receivable, bills receivable are divided into different groups:
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 ECLs of accounts receivableFor receivables and contract assets that do not contain significant financing components, the Company measures lossprovisions based on the ECL 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 ECL 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 distributor customers
This group comprises receivables with their ageing as credit risk characteristics.
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
13. Other receivables
Determination and accounting treatment of ECLs of other receivablesThe Company measures impairment losses using the ECL amount in the next 12 months or the entire duration, basedon whether the credit risk of other receivables has increased significantly upon initial recognition. In addition to otherreceivables which are individually assessed for credit risk, they are also classified into different groups based on theircredit risk characteristics:
ItemBasis for determining the groupsDividends receivableThis group comprises dividends receivable.Interest receivableThis group comprises interest due from financial institutions.Amount due from government agencies
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 of the Group mainly include raw materials, work in progress, goods in stock, development productsand consumable biological assets, etc.
(2) Pricing of inventories dispatched
Inventories of the Group are measured at their actual cost when obtained. Cost of raw materials, goods in stockand others will be calculated with weighted average method when being dispatched.Consumable biological assets refer to biological assets held-for-sale which include growing timber. Consumablebiological assets without a stock are stated at historical cost at initial recognition, and subsequently measuredat fair value when there is a stock. Changes in fair values shall be recognised as profit or loss in the currentperiod. The cost of self-planting, self-cultivating consumable biological assets is the necessary expensesdirectly attributable to such assets prior to canopy closure, including borrowing costs eligible for capitalisation.Subsequent expenses such as maintenance cost incurred after canopy closure shall be included in profit or lossfor the current period.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
14. Inventories (Cont
’d)
(3) Recognition of net realisable value of inventories and provision for inventory impairment
Net realisable value of inventories refers to the amount of the estimated price of inventories less the estimatedcost incurred upon completion, estimated sales expenses and taxes and levies. The realisable value 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, provision for inventory impairment is made when the cost is higher than the netrealisable value. The Group usually make provision for inventory impairment based on categories of inventories. Atthe balance sheet date, in case the factors causing inventory impairment no longer exists, the original provision forinventory impairment shall be reversed.
(4) Inventory stock taking system
The Group implements permanent inventory system as its inventory stock taking system.
(5) Amortisation of low-value consumables and packaging materials
The low-value consumables of the Group are amortised when issued for use.Packaging materials for turnover are amortised when issued for use.
15. Held for sale and discontinued operations
(1) Classification and measurement of non-current assets or disposal groups held for sale
A non-current asset or disposal group is classified as held for sale if its carrying amount will be recoveredprincipally through a sale transaction (including a non-monetary asset exchange with commercial substance)rather than through continuing use.The aforesaid non-current asset does not include the investment property subsequently measured at fair value,the biological assets measured at the net amount of the fair value deducting the sales expense, the assetsgenerated from remuneration, financial assets, deferred income tax assets and rights from insurance contract.A disposal group is a group of assets to be disposed of together as a whole by sale or other means in atransaction, and liabilities directly associated with those assets that will be transferred in the transaction. In certaincircumstances, the disposal group includes the goodwill acquired in the business combination.A non-current asset or a disposal group is classified as held for sale if it meets all of the following conditions: thenon-current asset or disposal group is available for immediate sale in its present condition subject only to termsthat are usual and customary for sales of such asset or disposal group; the sale is highly probable, i.e. a sale planhas been resolved and a firm purchase commitment has been obtained, and the sale is expected to be completedwithin one year. When the Group loses control of a subsidiary due to reasons such as disposal of investment ina subsidiary, regardless of whether the Group retains part of the equity investment after the disposal, when theinvestment in a subsidiary intended to be disposed of meets the conditions for classification as held for sale, theinvestment in a subsidiary is classified as held for sale as a whole in the separate financial statements, and allassets and liabilities of the subsidiary are classified as held for sale in the consolidated financial statements.
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
15. Held for sale and discontinued operations (Cont
’d)
(1) Classification and measurement of non-current assets or disposal groups held for sale (Cont
’d)When the non-current assets or disposal groups held for sale are initially measured or remeasured at the balancesheet date, the excess of the carrying amount over the net amount of the fair value less selling expenses isrecognised as asset impairment loss. For the amount of impairment loss recognised on disposal groups heldfor sale, the carrying amount of the goodwill of the disposal group shall be offset against first, and then beoffset against the carrying amount of non-current assets according to the proportion of the carrying amount ofnon-current assets.If the net amount of the fair value of the non-current assets or disposal groups held for sale less the sellingexpenses increases on the subsequent balance sheet date, the amount previously written down shall berecovered and reversed in the amount of asset impairment loss recognised after be classified as held for sale, andthe reversed amount shall be included in the current profit and loss. The carrying amount of goodwill written offshall not be reversed.Non-current assets held for sale and assets in disposal group held for sale are not depreciated or amortised.Interest and other expenses of a disposal group classified as held for sale continue to be recognised. For all orpart of an investment in an associate or a joint venture that is classified as held for sale, the part of being classifiedas held for sale shall cease to be accounted for using the equity method, while any retained portion (not classifiedas held for sale) shall continue to be accounted for using the equity method; The Group ceases to use the equitymethod from the date when the Group ceases to have significant influence over an associate or a joint venture.If a non-current asset or disposal group is classified as held for sale but subsequently no longer meets the criteriafor being classified as held for sale, the Group shall cease to classify it as held for sale and measure it at the lowerof:
the carrying amount of the asset or disposal group before being classified as held for sale is adjusted by thedepreciation, amortisation or impairment that would have been recognised if the asset or disposal grouphad not been classified as held for sale; recoverable amount.
(2) Discontinued operations
A discontinued operation is a component of the Group that either has been disposed of or is classified as held forsale, and can be distinguished separately, and meets one of the following conditions:
The component represents a separate major line of business or geographical area of operations.The component is part of a related plan to dispose of a separate major line of business or geographical area
of operations. The component is a subsidiary acquired exclusively with a view to resale.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
15. Held for sale and discontinued operations (Cont
’d)
(3) Presentation
The Group presents the non-current assets held for sale or the assets in the disposal group held for sale as“assetsheld-for-sale”and the liabilities in the disposal group held for sale as“liabilities held-for-sale” in the balance sheet.The Group presents profit or loss from continuing operations and profit or loss from discontinued operations inthe income statement. For non-current assets and disposal groups held for sale that do not meet the definitionof discontinued operation, their impairment losses and reversal amounts and gains or losses are presented asprofit or loss from continuing operations. Operating profit or loss such as impairment loss and reversal amount ofdiscontinued operation and disposal gain or loss is presented as profit or loss from discontinued operation.Disposal groups that are intended to be closed for use rather than for sale and meet the conditions for thecomponents in the definition of discontinued operations are presented as discontinued operations from the dateof cessation of use.For the discontinued operations presented in the current period, the information originally presented as profitor loss from continuing operations in the current financial statements is re-presented as profit or loss fromdiscontinued operations in the comparable accounting period. If the discontinued operations no longer meetthe conditions for being classified of held-for-sale, the information originally presented as profit or loss fromdiscontinued operations in the current financial statements shall be re-presented as profit or loss from continuingoperations in the comparable accounting period.
16. Long-term receivables
The Company measures the impairment loss of long-term receivables at an amount equal to the ECLs in the next 12months or the lifetime ECLs, depending on whether its credit risk has significantly increased upon initial recognition.Other than the long-term receivables assessed individually for credit risks, long-term receivables are classified intodifferent 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.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Long-term equity investments
Long-term equity investments include the equity investments in subsidiaries, joint ventures and associates. Associatesof the Group are those investees that the Group imposes significant influence over.
(1) Determination of initial investment cost
Long-term equity investments acquired through business combinations: for a long-term equity investmentacquired through a business combination involving enterprises under common control, the investment cost shallbe the absorbing party’s share of the carrying amount of the owners’equity under the consolidated financialstatements of the ultimate controlling party on the date of combination. For a long-term equity investmentacquired through a business combination involving enterprises not under common control, the investment cost ofthe long-term equity investment shall be the cost of combination.Long-term equity investments acquired through other means: for a long-term equity investment acquired by cashpayment, the initial investment cost shall be the purchase cost actually paid; for a long-term equity investmentacquired by issuing equity securities, the initial investment cost shall be the fair value of equity securities issued.
(2) Subsequent measurement and method for profit or loss recognition
Investments in subsidiaries shall be accounted for using the cost method. Except for the investments which meetthe conditions of holding for sale, investments in associates and joint ventures shall be accounted for using theequity method.For a long-term equity investment accounted for using the cost method, the cash dividends or profits declared bythe investees for distribution shall be recognised as investment gains and included in profit or loss for the currentperiod, except the case of receiving the actual consideration paid for the investment or the declared but not yetdistributed cash dividends or profits which is included in the consideration.For a long-term equity investment accounted for using the equity method, where the initial investment costexceeds the investor’s interest in the fair value of the investee’s identifiable net assets at the acquisition date, noadjustment shall be made to the investment cost of the long-term equity investment. Where the initial investmentcost is less than the investor’s interest in the fair value of the investee’s identifiable net assets at the acquisitiondate, adjustment shall be made to the carrying amount of the long-term equity investment, and the difference shallbe charged to profit or loss for the current period.Under the equity method, investment gain and other comprehensive income shall be recognised based on theCompany’s share of the net profits or losses and other comprehensive income made by the investee, respectively.Meanwhile, the carrying amount of long-term equity investment shall be adjusted. The carrying amount oflong-term equity investment shall be reduced based on the Group’s share of profit or cash dividend distributedby the investee. In respect of the other movement of net profit or loss, other comprehensive income and profitdistribution of investee, the carrying amount of long-term equity investment shall be adjusted and included inthe capital reserves (other capital reserves). The Group shall recognise its share of the investee’s net profits orlosses based on the fair values of the investee’s individual separately identifiable assets at the time of acquisition,after making appropriate adjustments thereto according to the accounting policies and accounting periods of theGroup.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
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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)For additional equity investment made in order to obtain significant influence or common control over investeewithout resulted in control, the initial investment cost under the equity method shall be the aggregate of fairvalue of previously held equity investment and additional investment cost on the date of transfer. The differencebetween the fair value and carrying amount of previously held equity investment on the date of transfer and theaccumulated change in fair value originally included in other comprehensive income shall be recognised in theprofit or loss for the current period under the equity method.In the event of loss of common control or significant influence over investee due to partial disposal of equityinvestment, the remaining equity interest after disposal shall be accounted for according to the AccountingStandard for Business Enterprises No. 22 – Recognition and measurement of Financial Instruments. The differencebetween its fair value and carrying amount shall be included in profit or loss for the current period. In respectof other comprehensive income recognised under previous equity investment using equity method, it shall beaccounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability byinvestee at the time when equity method was ceased to be used. Movement of other owners’equity related to theprevious equity investment shall be transferred to profit or loss for the current period.In the event of loss of control over investee due to partial disposal of equity investment, the remaining equityinterest which can apply common control or impose significant influence over the investee after disposal shall beaccounted for using equity method. Such remaining equity interest shall be treated as accounting for using equitymethod since it is obtained and adjustment was made accordingly. For the remaining equity interest which cannotapply common control or impose significant influence over the investee after disposal, it shall be accounted forusing the Accounting Standard for Business Enterprises No. 22 – Recognition and measurement of FinancialInstruments. The difference between its fair value and carrying amount as at the date of losing control shall beincluded in profit or loss for the current period.If the shareholding ratio of the Company is reduced due to the capital increase of other investors, and as a result,the Company loses the control of but still can apply common control or impose significant influence over theinvestee, the net asset increase due to the capital increase of the investee attributable to the Company shall berecognised according to the new shareholding ratio, and the difference with the original carrying amount of thelong-term equity investment corresponding to the shareholding ratio reduction part that should be carried forwardshall be recorded in the profit or loss for the current period; and then it shall be adjusted according to the newshareholding ratio as if equity method is used for accounting when acquiring the investment.In respect of the transactions between the Group and its associates and joint ventures, the share of unrealisedgain or loss arising from internal transactions shall be eliminated by the portion attributable to the Group.Investment gain shall be recognised accordingly. However, any unrealised loss arising from internal transactionsbetween the Group and an investee is not eliminated to the extent that the loss is impairment loss of thetransferred assets.(In case of using accounting policy options, the following disclosure should be added:
The Group’s long-term equity investments in associates and joint ventures, which are held indirectly by venturecapital institutions, mutual funds, trust companies or similar entities including investment-linked insurance funds,are measured at fair value and their changes are included in the profit or loss.)
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Long-term equity investments (Cont
’d)
(3) Basis for determining the common control and significant influence on the investee
Common control is the contractually agreed sharing of control over an arrangement, which relevant activities ofsuch arrangement must be decided by unanimously agreement from parties who share control. When determiningif there is any common control, it should first be identified if the arrangement is controlled by all the participantsor the group consisting of the participants, and then determined if the decision on the arranged activity can bemade only with the unanimous consent of the participants sharing the control. If all the participants or a groupof participants can only decide the relevant activities of certain arrangement through concerted action, it canbe considered that all the participants or a group of participants share common control on the arrangement. Ifthere are two or more participant groups that can collectively control certain arrangement, it does not constitutecommon control. When determining if there is any common control, the relevant protection rights will not be takeninto account.Significant influence is the power of the investor to participate in the financial and operating policy decisions ofan investee, but to fail to control or joint control the formulation of such policies together with other parties. Whendetermining if there is any significant influence on the investee, the influence of the voting shares of the investeeheld by the investor directly and indirectly and the potential voting rights held by the investor and other partieswhich are exercisable in the current period and converted to the equity of the investee, including the warrants,stock options and convertible bonds that are issued by the investee and can be converted in the current period,shall be taken into account.When the Company holds directly or indirectly through the subsidiary 20% (inclusive) to 50% of the voting sharesof the investee, it is generally considered to have significant influence on the investee, unless there is concreteevidence to prove that it cannot participate in the production and operation decision-making of the investee andcannot pose significant influence in this situation. When the Group owns less than 20% of the voting shares of theinvestee, it is generally considered that it has not significantly influenced on the investee, unless there is concreteevidence to prove that it can participate in the production and operation decision-making of the investee andcannot pose significant influence in this situation.
(4) Method for impairment test and measurement of impairment provision
For the method for making impairment provision for the investment in subsidiaries, associates and joint ventures,please refer to Note V. 25.
18. Investment property
Measurement of investment propertyMeasured by using the cost methodInvestment property refers to real estate held to earn rentals or for capital appreciation, or both. The investment propertyof the Group includes leased land use rights, land use rights held for sale after appreciation, and leased buildings.The investment property of the Group is measured initially at cost upon acquisition, and subject to depreciation oramortisation in the relevant periods according to the relevant provisions on fixed assets or intangible assets.For the method for making impairment provision for the investment property adopted cost method for subsequentmeasurement, please refer to Note V. 25.When an investment property is sold, transferred, retired or damaged, the amount of proceeds on disposal of theproperty net of the carrying amount and related tax and surcharges is recognised in profit or loss for the current period.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
19. Fixed assets
(1) Conditions for recognition of fixed assets
Fixed assets of the Group are tangible assets that are held for use in the production or supply of goods orservices, for rental to others, or for administrative purposes; and have a useful life of more than one accountingyear.Fixed assets are recognised only if the Company is very likely to receive economic benefits from the asset and itscost can be measured reliably.A fixed asset of the Group shall be initially measured at actual cost when acquired.
(2) Depreciation method of various types of fixed assets
The Group adopts the straight-line method for depreciation. Provision for depreciation will be started when thefixed asset reaches its expected usable state, and stopped when the fixed asset is derecognised or classified asa non-current asset held for sale. Without regard to the depreciation provision, the Group determines the annualdepreciation rate of various types of fixed assets by category, estimated useful lives and estimated residual valueof the fixed assets, as shown below:
Category
Useful lives
(Year)
Estimatedresidual value
(%)
Annualdepreciation
rate (%)Housing and building structure20-405-102.25-4.75Machinery and equipment8-205-104.50-11.88Transportation equipment5-85-1011.25-19.00Electronic equipment and others55-1018.00-19.00Where, for the fixed assets for which depreciation provision is made, to determine the depreciation rate, theaccumulated amount of the fixed asset depreciation provision that has been made shall be deducted.
(3) The impairment test method and impairment provision method of the fixed assets are set out in Note V. 25.
(4) The Group will recheck the useful lives, estimated net residual value and depreciation method of the fixed assets
at the end of each year.When there is any difference between the useful lives estimate and the originally estimated value, the usefullives of the fixed asset shall be adjusted. When there is any difference between the estimated net residual valueestimate and the originally estimated value, the estimated net residual value of the fixed asset shall be adjusted.
(5) Overhaul expense
For the overhaul expense incurred by the Group during the regular inspection on the fixed assets, if there isconcrete evidence to prove that it meets the fixed asset recognition condition, it shall be included in the cost offixed asset; if it does not meet the fixed asset recognition condition, it shall be included in the profit or loss for thecurrent period. The depreciation of fixed assets shall be continued in the intervals of the regular overhaul of thefixed asset.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
20. Construction in progress
Construction in progress of the Group is recognised based on the actual construction cost, including all necessaryexpenditures incurred for construction projects, capitalised borrowing costs for the construction in progress before ithas reached the working condition for its intended use, and other related expenses during the construction period.A construction in progress is reclassified to fixed assets when it has reached the working condition for its intended use.The method for impairment provision of construction in progress is set out in Note V. 25.
21. Borrowing costs
(1) Recognition principle for the capitalisation of the borrowing costs
The borrowing costs incurred by the Group directly attributable to the acquisition, construction or productionof a qualifying asset will be capitalised and included in the cost of relevant asset. Other borrowing costs will berecognised as expenses when incurred according to the incurred amount, and included in the profit or loss for thecurrent period. When the borrowing costs meet all the following conditions, capitalisation shall be started:
The capital expenditure has been incurred, which includes the expenditure incurred by paying cash,transferring non-cash assets or undertaking interest-bearing liabilities for acquiring, constructing orproducing the qualifying assets; The borrowing costs have been incurred;The acquisition, construction or production activity necessary for the asset to be ready for its intended useor sale has been started.
(2) Capitalisation period of borrowing costs
When a qualifying asset acquired, constructed or produced by the Group is ready for its intended use or sale,the capitalisation of the borrowing costs shall discontinue. The borrowing costs incurred after a qualifying assetis ready for its intended use or sale shall be recognised as expenses when incurred according to the incurredamount, and included in the profit or loss for the current period.Capitalisation of borrowing costs shall be suspended during periods in which the acquisition, construction orproduction of a qualifying asset is interrupted abnormally, when the interruption is for a continuous period of morethan 3 months. The capitalisation of the borrowing costs shall be continued in the normal interruption period.
(3) Calculation methods for capitalisation rate and capitalisation amount of the borrowing costs
Where funds are borrowed for a specific purpose, the amount of interest to be capitalised shall be the actualinterest expense incurred on that borrowing for the period less any bank interest earned from depositing theborrowed funds before being used into banks or any investment income on the temporary investment of thosefunds. Where funds are borrowed for general purpose, the Company shall determine the amount of interestto be capitalised on such borrowings by applying a capitalisation rate to the weighted average of the excessamounts of cumulative expenditures on the asset over and above the amounts of specific-purpose borrowings.The capitalisation rate shall be the weighted average of the interest rates applicable to the general-purposeborrowings.During the capitalisation period, exchange differences on a specific purpose borrowing denominated in foreigncurrency shall be capitalised. Exchange differences related to general-purpose borrowings denominated in foreigncurrency shall be included in profit or loss for the current period.
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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.
23. Right-of-use assets
(1) Conditions for recognition of right-of-use assets
Right-of-use assets of the Group are defined as the right of underlying assets in the lease term for the Group as alessee.Right-of-use assets are initially measured at cost at the commencement date of the lease. The cost includes theamount of the initial measurement of lease liability; lease payments made at or before the inception of the leaseless any lease incentives enjoyed; initial direct costs incurred by the Group as lessee; costs to be incurred indismantling and removing the underlying assets, restoring the site on which it is located or restoring the underlyingasset to the condition required by the terms and conditions of the lease incurred by the Group as lessee. Asa lessee, the Group recognises and measures the costs of dismantling and restoration in accordance with theAccounting Standard for Business Enterprises No. 13 – Contingencies. Subsequently, the lease liability is adjustedfor any remeasurement of the lease liability
(2) Depreciation method of right-of-use assets
The Group uses the straight-line method for depreciation. Where the Group, as a lessee, is reasonably certain toobtain ownership of the leased asset at the end of the lease term, such asset is depreciated over the remaininguseful life of the leased asset. Where ownership of the lease assets during the lease term cannot be reasonablydetermined, right-of-use assets are depreciated over the lease term or the remainder of useful lives of the leaseassets, whichever is shorter
(3) For the methods of impairment test and impairment provision of right-of-use assets, please refer to Note V. 25.
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24. Intangible assets
The intangible assets of the Group include land use rights, software and certificates of third party right.The intangible asset is initially measured at cost, and its useful life is determined upon acquisition. If the useful life isfinite, the intangible asset will be amortised over the estimated useful life using the amortisation method that can reflectthe estimated realisation of the economic benefits related to the asset, starting from the time when it is available for use.If it is unable to reliably determine the estimated realisation, straight-line method shall be adopted for amortisation. Theintangible assets with uncertain useful life will not be amortised.The amortisation methods for the intangible assets with finite useful life are as follows:
TypeUseful lifeMethod of amortisationLand use rights50-70Straight-line methodSoftware5-10Straight-line methodCertificates of third party right3Straight-line methodThe Group reviews the useful life and amortisation method of the intangible assets with finite useful life at the end ofeach year. If it is different from the previous estimates, the original estimates will be adjusted, and will be treated as achange in accounting estimate.If it is estimated on the balance sheet date that certain intangible asset can no longer bring future economic benefit tothe company, the carrying amount of the intangible asset will be entirely transferred into the profit or loss for the currentperiod.The impairment method for the intangible assets is set out in Note V. 25.
