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鹵霪Bㄩ2022爛圉爛僅惆豢(荎恅唳) 狟婥鼠豢
鼠豢梪:2022-08-31

SHANDONG CHENMING PAPER HOLDINGS LIMITED 2022 Interim Report

SHANDONG CHENMING PAPER HOLDINGS LIMITED

2022 Interim Report

August 2022

INTERIM REPORT 2022

I Important Notice, Table of Contents and Definitions

The board of directors (the※Board§), the supervisory committee (the※Supervisory Committee§) and the directors (the※Directors§),supervisors (the※Supervisors§) and senior management (the※Senior Management§) of the Company hereby warrant the truthfulness,accuracy and completeness of the contents of the interim report, guarantee that there are no false representations, misleadingstatements or material omissions contained in the interim report, and are jointly and severally responsible for the liabilities of theCompany.Chen Hongguo, head of the Company, Dong Lianming, head in charge of accounting, and Zhang Bo, head of the accountingdepartment (Accounting Officer), declare that they warrant the truthfulness, accuracy and completeness of the financial report in theinterim report.All directors have attended the board meeting to review this report.The Company is exposed to various risk factors such as macro-economic fluctuation, adjustment of state policy and competition inthe industry. Investors should be aware of investment risks. For further details, please refer to the risk exposures of the Companyand the measures to be taken to address them as set out in Management Discussion and Analysis.The Company does not propose distribution of cash dividends or bonus shares, and there will be no increase of share capital fromreserves.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

I Important Notice, Table of Contents and Definitions

Table of ContentsIImportant Notice, Table of Contents and Definitions1IICompany Profile and Key Financial Indicators5IIIManagement Discussion and Analysis9IVCorporate Governance24VEnvironmental and Social Responsibility26VIMaterial Matters33VIIChanges in Share Capital and Shareholders46VIIIPreference Shares52IXBonds53XFinancial Report57

INTERIM REPORT 2022

I Important Notice, Table of Contents and Definitions

Documents Available for Inspection(I)The financial statements signed and sealed by the head of the Company, the head in charge of accounting and the

head of the accounting department;(II)the interim report signed by the legal representative;(III)the original copies of all of the documents and announcements of the Company disclosed on the designated website

as approved by the China Securities Regulatory Commission during the reporting period;(VI)the interim report disclosed on The Stock Exchange of Hong Kong Limited: and(V)other relevant information.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

I Important Notice, Table of Contents and Definitions

DefinitionsItemDefinitionCompany, Group, Chenming Groupor Chenming Paper

meansShandong Chenming Paper Holdings Limited and its subsidiariesParent Company or ShouguangHeadquarters

meansShandong Chenming Paper Holdings LimitedChenming HoldingsmeansChenming Holdings Company LimitedShenzhen Stock ExchangemeansShenzhen Stock ExchangeStock ExchangemeansThe Stock Exchange of Hong Kong LimitedCSRCmeansChina Securities Regulatory CommissionShandong CSRCmeansShandong branch of China Securities Regulatory CommissionZhanjiang ChenmingmeansZhanjiang Chenming Pulp & Paper Co., Ltd.Jiangxi ChenmingmeansJiangxi Chenming Paper Co., Ltd.Wuhan ChenmingmeansWuhan Chenming Hanyang Paper Holdings Co., Ltd.Huanggang ChenmingmeansHuanggang Chenming Pulp & Paper Co., Ltd.Chenming (HK)meansChenming (HK) LimitedJilin ChenmingmeansJilin Chenming Paper Co., Ltd.Shouguang MeilunmeansShouguang Meilun Paper Co., Ltd.Chenming LeasingmeansShandong Chenming Financial Leasing Co., Ltd. and its subsidiariesCorporate Bondsmeans18 Chenming Bond 01Perpetual Bondsmeans17 Lu Chenming MTN001B-to-H Share ConversionmeansChange of listing venue of the domestic listed foreign shares on the Main Board of