25. Asset impairment
Impairment of long-term equity investments in subsidiaries, associates and joint ventures, investment property, fixedassets, construction in progress, intangible assets, goodwill and others (excluding inventories, deferred tax assets andfinancial assets) subsequently measured at cost is determined as follows:
The Group determines if there is any indication of asset impairment as at the balance sheet date. If there is any evidenceindicating that an asset may be impaired, recoverable amount shall be estimated for impairment test. Goodwill arisingfrom business combinations, intangible assets with an indefinite useful life and intangible assets not ready for use will betested for impairment annually, regardless of whether there is any indication of impairment.The recoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of thefuture cash flows expected to be derived from the asset. The Group estimates the recoverable amount of an individualasset. If it is not possible to estimate the recoverable amount of the individual asset, the Group shall determine therecoverable amount of the asset group to which the asset belongs. The determination of an asset group is based onwhether major cash inflows generated by the asset group are independent of the cash inflows from other assets or assetgroups.
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25. Asset impairment (Cont
’d)When the recoverable amount of an asset or an asset group is less than its carrying amount, the carrying amount isreduced to its recoverable amount. The reduction amount is charged to profit or loss and an impairment provision ismade accordingly.For the purpose of impairment test of goodwill, the carrying amount of goodwill acquired in a business combination isallocated to the relevant asset groups on a reasonable basis from the acquisition date; where it is difficult to allocateto the related asset groups, it is allocated to the combination of related asset groups. The related asset groups orcombination of asset groups are those which can benefit from the synergies of the business combination and are notlarger than the reportable segments identified by the Group.In the impairment test, if there is any indication that an asset group or a combination of asset groups related to goodwillmay be impaired, the Group first tests the asset group or set of asset groups excluding goodwill for impairment,calculates the recoverable amount and recognises the corresponding impairment loss. An impairment test is then carriedout on the asset group or combination of asset groups containing goodwill by comparing its carrying amount with itsrecoverable amount. If the recoverable amount is lower than the carrying amount, an impairment loss is recognised forgoodwill.An impairment loss recognised shall not be reversed in a subsequent period.
26. Long-term prepaid expenses
The long-term prepaid expenses incurred by the Group shall be recognised based on the actual cost, and evenlyamortised over the estimated benefit period. For the long-term prepaid expense that cannot benefit the subsequentaccounting periods, its value after amortisation shall be entirely included in the profit or loss for the current period.
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) Scope of employee benefits
Employee benefits are all forms of considerations or compensation given by an entity in exchange for servicesrendered by employees or for the termination of employment. Employee benefits include short-term staffremuneration, post-employment benefits, termination benefits and other long-term employee benefits. Employeebenefits include benefits provided to employees’spouses, children, other dependants, survivors of the deceasedemployees or to other beneficiaries.Employee benefits are presented as“employee benefits payable”and“long-term employee benefits payable”inthe balance sheet, respectively, according to liquidity.
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28. Employee benefits (Cont
’d)
(2) Short-term staff remuneration
Employee wages or salaries actually incurred, bonuses, and social insurance contributions such as medicalinsurance, work injury insurance, maternity insurance, and housing fund, contributed at the applicable benchmarksand rates, are recognised as a liability as the employees provide services, with a corresponding charge to profit orloss or included in the cost of assets where appropriate. Where the payment of liability is expected not to be fullysettled within 12 months after the end of the annual reporting period in which the employees render the relatedservices, and the financial impact would be material, these liabilities are measured at their discounted values.
(3) Post-employment benefits
Post-employment benefit plans include defined contribution plans and defined benefit plans. A definedcontribution plan is a post-employment benefit plan under which the Group pays fixed contributions into aseparate fund and the Group has no further obligations for payment. A defined benefit plan is a post-employmentbenefit plan other than a defined contribution plan.Defined contribution plansDefined contribution plans include basic pension insurance and unemployment insurance.During the accounting period in which an employee provides service, the amount payable calculated according tothe defined contribution plan is recognised as a liability and included in the profit or loss for the current period orthe cost of relevant assets.
(4) Termination benefits
When the Group provides termination benefits to employees, employee benefits liabilities arising from terminationbenefits are recognised in profit or loss for the current period at the earlier of the following dates: when the Groupcannot revoke unilaterally compensation for dismissal due to the cancellation of labour relationship plans andemployee redundant proposals; the Group recognises cost and expenses related to payment of compensation fordismissal and restructuring.For the early retirement plans, economic compensations before the actual retirement date were classified astermination benefits. During the period from the date of cease of render of services to the actual retirementdate, relevant wages and contribution to social insurance for the employees proposed to be paid are recognisedin profit or loss on a one-off basis. Economic compensation after the official retirement date, such as normalpension, is accounted for as post-employment benefits.
(5) Other long-term benefits
Other long-term employee benefits provided by the Group to employees that meet the conditions for definedcontribution plans are accounted for in accordance with the relevant provisions relating to defined contributionplans as stated above. If the conditions for defined benefit plans are met, the benefits shall accounted for inaccordance with the relevant provisions relating to defined benefit plans, but the“changes arising from theremeasurement of the net liabilities or net assets of the defined benefit plans”in the relevant employee benefitsshall be included in the current profit or loss or the relevant asset cost.
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29. Provisions
Obligations pertinent to the contingencies which satisfy the following conditions are recognised as provisions:
(1) the obligation is a current obligation borne by the Group;
(2) it is likely that an outflow of economic benefits from the Group will be resulted from the performance of the
obligation; and
(3) the amount of the obligation can be reliably measured.
The provisions shall be initially measured based on the best estimate for the expenditure required for the performanceof the current obligation, after taking into account relevant risks, uncertainties, time value of money and other factorspertinent to the contingencies. If the time value of money has significant influence, the best estimates shall bedetermined after discounting the relevant future cash outflow. The Group reviews the carrying amount of the provisionson the balance sheet date and adjust the carrying amount to reflect the current best estimates.If all or some expenses incurred for settlement of recognised provisions are expected to be borne by the third party,the compensation amount shall, on a recoverable basis, be recognised as asset separately, and compensation amountrecognised shall not be more than the carrying amount of provisions.
30. Share-based payments
(1) Category of share-based payment
The Group’s share-based payment is equity-based.
(2) Fair value of equity instrument
For the existence of an active market for options and other equity instruments granted by the Group, the fair valueis determined at the active market quotations. For options and other equity instruments with no active market,option pricing model shall be used to estimate the fair value of the equity instruments. The following factors shallbe taken into account using option pricing models: A. the exercise price of the option, B. the validity of the option,C. the current market price of the share, D. the expected volatility of the share price, E. predicted dividend of theshare, and F. risk-free rate of the option within the validity period.
(3) Recognition of vesting of equity instrument based on the best estimate
During the waiting period at each balance sheet date, the Group shall make the best available estimate ofthe number of equity instruments expected to vest and shall revise that estimate, if necessary, if subsequentinformation indicates that the number of equity instruments expected to vest differs from previous estimates.On the vesting date, the entity shall revise the estimate to equal the number of equity instruments that ultimatelyvested.
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30. Share-based payments (Cont
’d)
(4) Accounting treatment of implementation, modification and termination of share-based payment
Equity-settled share-based payment is measured at the fair value of the equity instruments granted to employees.For the shares exercise immediately after the grant, the fair value of equity instrument at the grant date includedin the relevant costs or expenses and increase in capital reserve accordingly. Within the vesting period, it willrecognise the received service-related costs or expense and capital reserves for each reporting date based on thebest estimate of the number of vested equity instruments on the grant date of the equity instruments value. Afterthe vesting period, relevant costs or expenses and total shareholders’equity has been confirmed and will not beadjusted.When there is changes in Group’s share-based payment plans, if the modification increases the fair value of theequity instruments granted, corresponding recognition of service increase in accordance with the increase in thefair value of the equity instruments; if the modification increases the number of equity instruments granted, theincrease in fair value of the equity instruments is recognised as a corresponding increase in service achieved.Increase in the fair value of equity instruments refer to the difference between the fair values of the modified date.If the modification reduces the total fair value of shares paid or not conductive to the use of other employeesshare-based payment plans to modify the terms and conditions of service, it will continue to be accounted for inthe accounting treatment, as if the change had not occurred, unless the Group cancelled some or all of the equityinstruments granted.During the vesting period, if the cancelled equity instruments (except for failure to meet the conditions of thenon-market vesting conditions, such as length of service performance conditions or market conditions arecancelled) granted by the Group to cancel the equity instruments granted amount treated as accelerated vestingof the remaining period should be recognised immediately in profit or loss, while recognizing the capital reserve. Ifemployees or other parties can choose to meet non-vesting conditions but they are not met in the vesting period,the Group will treat them as cancelled equity instruments granted.
31. Preference shares, perpetual bonds and other financial instruments
(1) Classification of financial liabilities and equity instruments
Financial instruments issued by the Group are classified into financial assets, financial liabilities or equityinstruments on the basis of the substance of the contractual arrangements and the economic nature not onlyits legal form, together with the definition of financial asset, financial liability and equity instruments on initialrecognition.
(2) Accounting treatment of preference shares, perpetual bonds and other financial instruments
Financial instruments issued by the Group are initially recognised and measured in accordance with the financialinstrument standards; thereafter, interest or dividends are accrued on each balance sheet date and accounted forin accordance with relevant specific ASBEs, i.e. to determine the accounting treatment for interest expenditureor dividend distribution of the instrument based on the classification of the financial instrument issued. Forfinancial instruments classified as equity instruments, their interest expenses or dividend distributions are treatedas profit distribution of the Group, and their repurchases and cancellations are treated as changes in equity;for financial instruments classified as financial liabilities, their interest expenses or dividend distribution are inprinciple accounted for with reference to borrowing costs, and the gains or losses arising from their repurchasesor redemption are included in the profit or loss for the current period.For the transaction costs such as fees and commissions incurred by the Group for issuing financial instruments, ifsuch financial instruments are classified as debt instruments and measured at amortised cost, they are includedin the initial measured amount of the instruments issued; if such financial instruments are classified as equityinstruments, they are deducted from equity.
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32. Revenue
(1) General principles
The Group recognises revenue when it satisfies a performance obligation in the contract, i.e. when the customerobtains control of the relevant goods or services.Where a contract has two or more performance obligations, the Group allocates the transaction price to eachperformance obligation based on the percentage of respective unit price of goods or services guaranteed byeach performance obligation, and recognises as revenue based on the transaction price that is allocated to eachperformance obligation.If one of the following conditions is fulfilled, the Group performs its performance obligation within a certain period;otherwise, it performs its performance obligation at a point of time:
when the customer simultaneously receives and consumes the benefits provided by the Group when theGroup performs its obligations under the contract;when the customer is able to control the goods in progress in the course of performance by the Groupunder the contract;when the goods produced by the Group under the contract are irreplaceable and the Group has the right to
payment for performance completed to date during the whole contract term.For performance obligations performed within a certain period, the Group recognises revenue by measuringthe progress towards complete of that performance obligation within that certain period. When the progressof performance cannot be reasonably determined, if the costs incurred by the Group are expected to becompensated, the revenue shall be recognised at the amount of costs incurred until the progress of performancecan be reasonably determined.For performance obligation performed at a point of time, the Group recognises revenue at the point of time atwhich the customer obtains control of relevant goods or services. To determine whether a customer has obtainedcontrol of goods or services, the Group considers the following indications:
the Group has the current right to receive payment for the goods, which is when the customers have the
current payment obligations for the goods;the Group has transferred the legal title of the goods to the customer, which is when the client possesses
the legal title of the goods;the Group has transferred the physical possession of goods to the customer, which is when the customer
obtains physical possession of the goods;the Group has transferred all of the substantial risks and rewards of ownership of the goods to the customer,
which is when the customer obtain all of the substantial risks and rewards of ownership of the goods to the
customer; the customer has accepted the goods; other information indicates that the customer has obtained control of the goods.
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32. Revenue (Cont
’d)
(1) General principles (Cont
’d)The Group’s right to consideration in exchange for goods or services that the Group has transferred to customers(and such right depends on factors other than passage of time) is accounted for as contract assets, and contractassets are subject to impairment based on ECLs (see Note V. 25). The Group’s unconditional right to receiveconsideration from customers (only depends on passage of time) is accounted for as accounts receivable. TheGroup’s obligation to transfer goods or services to customers for which the Group has received or should receiveconsideration from customers is accounted for as contract liabilities.Contract assets and contract liabilities under the same contract are presented on a net basis. Where the netamount has a debit balance, it is presented in“contract assets”or“other non-current assets”according to itsliquidity. Where the net amount has a credit balance, it is presented in“contract liabilities”or“other non-currentliabilities” according to its liquidity.
(2) Specific methods
Specific method for revenue recognition of machine-made paper business of the Group: in terms of domesticsales of machine-made paper, revenue is recognised when goods are delivered to the customers and suchdeliveries are confirmed; while in terms of overseas sales of machine-made paper, revenue is recognised on theday when goods are loaded on board and declared.Specific method for recognition of finance lease income of the Group: according to the repayment schedule, theincome is recognised by instalments according to the effective interest rate.Specific method for recognition of revenue from real estate of the Group: revenue is recognised by amortising therental income on a straight-line basis over the lease term.
33. Government grants
A government grant is recognised when there is reasonable assurance that the grant will be received and that the Groupwill comply with the conditions attaching to the grant.If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received orreceivable. If a government grant is in the form of a transfer of non-monetary asset, it is measured at fair value; if the fairvalue cannot be obtained in a reliable way, it is measured at the nominal amount of RMB1.Government grants obtained for acquisition or construction of long-term assets or other forms of long-term assetformation are classified as government grants related to assets, while the remaining government grants are classified asgovernment grants related to revenue.Regarding the government grant not clearly defined in the official documents and can form long-term assets, the partof government grant which can be referred to the value of the assets is classified as government grant related to assetsand the remaining part is government grant related to revenue. For the government grant that is difficult to distinguish,the entire government grant is classified as government grant related to revenue.
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33. Government grants (Cont
’d)A government grant related to an asset shall be recognised as deferred income, and evenly amortised to profit or lossover the useful life of the asset in a reasonable and systematic manner. For a government grant related to revenue, ifthe grant is a compensation for related costs, expenses or losses incurred, the grant shall be recognised in profit or lossfor the current period; 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, expenses or losses are recognised. A government grant measured at nominal amount is directly includedin profit or loss for the current period. The Group adopts a consistent approach to the same or similar governmentgrants.A government grant related to daily activities is recognised in other gains 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.For the policy preferential interest subsidy, if it is provided by the financial authority through banks, it is recognisedat the amount of borrowings actually received, and the borrowings costs are calculated based on the principal of theborrowings and the policy preferential interest rate; if it is provided by the financial authority directly, the correspondinginterest will be used to offset the relevant borrowing expenses.
34. Deferred income tax assets and deferred income tax liabilities
Income tax comprises current income tax expense and deferred income tax expense, which are included in profit orloss for the current period as income tax expenses, except for deferred tax related to transactions or events that aredirectly recognised in owners’ equity which are recognised in owners’equity, and deferred tax arising from a businesscombination, which is adjusted against the carrying amount of goodwill.Temporary differences arising from the difference between the carrying amount of an asset or liability and its tax baseat the balance sheet date of the Group shall be recognised as deferred income tax using the balance sheet liabilitymethod.All the taxable temporary differences are recognised as deferred income tax liabilities except for those incurred in thefollowing transactions:
(1) The initial recognition of goodwill, and the initial recognition of an asset or liability in a transaction which is neither
a business combination nor affects accounting profit or taxable profit (or deductible loss) when the transactionoccurs;
(2) The taxable temporary differences associated with investments in subsidiaries, associates and joint ventures,
and the Group is able to control the timing of the reversal of the temporary difference and it is probable that thetemporary difference will not reverse in the foreseeable future.
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34. Deferred income tax assets and deferred income tax liabilities (Cont
’d)The Group recognises a deferred income tax asset for the carry forward of deductible temporary differences, deductiblelosses and tax credits to subsequent periods, to the extent that it is probable that future taxable profits will be availableagainst which the deductible temporary differences, deductible losses and tax credits can be utilised, except for thoseincurred in the following transactions:
(1) The transaction is neither a business combination nor affects accounting profit or taxable profit (or deductible loss)
when the transaction occurs;
(2) The deductible temporary differences associated with investments in subsidiaries, associates and joint ventures,
the corresponding deferred income tax asset is recognised when both of the following conditions are satisfied: it isprobable that the temporary difference will reverse in the foreseeable future, and it is probable that taxable profitswill be available in the future, against which the temporary difference can be utilised.At the balance sheet date, deferred income tax assets and deferred income tax liabilities are measured at the taxrates that are expected to apply to the period when the asset is realised or the liability is settled, and their tax effect isreflected accordingly.At the balance sheet date, the Group reviews the carrying amount of a deferred income tax asset. If it is probable thatsufficient taxable profits will not be available in future periods to allow the benefit of the deferred tax asset to be utilised,the carrying amount of the deferred tax asset is reduced. Any such reduction in amount is reversed when it becomesprobable that sufficient taxable profits will be available.
35. Lease
(1) Identification of leases
On the beginning date of the contract, the Group (as a lessee or lessor) assesses whether the customer inthe contract has the right to obtain substantially all of the economic benefits from use of the identified assetthroughout the period of use and has the right to direct the use of the identified asset throughout the period ofuse. If a contract conveys the right to control the use of an identified asset and multiple identified assets for aperiod of time in exchange for consideration, the Group identifies such contract is, or contains, a lease
(2) The Group as lessee
On the beginning date of the lease, the Company recognises right-of-use assets and lease liabilities for all leases,except for short-term lease and low-value asset lease with simplified approach.The accounting policy for right-of-use assets is set out in Note V. 23.The lease liability is initially measured at the present value of the lease payments that are not paid at the beginningdate of the lease using the interest rate implicit in the lease or the incremental borrowing rate. Lease paymentsinclude fixed payments and in-substance fixed payments, less any lease incentives receivable; variable leasepayments that are based on an index or a rate; the exercise price of a purchase option if the lessee is reasonablycertain to exercise that option; payments for terminating the lease, if the lease term reflects the lessee exercisingthat option of terminating; and amounts expected to be payable by the lessee under residual value guarantees.Subsequently, the interest expense on the lease liability for each period during the lease term is calculated using aconstant periodic rate of interest and is recognised in profit or loss for the current period. Variable lease paymentsnot included in the measurement of lease liabilities are charged to profit or loss in the period in which they actuallyarise. The Group calculates the interest expense of the lease liability for each period of the lease term based onthe fixed periodic interest rate and is included in the current profit and loss. The variable lease payments that arenot included in the measurement of the lease liability are recognised in profit or loss when incurred.
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35. Lease (Cont
’d)
(2) The Group as lessee (Cont
’d)Short-term leaseShort-term leases refer to leases with a lease term of less than 12 months from the commencement date, exceptfor those with a purchase option.Lease payments on short-term leases are recognised in the cost of related assets or current profit or loss on astraight-line basis over the lease term.For short-term leases, the Group chooses to adopt the above simplified approach for the following types of assetsthat meet the conditions of short-term lease according to the classification of leased assets.Low-valve machinery and equipmentTransportation vehiclesLow-value asset leaseA low-value asset lease is a lease that the value of a single leased asset is below RMB2,000,000 when it is a newasset.For a low-value asset lease, the Group chooses the above simplified approach based on the specificcircumstances of each lease.Lease payments on low-value asset leases are recognised on a straight-line basis over the lease term, and eitherincluded in the cost of the related asset or charged to profit or loss for the current period.
(3) The Group as lessor
When the Group is a lessor, a lease is classified as a finance lease whenever the terms of the lease transfersubstantially all the risks and rewards of asset ownership to the lessee. All leases other than financial leases areclassified as operating leases.
Operating lease
Lease payments under operating leases are recognised in profit or loss on a straight-line basis over the lease term.Initial direct costs incurred in relation to operating leases are capitalised and amortised over the lease term on thesame basis as rental income and recognised in profit or loss for the current period. The variable lease paymentsobtained in relation to operating leases that are not included in the lease payments are recognised in profit or lossin the period in which they actually incurred.
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35. Lease (Cont
’d)
(4) Sale and leaseback
The lessee and the lessor shall assess and determine whether the transfer of assets in a sale and leasebacktransaction is a sale in accordance with the requirements of the Accounting Standard for Business Enterprises No.14 – Revenue.Where asset transfer under the sale and leaseback transactions is a sale, the lessee shall measure the right-of-useassets created by the sale and leaseback based on the portion of carrying amount of the original assets relatedto right of use obtained upon leaseback, and only recognise relevant profit or loss for the right transferred tothe lessor. The lessor shall account for the purchase of assets in accordance with other applicable ASBEs andaccount for the lease of assets in accordance with this standard.Where asset transfer under the sale and leaseback transactions is not a sale, the lessee shall continue torecognise the transferred assets while recognising a financial liability equal to the transfer income and accountfor such liability according to the Accounting Standard for Business Enterprises No. 22 – Recognition andMeasurement of Financial Instruments; or not to recognise the transferred assets but recognise a financial assetequal to the transfer income and account for such asset according to the Accounting Standard for BusinessEnterprises No. 22 – Recognition and Measurement of Financial Instruments.