The Stock Exchange of Hong Kong Limited by way of conversionreporting periodmeansthe period from 1 January 2022 to 30 June 2022the beginning of the year or theperiod

means1 January 2022the end of the interim period or theperiod

means30 June 2022

INTERIM REPORT 2022

II Company Profile and Key Financial Indicators

I. Company profileStock abbreviationStock code000488

B200488Stock exchanges on which the shares are listedShenzhen Stock ExchangeStock abbreviationChenming PaperStock code01812Stock exchanges on which the shares are listedThe Stock Exchange of Hong Kong LimitedStock abbreviation before any changes (if any)NoneLegal name in Chinese of the CompanyLegal short name in Chinese of the Company (if any)Legal name in English of the Company (if any)SHANDONG CHENMING PAPER HOLDINGS LIMITEDLegal short name in English of the Company (if any)SCPHLegal representative of the CompanyChen HongguoII. Contact persons and contact methods

Secretary to the BoardHong Kong Company SecretaryNameYuan XikunChu Hon LeungCorrespondence

Address

No. 2199 Nongsheng East Road, Shouguang City,

Shandong Province

22nd Floor, World Wide House, Central, Hong KongTelephone0536-215800800852-21629600Facsimile0536-215897700852-25010028Email addresschenmmingpaper@163.comliamchu@li-partners.comIII. Other information

1. Contact methods of the Company

Whether the registered address, office address, postal code, website, email of the Company changed during thereporting period Applicable ﹟ Not applicableThere was no change of the registered address, office address, postal code, website and email of the Company duringthe reporting period. Please refer to the 2021 annual report for details.

2. Information disclosure and places for inspection

Whether the information disclosure and places for inspection changed during the reporting period Applicable ﹟ Not applicableThere was no change of the newspapers designated by the Company for information disclosure, designated websitesfor the publication of the interim report as approved by CSRC and places for inspection of the Company*s interim reportduring the reporting period. Please refer to the 2021 annual report for details.

3. Other relevant information

Whether other relevant information changed during the reporting period Applicable ﹟ Not applicable

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

II Company Profile and Key Financial Indicators

IV. Major accounting data and financial indicatorsRetrospective adjustment to or restatement of the accounting data for prior years by the Company Yes ﹟ No

The reporting period

The corresponding

period ofthe prior year

Increase/decreasefor the reportingperiod as comparedto the corresponding

period ofthe prior yearRevenue (RMB)16,676,428,365.8317,172,816,354.53-2.89%Net profit attributable to shareholders of the Company (RMB)230,141,463.762,021,095,417.54-88.61%Net profit after extraordinary gains or losses attributable toshareholders of the Company (RMB)173,407,927.131,964,718,180.70-91.17%Net cash flows from operating activities (RMB)998,264,209.454,747,185,521.94-78.97%Basic earnings per share (RMB per share)0.0640.604-89.40%Diluted earnings per share (RMB per share)0.0640.604-89.40%Rate of return on weighted average net assets1.02%8.94%

Decrease by 7.92percentage points

As at the end ofthe reporting period

As at the end ofthe prior year

Increase/decrease asat the end of thereporting period ascompared to theend of the prior yearTotal assets (RMB)85,186,581,045.2482,841,454,602.242.83%Net assets attributable to shareholders of the Company (RMB)19,220,377,294.7419,089,778,227.640.68%Data description of basic earnings per share, diluted earnings per share, and rate of return on weighted average net assets:

Net profit attributable to shareholders of the Company does not exclude the effect of interest of Perpetual Bonds during thereporting period. When calculating earnings per share and the rate of return on weighted average net assets, the interest onPerpetual Bonds from 1 January 2022 to 30 June 2022 of RMB44,481,369.86 is deducted.

INTERIM REPORT 2022

II Company Profile and Key Financial Indicators

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

1. Differences between the net profit and net assets disclosed in accordance with international accounting

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

2. Differences between the net profit and net assets disclosed in accordance with overseas accounting

standards and China accounting standards in the financial report Applicable ﹟ Not applicableThere was no difference between the net profit and net assets disclosed in accordance with overseas accountingstandards and China accounting standards in the financial report during the reporting period.VI. Items and amounts of extraordinary gains or losses

﹟ Applicable Not applicable

Unit: RMBItemAmountExplanationProfit or loss from disposal of non-current assets (including write-off of provisionfor asset impairment)-3,921,463.03Government grants (except for the government grants closely related to thenormal operation of the Company and granted constantly at a fixed amountor quantity in accordance with a certain standard in compliance with nationalpolicies and regulations) accounted for in profit or loss for the current period149,264,611.68Profit or loss from debt restructuring-754,806.87Except for effective hedging business conducted in the ordinary course of

business of the Company, gain or loss arising from the change in fair value offinancial assets held for trading and financial liabilities held for trading, as wellas investment gains from disposal of financial assets held for trading, financialliabilities held for trading and financial assets available for sale-62,122,863.58Consumable biological assets subsequently measured at fair value3,309,448.09Other non-operating income and expenses other than the above items-3,575,720.23Less: Effect of income tax24,569,100.79Effect of minority interests (after tax)896,568.64Total56,733,536.63每

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

II Company Profile and Key Financial Indicators

Details of other gain or loss items falling within the definition of extraordinary gain or loss:

Applicable ﹟ Not applicableThe Company did not have details of other gain or loss items falling within the definition of extraordinary gain or loss.Explanation on the extraordinary gain or loss items as illustrated in the Explanatory Announcement on Information Disclosurefor Companies Offering Their Securities to the Public No.1 每 Extraordinary Gains or Losses defined as its recurring gain or lossitems Applicable ﹟ Not applicableNo extraordinary gain or loss items as illustrated in the Explanatory Announcement on Information Disclosure for CompaniesOffering Their Securities to the Public No. 1 每 Extraordinary Gains or Losses were defined by the Company as its recurringgain or loss items.

INTERIM REPORT 2022

III Management Discussion and Analysis

I. Principal activities of the Company during the Reporting Period(I) Industry overview and industry positionThe industry in which the Company operates is the paper making and paper product industry. After decades ofdevelopment, the Company has developed into a large modern conglomerate principally engaged in pulp productionand paper making. Its key indicators in respect of economic efficiency have been in a leading position in the industryfor more than 20 years in a row. The Company has been on the Fortune 500 China list for 13 consecutive years.Taking※revitalising the Chinese papermaking industry§as its mission, the Company has been adhering to its greendevelopment philosophy, committing itself to implementing a pulp and paper integration strategy and promoting theintegrated development in the industry chain and the value chain. The Company has established 6 production bases in,among others, Shandong, Guangdong, Hubei, Jiangxi and Jilin with annual pulp and paper production capacity of morethan 11 million tonnes. It is the first large-scale integrated pulp and paper company in China that achieves a balancebetween pulp and paper production.In the first half of 2022, affected by factors such as the evolution of public health events, the changing internationalpolitical landscape and high inflation, commodity prices and international logistics prices surged, resulting in asignificant increase in operating costs of papermaking companies. In the downstream market, the price transmissionmechanism did not work due to weak demand in the domestic market, resulting in lower machine-made paper pricesthan the corresponding period of the prior year, and limiting the scope for corporate earnings. According to the NationalBureau of Statistics of China, the total profit of the paper making and paper product industry from January to June 2022amounted to RMB25.99 billion, representing a year-on-year decrease of 46.2%. Recently, large pulp companies such asArauco in Chile had announced their expansion and production plans, which would be expected to mitigate the pressureon pulp supply. In addition, raw material prices would be expected to fall due to the global tightening of monetary policyand declining inflation. At the same time, with the epidemic under better control and the implementation of the policiesto stabilise growth in China, domestic demand would improve. It was expected that the papermaking industry wouldrebound gradually with recovery in profitability for the industry.Although the complex and changing external environment increased the difficulty factor of corporate development,the Company consolidated its profitability by strengthening its internal management, optimising its cost structure,checking raw material cost hikes and seizing opportunities in overseas markets. During the reporting period, theCompany recorded machine-made paper production of 2.58 million tonnes and sales of 2.69 million tonnes, revenue ofRMB16,676 million and total profit of RMB275 million.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