36. General risk reserves
General risk reserve is a reserve provided from net profit for the partial offset unidentified possible lossesAdopting the principle of dynamic provisioning, the Finance Company employs the standard method to quantitativelyanalyse the risk situation faced by risk assets, to determine the estimated potential risk value. After calculating thepotential risk value, if the potential risk value is higher than the provision for impairment of assets, the accrued provisionfor impairment of assets will be deducted and provision for general risk will be made. If the potential risk value is lowerthan the provision for impairment of assets, provision for general risk will not be made.Dynamic provisioning is a counter-cyclical provisioning method adopted by financial companies based on changesin the macroeconomic situation, as in, in the upward cycle of macro economy and when the risk asset default rateis relatively low, more provisions are made to enhance financial buffer capacity; and in the downturn cycle of macroeconomy and when the risk asset default rate is relatively high, the accumulated provisions are used to absorb assetlosses.The Finance Company makes general risk provisions for assets bearing risks and losses at the end of each year, thebalance of which, in principle, shall not be lower than 1.5% of the closing balance of risk assets. The risk provisionmade by factoring companies shall not be lower than 1% of the closing balance of the financial factoring business.Based on changes in the macroeconomic situation, and with reference to non-performing corporate loans,non-performing loan ratio, provision coverage ratio for non-performing loans, loan provision ratio, standard risk factorand the requirement of general risk provision as a percentage of risk assets, the Ministry of Finance makes adjustmentsto the scope of risk assets for general risk provisions, standard risk factor and the requirement of general risk provisionas a percentage of risk assets as appropriate. The Finance Company shall make adjustments accordingly according tothe requirements of the Ministry of Finance.Provisions for general risk are insufficient, in principle, the company shall not engage in after-tax profit distribution. Asconsidered and approved by the board of directors and general meeting of the Finance Company, such provisions maybe used to offset losses but not for dividends. For special reasons, as approved by the Board and the general meeting,general risk reserves may be reclassified into undistributed profits.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
37. Critical accounting judgments and estimates
The Group gives continuous assessment on, among other things, the reasonable expectations of future events and thecritical accounting estimates and key assumptions adopted according to its historical experience and other factors. Thecritical accounting estimates and key assumptions that are likely to lead to significant adjustment risks of the carryingamount of assets and liabilities for the next financial year are listed as follows:
Classification of financial assetsSignificant judgements involved in determining the classification of financial assets include the analysis of businessmodels and contractual cash flow characteristics.Factors considered by the Group in determining the business model for a group of financial assets include how theasset’s performance is evaluated and reported to key management personnel, how risks are assessed and managedand how the relevant management personnel are compensated.When the Group assesses whether the contractual cash flows of the financial assets are consistent with basic lendingarrangements, the main judgements are described as below: whether the principal amount may change over the life ofthe financial asset (for example, if there are repayments of principal); whether the interest includes only considerationfor the time value of money, credit risk, other basic lending risks and a profit margin and cost. For example, whetherthe amount repaid in advance reflects only the outstanding principal and interest thereon, as well as reasonablecompensation paid for early termination of the contract.Measurement of the ECLs of accounts receivableThe Group calculates the ECLs of accounts receivable using the exposure to default risk and ECL rate of accountsreceivable, and determines the ECL rate based on default probability and default loss rate. When determining the ECLrate, the Group adjusts its historical data by referring to information such as historical credit loss experience as well ascurrent situation and forward-looking information. When considering the forward-looking information, indicators used bythe Group include the risk of economic downturn, external market environment, technology environment and changesin customers. The assumptions relating to the ECL calculation are monitored and reviewed by the Group on a regularlybasisDeferred income tax assetsDeferred income tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profitwill be available against which the losses can be utilised. Significant management judgement is required to determinethe amount of deferred income tax assets that can be recognised, based upon the likely timing and level of futuretaxable profits together with future tax planning strategies.
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X Financial Report
VI. Taxation
1. Main tax types and tax rates
Tax typeTax base and rateValue added tax (VAT)13% for general, 9% for sales of water and gas and 6% for the service industry. VAT is
computed on the difference after deduction of input value-added tax.Urban maintenance and construction tax
7%, 3%, 2% and 0.5% of actual payment of turnover tax.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.Companies subject to different income tax rates are disclosed as followsName of taxpayerIncome tax rateShandong Chenming Paper Holdings Limited15%Shouguang Meilun Paper Co., Ltd.15%Jilin Chenming Paper Co., Ltd.15%Jiangxi Chenming Paper Co., Ltd.15%Zhanjiang Chenming Pulp & Paper Co., Ltd.15%Shouguang Shun Da Customs Declaration Co, Ltd.10%Qingdao Chenming Pulp & Paper Electronic Commodity Spot Trading Co., Ltd.10%Zhanjiang Chenming Arboriculture Development Co., Ltd.Exempt from EITNanchang Chenming Arboriculture Development Co., Ltd.Exempt from EITChenming Arboriculture Co., Ltd.Exempt from EITYangjiang Chenming Arboriculture Development Co., Ltd.Exempt from EIT
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
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.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, received a high and new technology enterprisecertificate with a certification number of GR201922000658 on 2 September 2019. Pursuant to the requirementsunder the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies, it is subjectto a corporate income tax rate of 15% of taxable income, and is entitled to the preferential treatment from 2019 to2021.For Jiangxi Chenming Paper Co., Ltd., a subsidiary of the Company, received a high and new technologyenterprise certificate with a certification number of GR201936002184 on 3 December 2019. 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 2019 to 2021.Zhanjiang Chenming Pulp & Paper Co., Ltd., a subsidiary of the Company, received a high and new technologyenterprise certificate with a certification number of GR20184400547 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.
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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 2020.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 2020.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 2020.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements
1. Monetary funds
Unit: RMBItemClosing balanceOpening balanceTreasury cash3,240,007.662,418,131.86Bank deposit2,210,042,623.102,965,127,198.70Other monetary funds17,088,478,523.9016,338,984,142.77Total19,301,761,154.6619,306,529,473.33Of which: Total deposits in overseas banks359,705,929.81405,881,189.78
Notes: Other monetary funds of RMB12,368,983,244.21 (31 December 2019: RMB11,796,498,642.44) were the guarantee deposit for the
application for bank acceptance with the banks by the Group.Other monetary funds of RMB2,121,287,629.87 (31 December 2019: RMB2,091,467,385.94) were the guarantee deposit for the
application for letter of credit with the banks by the Group.Other monetary funds of RMB1,921,790,589.38 (31 December 2019: RMB1,846,470,647.92) were the guarantee deposit for the
application for guarantees with the banks by the Group. Other monetary funds of RMB408,693,277.15 (31 December 2019: RMB440,810,000.00) were the Group’s statutory reserve deposit
at the banks.Other monetary funds of RMB2,125,345.50 (31 December 2019: RMB995,129.48) were locked-up due to litigations, resulting in
restriction on the use of that account’s balance. The other monetary funds include interest receivable of RMB265,598,437.79.
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VII. Notes to items of the consolidated financial statements (Cont’d)
2. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMBClosing balanceOpening balanceBook balanceBad debts provisionBook balanceBad debts provisionCategoryAmountPercentageAmount
Provisionpercentage
CarryingamountAmountPercentageAmount
Provisionpercentage
CarryingamountAccounts receivable assessed individually for impairment124,495,140.174.30%124,495,140.17100.00%0117,277,135.483.81%117,277,135.48100.00%0Accounts receivable assessed collectively for impairment2,773,270,689.2895.70%475,575,242.5417.15%2,297,695,446.742,960,085,058.3696.19%435,001,747.3314.70%2,525,083,311.03Of which:
Accounts receivable from related parties25,652,085.290.89%2,380,460.929.28%23,271,624.372,008,185.600.07%61,132.763.04%1,947,052.84Accounts receivable from distributor clients1,969,061,227.3067.95%326,725,018.9516.59%1,642,336,208.352,202,548,603.0371.57%307,333,600.8713.95%1,895,215,002.16 Factoring receivables778,557,376.6926.87%146,469,762.6718.81%632,087,614.02755,528,269.7324.55%127,607,013.7016.89%627,921,256.03Total2,897,765,829.45100.00%600,070,382.7120.71%2,297,695,446.743,077,362,193.84100.00%552,278,882.8117.95%2,525,083,311.03
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
2. Accounts receivable (Cont
’d)
(1) Disclosure of accounts receivable by category (Cont
’d)
Items assessed individually for impairment:
Unit: RMBClosing balanceNameBook balance
Bad debtsprovision
ProvisionpercentageReasons for provisionHengfeng Hongyuan Real Estate Holdings Co., Ltd.
45,500,000.0045,500,000.00100.00%Due to poor management, the financial
indicators of the company deteriorated andits repayment ability substantially declinedFoshan Shunde Xingchen Paper Co., Ltd.
26,236,528.7026,236,528.70100.00%Due to poor management, the financial
indicators of the company deteriorated andits repayment ability substantially declinedNingxia Lingwu Baota Dagu Storage and Transportation Co., Ltd.
32,600,000.0032,600,000.00100.00%Due to poor management, the financial
indicators of the company deteriorated andits repayment ability substantially declinedBeijing Huaxia Power Culture Media Co., Ltd.
8,207,950.428,207,950.42100.00%Due to poor management, the financial
indicators of the company deteriorated andits repayment ability substantially declined47 companies including Jiangxi Longming Enterprise Co., Ltd.
11,950,661.0511,950,661.05100.00%Due to poor management, the financial
indicators of the company deteriorated andits repayment ability substantially declinedTotal124,495,140.17124,495,140.17––Items assessed collectively for impairment:
Accounts receivable with collective provision for bad debts based on receivables from related parties
Unit: RMBClosing balanceNameBook balance
Bad debts
provision
ProvisionpercentageWithin 1 year13,453,177.37814,471.176.05%1 to 2 years11,393,260.181,370,890.3112.03%2 to 3 years805,647.74195,099.4424.22%Total25,652,085.292,380,460.92–
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
2. 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 balance
Bad debtsprovision
ProvisionpercentageWithin 1 year1,356,307,954.9221,065,204.221.55%1 to 2 years329,934,211.4472,588,902.2222.00%2 to 3 years55,832,347.1517,735,625.8931.77%Over 3 years226,986,713.79215,335,286.6294.87%Total1,969,061,227.30326,725,018.95–
Accounts receivable with collective provision for bad debts based on factoring receivables
Unit: RMBClosing balanceNameBook balance
Bad debtsprovision
ProvisionpercentageWithin 1 year620,418,416.69128,655,866.6720.74%1 to 2 years158,138,960.0017,813,896.0011.26%Total778,557,376.69146,469,762.67–
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
2. Accounts receivable (Cont
’d)
(1) Disclosure of accounts receivable by category (Cont
’d)Disclosure by ageing
Unit: RMBAgeingClosing balanceWithin 1 year (including 1 year)1,975,452,308.322,440,760,038.211 to 2 years502,455,831.77397,312,284.082 to 3 years187,335,446.7170,484,233.21Over 3 years232,522,242.65168,805,638.34Subtotal2,897,765,829.453,077,362,193.84Bad debts provision600,070,382.71552,278,882.81Total2,297,695,446.742,525,083,311.03
(2) Provision, recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMBChanges in the periodCategory
OpeningbalanceProvision
Recoveryor reversalWrite-offOthers
ClosingbalanceAccounts receivable with provision for bad debt552,278,882.8150,618,019.252,826,519.34600,070,382.71Total552,278,882.8150,618,019.252,826,519.34600,070,382.71
(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 theperiod was RMB961,602,717.39, which accounted for 33.18% of the closing balance of the total accountsreceivable. The closing balance of corresponding bad debt provision amounted to RMB153,122,029.71.
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
3. Accounts receivable financing
Unit: RMBItemClosing balanceOpening balanceBills receivable1,418,702,732.26442,915,861.70Total1,418,702,732.26442,915,861.70Other explanation:
Bill receivable pledged by the Group at the end of the period:
ItemClosing balanceBank acceptance bill366,587,869.44Total366,587,869.44
4. Prepayments
(1) Presentation of prepayments stated according to ageing analysis
Unit: RMBClosing balanceOpening balanceAgeingAmountPercentageAmountPercentageWithin 1 year722,311,037.6298.76%528,554,005.6687.57%1-2 years9,092,198.141.24%75,019,543.4212.43%Total731,403,235.76–603,573,549.08–
(2) Top five prepayments according to closing balance of prepaid parties
Top five prepayments according to closing balance of prepaid parties was RMB401,058,608.97, which accountedfor 54.83% of the closing balance of the total accounts payable.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
5. Other receivables
Unit: RMBItemClosing balanceOpening balanceDividends receivable13,000,000.0013,000,000.00Other receivables3,116,061,804.472,203,654,598.66Total3,129,061,804.472,216,654,598.66
(1) Dividends receivable
1) Classification of dividends receivable
Unit: RMBItem (or investee)Closing balanceOpening balanceWeifang Xingxing United Chemical Co., Ltd13,000,000.0013,000,000.00Total13,000,000.0013,000,000.00
(2) Other receivables
1) Other payables by nature
Unit: RMBNature
Closingbook balance
Openingbook balanceOpen credit2,971,708,307.752,043,396,146.61Guarantee deposit60,901,897.2124,109,727.59Advances1,868,651.2615,799,693.34Insurance premium3,700,154.1817,650.66Reserve and borrowings18,148,625.0717,045,478.09Others59,734,169.00103,285,902.37Total3,116,061,804.472,203,654,598.66
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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
ECLs for thenext 12 months
ECLs over theentire life (notcredit-impaired)
ECLs over theentire life(credit-impaired)TotalBalance as at 1 January 2020169,202,744.32326,147,132.58495,349,876.90Balance as at 1 January 2020 during the period–––– –Transferred into Phase 2 –Transferred into Phase 3326,147,132.58326,147,132.58 –Reversal to Phase 2 –Reversal to Phase 1169,202,744.32169,202,744.32Provision for the period7,219,809.987,219,809.98Reversal for the period18,994,740.8375,363,658.8694,358,399.69Transfer for the periodWrite-off for the periodOther changesBalance as at 30 June 2020157,427,813.47250,783,473.72408,211,287.19By ageing
Unit: RMBAgeingClosing balanceWithin 1 year (including 1 year)2,305,069,753.201,601,285,972.691-2 years1,017,960,400.03920,980,164.232-3 years96,790,390.2082,752,788.663-4 years20,226,080.1618,199,261.774-5 years17,164,897.9126,242,336.99Over 5 years67,061,570.1649,543,951.22Subtotal3,524,273,091.662,699,004,475.56Less: Bad debt provision408,211,287.19495,349,876.90Total3,116,061,804.472,203,654,598.66
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
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
Provision of bad debt provision for the period:
Unit: RMBChanges in the periodCategory
OpeningbalanceProvision
Recoveryor reversalWrite-offOthers
ClosingbalanceBad debt provision for other receivables495,349,876.907,219,809.9894,358,399.69408,211,287.19Total495,349,876.907,219,809.9894,358,399.69408,211,287.19
4) Top five other receivables according to closing balance of debtors
The top five other accounts receivable based on closing balance of debtors for the period amountedto RMB2,537,485,412.78 in total, accounting for 72.00% of the total closing balance of other accountsreceivable. The closing balance of the corresponding bad debt provision amounted to RMB297,887,552.29in total.
5) Receivables in respect of government grant
Unit: RMBName of entityName of government grantClosing balanceClosing age
Time of
receptionWuhan Chenming Hanyang Paper Holdings Co., Ltd.