III Management Discussion and Analysis

I. Principal activities of the Company during the Reporting Period (Cont*d)(II) ProductsDuring the reporting period, the machine-made paper business was the major source of revenue and profit of theCompany. There was no significant changes in its principal activities and its operation models such as purchase,production, marketing and R&D. The products of the Company covering more than 200 types in seven series and fivemajor categories are detailed in the following table.CategoryMajor brands and types

MajorproductioncompaniesRange of applicationCultural paper series1.※BIYUNTIAN§,※CLOUDY MIRROR§,※CLOUDYLEOPARD§and※YUNJIN§all-wood pulp offsetpaper and electrostatic base paper2.※CLOUDY LION§and※CLOUDY CRANE§originalwhite offset paper3.※CLOUDY PINE§and※GREEN PINE§light weightpaper

4. Blueprint paper, colour offset paper, pure texture

paper, non-fluorescent offset paper, PE offsetpaper

5. Beige and high white book paper

6. Light weight coated paper

ShouguangHeadquartersZhanjiang ChenmingWuhan ChenmingJilin Chenming

Printing publications, textbooks, magazines,covers, illustrations, notebooks, test papers,teaching materials, reference books, etc.

Coated paper series1.※SNOW SHARK§and※EAGLE§one-sided coatedpaper2.※SNOW SHARK§,※EAGLE§and※RABBIT§ double-sided coated paper3.※EAGLE§and※RABBIT§ matte coated paper

ShouguangHeadquartersShouguang Meilun

Double-sided coated paper is suitable forhigh quality printing, such as high-gradepicture albums, picture, magazines and soon, promotional materials such as interiorpages of high-end books, wall calendars,posters and so on, and suitable for suitablefor high-speed sheet printing and high-speedrotary printing;One-sided coated paper is suitable forupscale tobacco package paper, adhesivesticker, shopping bags, slipcases, envelopes,gift wrapping and so on, and suitable for largeformat printing and commercial printing.

INTERIM REPORT 2022

III Management Discussion and Analysis

I. Principal activities of the Company during the Reporting Period (Cont*d)(II) Products (Cont*d)CategoryMajor brands and types

MajorproductioncompaniesRange of applicationWhite paper board

series

1. White paper board of

※LIYA§series, white paperboard and ivory cardboard of※LIPIN§and※POPLAR§series, high bulk cardboard and ivorycardboard of※LIZZY§and※BAIYU§series andsuper high bulk cardboard of※LIYING§and※BAIYU§

series

2. Food package board of

※LIYA§and※LIZZY§ series

3. Coated cattle card and LIYA book card

4. Playcard paper board

5. Chenming cigarette cardboard

ShouguangHeadquartersJiangxi ChenmingZhanjiang Chenming

High-end gift boxes, cosmetics boxes, tags,shopping bags, publicity pamphlets, high-end postcards; cigarette package printingof medium and high quality; milk package,beverage package, disposable paper cups,milk tea cups and noodle bowls.

Copy paper series※GOLDEN MINGYANG§and※GOLDEN CHENMING§

copy paper,※BOYA§and※BIYUNTIAN§copy paper,※MINGYANG§,※LUCKY CLOUDS§,※BOYANG§and※SHANYIN§copy paper, and※GONGHAO§and※TIANJIAN§ copy paper

Shouguang MeilunZhanjiang Chenming

Printing and copying business documents,training materials, and writing.Industrial paper

series

High-grade yellow anti-sticking base paper, ordinaryyellow/white anti-sticking base paper and PE paper

ShouguangHeadquartersWuhan ChenmingJiangxi ChenmingZhanjiang Chenming

Anti-stick base paper is mainly used forproducing the paper base of stripping paperor anti-sticking base paper;Cast coated base paper is suitable forproducing adhesive paper or playcardcompound paper after coating.Special paper seriesThermal paper and glassine paperShouguang Art Paper