Final payment of relocation compensation
533,390,000.00Within one year1 July 2020
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
6. Inventories
Whether the New Revenue Standard 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 materials1,902,641,983.5118,670,304.781,883,971,678.731,972,197,240.9321,269,429.011,950,927,811.92Work-in-process products46,382,707.7046,382,707.7081,382,693.4981,382,693.49Goods in stock1,899,848,296.971,899,848,296.97886,102,819.24886,102,819.24Consumable biological assets1,556,753,786.651,556,753,786.651,541,004,633.421,541,004,633.42Developing products314,614,378.34314,614,378.34315,012,152.74315,012,152.74Total5,720,241,153.1718,670,304.785,701,570,848.394,795,699,539.8221,269,429.014,774,430,110.81
(2) Impairment provision for inventories or performance costs
Unit: RMBIncrease for the periodDecrease for the periodItemOpening balanceProvisionOthersReversal or transferOthersClosing balanceRaw materials21,269,429.012,599,124.2318,670,304.78Total21,269,429.012,599,124.2318,670,304.78
7. Non-current assets due within one year
Unit: RMBItemClosing balanceOpening balanceLong-term receivables due within one year6,010,580,174.266,974,539,613.30Total6,010,580,174.266,974,539,613.30
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
8. Other current assets
Unit: RMBItemClosing balanceOpening balanceVAT recoverable1,157,984,356.261,431,298,632.04Prepaid tax46,114,054.5056,778,563.04Receivables under financial lease due within one year5,602,015,240.625,229,125,471.51Factoring receivables due within one year1,043,959,033.921,008,707,988.47Prepaid expenses685,359,071.56366,080,343.71Others22,975,892.2716,716,395.93Total8,558,407,649.138,108,707,394.70
9. Long-term receivables
(1) Particulars of long-term receivables
Unit: RMBClosing balanceOpening balanceItemBook balance
Bad debtprovisionCarrying amountBook balance
Bad debtprovisionCarrying amount
Discountrate rangeFinance lease payments6,908,421,427.84583,399,494.296,325,021,933.558,144,589,680.91182,532,601.307,962,057,079.614%-20%Less: Unrealised financing income142,692,516.64–142,692,516.64462,276,887.85462,276,887.85Less: non-current assets due within one year6,551,087,262.04580,514,958.755,970,572,303.297,004,375,494.85159,382,707.556,844,992,787.30Subtotal214,641,649.162,884,535.54211,757,113.62677,937,298.2123,149,893.75654,787,404.46Deposit for finance lease637,879,277.38-637,879,277.38734,530,650.26734,530,650.26Less: Unrealised financing income46,532,961.75-46,532,961.7559,195,417.7759,195,417.77Less: non-current assets due within one year39,557,909.14-39,557,909.14129,546,826.00129,546,826.00Subtotal551,788,406.49-551,788,406.49545,788,406.49545,788,406.49Total766,430,055.652,884,535.54763,545,520.111,223,725,704.7023,149,893.751,200,575,810.95
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
9. Long-term receivables (Cont
’d)
(1) Particulars of long-term receivables (Cont
’d)Particulars of bad debt impairment provision
Unit: RMBPhase 1Phase 2Phase 3Bad debt provision
ECLs for thenext 12 months
ECLs over theentire life (notcredit-impaired)
ECLs over theentire life(credit-impaired)TotalBalance as at 1 January 20203,124,322.4420,025,571.3123,149,893.75Balance as at 1 January 2020 during the period –Transferred into Phase 2 –Transferred into Phase 320,025,571.3120,025,571.31 –Reversal to Phase 2 –Reversal to Phase 13,124,322.443,124,322.44Provision for the yearReversal for the year2,440,892.9517,824,465.2620,265,358.21Transfer for the yearWrite-off for the yearOther changesBalance as at 30 June 2020683,429.492,201,106.052,884,535.54
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
10. Long-term equity investments
Unit: RMBChange for the period
InvesteeOpening balance
Additionalcontribution
Investmentgain or lossrecognisedunder equitymethod
Adjustment
of othercomprehensiveincomeOther changein equityinterest
Distributionof cashdividend orprofit declared
Impairment
provisionClosing balance
Closing balance
of impairmentprovisionI. Joint venturesShouguang Chenming Huisen New-style Construction Materials Co., Ltd.3,789,667.61740,169.161,200,000.003,329,836.77Weifang Sime Darby West Port Co., Ltd89,726,671.76-2,880,211.1786,846,460.59Shouguang Meite Environmental Technology Co., Ltd.5,880,000.00-257,524.395,622,475.61Weifang Chenrong New and Old KineticEnergy Conversion Equity Investment Fund Partnership (Limited Partnership158,000,000.0042,000,000.00-553,476.37199,446,523.63Weifang Xingxing United Chemical Co., Ltd.93,816,557.39-1,459,789.7992,356,767.60Subtotal351,212,896.7642,000,000.00-4,410,832.561,200,000.00387,602,064.20II. AssociatesJiangxi Jiangbao Media Colour Printing Co. Ltd.0.000.00Zhuhai Dechen New Third Board EquityInvestment Fund Company (Limited Partnership)52,412,989.91-30,470.8652,382,519.05Ningbo Kaichen Huamei Equity Investment Fund Partnership (Limited Partnership)199,528,847.52516,198.50200,045,046.02Xuchang Chenming Paper Co., Ltd.5,994,545.96Jiangxi Chenming Port Co., Ltd.1,690,359.66-521,745.211,168,614.45Chenming (Qingdao) Asset Management Co., Ltd.8,669,491.17-6,654.568,662,836.61Goldtrust Futures Co., Ltd.192,732,957.71509,191.24193,242,148.95Guangdong Nanyue Bank Co., Ltd2,800,091,481.01124,059,754.412,924,151,235.42Subtotal3,255,126,126.98124,526,273.523,379,652,400.505,994,545.96Total3,606,339,023.7442,000,000.00120,115,440.961,200,000.003,767,254,464.705,994,545.96
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
11. Other non-current financial assets
Unit: RMBItemClosing balanceOpening balanceEquity instrument investments147,445,653.55147,445,653.55Total147,445,653.55147,445,653.55
12. Investment properties
(1) Investment properties under the cost method
√ Applicable Not applicable
Unit: RMBItem
Housing andbuilding structureLand use rights
Constructionin progressTotalI.Original carrying amount
1 Opening balance5,433,710,034.395,433,710,034.39
2. Increase for the period188,223,636.73188,223,636.73 Transferred from fixed assets188,223,636.73188,223,636.73
3. Closing balance5,621,933,671.125,621,933,671.12II.Accumulated depreciation and
accumulated amortisation
1. Opening balance351,347,741.28351,347,741.28
2. Increase for the period72,208,415.1472,208,415.14
(1) Provision or amortisation62,862,063.9462,862,063.94
(2) Transferred from inventories/
fixed assets/construction inprogress9,346,351.209,346,351.20
3. Closing balance423,556,156.42423,556,156.42III.Carrying amount
1. Closing carrying amount5,198,377,514.705,198,377,514.70
2. Opening carrying amount5,082,362,293.115,082,362,293.11
13. Fixed assets
Unit: RMBItemClosing balanceOpening balanceFixed assets38,215,983,514.5134,439,935,032.69Total38,215,983,514.5134,439,935,032.69
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
13. Fixed assets (Cont
’d)
(1) Particulars of fixed assets
Unit: RMBItem
Housing andbuilding structure
Machinery andequipment
Transportationequipment
Electronicequipmentand othersTotalI.Original carrying amount:
1. Opening balance9,941,580,880.7839,482,080,460.52351,029,607.21398,368,057.1850,173,059,005.69
2. Increase for the period1,071,404,086.534,039,267,399.98703,446.292,283,209.995,113,658,142.79
(1) Acquisition22,691,006.6818,937,890.61418,490.171,344,019.1143,391,406.57
(2) Transferred from construction in progress1,048,713,079.854,020,329,509.37284,956.12939,190.885,070,266,736.22
3. Decrease for the period299,507,564.4812,375,048.7623,948,959.40521,394.19336,352,966.83
(1) Disposal or retirement111,283,927.7512,375,048.7623,948,959.40521,394.19148,129,330.10
(2) Transferred into investment properties188,223,636.73188,223,636.73
4. Closing balance10,713,477,402.8343,508,972,811.74327,784,094.10400,129,872.9854,950,364,181.65II.Accumulated depreciation
1. Opening balance1,796,330,000.7713,297,091,535.53188,896,834.23257,770,900.1415,540,089,270.67
2. Increase for the period139,085,677.89878,544,680.4113,206,342.467,587,382.571,038,424,083.33
(1) Provision139,085,677.89878,544,680.4113,206,342.467,587,382.571,038,424,083.33
3. Decrease for the period15,015,295.165,361,980.4916,525,427.54264,686.0037,167,389.19
(1) Disposal or retirement5,668,943.965,361,980.4916,525,427.54264,686.0027,821,037.99
(2) Depreciation for transfer into investment
properties9,346,351.209,346,351.20
4. Closing balance1,920,400,383.5014,170,274,235.45185,577,749.15265,093,596.7116,541,345,964.81III.Provision for impairment
1. Opening balance27,808,852.79157,777,407.5413,889.137,434,552.87193,034,702.33
2. Closing balance27,808,852.79157,777,407.5413,889.137,434,552.87193,034,702.33IV.Carrying amount
1. Closing carrying amount8,765,268,166.5429,180,921,168.75142,192,455.82127,601,723.4038,215,983,514.51
2. Opening carrying amount8,117,442,027.2226,027,211,517.45162,118,883.85133,162,604.1734,439,935,032.69
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
13. Fixed assets (Cont
’d)
(2) Particulars of temporarily idle fixed assets
Unit: RMBItem
Originalcarrying amount
Accumulateddepreciation
Provision forimpairment
CarryingamountRemarkHousing and building structure95,571,926.2915,334,914.471,420,368.9678,816,642.86Machinery and equipment1,041,587,310.23504,133,469.38102,416,418.00435,037,422.85Transportation equipment12,200.0010,980.00–1,220.00Electronic equipment and others781,694.91669,098.402,594.47110,002.04Total1,137,953,131.43520,148,462.25103,839,381.43513,965,287.75
(3) Particulars of fixed assets without obtaining property right certificates
Unit: RMBItemCarrying amount
Reason for not yetobtaining propertyright certificatesHousing and building structure (Zhanjiang Chenming Pulp & Paper Co., Ltd.)1,291,450,246.23HandlingHousing and building structure (Huanggang Chenming Pulp & Paper Co., Ltd.)1,274,008,741.37HandlingHousing and building structure (Shouguang Meilun Paper Co., Ltd.)412,535,443.46HandlingHousing and building structure (Jilin Chenming Paper Co., Ltd.)396,097,436.98HandlingHousing and building structure (Jiangxi Chenming Paper Co., Ltd.)213,987,044.09HandlingHousing and building structure (Shandong Chenming Paper Holdings Limited)108,006,195.95HandlingHousing and building structure (Shandong Chenming Investment Limited)86,519,304.60HandlingHousing and building structure (Wuhan Chenming Hanyang Paper Holdings Co., Ltd.)80,441,254.26HandlingTotal3,863,045,666.94
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
14. Construction in progress
Unit: RMBItemClosing balanceOpening balanceConstruction in progress589,320,449.785,467,321,406.80Materials for project8,730,717.098,801,522.15Total598,051,166.875,476,122,928.95
(1) Particulars of construction in progress
Unit: RMBClosing balanceOpening balanceItemBook balance
Provision forimpairmentCarrying amountBook balance
Provision forimpairmentCarrying amountUpgrading and renovation of back pressure unit of captive power plant249,589,135.27249,589,135.27263,626,439.57263,626,439.57New annual 200,000 tonne of fly ash cement ceramsite production project54,186,705.2354,186,705.2351,767,628.0051,767,628.00High-end cultural paper intelligent warehouse project61,116,179.1561,116,179.15179,056,842.38179,056,842.38Meilun modification project17,026,765.3917,026,765.3931,858,373.5031,858,373.50Huanggang pulp production project93,052,147.9593,052,147.954,601,844,646.274,601,844,646.27Huanggang biomass power generation project193,548,348.79193,548,348.79Technological modification project in the headquarter32,686,178.7532,686,178.7535,229,753.8535,229,753.85Others111,351,796.2129,688,458.1781,663,338.04139,914,114.8529,524,740.41110,389,374.44Total619,008,907.9529,688,458.17589,320,449.785,496,846,147.2129,524,740.415,467,321,406.80
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont
’d)
14. Construction in progress (Cont
’d)
(2) Changes in material construction in progress projects for the period
Unit: RMB
Project nameBudget
OpeningbalanceIncrease forthe periodTransfer tofixed assetfor the periodOther deductionsfor the period
ClosingbalanceAccumulated
investmentto budgetConstructionin progressAccumulatedcapitalised
interestOf which:
capitalised
interest amount
for the periodCapitalisation
rate of the
interest amount
for the periodSource of fund
Upgrading and renovation of back pressure unit of captive power plant (Headquarters)
274,000,000263,626,439.571,259,640.5615,296,944.86249,589,135.2791%92%822,004.98Self-raised and
borrowings
New annual 200,000 tonne of fly ash cement ceramsite production project
76,000,00051,767,628.002,419,077.2354,186,705.2371%71%Self-raised
High-end cultural paper (Meilun)2,261,000,000179,056,842.3814,449,141.54132,389,804.7761,116,179.1591%99%64,161,971.31Self-raised and
borrowings
Huanggang Chenming Forest and Paper Integration Project (Pulping Project) (Huanggang Chenming)
4,785,000,0004,601,844,646.27192,849,130.434,701,641,628.7593,052,147.95101%99%241,118,047.0017,272,974.159%Self-raised and
borrowings
Biomass power generation project (southern district) (Huanggang Chenming)
205,000,000193,548,348.794,419,515.45197,967,864.24-0.0097%100%Self-raised
Membrane treatment project (Zhanjiang Chenming)120,000,00025,833,751.0723,189,964.242,643,786.8384%95%Self-raisedTotal7,721,000,0005,315,677,656.08215,396,505.215,055,189,262.0015,296,944.86460,587,954.43––306,102,023.2917,272,974.15–
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
14. Construction in progress (Cont
’d)
(3) Particulars of provision for construction in progress impairment
Unit: RMBItem
Amount for the
period
Reason for the
provisionOther projects of Huanggang Chenming163,717.76Project modificationTotal163,717.76–Other explanation
(4) Materials for project
Unit: RMBClosing balanceOpening balanceItemBook balance
ImpairmentprovisionCarrying amountBook balance
ImpairmentprovisionCarrying amountSpecial materials8,730,717.098,730,717.098,801,522.158,801,522.15Total8,730,717.09–8,730,717.098,801,522.15–8,801,522.15
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
15. Right-of-use assets
Unit: RMBItemTotalI.Original carrying amount:
1. Opening balance163,334,964.90163,334,964.90
2. Closing balance163,334,964.90163,334,964.90II.Accumulated depreciation
1. Opening balance11,193,082.8511,193,082.85
2. Increase for the period2,691,472.702,691,472.70
(1) Provision2,691,472.702,691,472.70
3. Closing balance13,884,555.5513,884,555.55III.Carrying amount
1. Closing carrying amount149,450,409.35149,450,409.35
2. Opening carrying amount152,141,882.05152,141,882.05
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
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 rightsSoftware
Certificates ofthird party rightTotalI.Original carrying amount
1. Opening balance2,176,207,105.7526,352,090.7415,895,213.332,218,454,409.82
2. Increase for the period72,000.0072,000.00
(1) Acquisition72,000.0072,000.00
3. Decrease for the period107,209,008.00107,209,008.00
(1) Disposal107,209,008.00107,209,008.00
4. Closing balance2,068,998,097.7526,424,090.7415,895,213.332,111,317,401.82II.Accumulated amortisation
1. Opening balance407,497,707.2522,891,289.247,003,508.82437,392,505.31
2. Increase for the period21,157,836.48663,165.082,649,202.2624,470,203.82
(1) Provision21,157,836.48663,165.082,649,202.2624,470,203.82
3. Decrease for the period9,662,821.099,662,821.09
(1) Disposal9,662,821.099,662,821.09
4. Closing balance418,992,722.6423,554,454.329,652,711.08452,199,888.04III.Provision for impairmentIV.Carrying amount
1. Closing carrying amount1,650,005,375.112,869,636.426,242,502.251,659,117,513.78
2. Opening carrying amount1,768,709,398.503,460,801.508,891,704.511,781,061,904.51
17. Goodwill
(1) Original carrying amount of goodwill
Unit: RMBName of investee or item generating goodwill
Openingbalance
Increase for
the period
Decrease for
the period
ClosingbalanceShandong 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
(2) Provision for impairment of goodwill
Unit: RMBName of investee or item generating goodwill
Openingbalance
Increase for
the period
Decrease for
the period
ClosingbalanceJilin Chenming Paper Co., Ltd.14,314,160.6014,314,160.60Total14,314,160.6014,314,160.60
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
18. Long-term prepaid expenses
Unit: RMBItem
Openingbalance
Increase forthe period
Amortisationfor the period
Otherdeductions
ClosingbalanceWoodland expenses9,642,224.60302,898.009,339,326.60Railway expenses16,071,459.93599,814.9615,471,644.97Other expenses22,489,724.184,176,000.00527,201.8226,138,522.36Total48,203,408.714,176,000.001,429,914.7850,949,493.93
19. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before offsetting
Unit: RMBClosing balanceOpening balanceItem
Deductibletemporarydifference
Deferredincome tax
assets
Deductible/taxable temporary
difference
Deferred income
tax assets/
liabilitiesDeferred income tax assets:
Provision for impairment of assets2,041,447,469.67482,105,135.451,791,356,735.71417,688,820.31Unrealised profit arising from intra-group transactions75,054,127.2418,763,531.81164,089,227.2641,022,306.82Deductible loss2,343,752,044.37366,327,959.092,243,481,924.83344,125,106.67Outstanding payables470,036,072.1972,746,587.79446,580,396.8768,163,018.91Deferred income111,566,555.6220,612,480.91116,165,951.1421,443,378.33Subtotal5,041,856,269.09960,555,695.054,761,674,235.81892,442,631.04Debt reconstructing5,644,502.361,411,125.59Subtotal5,644,502.361,411,125.59
(2) The breakdown of unrecognised deferred income tax assets
Unit: RMBItemClosing balanceOpening balanceDeductible temporary difference293,607,004.97352,057,221.14Deductible loss661,787,456.93521,737,724.53Total955,394,461.90873,794,945.67
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
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)
(3) Expiry of deductible loss of unrecognised deferred income tax assets falls in the periods as follows
Unit: RMBYearClosing amountOpening amountRemark2020–674,989.712021185,647.61185,647.61202211,628,813.1411,628,813.142023163,280,498.87164,859,774.532024338,716,266.07344,388,499.542025147,976,231.24–Total661,787,456.93521,737,724.53–
20. Other non-current assets
Unit: RMBClosing balanceOpening balanceItem
Bookbalance
Impairment
provision
Carryingamount
Bookbalance
Impairmentprovision
CarryingamountPrepayments for land-transferring fee101,130,000.00101,130,000.00101,130,000.00101,130,000.00Prepayments for engineering61,915,754.5761,915,754.5747,430,952.0947,430,952.09Prepayments for properties9,800,000.009,800,000.009,800,000.009,800,000.00Prepayments for equipment19,350,298.7019,350,298.7015,514,874.5815,514,874.58Prepayments for purchase of equity interest176,000,000.00176,000,000.00–Total368,196,053.27–368,196,053.27173,875,826.67–173,875,826.67
21. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMBItemClosing balanceOpening balancePledged borrowings277,536,675.69859,312,833.51Mortgage borrowings180,000,000.00180,000,000.00Guaranteed borrowings8,006,661,333.877,082,088,423.98Credit borrowings8,441,863,225.447,174,060,275.17Discounted borrowings21,648,250,000.0021,587,694,481.53Total38,554,311,235.0036,883,156,014.19
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
22. Bills payable
Unit: RMBClassificationClosing balanceOpening balanceCommercial acceptance bills382,897,538.49625,325,798.18Bank acceptance bills2,364,709,222.68889,722,407.82Total2,747,606,761.171,515,048,206.00
23. Accounts payable
(1) Particulars of accounts payable
Unit: RMBItemClosing balanceOpening balanceLoans3,501,525,952.773,393,786,063.51Payment for engineering151,196,271.94408,694,349.00Payment for equipment357,086,520.95312,292,221.48Service expense165,525,980.81199,838,288.95Others69,571,698.8336,476,659.04Total4,244,906,425.304,351,087,581.98
(2) Significant advance receipts for over 1 year
Unit: RMBItemClosing balanceReasonsGuangxi Construction Engineering Group No. 1 Installation
Co., Ltd.31,311,231.15
Quality guaranteedeposit for engineeringBeijing Guodian Futong Science And Development Co., Ltd.26,630,150.00
Quality guaranteedeposit for engineeringOmya Haiming (Nanchang) Chemical Co. Ltd.16,000,000.00
Quality guaranteedeposit for engineeringChina Energy Engineering Group Guangzhou Electric Power
Design14,128,415.00
Quality guaranteedeposit for engineeringFujian Xinze Environmental Protection Equipment and
Engineering Co., Ltd.13,001,120.40
Quality guaranteedeposit for engineeringTotal101,070,916.55–
24. Contract liabilities
Unit: RMBItemClosing balanceOpening balanceDeposits received1,230,606,297.46968,082,063.13Total1,230,606,297.46968,082,063.13
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
25. Staff remuneration payables
(1) Particulars of staff remuneration payables
Unit: RMBItem
Openingbalance
Increase forthe period
Decrease forthe period
ClosingbalanceI. Short-term remuneration189,006,380.72632,598,237.29597,988,645.16223,615,972.85II. Retirement benefit plan – defined contribution scheme1,223,502.8064,951,329.8958,372,687.097,802,145.60Total190,229,883.52697,549,567.18656,361,332.25231,418,118.45
(2) Particulars of short-term remuneration
Unit: RMBItem
Openingbalance
Increase forthe period
Decrease forthe period
Closingbalance
1. Salaries, bonuses, allowance and subsidies120,634,999.88509,315,990.09477,709,438.90152,241,551.07
2. Staff welfare14,502,279.8714,502,279.87
3. Social insurance premium1,871,932.3033,348,186.9433,097,202.502,122,916.74Of which: Medical insurance premium840,248.8230,482,685.6331,165,115.14157,819.31Work-related injury insurance premium23,069.881,365,767.12963,528.54425,308.46Maternity insurance premium1,008,613.601,499,734.19968,558.821,539,788.97
4. Housing provident funds8,856,543.6248,333,531.8644,866,200.8812,323,874.60
5. Union funds and workers
’ education35,831,023.9316,175,524.4214,301,359.0637,705,189.29
6. Other short-term remuneration21,811,880.9910,922,724.1113,512,163.9519,222,441.15Total189,006,380.72632,598,237.29597,988,645.16223,615,972.85
(3) Defined contribution plan
Unit: RMBItem
Openingbalance
Increase for
the period
Decrease for
the period
Closingbalance
1. Basic pension insurance1,033,762.4262,119,798.3655,961,336.457,192,224.33
2. Unemployment insurance189,740.382,831,531.532,411,350.64609,921.27Total1,223,502.8064,951,329.8958,372,687.097,802,145.60
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
26. Taxes payable
Unit: RMBItemClosing balanceOpening balanceEnterprise income tax241,770,346.42166,389,232.03Value added tax60,572,555.8481,745,671.90Land use tax10,658,837.918,206,677.02Property tax24,362,303.638,239,300.78Urban maintenance and construction tax3,421,307.005,844,684.79Educational surcharges and others11,151,393.456,850,900.34Individual income tax28,149,300.0729,565,363.87Stamp duty3,191,475.064,712,286.00Total383,277,519.38311,554,116.73
27. Other payables
Unit: RMBItemClosing balanceOpening balanceInterest payable149,518,233.84208,189,699.15Dividend payable610,109,667.16Other payables1,694,370,129.512,386,059,927.39Total2,453,998,030.512,594,249,626.54
(1) Interest payable
Unit: RMBItemClosing balanceOpening balanceInterest on borrowings26,109,646.6727,960,930.86Interest on corporate bonds7,367,916.67103,432,934.98Interest on medium-term notes116,040,670.5076,795,833.31Total149,518,233.84208,189,699.15
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
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 shares256,449,200.77B shares103,543,930.17H shares77,440,462.80Preference shares172,676,073.42Total610,109,667.16
(3) Other payables
1) Other payables by nature
Unit: RMBItemClosing balanceOpening balanceOpen credit507,890,103.311,287,822,732.06Deposit417,858,566.67451,756,402.26Accrued expenses427,320,371.12506,095,837.14Equity incentive226,860,000.00Others114,441,088.41140,384,955.93Total1,694,370,129.512,386,059,927.39
2) Significant other payables for over 1 year
Unit: RMBItemClosing balanceReasonsNINE DRAGONS DAWEI HOLDINGS CO., LTD.30,000,000.00DepositSHOUGUANG LONGYUAN PAPER COATING CO., LTD.9,250,000.00DepositSTATE-OWNED SHOUGUANG QINGSHUIPO FARM8,800,000.00Open creditZHEJIANG TSINGSHAN STEEL PIPE CO., LTD.5,860,000.00DepositWENZHOU DONGDA MINE CONSTRUCTION
ENGINEERING CO., LTD.5,450,000.00DepositTotal59,360,000.00–
INTERIM FINANCIAL REPORT 2020
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 year3,963,363,135.832,520,582,051.43Long-term payables due within one year1,968,889,601.582,238,647,651.02Lease liabilities due within one year4,606,717.584,606,717.58Bonds payable due within one year899,122,500.00Medium-term notes due within one year1,000,000,000.00Total6,936,859,454.995,662,958,920.03
29. Other current liabilities
Unit: RMBItemClosing balanceOpening balanceShort-term bonds payable150,686,164.01222,402,500.00Total150,686,164.01222,402,500.00
30. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMBItemClosing balanceOpening balancePledge borrowings74,823,068.83Secured borrowings4,789,105,773.485,110,291,847.19Guarantee borrowings5,232,927,028.335,695,114,793.03Credit borrowings950,692,035.94780,692,035.94Less: Long-term borrowings due within 1 year3,963,363,135.832,520,582,051.43Total7,009,361,701.929,140,339,693.56
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
31. Bonds payable
(1) Bonds payable
Unit: RMBItemClosing balanceOpening balance17 Chenming bond 01- Chenming Paper89,943,750.0089,070,000.0018 Chenming bond 01- Chenming Paper350,000,000.00Chenming USD Bonds1,188,190,442.591,169,200,909.49Total1,628,134,192.591,258,270,909.49
(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 Paper1,200,000,000.002017/8/225 years1,198,200,000.0089,070,000.0018 Chenming bond 01 – Chenming Paper350,000,000.002020/6/15 years350,000,000.00Chenming USD Bonds1,137,120,600.002019/8/62.6 years1,125,276,863.461,169,200,909.49Total2,687,120,600.002,673,476,863.461,258,270,909.49(Cont’d)Name of bond
Issue duringthe year
Interest atpar value
Amortisationof premium/discount
Redemptionduring the year
Closingbalance17 Chenming bond 01 – Chenming Paper873,750.0089,943,750.0018 Chenming bond 01- Chenming Paper350,000,000.00350,000,000.00Chenming USD Bonds16,768,832.502,220,700.601,188,190,442.59Total350,000,000.0016,768,832.503,094,450.601,628,134,192.59
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
32. Lease liabilities
Unit: RMBItemClosing balanceOpening balanceLease payments payable90,539,867.0390,539,867.03Less: Unrecognised financing expenses25,661,379.5526,236,020.80Subtotal64,878,487.4864,303,846.23Less: Lease liabilities due within one year4,606,717.584,606,717.58Total60,271,769.9059,697,128.65
33. Long-term payables
Unit: RMBItemClosing balanceOpening balanceLong-term payables2,748,780,858.473,321,535,538.94Total2,748,780,858.473,321,535,538.94
(1) By nature
Unit: RMBItemClosing balanceOpening balanceRetention for the financial leasing operations76,000,000.00160,190,103.51China Development Bank Special funds517,500,000.00595,000,000.00Financial leasing4,124,170,460.054,804,993,086.45Subtotal4,717,670,460.055,560,183,189.96Less: Long-term payables due within 1 year1,968,889,601.582,238,647,651.02Total2,748,780,858.473,321,535,538.94
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
34. Provision
Unit: RMBItem
Closingbalance
Increase for
the period
Decrease forthe period
OpeningbalanceReasonProvision325,259,082.28325,259,082.28
Losses fromArjo’s lawsuitTotal325,259,082.28325,259,082.28–
35. Deferred income
Unit: RMBItem
Openingbalance
Increase forthe period
Decrease for
the period
ClosingbalanceReasonGovernment grants1,771,013,335.1128,360,000.00106,871,499.811,692,501,835.30Financial provisionTotal1,771,013,335.1128,360,000.00106,871,499.811,692,501,835.30–Items in respect of government grants:
Unit: RMB
Liabilities item
Openingbalance
New grantsfor the period
Include innon-operating
income for
the period
Include inother incomefor the period
Amountchargedagainst cost
expenses
Otherchanges
Closingbalance
Asset-related/income-relatedProject fund for Nationaltechnological support scheme1,452,525.0082,350.001,370,175.00Asset-relatedSewage treatment and waterconservation reconfiguration project63,274,136.711,588,476.4461,685,660.27Asset-relatedFinancial grants fortechnological modification project168,182,448.8028,360,000.006,391,903.86190,150,544.94Asset-relatedSubsidy funds for environmental protection700,228,305.1924,595,985.84675,632,319.35Asset-relatedLogistics park project51,960,000.0051,960,000.00Asset-relatedZhanjiang integrated forestry, pulp and paper project67,047,201.5010,098,654.9356,948,546.57Asset-relatedHuanggang pulp-forestry-paper project681,564,072.6611,359,401.20670,204,671.46Asset-relatedOthers37,304,645.25794,727.5436,509,917.71Asset-relatedTotal1,771,013,335.1128,360,000.0054,911,499.8151,960,000.001,692,501,835.30
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
36. Other non-current liabilities
Unit: RMBItemClosing balanceOpening balanceMedium-term notes3,384,489,390.183,042,841,328.86Less: Other non-current liabilities due within one year1,000,000,000.00Total2,384,489,390.183,042,841,328.86
37. Share capital
Unit: RMBIncrease/decrease during the year (+/-)OpeningbalanceNew issueBonus issue
Sharesconverted fromreservesOthersSubtotal
ClosingbalanceTotal number of shares2,904,608,200.0079,600,000.0079,600,000.002,984,208,200.00
38. Other equity instruments
(1) Preference shares, perpetual bonds and other financial instruments outstanding at the end of the period
Item
Openingbalance
Increase for
the period
Decrease for
the period
ClosingbalancePerpetual 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 instruments
Openingbalance
Increase for
the period
Decrease for
the period
Closingbalance17 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
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
38. Other equity instruments (Cont
’d)
(3) Changes in perpetual bonds outstanding at the end of the period
Outstanding financial instruments
Openingbalance
Increase forthe period
Decrease forthe period
ClosingbalanceChenming 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
39. Capital reserves
Unit: RMBItem
Openingbalance
Increase forthe period
Decrease forthe period
ClosingbalanceCapital premium (share premium)4,416,363,920.09177,314,104.004,593,678,024.09Other capital reserves670,322,507.21670,322,507.21Total5,086,686,427.30177,314,104.005,264,000,531.30
40. Treasury shares
Unit: RMBItem
Openingbalance
Increase for
the period
Decrease for
the period
ClosingbalanceRestricted treasury shares226,860,000.00226,860,000.00Total226,860,000.00226,860,000.00
41. Other comprehensive income
Unit: RMBDuring the period
Item
Openingbalance
Incurred before
income taxfor the period
Less:
Transferredfrom othercomprehensiveincome in priorperiods to profit
or loss during
the period
Less:
Transferredfrom othercomprehensiveincome in prior
periods toretained earningsduring the period
Less: Incometax expenses
Attributable toparent company
after tax
Attributableto minorityshareholders
after tax
ClosingbalanceOther comprehensive income to bereclassified to profit or loss in subsequent periodsExchange differences on translation of foreign operations-879,452,135.10-100,282,332.31-100,282,332.31-979,734,467.41Total other comprehensive income-879,452,135.10-100,282,332.31-100,282,332.31-979,734,467.41
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
42. General risk reserves
Item
Openingbalance
Increase forthe period
Decrease forthe period
ClosingbalanceGeneral risk reserves74,122,644.2074,122,644.20Total74,122,644.2074,122,644.20
43. Surplus reserves
Unit: RMBItem
Openingbalance
Increase forthe period
Decrease forthe period
ClosingbalanceStatutory surplus reserves1,212,009,109.971,212,009,109.97Total1,212,009,109.971,212,009,109.97
44. Retained profit
Unit: RMBItemThe period
The prior period(the same period
last year)Retained profit as at the end of the prior year before adjustment9,306,269,617.389,107,422,690.85Accumulated adjustments to retained profit as at the beginningof the year (increase“+”, decrease“-”)Retained profit as at the beginning of the year after adjustment9,306,269,617.389,107,422,690.85Plus: Net profit for year attributable to shareholders of the parent company516,326,703.48509,795,572.29Less: Transfer of statutory surplus reserves Ordinary dividend payable437,433,593.74697,105,968.00 Preferred shares interest payable270,776,073.42377,169,767.52Retained profit as at the end of the year9,114,386,653.708,542,942,527.62
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
45. Revenue and operating cost
Unit: RMBAmount for the periodAmount for the prior periodItemRevenueCostsRevenueCostsPrincipal activities12,956,373,458.789,705,685,293.0613,127,389,053.489,644,049,075.24Other activities643,432,307.08479,614,740.25221,259,060.22110,048,724.58Total13,599,805,765.8610,185,300,033.3113,348,648,113.709,754,097,799.82Information related to revenue:
Unit: RMBCategory of contract
Machine-madepaper segment
Financialsegment
OthersegmentsTotalType of goodsMachine-made paper11,558,358,972.7011,558,358,972.70Financial leasing523,141,507.84523,141,507.84Electricity and steam76,551,167.171,284,686.6777,835,853.84Construction materials178,629,808.17178,629,808.17Paper chemicals65,927,709.4565,927,709.45Hotel services7,284,272.637,284,272.63Others1,080,801,337.9543,572,514.5464,253,788.741,188,627,641.23Total12,781,639,187.27566,714,022.38251,452,556.2113,599,805,765.86
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
46. Taxes and surcharges
Unit: RMBItem
Amount forthe period
Amount forthe prior periodUrban maintenance and construction tax16,351,064.2133,491,970.50Educational surcharges11,385,806.5930,083,061.41Property tax35,765,283.6225,991,020.83Land use tax15,431,134.0617,485,547.38Vehicle and vessel tax12,010.6853,845.71Stamp duty13,063,555.4310,950,170.18Water engineering funds849,304.031,634,705.86Environmental tax7,919,659.654,945,936.66Water resource tax6,270,279.949,852,286.53Total107,048,098.21134,488,545.06
47. Selling and distribution expenses
Unit: RMBItem
Amount for
the period
Amount forthe prior periodWages and surcharges58,686,281.8261,585,417.90Depreciation expenses6,122,536.006,288,587.94Office expenses1,843,778.511,758,975.11Transportation expenses486,328,202.98425,245,830.59Selling commissions21,030,123.345,725,354.65Cargo handling charges8,233,465.187,716,321.23Travel expenses9,122,159.3314,946,381.33Business hospitality expenses21,137,948.3528,199,788.34Warehouse expenses1,116,656.861,080,149.47Rental expenses3,513,698.234,019,981.96Others35,607,569.7534,018,168.95Total652,742,420.35590,584,957.47
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
48. General and administrative expenses
Unit: RMBItem
Amount for
the period
Amount forthe prior periodWages and surcharges158,698,083.16118,518,202.91Welfare expenses29,416,491.4327,556,239.75Insurance premium13,706,761.0914,052,377.28Depreciation expenses58,348,214.94114,171,603.76Waste disposal expenses6,215,674.325,411,881.45Hospitality expenses40,625,251.7438,283,517.05Amortisation of intangible assets22,805,226.1724,242,384.25Production interruption loss59,359,808.2269,899,210.78Repair fees16,847,259.1515,566,475.96Others85,964,475.11134,715,506.06Total491,987,245.33562,417,399.25
49. R&D expenses
Unit: RMBItem
Amount for
the period
Amount forthe prior periodInstallation expenses609,432.498,229,476.80Depreciation expenses27,731,869.0618,616,150.51Consumption of raw materials198,168,322.21181,729,065.27Consumption of semi-finished products87,624,595.3161,663,204.78Consumption of auxiliary materials78,527,925.3941,870,386.58Travel expenses1,574.18Wages and surcharges69,924,624.2152,643,872.99Welfare expenses3,526,275.773,128,695.00Housing provident funds3,787,143.403,507,430.88Insurance premium8,279,960.278,344,818.02Union funds391,146.46165,815.82Utilities69,857,222.2850,274,197.98Other expenses128,630.041,309,027.25Total548,557,146.89431,483,716.06
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
50. Finance expenses
Unit: RMBItem
Amount forthe period
Amount forthe prior periodFinance expenses1,459,184,970.391,650,075,404.49Less: interest income276,115,018.97213,994,280.22Less: capitalised interest amount19,684,809.6273,319,125.19Foreign exchange gains and losses-1,552,952.90-2,644,727.97Bank charges184,385,373.56156,731,452.69Total1,346,217,562.461,516,848,723.80
51. Other income
Unit: RMBItem
Amount forthe period
Amount forthe prior periodGovernment grants – amortised deferred income included in profit or loss54,911,499.8134,507,125.14Government grants – directly included in profit or loss78,522,474.644,324,165.50Total133,433,974.4538,831,290.64
52. Investment income
Unit: RMBItem
Amount for
the period
Amount forthe prior periodIncome from long-term equity investments accounted for usingthe equity method120,115,440.96-9,467,172.97Investment gain on disposal of long-term equity investments16,778,042.01Total136,893,482.97-9,467,172.97
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
53. Gain on change in fair value
Unit: RMBSource of gain on change in fair value
Amount for
the period
Amount forthe prior periodConsumable biological assets measured at fair value-9,246,743.86-1,883,064.80Total-9,246,743.86-1,883,064.80
54. Credit impairment loss
Unit: RMBItem
Amount forthe period
Amount forthe prior periodBad debt loss of accounts receivable-257,855,903.60-62,440,283.34Total-257,855,903.60-62,440,283.34
55. Loss on impairment of assets
Unit: RMBItem
Amount for
the period
Amount forthe prior periodLoss on inventory impairment and impairment loss of performance
costs of contracts83,464,107.59Loss on construction in progress impairment-163,717.76Total-163,717.7683,464,107.59
56. Asset disposal income
Unit: RMBSource of asset disposal income
Amount for
the period
Amount forthe prior periodNet income from disposal of non-current assets-4,705,886.8922,823,551.43Total-4,705,886.8922,823,551.43
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
57. Non-operating income
Unit: RMB
Item
Amount forthe period
Amount forthe prior period
Amounts includedin extraordinarygains and losses
for the periodGovernment grants633,778,881.76227,700,148.23633,778,881.76Others8,621,236.029,772,444.748,621,236.02Total642,400,117.78237,472,592.97642,400,117.78
58. Non-operating expenses
Unit: RMB
Item
Amount forthe period
Amount forthe prior period
Amounts included
in extraordinarygains and losses
for the periodDonation5,144,077.883,041,000.005,144,077.88Loss on destroyed and scrapped non-current assets510,335.351,207,252.11510,335.35Others3,353,130.95801,876.083,353,130.95Total9,007,544.185,050,128.199,007,544.18
59. Income tax expenses
(1) Particulars of income tax expenses
Unit: RMBItem
Amount for
the period
Amount forthe prior periodIncome tax expenses for the period306,073,252.16264,288,265.75Deferred income tax expenses-68,113,064.01-138,410,446.13Total237,960,188.15125,877,819.62
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
60. Items on statements of cash flow
(1) Cash received relating to other operating activities
Unit: RMBItem
Amount forthe period
Amount forthe prior periodFinance support fund207,271,356.40184,083,293.99Interest income202,247,580.26213,994,280.22Open credit, and income from default penalty and fine97,478,845.77199,443,495.78Net return of principal receivables relating to finance lease business1,056,112,435.521,700,675,170.98Total1,563,110,217.952,298,196,240.97
(2) Cash paid relating to other operating activities
Unit: RMBItem
Amount forthe period
Amount forthe prior periodExpense and open credit1,083,849,666.321,000,088,741.18Total1,083,849,666.321,000,088,741.18
(3) Cash received relating to other investing activities
Unit: RMBItem
Amount for
the period
Amount forthe prior periodSales of right in Haiming60,436,164.38Sales of right in Qingdao Logistics37,399,937.28Sales of right in Industrial Logistics31,361,866.40Total129,197,968.06
(4) Cash paid relating to other investing activities
Unit: RMBItem
Amount for
the period
Amount forthe prior periodPurchase of Goldtrust Futures equity interest144,248,400.00Investment in Growth Driver Replacement39,500,000.00Investment in Meite Environment5,880,000.00Acquisition of equity in Taan Plastic176,000,000.00Total176,000,000.00189,628,400.00
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
60. Items on statements of cash flow (Cont
’d)
(5) Cash received relating to other financing activities
Unit: RMBItem
Amount forthe period
Amount forthe prior periodShort-term commercial paper144,457,000.001,887,185,904.00Equipment financing542,500,000.00831,099,242.78Debt financing receivable320,000,000.00400,071,077.96Loan from the Finance Company200,000,000.00Shandong Financial Assets Exchange borrowings161,337,302.32Issuance of corporate bonds350,000,000.00Total1,356,957,000.003,479,693,527.06
(6) Cash paid relating to other financing activities
Unit: RMBItem
Amount forthe period
Amount forthe prior periodRepayment of short-term commercial paper190,000,000.002,820,000,000.00Repayment of matured bonds900,000,000.00Repayment of interest on preference shares98,100,000.0098,100,000.00Repayment of equipment leaseback1,304,243,353.951,400,052,857.83Increase in restricted bank deposits for the period704,209,894.721,807,611,450.60Repayment of borrowings from Chenming Holdings708,440,865.27330,800,000.00Payment of equity in China Development Bank funds77,500,000.00Total3,982,494,113.946,456,564,308.43
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
61. Supplementary information on cash flow statement
(1) Supplementary information on cash flow statement
Unit: RMBSupplementary information
Amount forthe period
Amount forthe prior period
1. Reconciliation of net profit as cash flows from operating activities:––Net profit661,740,850.07536,600,045.95Plus: Provision for impairment of assets258,019,621.36-83,464,107.59Depreciation of fixed assets, consumption of oil and gas assets,depreciation of bearer biological assets1,103,977,619.97763,316,039.38Amortisation of intangible assets24,470,203.8226,402,322.31Amortisation of long-term prepaid expenses1,429,914.785,347,583.69Loss on disposal of fixed assets, intangible assets and other long-term assets (“-” denotes gain)2,171,437.2122,823,551.43Loss on changes in fair value (“-” denotes gain)-9,246,743.86-1,883,064.80Finance expenses (“-” denotes gain)1,439,500,160.771,516,848,723.80Investment loss (“-” denotes gain)-136,893,482.97-9,467,172.97Decrease in deferred income tax assets (“-” denotes increase)-68,113,064.01-155,056,230.40Increase in deferred income tax liabilities (“-” denotes increase)-1,411,125.59Decrease in inventories (“-” denotes increase)-927,140,737.58-678,542,881.70Decrease in operating receivables (“-” denotes increase)-1,749,063,323.95-282,017,217.78Increase in operating payables (“-” denotes decrease)1,727,592,454.671,038,863,300.37Net cash flows from operating activities2,327,033,784.682,699,770,891.69
2. Major investing and financing activities not involving cash
settlements:––
3. Net change in cash and cash equivalents:––Closing balance of cash2,213,282,630.762,009,063,231.38Less: Opening balance of cash2,890,328,027.402,381,558,242.53Plus: Closing balance of cash equivalentsLess: Opening balance of cash equivalentsNet increase in cash and cash equivalents-677,045,396.64-372,495,011.15
(2) Cash and cash equivalents composition
Unit: RMBItemClosing balanceOpening balanceI. Cash2,213,282,630.762,890,328,027.40
Of which: Treasury cash3,240,007.662,418,131.86Bank deposit that can be used for payment at any time2,210,042,623.102,887,909,895.54III. Balance of cash and cash equivalent as at end of period2,213,282,630.762,890,328,027.40Other explanation:
Cash and cash equivalents did not include the restricted cash and cash equivalents used by the Company orsubsidiaries within the Group.
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
62. Assets with restricted ownerships or right to use
Unit: RMBItem
Closingcarrying amountReason for such restrictionsMonetary funds18,718,827,955.87As guarantee deposits for bank acceptance bills, letter of credit,
and bank borrowings deposits, and deposit reservesBills receivable624,106,580.39As collateral for short-term borrowings, letters of guarantee and
letters of creditFixed assets9,433,004,439.14As collateral for bank borrowings and long-term payablesIntangible assets855,039,400.00As collateral for bank borrowings and long-term payablesInvestment properties4,581,606,847.89As collateral for bank borrowingsTotal34,212,585,223.29–
63. Foreign currency items
(1) Foreign currency items
Unit: RMBItem
Closing foreigncurrency balanceExchange rate
Closing balance
in RMBMonetary funds––Of which: USD63,132,986.237.0795446,949,976.05 EUR4,399,947.087.961035,027,978.69 HKD36,519,300.650.913433,358,189.99 GBP5,709.699.150152,244.22Accounts receivables––Of which: USD17,402,059.387.0795123,197,879.41 EUR3,299,963.797.961026,271,011.73Accounts payable––Of which: USD95,108,075.117.0795673,317,617.77 EUR11,053,728.267.961087,998,730.71 HKD23,572,925.520.913421,532,453.09Other payables––Of which: USD1,406,229.347.07959,955,400.59 EUR578,759.357.96104,607,503.19Short-term borrowings––Of which: USD129,772,338.607.0795918,723,271.12Long-term borrowings––Of which: USD223,535,000.007.07951,582,516,032.50Non-current liabilities due within one yearOf which: USD333,362,309.207.07952,360,038,467.98
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
63. 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, USAUSD7Chenming (Overseas) LimitedHong Kong, ChinaHong Kong, ChinaUSD8Chenming (Singapore) LimitedSingaporeSingaporeUSD
64. Government grants
(1) General information of government grants
Unit: RMBTypeAmountReporting item
Amount accountedfor in profit or lossNational Science and Technology Support
Program Project Funding
1,452,525.00Deferred income82,350.00Sewage treatment and water saving reconstruction63,274,136.71Deferred income1,588,476.44Financial subsidies for technical transformation
items
196,542,448.80Deferred income6,391,903.86Funding for environmental protection700,228,305.19Deferred income24,595,985.84Industrial logistics park reconstruction
compensation
51,960,000.00Deferred incomeZhanjiang Forest Pulp & Paper Integration Item67,047,201.50Deferred income10,098,654.93Huanggang Forest Pulp & Paper Integration Item681,564,072.66Deferred income11,359,401.20Others37,304,645.25Deferred income794,727.54Interest subsidy1,087,500.00Finance expenses1,087,500.00Risk subsidy19,980,000.00Other income19,980,000.00Tax return62,377,043.64Non-operating income,
and other income
62,377,043.64Enterprise reform and development subsidies80,837,506.25Non-operating income,
and other income
80,837,506.25Government awards5,845,000.00Non-operating income5,845,000.00Afforestation subsidy3,252,768.00Other income3,252,768.00VAT return1,380,000.00Other income1,380,000.00Employment stabilization subsidy3,725,651.13Non-operating income,
and other income
3,725,651.13Relocation compensation balance533,390,000.00Non-operating income533,390,000.00Special subsidy funds for environmental protection1,000,000.00Non-operating income1,000,000.00Others513,387.38Non-operating income,
and other income
513,387.38Total2,512,762,191.51768,300,356.21
INTERIM FINANCIAL REPORT 2020
X Financial Report
VIII. Change in scope of consolidation
1. Disposal of subsidiaries
Whether there is loss of control over subsidiaries in a single disposal
√ Yes No
Unit: RMB
Name of subsidiary
Considerationof disposal of
equity interestShareholding ofdisposal of
equity interest
Way ofdisposal of
equity interest
Time of
loss of control
Basis fordetermining thetime of loss
of controlDifferencebetween
consideration
and share of
net assetsof relevantsubsidiary
as per
consolidated
financial
statementsRemaining
shareholding
as of the date of
loss of controlCarrying amount
of remainingshareholding
as of the date of
loss of controlFair value of
remaining
shareholding
as of the date of
loss of control
Gain or loss
in fair value of
remaining
shareholdingDetermination
and key
assumption of
fair value of
remaining
shareholding
as of the date of
loss of controlRelevant othercomprehensive
income of
former
subsidiary
transferred to
profit or loss
Qingdao Chenming International Logistics Co., Ltd.23,000,000.00100.00%Transfer2020.2.29Without control11,364,811.860.00%0.000.000.00Shouguang Chenming Industrial Logistics Co., Ltd.7,100,000.00100.00%Transfer2020.2.29Without control5,413,230.150.00%0.000.000.00
2. Change in consolidation scope for other reasons
Two new subsidiaries were added to the scope of consolidation during the reporting period, namely Chenming (Overseas) Co., Ltd. and Chenming (Singapore) Co.,Ltd.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
IX. Interest in other entities
1. Interest in subsidiaries
(1) Group composition
Shareholding (%)Name of subsidiary
Principal placeof business
Place ofincorporation
Nature ofbusinessDirectIndirect
Method ofacquisitionZhanjiang Chenming Pulp & Paper Co., Ltd.Zhanjiang, ChinaZhanjiang, ChinaPaper making100EstablishmentShouguang Meilun Paper Co., Ltd.Shouguang, ChinaShouguang, ChinaPaper making92EstablishmentJilin Chenming Paper Co., Ltd.Jilin, ChinaJilin, ChinaPaper making100Merger and
acquisitionHuanggang Chenming Pulp & Paper Co., Ltd.Huanggang, ChinaHuanggang, ChinaPulp production100EstablishmentShandong Chenming Paper Sales Co., Ltd.Shouguang, ChinaShouguang, ChinaSales of paper100EstablishmentShouguang Chenming Import and Export Trade Co., Ltd.
Shouguang, ChinaShouguang, ChinaImport and export trade100EstablishmentJiangxi Chenming Supply Chain Management Co., Ltd.
Jiangxi, ChinaJiangxi, ChinaTrading70EstablishmentChenming GmbHHamburg, GermanyHamburg, GermanyPaper product trading100EstablishmentShouguang Chenming Papermaking Machine Co., Ltd.
Shouguang, ChinaShouguang, ChinaMachinery
manufacturing
100EstablishmentShouguang Hongxiang Printing and Packaging Co., Ltd.
Shouguang, ChinaShouguang, ChinaPrinting and packaging100Merger and
acquisitionShouguang Chenming Modern Logistic Co., Ltd.Shouguang, ChinaShouguang, ChinaTransportation100EstablishmentJinan Chenming Investment Management Co., Ltd.Jinan, ChinaJinan, ChinaInvestment
management
100EstablishmentHuanggang Chenming Arboriculture Development Co., Ltd.
Huanggang, ChinaHuanggang, ChinaArboriculture100EstablishmentChenming Arboriculture Co., Ltd.Wuhan, ChinaWuhan, ChinaArboriculture100EstablishmentChenming Paper Korea Co., Ltd.Seoul, KoreaSeoul, KoreaSales of paper100EstablishmentShandong Chenming Power Supply Holdings Co., Ltd.Shouguang, ChinaShouguang, ChinaPower Supply100EstablishmentShouguang Shun Da Customs Declaration Co, Ltd.Shouguang, ChinaShouguang, ChinaCustoms declaration100EstablishmentShanghai Chenming Industrial Co., Ltd.Shanghai, ChinaShanghai, ChinaProperty investment
and management
100EstablishmentShandong Chenming Paper Group (Fuyu) Sales Co., Ltd.Fuyu, ChinaFuyu, ChinaSales of paper100EstablishmentShandong Chenming Group Finance Co., Ltd.Jinan, ChinaJinan, ChinaFinance8020EstablishmentJiangxi Chenming Paper Co., Ltd.Nanchang, ChinaNanchang, ChinaPaper making42.4640.79EstablishmentShouguang Chenming Art Paper Co., Ltd.Shouguang, ChinaShouguang, ChinaPaper making75EstablishmentHailaer Chenming Paper Co., Ltd.Hailaer, ChinaHailaer, ChinaPaper making75EstablishmentShandong Grand View Hotel Co., Ltd.Shouguang, ChinaShouguang, ChinaCatering70EstablishmentWuhan Chenming Hanyang Paper Holdings Co., Ltd.Wuhan, ChinaWuhan, ChinaPaper making65.205EstablishmentChengdu Chenming Culture Communication Co., Ltd.Chengdu, ChinaChengdu, ChinaMarketing100EstablishmentShandong Chenming Financial Leasing Co., Ltd.Jinan, ChinaJinan, ChinaFinancial leasing100EstablishmentQingdao Chenming Nonghai Financial Leasing Co., Ltd.Qingdao, ChinaQingdao, ChinaFinancial leasing100EstablishmentChenming (HK) LimitedHong Kong, ChinaHong Kong, ChinaPaper product trading100EstablishmentChenming (Overseas) Co., Ltd.Hong Kong, ChinaHong Kong, ChinaPaper product trading100EstablishmentChenming (Singapore) Co., Ltd.SingaporeSingaporePaper product trading100EstablishmentShouguang Hongyi Decorative Packaging Co., Ltd.Shouguang, ChinaShouguang, ChinaPackaging100Merger and
acquisitionShouguang Xinyuan Coal Co., Ltd.Shouguang, ChinaShouguang, ChinaCoal100Merger and
acquisitionShouguang City Run Sheng Wasted Paper Recycle Co., Ltd.
Shouguang, ChinaShouguang, ChinaPurchase and
sale of waste
100Merger and
acquisition
INTERIM FINANCIAL REPORT 2020
X Financial Report
Shareholding (%)Name of subsidiary
Principal placeof business
Place ofincorporation
Nature ofbusinessDirectIndirect
Method ofacquisitionShouguang Wei Yuan Logistics Company LimitedShouguang, ChinaShouguang, ChinaLogistics100Merger and
acquisitionShandong Chenming Panels Co., Ltd.Shouguang, ChinaShouguang, ChinaPanels100Merger and
acquisitionShouguang Chenming Floor Board Co., Ltd.Shouguang, ChinaShouguang, ChinaFloor board100Merger and
acquisitionShouguang Chenming Cement Co., LimitedShouguang, ChinaShouguang, ChinaCement100EstablishmentWuhan Chenming Qianneng Electric Power Co., Ltd.Wuhan, ChinaWuhan, ChinaElectric power51EstablishmentShandong Chenming Investment LimitedJinan, ChinaJinan, ChinaInvestment100EstablishmentJapan Chenming Paper Co., Ltd.Tokyo, JapanTokyo, JapanPaper product trading100EstablishmentChenming International Co., Ltd.Los Angeles, USALos Angeles, USAPaper product trading100EstablishmentZhanjiang Chenming Arboriculture Development Co., Ltd.Zhanjiang, ChinaZhanjiang, ChinaArboriculture100EstablishmentYangjiang Chenming Arboriculture Development Co., Ltd.Yangjiang, ChinaYangjiang, ChinaArboriculture100EstablishmentNanchang Chenming Arboriculture Development Co., Ltd.Nanchang, ChinaNanchang, ChinaArboriculture100EstablishmentGuangdong Huirui Investment Co., Ltd.Zhanjiang, ChinaZhanjiang, ChinaInvestment100Zhanjiang Chenming New-style Wall Materials Co., Ltd.Zhanjiang, ChinaZhanjiang, ChinaWall materials100EstablishmentJilin Chenming New-style Wall Materials Co., Ltd.Jilin, ChinaJilin, ChinaWall materials100EstablishmentJilin Chenming Logistics Co., Ltd.Jilin, ChinaJilin, ChinaLogistics100EstablishmentJiangxi Chenming Logistics Co., Ltd.Nanchang, ChinaNanchang, ChinaLogistics100EstablishmentFuyu Chenming Paper Co., Ltd.Fuyu, ChinaFuyu, ChinaPaper making100EstablishmentZhanjiang Meilun Pulp & Paper Co., Ltd.Zhanjiang, ChinaZhanjiang, ChinaPaper making100EstablishmentShanghai Chenming Group Financial Leasing Co., Ltd.Shanghai, ChinaShanghai, ChinaFinancial leasing100EstablishmentGuangzhou Chenming Financial Leasing Co., Ltd.Guangzhou, ChinaGuangzhou, ChinaFinancial leasing100EstablishmentShanghai Hongtai Real Estate Co., Ltd.Shanghai, ChinaShanghai, ChinaReal estate100Merger and
acquisitionShanghai Hongtai Property Management Co., Ltd.Shanghai, ChinaShanghai, ChinaProperty Management100Merger and
acquisitionShandong Chenming Commercial Factoring Co., Ltd.Jinan, ChinaJinan, ChinaBusiness factoring100EstablishmentGuangzhou Chenming Commercial Factoring Co., Ltd.Guangzhou, ChinaGuangzhou, ChinaBusiness factoring51EstablishmentQingdao Chenming Pulp & Paper Electronic
Commodity Spot Trading Center Co., Ltd.
Qingdao, ChinaQingdao, ChinaTrading3070EstablishmentShandong Chenming Paper Coated Paper Sales Co., Ltd.
Shouguang, ChinaShouguang, ChinaSales100EstablishmentZhanjiang Chenming Port Co., Ltd.Zhanjiang, ChinaZhanjiang, ChinaLoading and unloading100EstablishmentBeijing Chenming Financial Leasing Co., Ltd.Beijing, ChinaBeijing, ChinaFinance100EstablishmentChenming Paper United States Co., Ltd.USA3200 EL CAMINO
REAL, SUITE 130,IRVINE, CA
Paper trading100EstablishmentGuangdong Chenming Panels Co., Ltd.GuangdongGuangdongPanels100EstablishmentMeilun (BVI) LimitedCaymanCayman100EstablishmentWeifang Chenming Growth Driver Replacement Equity Investment Fund Partnership (Limited Partnership)
WeifangWeifangFund79EstablishmentNanjing Chenming Culture Communication Co., Ltd.NanjingNanjingMarketing100EstablishmentShanghai Chenming Pulp & Paper Sales Co., Ltd.Shanghai, ChinaShanghai, ChinaSales of pulp and paper100Establishment
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont
’d)
(1) Group composition (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
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 subsidiary
Minorityinterest
Gain or lossattributable tominority interestduring the period
Dividend tominority interestdeclared duringthe period
Closingbalance ofminority interestWuhan Chenming Hanyang Paper Holdings Co., Ltd.34.80%130,961,346.12242,658,667.31Shouguang Chenming Art Paper Co., Ltd.25.00%692,249.3999,058,489.45Jiangxi Chenming Paper Co., Ltd.16.75%16,377,116.118,375,000.00552,551,611.24Shouguang Meilun Paper Co., Ltd.8.00%4,398,120.59438,545,346.36
INTERIM FINANCIAL REPORT 2020
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
Closing balanceOpening balance
Name of subsidiaryCurrent assetsNon-current assetsTotal assetsCurrent liabilities
Non-currentliabilitiesTotal liabilitiesCurrent assetsNon-current assetsTotal assetsCurrent liabilities
Non-current
liabilitiesTotal liabilities
Wuhan ChenmingHanyang Paper Holdings Co., Ltd.796,365,369.501,017,024,289.911,813,389,659.411,056,108,856.1538,774,975.641,094,883,831.79242,300,843.281,042,530,549.731,284,831,393.01854,628,918.2284,521,086.72939,150,004.94Shouguang Chenming Art Paper Co., Ltd.538,720,021.42552,091,921.511,090,811,942.93694,577,985.19694,577,985.19651,004,033.69573,204,378.671,224,208,412.36830,743,452.16830,743,452.16Jiangxi Chenming Paper Co., Ltd.4,431,050,327.603,749,406,518.068,180,456,845.663,880,518,059.331,068,758,391.604,949,276,450.935,176,446,285.483,845,100,253.809,021,546,539.284,643,403,573.271,194,736,398.815,838,139,972.08Shouguang Meilun Paper Co., Ltd.5,188,031,185.5911,199,941,763.8316,387,972,949.4210,039,237,024.74871,704,604.7910,910,941,629.535,071,137,194.6511,453,663,652.7316,524,800,847.3810,013,297,488.591,186,061,831.0811,199,359,319.67
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
IX. Interest in other entities (Cont’d)
2. Interest in joint arrangements or associates
(1) Major joint ventures and associates
ShareholdingName of joint ventures and associates
Principle placeof business
Place ofincorporation
Nature ofbusinessDirectIndirect
AccountingmethodWeifang Sime Darby West Port Co., Ltd.Weifang, ChinaWeifang, ChinaPort construction50.00Equity methodNingbo Qichen Huamei Equity Investment Fund Partnership (Limited Partnership)
Ningbo, ChinaNingbo, ChinaInvestment
management
40.00Equity methodWeifang Xingxing United Chemical Co., Ltd.
Weifang, ChinaWeifang, ChinaChemical engineering50.00Equity methodZhuhai Dechen New Third Board EquityInvestment Fund Company (Limited Partnership)
Zhuhai, ChinaZhuhai, ChinaInvestment
management
50.00Equity methodGoldtrust Futures Co., Ltd.ChangshaChangshaFutures35.43Equity methodWeifang Chenming Growth DriverReplacement Equity Investment Fund Partnership (Limited Partnership)
WeifangWeifangInvestment
management
44.44Equity methodGuangdong Nanyue Bank Co., Ltd.GuangdongGuangdongBank16.62Equity method
INTERIM FINANCIAL REPORT 2020
X Financial Report
IX. Interest in other entities (Cont’d)
2. Interest in joint arrangements or associates (Cont
’d)
(2) Key financial information of major joint ventures
Unit: RMBClosing balance/amount for the period
Opening balance/amount for the prior periodItem
Weifang SimeDarby WestPort Co., Ltd.
Weifang XingxingUnited Chemical
Co., Ltd.
Weifang Sime
Darby WestPort Co., Ltd.
Weifang XingxingUnited ChemicalCo., Ltd.Current assets21,064,715.93128,074,700.6026,890,506.2394,334,994.14Of which: Cash and cash equivalents4,931,553.0874,028,507.408,299,040.1025,959,739.14Non-current assets534,323,243.5733,973,666.50543,566,206.6032,100,379.42Total assets555,387,959.50162,048,367.10570,456,712.83126,435,373.56Current liabilities14,260,458.2227,221,822.0916,216,196.0827,927,549.31Non-current liabilities382,165,018.0140,000,000.00389,517,611.14Total liabilities396,425,476.2367,221,822.09405,733,807.2227,927,549.31Equity interest attributable to shareholders of the parent company158,962,483.2794,826,545.01164,722,905.6198,507,824.25Share of net assets based on shareholding79,481,241.6447,413,272.5182,361,452.8149,253,912.13– Unrealised profit arising from intra-group transactions7,365,218.9544,943,495.097,365,218.9544,562,645.26Carrying amount of investment in joint ventures86,846,460.5992,356,767.6089,726,671.7693,816,557.39Revenue31,672,998.0225,838.067,744,022.1678,509,386.24Finance expenses10,889,263.03-289,698.5310,159,513.72-261,143.08Income tax expenses2,733,067.31Net profit-5,760,422.34-2,919,579.59-15,939,693.968,199,201.95Total comprehensive income-5,760,422.34-2,919,579.59-15,939,693.968,199,201.95
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
IX. Interest in other entities (Cont’d)
2. Interest in joint arrangements or associates (Cont
’d)
(3) Key financial information of major associates
Unit: RMBClosing balance/amount for the reporting period
Opening balance/amount for the prior period
Item
Ningbo QichenHuamei EquityInvestment Fund
Partnership(LimitedPartnership)
Zhuhai DechenNew Third BoardEquity InvestmentFund Company
(LimitedPartnership)
Ningbo QichenHuamei EquityInvestment Fund
Partnership
(LimitedPartnership)
Zhuhai DechenNew Third BoardEquity Investment
Fund Company
(LimitedPartnership)Current assets27,675,379.915,750,038.0743,709,912.785,810,979.79Non-current assets171,877,206.0099,020,000.00154,450,006.0099,020,000.00Total assets199,552,585.91104,770,038.07198,159,918.78104,830,979.79Current liabilities28,721.175,000.0021,826.945,000.00Total liabilities28,721.175,000.0021,826.945,000.00Equity interest attributable to shareholders of the parent company199,523,864.74104,765,038.07198,138,091.84104,825,979.79Share of net assets based on shareholding79,809,545.9052,382,519.0479,255,236.7452,412,989.90Carrying amount of investment in associates200,045,046.0252,382,519.05199,528,847.5252,412,989.91Net profit1,290,560.77-60,941.721,998,750.11217,016.34Total comprehensive income1,290,560.77-60,941.721,998,750.11217,016.34
(4) Excess loss of joint ventures or associates
Unit: RMB
Name of joint ventures or associates
Accumulatedunrecognisedloss incurredfor prior periods
Unrecognisedloss (or share of
net profit) for
the period
Unrecognisedloss (or share of
net profit) for
the periodArjo Wiggins Chenming Specialty Paper Co., Ltd.7,308,869.167,308,869.16Xuchang Chenming Paper Co., Ltd.4,091,767.839,967,855.3214,059,623.15
INTERIM FINANCIAL REPORT 2020
X Financial Report
X. Risk relating to financial instrumentsMain financial instruments of the Group include monetary funds, bills receivable, accounts receivable, other receivables,non-current assets due within one year, other current assets, other non-current financial assets, long-term receivables,short-term borrowings, accounts payable, other payables, short-term borrowings, non-current liabilities due within one year,long-term borrowings, bonds payable and Long-term payables. Details of financial instruments refer to related notes. The risksassociated with these financial instruments and the risk management policies adopted by the Company to mitigate these risksare described below. The management of the Company manages and monitors these exposures to ensure that the aboverisks are controlled in a limited extent.
1. Risk management goals and policies
The Group aims to seek the appropriate balance between the risks and benefits in order to mitigate the adverse effectson the Group’s financial performance from financial risk. Based on such objectives, the Group’s risk managementpolicies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and devisecorresponding internal control procedures, and to monitor risks faced by the Group. Such risk management policies andinternal control systems are reviewed regularly to adapt to changes in market conditions and the Group’s activities. Theinternal audit department of the Group undertakes both regular and ad-hoc reviews of risk management controls andprocedures.Risks associated with the financial instrument of the Group mainly include credit risk, liquidity risk, market risk (includingexchange rate risk, interest rate risk and commodity price risk).The board of directors is responsible to plan and establish the Group’s risk management structure, make riskmanagement policies and related guidelines, and supervise the implementation of risk management. The Group hasalready made risk management risks to identify and analyse risks that the Group face. These policies mentioned specificrisks, covering market, credit risk and liquidity risk etc. The Group regularly assesses market environment and theoperation of the Group changes to determine if to make alteration to risk management policy and systems. The Group’srisk management is implemented by Risk Management Committee according to the approval of the board of directors.The Risk Management Committee works closely with other business department of the Group to identify, evaluatingand avoiding certain risks. The Group’s internal audit department will audit the risk management control and proceduresregularly and report the result to audit committee of the Group.The Group spreads risks through diverse investment and business lines, and through making risk management policy toreduce risks of single industry, specific area and counterpart.
(1) Credit risks
Credit risk refers to risk associated with the default of contract obligation of a transaction counterparty.The Group manages credit risk based category. Credit risks mainly arose from bank deposit, bills receivable,accounts receivable, other receivables and long-term receivables etc.The Group’s bank deposit mainly deposits in state-owned banks and other large and medium-sized listed banks.The Group anticipated that the bank deposit does not have significant credit risk.For bill receivable, accounts receivables, other receivables and long-term receivables, the Group set relatedpolicies to control exposure of credit risks. The Group evaluate client’s credit quality and set related credit periodbased on the client’s financial status, credit records and other factors such as current market situation etc. TheGroup keep monitor the client’s credit record and for client with deteriorate credit records, the Group will ensurethe credit risk is under control in whole by means of written notice of payment collection, shorten or cancel creditperiod.The Group’s debtor spread over different industry and area. The Group continued to assess the credit evaluationto receivables and purchase credit guarantee insurance if necessary.The biggest credit risk exposure of the Group is the carrying amount of each financial asset in the balance sheet.The Group did not provide financial guarantee which resulted in credit risks.The amount of top 5 accounts receivable of the Group accounted for 31.17% (2019: 29.05%) of the Group’s totalaccounts receivables. The amount of top 5 other receivable of the Group accounted for 60.04% (2019: 87.09%) ofthe Group’s total other receivables.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont
’d)
(2) Liquidity risk
Liquidity risk refers to the risks that the Group will not be able to meet its obligations associated with its financialliabilities that are settled by delivering cash or other financial assets.To manage the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents to finance theGroup’s operations and mitigate the effects of fluctuations in cash flows. The management of the Group monitorsthe usage of bank borrowings and ensures compliance with the borrowing agreements. In the meantime, weobtain commitments from major financial institutions to provide sufficient standby funds to meet short-term andlong-term funding needs.Operating cash was generated from capital and bank and other borrowings. As of 30 June 2020, the Group’sunused bank loan credit is RMB35,354.9489 million (31 December 2019: 34,072.1416 million).As at the end of the period, the financial assets and financial liabilities of the Group are analysed by their maturitydate as below at their undiscounted contractual cash flows (in ten thousand RMB):
30 June 2020ItemWithin 1 year1-2 years2-3 years3-4 yearsOver 4 yearsTotalFinancial assets:
Monetary funds1,930,176.121,930,176.12Accounts receivable289,776.58289,776.58Accounts receivable financial141,870.27141,870.27Other receivables352,427.31352,427.31Long-term receivables61,373.616,484.028,785.3876,643.01Other current assets855,840.76855,840.76Non-current assets due within one year601,058.02601,058.02Total financial assets4,171,149.0661,373.616,484.028,785.38-4,247,792.07Financial liabilities:
Short-term borrowings3,855,431.123,855,431.12Bills payable274,760.68274,760.68Accounts payable424,490.64424,490.64Other payables169,437.01169,437.01Non-current liabilities due within one year693,685.95693,685.95Other current liabilities15,068.6215,068.62Long-term borrowings273,762.32116,584.0632,147.50278,442.29700,936.17Bonds payable127,813.4235,000.00162,813.42Lease liabilities457.07443.29472.837,277.588,650.78Long-term payables117,454.3973,980.5826,179.4457,263.68274,878.09Total financial liabilities and contingent liabilities5,432,874.02519,487.20226,007.9358,799.77342,983.556,580,152.47
INTERIM FINANCIAL REPORT 2020
X Financial Report
X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont
’d)
(2) Liquidity risk (Cont
’d)As at the beginning of the period, the financial assets and financial liabilities of the Group at the reporting date areanalysed by their maturity date as below at their undiscounted contractual cash flows (in ten thousand RMB):
31 December 2019ItemWithin 1 year1-2 years2-3 years3-4 yearsOver 4 yearsTotalFinancial assets:
Monetary funds1,906,656.981,906,656.98Accounts receivable307,736.22307,736.22Accounts receivable financial44,291.5944,291.59Other receivables270,183.01270,183.01Long-term receivables17,413.5423,488.2081,470.83122,372.57Other current assets808,452.56808,452.56Non-current assets due within one year697,303.80697,303.80Total financial assets4,034,624.1617,413.5423,488.2081,470.834,156,996.73Financial liabilities:
Short-term borrowings3,688,315.603,688,315.60Bills payable151,504.82151,504.82Accounts payable435,108.76435,108.76Other payables238,605.99238,605.99Non-current liabilities due within one year566,295.89566,295.89Other current liabilities22,240.2522,240.25Long-term borrowings521,440.85117,319.8886,672.98188,600.26914,033.97Bonds payable116,920.098,907.00125,827.09Lease liabilities457.07443.29472.837,220.128,593.31Long-term payables64,272.9896,887.5983,321.6587,671.33332,153.55Total financial liabilities and contingent
liabilities5,102,071.31703,090.99223,557.76170,467.46283,491.716,482,679.23The financial liabilities disclosed above are based on cash flows that are not discounted and may differ from thecarrying amount of the line items of the balance sheet. Financial guarantees issued do not represent the amountto be paid.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont
’d)
(3) Market risk
Market risk includes interest rate risk and currency risk, refers to the risk that the fair value or future cash flow of afinancial instrument will be fluctuated due to the changes in market price.
Interest riskInterest rate risk refers to the risk that the fair value or future cash flow of a financial instrument will be fluctuateddue to the floating rate. Interest rate risk arises from recognised interest-bearing financial instrument andunrecognised financial instrument (e.g. loan commitments).The Group’s interest rate risk arises from long-term interest-bearing liabilities including long-term borrowing andbonds payable. Financial liabilities issued at floating rate expose the Group to cash flow interest rate risk. Financialliabilities issued at fixed rate expose the Group to fair value interest rate risk. The Group determines the relativeproportions of its fixed rate and floating rate contracts depending on the prevailing market conditions and tomaintain an appropriate combination of financial instruments at fixed rate and floating rate through regular reviewsand monitors.The Group’s finance department continuously monitors the interest rate position of the Group. The Group didnot enter into any interest rate hedging arrangements. But the management is responsible to monitor the risksof interest rate and consider to hedge significant interest risk if necessary. Increase in interest rates will increasethe cost of new borrowing and the interest expenses with respect to the Group’s outstanding floating rateinterest-bearing borrowings, and therefore could have a material adverse effect on the Group’s financial result.The management will make adjustments with reference to the latest market conditions. These adjustments mayinclude enter into interest swap agreement to mitigate its exposure to the interest rate risk.Interest bearing financial instrument held by the Group are as follows (in ten thousand RMB):
Item
Balance for
the period
Balance forthe prior yearFinancial instrument with fixed interest rateFinancial liabilitiesOf which: Short-term borrowings3,855,431.123,688,315.60Long-term borrowings1,163,772.48914,033.97Bonds payable162,813.42125,827.09Total5,182,017.034,728,176.66Financial instrument with float interest rateFinancial assetsOf which: Monetary funds221,115.73288,790.99Total221,115.73288,790.99The financial instruments held by the Group at the reporting date expose the Group to fair value interest rate risk.This sensitivity analysis as above has been determined assuming that the change in interest rates had occurred atthe reporting date and arisen from the recalculation of the above financial instrument issued at new interest rates.The non-derivative tools issued at floating interest rate held by the Group at the reporting date expose the Groupto cash flow interest rate risk. The effect to the net profit and shareholder’s equity illustrated in the sensitivityanalysis as above is arisen from the effect to the annual estimate amount of interest expenses or revenue at thefloating interest rate. The analysis is performed on the same basis for prior year.
INTERIM FINANCIAL REPORT 2020
X Financial Report
X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont
’d)
(3) Market risk (Cont
’d)Exchange rate riskExchange risk refers to the risk that the fair value or future cash flows of a financial instrument will be fluctuateddue to the changes in foreign currency rates. Foreign currency risk arises on financial instruments that aredenominated in a currency other than the functional currency in which they are measured.The principal business of the Group is situated within the PRC and is denominated in RMB. However, foreignexchange risks still exist for the assets and liabilities in foreign currencies and future foreign currency transactionsas recognised by the Group (assets and liabilities in foreign currencies and foreign currency transactions aremainly denominated in US dollar, Japanese yen, Euro and South Korean Won).The following table details the financial assets and liabilities held by the Group which denominated in foreigncurrencies and amounted to RMB as at 30 June 2020 are as follows (in RMB ten thousands):
Liabilities denominatedin foreign currency
Asset denominatedin foreign currencyItem
As at the endof the period
As at thebeginning ofthe period
As at the endof the period
As at thebeginning of
the periodUSD569,541.73453,753.1495,384.06147,730.57EUR9,260.629,890.437,536.405,131.53HKD2,153.253,150.803,335.8263.69KRWYEN941.18GBP5.221.86Total580,955.59466,794.37106,261.50153,868.82The Company closely monitors the impact of exchange rate changes on the Company’s foreign exchange risk. TheCompany has not taken any measures to avoid foreign exchange risks. However, the management is responsiblefor monitoring exchange rate risks and will consider hedging significant exchange rate risks when necessary.With other variables unchanged, the after-tax effect of the possible reasonable changes in the exchange rate offoreign currency to RMB on the current profit and loss of the Group is as follows (in RMB ten thousands):
Increase (decrease) in after-tax profitsBalance for the periodBalance for the prior yearIncrease in exchange rate of USD5%-17,317.305%-15,301.13Decrease in exchange rate of USD-5%17,317.30-5%15,301.13Increase in exchange rate of Euro5%-107.485%-237.95Decrease in exchange rate of Euro-5%107.48-5%237.95
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
X. Risk relating to financial instruments (Cont’d)
2. Capital management
The objective of the Group’s capital risk management is to safeguard the Group’s ability to continue as a going concernin order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capitalstructure to reduce the cost of capital.In order to maintain or adjust the capital structure, the Group may adjust the number of dividends paid to shareholders,return capital to shareholders, issue new shares or disposes assets to reduce its liabilities.The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net liabilities divided by totalcapital. As at 30 June 2020, the Group’s gearing ratio is 73.49% (31 December 2019: 73.11%).XI. Fair value
1. Fair value of assets and liabilities measured at fair value as at the end of the period
Unit: RMBFair value as at the end of the periodItemLevel 1Level 2Level 3TotalI. Continuous measurement of fair value––––
(I) Other non-current financial assets147,445,653.55147,445,653.55(II) Biological assets
1. Consumable biological assets1,556,753,786.651,556,753,786.65
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 reasonable and probable changesin risk variables to profit or loss for the period or to the shareholders’equity. Since risk variables seldom change on astand-alone basis, while the correlation between variables may have significant effect on the ultimate amount of changeeffected by the change in a single risk variable, the analysis below is based on the assumption that the changes in eachvariable occurred separately.
For the yearFor the prior yearItem
Change ininvestment yieldor discount rate
Impacton profit
Impact onshareholders’
equity
Impacton profit
Impact onshareholders’
equityConsumable biological assetsIncreases by 1%-32,178,275.96-32,178,275.96-33,202,809.15-33,202,809.15Consumable biological assetsDecreases by 1%36,713,253.9436,713,253.9436,397,424.8836,397,424.88
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.
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.
INTERIM FINANCIAL REPORT 2020
X Financial Report
XII. Related parties and related party transactions
1. Parent company of the Company
Name of parent company
Place ofincorporationNature of business
Registeredcapital(RMB’ 0,000)
Shareholdingof the parentcompany in the
Company
Voting rightof the parentcompany inthe CompanyChenming Holdings Company LimitedShouguang
Investment in manufactureof paper, electricity, steam,arboriculture123,878.7727.87%27.87%Note: The ultimate controller of the Company is State-owned Assets Supervision and Administration Bureau of Shouguang City.
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. 2. Interest in joint ventures or associates for details.Balance of related party transaction between the Company and its joint ventures or associates during the period or 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 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 CompanyGuangdong Nanyue Bank Co., Ltd.An associate of the Company
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
XII. Related parties and related party transactions (Cont’d)
4. Other related parties
Name of other related partiesRelationShandong Shouguang Jinxin Investment DevelopmentHoldings 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. andits 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 SupervisorsWuhan Chenming Zhongjin Real Estate Co., Ltd. and
its subsidiaries
Directors and senior management served by the
Company’s SupervisorsWuhan Rongsheng Zhongjin Development and Investment
Co., Ltd. and its subsidiaries
Directors and senior management served by the
Company’s SupervisorsShouguang Hengyuan Energy Co., Ltd.Directors and senior management served by the
Company’s SupervisorsQingzhou Chenming Denaturation Amylum Co., Ltd.Investee of the CompanyAnhui Time Source CorporationInvestee of the CompanyShandong Hongqiao Venture Capital Co., Ltd.Investee of the CompanyShanghai Hengzheng Venture Investment Center
(Limited Partnership)
Investee of the CompanyLide Technology Co., Ltd.Investee of the CompanyJiangxi Jiuyu Energy Co., Ltd. and its subsidiariesDirectors and senior management served by the
Company’s Directors in the past twelve monthChen Hongguo, Hu Changqing, Li Xingchun, Geng Guanglin,Li Feng, Chen Gang, Dong Lianming and Yuan Xikun
Key management personnel
INTERIM FINANCIAL REPORT 2020
X Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions
(1) Purchase and sales of goods and rendering and receiving services
Table on purchase of goods/receiving of services
Unit: RMB
Related party
Details of related partytransaction
Amount forthe period
Transactionfacilityapproved
Whether the
transactionfacility isexceeded
Amountfor the priorperiodJiangxi Jiuyu Energy Co., Ltd.Procurement of natural
gas and heavy oil, etc.
68,606,145.25600,000,000.00No112,367,700.00Weifang Xingxing United Chemical Co., Ltd.
Procurement of hydrogen peroxide etc.
045,877,683.03
Table on sales of goods/providing of services
Unit: RMBRelated party
Details of relatedparty transaction
Amount for
the period
Amount forthe prior periodShouguang Chenming Huisen New-style Construction Materials Co., Ltd.Sales of electricity and gas3,186,741.723,980,581.15Shouguang Huixin Construction Materials Co., Ltd.Machinery materials2,422,678.9434,785.90
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont
’d)
(2) Guarantee
The Company as guarantor
Unit: RMB
GuarantorParty being guaranteed
Amount
underguarantee
Starting dateof guarantee
Expiry dateof guarantee
Whetherperformanceof guaranteeis completedShandong Chenming Paper Holdings LimitedWeifang Sime Darby West Port Co., Ltd.135,000,000.002017/12/202027/12/20NoShandong Chenming Paper Holdings LimitedShouguang Meilun Paper Co., Ltd.125,705,687.822019/8/62020/8/6NoShandong Chenming Paper Holdings LimitedShouguang Meilun Paper Co., Ltd.100,000,000.002019/9/302020/9/30NoShandong Chenming Paper Holdings LimitedShouguang Meilun Paper Co., Ltd.168,622,526.922019/12/92020/12/3NoShandong Chenming Paper Holdings LimitedShouguang Meilun Paper Co., Ltd.24,851,540.872020/3/252020/9/25NoShandong Chenming Paper Holdings LimitedShouguang Meilun Paper Co., Ltd.99,476,860.752020/4/82020/10/8NoShandong Chenming Paper Holdings LimitedShouguang Meilun Paper Co., Ltd.132,570,677.482020/6/82020/12/8NoShandong Chenming Paper Holdings LimitedShandong Chenming Paper Sales Co., Ltd.280,000,000.002019/7/302020/7/29NoShandong Chenming Paper Holdings LimitedShandong Chenming Paper Sales Co., Ltd.253,272,043.362020/3/92021/3/4NoShandong Chenming Paper Holdings LimitedShandong Chenming Paper Sales Co., Ltd.60,000,000.002020/3/312021/1/22NoShandong Chenming Paper Holdings LimitedShandong Chenming Paper Sales Co., Ltd.240,000,000.002020/3/312020/9/7NoShandong Chenming Paper Holdings LimitedShandong Chenming Paper Sales Co., Ltd.420,456,575.632020/5/62021/5/2NoShandong Chenming Paper Holdings LimitedShandong Chenming Paper Sales Co., Ltd.100,000,000.002020/6/102021/6/7NoShandong Chenming Paper Holdings LimitedShandong Chenming Paper Sales Co., Ltd.270,000,000.002020/6/162021/1/22NoShandong Chenming Paper Holdings LimitedShanghai Chenming Pulp & Paper Sales
Co., Ltd
20,000,000.002019/8/302020/8/7NoShandong Chenming Paper Holdings LimitedShanghai Chenming Pulp & Paper Sales
Co., Ltd
10,000,000.002019/12/272020/12/24NoShandong Chenming Paper Holdings LimitedShanghai Chenming Pulp & Paper Sales
Co., Ltd
5,000,000.002020/5/112021/5/10NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002019/8/162020/8/14NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.86,000,000.002019/8/212020/8/20NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.50,108,549.492019/9/62020/9/6NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.200,000,000.002019/10/92020/10/8NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.80,000,000.002019/10/142020/10/13NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.110,000,000.002019/10/162020/10/15NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.115,000,000.002019/11/52020/11/4NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.90,000,000.002019/11/82020/11/7NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.166,668,000.002019/11/132020/11/13NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.90,000,000.002019/11/52020/11/14NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002019/12/92020/12/8NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002019/12/172020/12/16NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.49,556,500.002019/11/132020/11/5NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.89,000,000.002020/3/182020/9/14NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.99,600,000.002020/3/262020/9/22NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002020/1/142021/1/13NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.125,000,000.002020/1/212021/1/21NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002020/2/112021/2/10NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002020/2/192021/2/18No
INTERIM FINANCIAL REPORT 2020
X Financial Report
GuarantorParty being guaranteed
Amount
underguarantee
Starting dateof guarantee
Expiry dateof guarantee
Whetherperformanceof guaranteeis completedShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002020/2/272021/2/25NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002020/2/182021/2/12NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.300,000,000.002020/2/292021/2/28NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.30,000,000.002020/3/132021/3/10NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.70,000,000.002020/3/132021/3/12NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002020/3/252021/3/25NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002020/3/272021/3/22NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.38,229,300.002020/3/252021/3/24NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.53,096,250.002020/1/132020/7/10NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.353,975,000.002020/2/262021/2/25NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.30,071,580.002020/4/292020/10/26NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.90,000,000.002020/5/182020/11/17NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.31,857,750.002020/5/212021/5/18NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.33,981,600.002020/5/272020/11/26NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.51,500,000.002020/6/12020/11/24NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.90,000,000.002020/6/32020/12/1NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.90,000,000.002020/6/82020/12/5NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002020/5/192020/8/19NoShandong Chenming Paper Holdings LimitedJilin Chenming Paper Co., Ltd.20,000,000.002020/3/162021/2/26NoShandong Chenming Paper Holdings LimitedJilin Chenming Paper Co., Ltd.20,053,500.002020/3/62020/9/2NoShandong Chenming Paper Holdings LimitedJilin Chenming Paper Co., Ltd.78,000,000.002020/5/182020/11/16NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.150,000,000.002019/12/42020/12/4NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.46,800,000.002020/2/142021/2/13NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.25,000,000.002020/2/252020/8/21NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.60,000,000.002020/2/242021/2/23NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.99,000,000.002020/3/32021/3/2NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.150,000,000.002020/3/202021/3/19NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.90,000,000.002020/3/272021/3/26NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.49,500,000.002020/3/192021/3/19NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.100,000,000.002020/4/102021/4/9NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.70,000,000.002020/4/152021/4/14NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.73,000,000.002020/5/272021/5/26NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.200,000,000.002019/9/292020/9/28NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.100,000,000.002019/12/232020/12/22NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.20,000,000.002020/3/302021/3/29NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.70,000,000.002020/4/272021/3/29NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.90,000,000.002020/6/242021/3/29NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.100,000,000.002020/5/182020/12/22NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.20,000,000.002020/3/232021/3/22NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.96,942,436.112020/4/142021/4/13NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.30,000,000.002020/6/92021/6/8NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.38,057,563.892020/6/192021/6/18No
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont
’d)
(2) Guarantee (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
GuarantorParty being guaranteed
Amount
underguarantee
Starting dateof guarantee
Expiry dateof guarantee
Whetherperformanceof guaranteeis completedJiangxi Chenming Paper Co., Ltd.Chenming (HK) Limited154,687,075.002019/1/122020/1/10NoJiangxi Chenming Paper Co., Ltd.Chenming (HK) Limited94,538,935.052020/3/192021/3/9NoShandong Chenming Paper Holdings LimitedChenming (HK) Limited70,795,000.002019/8/52021/5/30NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.200,000,000.002019/6/282022/6/27NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.300,000,000.002019/7/12020/6/27NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.85,000,000.002019/10/232022/6/27NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.114,750,000.002019/11/222022/6/27NoZhanjiang Chenming Pulp & Paper Co., Ltd.Chenming (HK) Limited106,192,500.002019/3/282022/1/7NoZhanjiang Chenming Pulp & Paper Co., Ltd.Chenming (HK) Limited208,385,082.502019/4/22022/1/6NoShandong Chenming Paper Holdings LimitedChenming (HK) Limited142,297,950.002019/4/302022/4/22NoShandong Chenming Paper Holdings LimitedChenming (HK) Limited138,191,840.002018/4/232021/4/7NoShandong Chenming Paper Holdings LimitedChenming (HK) Limited79,290,400.002018/5/42021/4/6NoShandong Chenming Paper Holdings LimitedChenming (HK) Limited49,839,680.002018/5/172021/5/5NoZhanjiang Chenming Pulp & Paper Co., Ltd.Chenming (HK) Limited262,533,732.742018/8/82021/5/25NoZhanjiang Chenming Pulp & Paper Co., Ltd.Chenming (HK) Limited262,533,732.742018/8/82021/5/25NoZhanjiang Chenming Pulp & Paper Co., Ltd.Chenming (HK) Limited267,782,087.502018/9/42021/6/21NoZhanjiang Chenming Pulp & Paper Co., Ltd.Chenming (HK) Limited267,782,087.502018/9/62021/6/21NoZhanjiang Chenming Pulp & Paper Co., Ltd.Chenming (HK) Limited168,138,125.002019/1/252021/5/21NoZhanjiang Chenming Pulp & Paper Co., Ltd.Chenming (HK) Limited106,192,500.002019/3/282021/6/16NoZhanjiang Chenming Pulp & Paper Co., Ltd.Chenming (HK) Limited208,385,082.502019/4/22021/6/10NoZhanjiang Chenming Pulp & Paper Co., Ltd.Chenming (HK) Limited138,050,250.002019/7/192021/6/19NoShandong Chenming Paper Holdings LimitedChenming (HK) Limited198,933,950.002018/11/302020/10/30NoShandong Chenming Paper Holdings LimitedShandong Chenming Financial Leasing
Co., Ltd.
25,000,000.002017/9/212020/9/21NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.330,000,000.002018/10/312020/10/30NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.70,000,000.002018/10/312020/10/30NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002018/12/182020/10/31NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.200,000,000.002019/7/122021/7/12NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.140,000,000.002019/12/42021/12/3NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.700,870,500.002019/12/272022/12/27NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.38,240,000.002017/1/52020/9/26NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.38,240,000.002017/1/52020/12/26NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.43,690,000.002017/1/52021/3/26NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.43,690,000.002017/1/52021/6/26NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.3,900,000.002017/1/52021/9/26NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.36,260,000.002017/2/32021/9/26NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.40,160,000.002017/2/32021/12/26NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.40,160,000.002017/2/32022/3/26NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.33,420,000.002017/2/32022/6/26NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.45,017,527.852018/11/142020/9/26No
Total13,357,901,980.70
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont
’d)
(2) Guarantee (Cont
’d)
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X Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont
’d)
(3) Related party lending and borrowing
Unit: RMBRelated party
Borrowing
amount
StartingdateExpiry dateDescriptionLending Weifang Sime Darby West Port Co., Ltd.59,500,000.002018/07/092022/07/08
(4) Interest on related party lending and borrowing
Unit: RMBRelated party
Related partytransaction
Amount for
the period
Amount forthe prior periodWeifang Sime Darby West Port Co., Ltd.Interest income1,980,057.341,794,916.65
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
XII. Related parties and related party transactions (Cont’d)
6. Related party accounts receivable and accounts payable
(1) Accounts receivables
Unit: RMBClosing balanceOpening balanceItemBook balanceBad debtBook balanceBad debtAccounts receivable:
Shouguang Chenming Huisen New-style Construction Materials Co., Ltd.1,548,830.1282,185.062,008,185.6061,132.76Shouguang Huixin Construction Materials Co., Ltd.24,103,255.172,298,275.87Total25,652,085.292,380,460.922,008,185.6061,132.76Prepayments:
Jiangxi Jiuyu Energy Co., Ltd.12,089,761.1215,358,225.83Shouguang Hengyuan Energy Co., Ltd.8,838,324.1720,179,937.87Total20,928,085.29–35,538,163.70–Other receivables:
Shouguang Hengyuan Energy Co., Ltd.10,000,000.00757,910.97Weifang Sime Darby West Port Co., Ltd.66,436,602.105,151,661.5864,889,583.265,151,661.58Total66,436,602.105,151,661.5874,889,583.265,909,572.55
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XII. 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 Joint Chemical Co., Ltd.26,905,494.3426,905,494.34Accounts payable:Jiangxi Jiuyu Energy Co., Ltd.4,067,576.013,054,956.65Accounts payable:Jiangxi Chenming Port Co., Ltd.910,329.34Total31,883,399.6929,960,450.99Other current liabilitiesGuangdong Nanyue Bank Co., Ltd.400,000,000.00400,000,000.00Total400,000,000.00400,000,000.00
(3) Deposits with related parties
Unit: RMBRelated partyRelated party transaction
Closing bookbalance
Opening bookbalanceBank depositGuangdong Nanyue Bank Co., Ltd.83,915.7585,668.46Other monetary fundsGuangdong Nanyue Bank Co., Ltd.1,964,668,000.002,414,668,000.00
(4) Loans from related parties
Unit: RMBItem nameRelated party
Closing bookbalance
Opening book
balanceShort-term borrowingsGuangdong Nanyue Bank Co., Ltd.2,598,668,000.002,948,970,000.00
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
XIII. Share-based payment
1. General information of share-based payment
√ Applicable Not applicable
Unit: RMBTotal equity instruments of the Company granted during the period226,860,000On 29 May 2020, the Company disclosed the Announcement on Grant of Restricted Shares to Participants anddetermined to grant 79,600,000 restricted shares to 111 participants at the grant price of RMB2.85 per share. On 9 July2020, the Company disclosed the announcement on Completion of Registration of the Grant of the 2020 Restricted AShares. The restricted shares will be unlocked respectively after 24 months, 36 months and 48 months from the date ofcompletion of the registration of the restricted shares under the grant.
2. Equity-settled share-based payment
√ Applicable Not applicable
Unit: RMBThe method of determining the fair value of equity instrumenton the grant date
The Company chooses to calculate thefair value based on the closing price ofthe Company’s shares on the grantdate deducting the grant priceBasis for determining the quantity of exercisable equity instrumentsBased on subsequent information such
as the latest changes in the number ofparticipants who are entitled to exercise
and the completion status of
performance targetsReasons for significant difference between the current estimate and
previous estimate
NoneAccumulated amount of equity-settled share-based payment included
in the capital reserve
146,264,104Total amount of equity-settled share-based payment recognised
in the current period
34,443,000
INTERIM FINANCIAL REPORT 2020
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XIV. Undertaking and contingency
1. Significant commitments
(1) Capital commitment
ItemClosing balanceOpening balanceCommitments in relation to acquisition and construction oflong-term assets360,655,698.54260,421,348.84Total360,655,698.54260,421,348.84
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 2020, 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
XV. Post-balance sheet eventsAs of 10 August 2020 (the date of approval of the report by the Board of Directors), the Group has no events that should bedisclosed after the balance sheet date.XVI. Other material matters
1. Segment information
(1) Basis for determination and accounting policies
According to the Group’s internal organizational structure, management requirements and internal reportingsystem, the Group’s operating business is divided into 5 reporting segments. These report segments aredetermined based on the financial information required by the company’s daily internal management. Themanagement of the Group regularly evaluates the operating results of these reporting segments to determine theallocation of resources to them and evaluate their performance.The Group’s reporting segments include:
(1) Machine paper segment, which is responsible for production and sales of machine paper;
(2) Financial services segment, which provides financial services;
(3) Investment real estate segment, which is responsible for real estate rental;
(4) Other segments, which is responsible for the above segments otherwise.
Segment report information is disclosed in accordance with the accounting policies and measurement standardsadopted by each segment when reporting to management. These accounting policies and measurement basis areconsistent with the accounting policies and measurement basis used in preparing the financial statements.
(2) Financial Information of Reporting Segment
Unit: RMB’ 0,000Item
Machine
paper
FinancialServices
Investmentreal estateOthers
Inter-segment
offsetTotalRevenue from principal activities1,219,124.9880,275.713,567.2045,013.0552,343.591,295,637.35Costs of principal activities935,107.6047,183.266,399.6439,695.0457,817.01970,568.53Total assets9,494,702.872,674,717.40565,998.03509,033.893,341,044.229,903,407.97Total liabilities6,753,299.011,306,696.34314,968.25286,852.271,383,568.997,278,246.88
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XVI. Other material matters (Cont’d)
2. Government Subsidies
(1) Government subsidies included in deferred income will be subsequently measured using the gross method
Unit: RMBLiability item
Openingbalance
New grantsfor the period
Include inother incomefor the period
Otherchanges
Closingbalance
Asset-related/income-relatedNational Science and Technology Support Program Project Funding1,452,525.0082,350.001,370,175.00Asset-relatedSewage treatment and water saving reconstruction63,274,136.711,588,476.4461,685,660.27Asset-relatedFinancial subsidies for technical transformation project168,182,448.8028,360,000.006,391,903.86190,150,544.94Asset-relatedFunding for environmental protection700,228,305.1924,595,985.84675,632,319.35Asset-relatedIndustrial logistics park reconstruction compensation51,960,000.0051,960,000.00Asset-relatedZhanjiang integrated forestry, pulp and paper project67,047,201.5010,098,654.9356,948,546.57Asset-relatedHuanggang pulp-forestry-paper project681,564,072.6611,359,401.20670,204,671.46Asset-relatedOthers37,304,645.25794,727.5436,509,917.71Asset-relatedTotal1,771,013,335.1128,360,000.0054,911,499.8151,960,000.001,692,501,835.30
(2) Government subsidies calculated into the current profit and loss using the total method
Unit: RMB
Subsidy ItemType
Amountcredited toprofit or loss forthe prior period
Amountcredited toprofit or lossfor the period
Presentableitems includedin profit or loss
Asset-related/revenue-relatedInterest subsidyFinancial appropriation1,087,500.00Finance expensesAsset-relatedRisk subsidyFinancial appropriation19,980,000.00Other incomeIncome-relatedTax rebateTax rebate33,984,039.8962,377,043.64Non-operating income
and other income
Income-relatedEnterprise reform and development subsidies
Financial appropriation160,161,518.7680,837,506.25Non-operating income
and other income
Income-relatedGovernment awardsFinancial appropriation10,000.005,845,000.00Non-operating incomeIncome-relatedAfforestation subsidyFinancial appropriation588,512.583,252,768.00Other incomeIncome-relatedValue-added tax rebateTax rebate275,104.761,380,000.00Other incomeIncome-relatedEmployment subsidyFinancial appropriation135,853.853,725,651.13Non-operating income
and other income
Income-relatedFinal payment of relocation compensationFinancial appropriation533,390,000.00Non-operating incomeIncome-relatedFunding for environmental protectionFinancial appropriation36,428,597.001,000,000.00Non-operating incomeIncome-relatedResearch and development grantsFinancial appropriation392,300.00Non-operating incomeIncome-relatedOthersFinancial appropriation46,886.89513,387.38Non-operating income
and other income
Income-relatedTotal232,022,813.73713,388,856.40
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
XVI. Other material matters (Cont’d)
3. Net Current Assets and Total Assets less Current Liabilities
(1) Net current assets
Unit: RMB’0,0002020.06.302019.12.31Current assets4,714,918.304,495,243.39Less: Current liabilities5,693,367.005,269,876.89Net current assets-978,448.70-774,633.50
(2) Total assets less current liabilities
Unit: RMB’0,0002020.06.302019.12.31Total assets9,903,407.979,795,890.99Less: Current liabilities5,693,367.005,269,876.89Total assets less current liabilities4,210,040.974,526,014.10
INTERIM FINANCIAL REPORT 2020
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XVII. Notes to major financial statement items of the parent company
1. Accounts receivable
(1) Accounts receivable by category
Unit: RMBClosing balanceOpening balanceBook balanceBad debt provisionBook balanceBad debt provisionCategoryAmountPercentageAmountPercentage
CarryingamountAmountPercentageAmountPercentage
CarryingamountAccounts receivable assessed individually for impairment5,000,000.000.52%5,000,000.00100.00%778,063.571.73%778,063.57100.00%Accounts receivable assessed collectively for impairment957,744,376.6399.48%4,723,988.820.92%953,020,387.8144,083,258.7998.27%4,878,588.7911.07%39,204,670.00Of which:
Receivables from related parties446,319,284.2246.36%276.000.00%446,319,008.2231,427,654.3670.06%157,138.270.50%31,270,516.09Receivables from dealer customers511,425,092.4153.12%4,723,712.820.92%506,701,379.5912,655,604.4328.21%4,721,450.5237.31%7,934,153.91Total962,744,376.63100.00%9,723,988.821.88%953,020,387.8144,861,322.36100.00%5,656,652.3612.61%39,204,670.00
Items assessed individually for impairment:
Unit: RMBClosing balanceName
Bookbalance
Bad debtprovision
Provisionpercentage
Reasons for
provisionNingxia Lingwu Baota Dagu
Storage and TransportationCo., Ltd.
5,000,000.005,000,000.00100.00%Due to poor
management, thefinancial indicators
of the companydeteriorated and its
repayment abilitysubstantially declinedTotal5,000,000.005,000,000.00––
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
XVII. 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 collectively for impairment:
Accounts receivable with collective provision for bad debts based on receivables from related parties:
Unit: RMBClosing balanceNameBook balance
Bad debtprovision
ProvisionpercentageWithin 1 year446,319,284.22276.000.00%Total446,319,284.22276.00–
Accounts receivable with collective provision for bad debts based on receivables from dealer customers:
Unit: RMBClosing balanceNameBook balance
Bad debtprovision
ProvisionpercentageWithin 1 year511,425,092.414,723,712.820.92%Total511,425,092.414,723,712.82–By ageing
Unit: RMBAgeingClosing balanceWithin 1 year (including 1 year)953,020,387.81Total953,020,387.81
INTERIM FINANCIAL REPORT 2020
X Financial Report
XVII. Notes to major financial statement items of the parent company (Cont’d)
1. Accounts receivable (Cont
’d)
(2) Provision, recovery or reversal of bad debt provision for the period
Unit: RMBChanges in the periodCategory
OpeningbalanceProvision
Recoveryor reversalWrite-offOthers
Closingbalancebad debt provision for accounts receivable5,656,652.364,067,336.469,723,988.82
5,656,652.364,067,336.469,723,988.82
(3) Top five accounts receivable based on closing balance of debtors
The top five accounts receivable based on closing balance of debtors for the period amounted toRMB509,639,869.96 in total, accounting for 98.69% of the total closing balance of accounts receivable. Theclosing balance of the corresponding bad debt provision amounted to RMB9,422,600.00 in total.
2. Other receivables
Unit: RMBItemClosing balanceOpening balanceOther receivables13,615,203,417.4313,975,590,537.58Total13,615,203,417.4313,975,590,537.58
(1) Other receivables
1) Other receivables by nature
Unit: RMBNature
Closing book
balance
Opening book
balanceOpen credit13,530,563,966.5113,888,363,610.88Guarantee deposit52,295,446.665,379,025.93Advances519,489.32Insurance premium1,692,817.3813,786.37Reserve and borrowings9,505,097.327,978,371.88Others21,146,089.5673,336,253.20Total13,615,203,417.4313,975,590,537.58
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
XVII. Notes to major financial statement items of the parent company (Cont’d)
2. Other receivables (Cont
’d)
(1) Other receivables (Cont
’d)
2) Particulars of bad debt provision
Unit: RMBPhase 1Phase 2Phase 3Bad debt provision
ECLs for thenext 12 months
ECLs over theentire life (notcredit-impaired)
ECLs over theentire life (credit-impaired)TotalBalance as at 1 January 2020192,610,311.652,790,901.12195,401,212.77Balance as at 1 January 2020 during the period––––– Transferred into Phase 2– Transferred into Phase 32,790,901.122,790,901.12– Reversal to Phase 2– Reversal to Phase 1192,610,311.65192,610,311.65Provision for the periodReversal for the period14,305,237.9714,305,237.97Transfer for the periodWrite-off for the periodOther changesBalance as at 30 June 2020178,305,073.682,790,901.12181,095,974.80Changes in book balances with significant changes in loss provision for the period Applicable √ Not applicableBy ageing
Unit: RMBAgeingBook balanceWithin 1 year (including 1 year)13,543,034,435.301 – 2 years47,804,128.412 – 3 years24,364,853.72Total13,615,203,417.43
INTERIM FINANCIAL REPORT 2020
X Financial Report
XVII. Notes to major financial statement items of the parent company (Cont’d)
2. Other receivables (Cont
’d)
(1) Other receivables (Cont
’d)
3) Provision, recovery or reversal of bad debt provision for the period
Provision of bad debt provision for the period:
Unit: RMBChanges in the periodCategory
OpeningbalanceProvision
Recoveryor reversalWrite-offOthers
ClosingbalanceBad debt provision for other receivables195,401,212.7714,305,237.97181,095,974.80Total195,401,212.7714,305,237.97181,095,974.80
4) Top five other receivables according to closing balance of debtors
Unit: RMB
Name of entityNatureClosing balanceMaturity
Percentage toclosing balance
of otherreceivables
Closing balance
of bad debt
provisionShanghai Chenming Financial Leasing Co., Ltd.Open credit3,559,000,000.00Within 1 year24.99%17,795,000.00Shandong Chenming Financial Leasing Co., Ltd.Open credit1,974,869,546.02Within 1 year13.87%9,874,347.73Shanghai Chenming Industrial Co., Ltd.Open credit1,634,234,658.73Within 1 year11.47%8,171,173.29Zhanjiang Chenming Pulp & Paper Co., Ltd.Open credit1,397,791,325.58Within 1 year9.81%6,988,956.63Shouguang Chenming Import and Export Trade Co., LtdOpen credit1,154,508,529.76Within 1 year8.11%5,772,542.65Total–9,720,404,060.09–68.25%48,602,020.30
3. Long-term equity investments
Unit: RMBClosing balanceOpening balanceItem
Bookbalance
Impairment
provision
Carryingamount
Bookbalance
Impairment
provision
CarryingamountInvestment in subsidiaries23,343,942,649.9023,343,942,649.9023,275,652,649.9023,275,652,649.90Investment in associates and joint ventures357,261,245.005,994,545.96351,266,699.04360,122,213.935,994,545.96354,127,667.97Total23,701,203,894.905,994,545.9623,695,209,348.9423,635,774,863.835,994,545.9623,629,780,317.87
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
XVII. 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 balance
Increase for
the year
Decrease forthe year
Closingbalance
Impairmentprovision forthe year
Closing balanceprovision 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.1,000,000.001,000,000.00Hailaer Chenming Paper Co., Ltd.12,000,000.0012,000,000.00Huanggang Chenming Pulp & Paper Co., Ltd.2,250,000,000.0050,000,000.002,300,000,000Huanggang 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.5,055,000,000.0027,500,000.005,082,500,000.00Shouguang Chenming Modern Logistic Co., Ltd.10,000,000.0010,000,000.00Shouguang Chenming Art Paper Co., Ltd.113,616,063.80113,616,063.80Shouguang Meilun Paper Co., Ltd.4,449,441,979.314,449,441,979.31Shouguang Shun Da Customs Declaration Co, Ltd.1,500,000.001,500,000.00Shandong Chenming Paper Sales Co., Ltd.762,641,208.20762,641,208.20Shouguang Chenming Import and Export Trade Co., Ltd.250,000,000.00250,000,000.00Shouguang Chenming Papermaking Machine Co., Ltd.2,000,000.002,000,000.00Shouguang 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 Industrial 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.20,000,000.0020,000,000.00Weifang Chenming Growth Driver Replacement Equity Investment Fund Partnership (Limited Partnership)158,000,000.00790,000.00158,790,000.00Total23,275,652,649.9078,290,000.0010,000,000.0023,343,942,649.90
INTERIM FINANCIAL REPORT 2020
X Financial Report
XVII. 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: RMBChange for the periodInvestee
OpeningbalanceAdditionalcontribution
Withdrawncontribution
Investmentgain or lossrecognisedunder equitymethod
Adjustment
of othercomprehensiveincome
Otherchangein equityinterestDistributionof cashdividendor profitdeclared
Impairment
provisionOthers
Closingbalance
Closingbalance ofimpairment
provisionI. Joint venturesShouguang Chenming HuisenNew-style Construction Materials Co., Ltd.3,789,667.61740,169.161,200,000.003,329,836.77Weifang Sime Darby West Port Co., Ltd.89,726,671.76-2,880,211.1786,846,460.59Subtotal93,516,339.37-2,140,042.011,200,000.0090,176,297.36II. AssociatesJiangxi Jiangbao Media Colour Printing Co., Ltd.00Zhuhai Dechen New ThirdBoard Equity InvestmentFund Company (Limited Partnership)52,412,989.91-30,470.8652,382,519.05Ningbo Kaichen HuameiEquity Investment FundPartnership (Limited Partnership)199,528,847.52516,198.50200,045,046.02Xuchang Chenming Paper Co., Ltd.5,994,545.96Chenming (Qingdao) Asset Management Co., Ltd.8,669,491.17-6,654.568,662,836.61Subtotal260,611,328.600.000.00479,073.080.000.000.000.000.00261,090,401.685,994,545.96Total354,127,667.970.000.00-1,660,968.930.000.001,200,000.000.000.00351,266,699.045,994,545.96
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM FINANCIAL REPORT 2020
X Financial Report
XVII. Notes to major financial statement items of the parent company (Cont’d)
4. Other payables
Unit: RMBItemClosing balanceOpening balanceInterest payable109,263,749.98127,278,083.35Dividend payable610,109,667.16Other payables3,672,958,735.206,299,370,764.60Total4,392,332,152.346,426,648,847.95Other payables of the top five closing balances collected by the payee
Unit: RMBName of companyClosing balanceJiangxi Chenming Paper Co., Ltd.1,655,496,622.33Shouguang Meilun Paper Co., Ltd.950,951,379.11Jilin Chenming Paper Co., Ltd.233,624,654.50Shandong Chenming Power Supply Holdings Co., Ltd.146,387,007.68Sutai (Hangzhou) Investment Management Co., Ltd.100,000,000.00Total3,086,459,663.62
5. Revenue and operating costs
Unit: RMBAmount for the periodAmount for the prior periodItemRevenueCostsRevenueCostsPrincipal activities3,138,096,400.012,435,165,869.612,237,163,494.681,674,925,035.20Other activities709,097,257.52593,307,602.81458,848,921.42428,362,116.44Total3,847,193,657.533,028,473,472.422,696,012,416.102,103,287,151.64
6. Investment income
Item
Amount for
the period
Amount forthe prior periodIncome from long-term equity investments accounted for using the cost method681,230,000.001,023,353,000.00Income from long-term equity investments accounted for using the equity method-1,660,968.93-12,799,856.43Investment gain on disposal of long-term equity investments3,100,000.00Total682,669,031.071,010,553,143.57
INTERIM FINANCIAL REPORT 2020
X Financial Report
XVIII. Supplementary information
1. Breakdown of extraordinary gains and losses for the current period
√ Applicable Not applicable
Unit: RMBItemAmountProfit or loss from disposal of non-current assets13,758,306.22Government grants (except for the government grants closely related to the normal operationof the Company and granted constantly at a fixed amount or quantity in accordance with acertain standard based on state policies) accounted for in profit or loss for the current period767,184,012.96Gain or loss from change in fair value of consumable biological assets and other non-currentfinancial assets by adopting fair value method for subsequent measurements-9,246,743.86Other gain or loss items within the definition of extraordinary gain or loss-2,416,979.09Less: Effect of income tax179,535,882.21Effect of minority interest141,298,126.77Total448,444,587.25Notes 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. Return on net assets and earnings per share
Earnings per shareProfit for the reporting period
Rate of returnon net assets
on weightedaverage basis
Basic(RMB per share)
Diluted(RMB per share)Net profit attributable to ordinary shareholders of the
Company0.84%0.0510.051Net profit after extraordinary gains and losses attributable to
ordinary shareholders of the Company-1.69%-0.103-0.103
Note: The net profit attributable to shareholders of the listed company has not deducted perpetual debt incurred interest and impact of dividends
issued and declared by preference shares. When calculating the financial indicators of earnings per share and weighted average return onequity, the interest on perpetual bonds of RMB96,734,246.58 from 1 January 2020 to 30 June 2020 and the dividends issued and declaredby preference shares of RMB270,776,073.42 in 2020 are deducted.
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