Wuhan Chenming

High-grade adhesive backing paper forelectronics, medicine, food, washing supplies,supermarket labels, double-sided tapes, etc.Household paper

series

Toilet paper, facial tissue, pocket tissue, napkin, papertowels and※XINGZHILIAN§

Shouguang MeilunWuhan Chenming

Daily toilet supplies; used in restaurants andother catering industries, and used in publictoilets in hotels, guesthouses, and officebuildings, and also suitable for home andother environment.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

III Management Discussion and Analysis

II. Analysis of liquidity, financial resources and capital structure disclosed in accordance with thelisting rules of Hong Kong Stock ExchangeAs at 30 June 2022, the Group*s current ratio was 68.50%. The quick ratio was 58.10%. The gearing ratio was 72.89%.There was no significant seasonal trend for capital requirements of the Group.The Group*s sources of capital primarily came from cash inflow generated from operating activities, borrowings from financialinstitutions, public issuance of corporate bonds in the capital market, as well as issuance of medium-term notes in theinterbank market.As at 30 June 2022, the total bank borrowings, Corporate Bonds and medium-term notes of the Group were RMB43,193million, RMB350 million and RMB1,004 million, respectively (as at the end of the prior year: the total bank borrowings,Corporate Bonds and medium-term notes of the Group were RMB41,383 million, RMB1,426 million and RMB1,199 million,respectively). As at 30 June 2022, the Group had monetary funds of RMB14,959 million (as at the end of the prior year:

RMB14,120 million) in total (For the breakdown of monetary funds, please refer to X. VII. 1 Note on Monetary Funds in thisreport).To strengthen its financial management, the Group established and optimised its strict internal control system on cash andcapital management. The liquidity and repayment ability of the Group were in a good condition. As at 30 June 2022, the Grouphad 11,736 employees. The total staff remuneration for the first half of 2022 amounted to RMB620.3574 million (The Grouphad 12,296 employees in 2021. The total staff remuneration for 2021 amounted to RMB1,311.7337 million).There was no major investment project of the Company during the second half of 2022.The Company*s existing bank deposits were primarily used for production and operation, construction projects andinvestment in technology research and developments.For details of the assets with restricted ownership of the Group as at 30 June 2022, please refer to X. VII. 65. Details of assetswith restricted ownership or right to use in this report.For details of the contingent event required to be disclosed by the Group as at 30 June 2022, please refer to X. VII. 37Provisions.III. Analysis of Core CompetitivenessAfter innovation and development for more than 60 years, the Company has created a strong brand influence and cultivated asolid comprehensive competitiveness. It promotes product upgrades by building a supply chain, enhances R&D strength andimproves core competitiveness, details of which are as follows:

1. Advantages of pulp and paper integration

The Company has unwaveringly implemented a pulp and paper integration strategy. At present, its major productionbases located in Shouguang, Zhanjiang, and Huanggang are equipped with chemical pulp production lines, with totalproduction capacity of wood pulp reaching 4.30 million tonnes. It is the first modern large-scale paper making companythat basically realises wood pulp self-sufficiency in China. A complete supply chain not only creates cost advantagefor the Company, but also safeguards the safety, stability and quality of upstream raw materials, and renders strongsupport for the Company to maintain its long-term competitiveness.

INTERIM REPORT 2022

III Management Discussion and Analysis

III. Analysis of Core Competitiveness (Cont*d)

2. Scale advantages

The papermaking industry is a typical capital-intensive and technology-intensive industry that follows the laws ofeconomies of scale. The Company has established large-scale production bases in the major markets in Southern,Central, Northern, and Northeast China, with annual pulp and paper production capacity reaching over 11 milliontonnes, where reasonable production scale creates the marginal cost advantage. Meanwhile, by leveraging the scaleadvantages, the Company has built an international logistics centre and supporting railway dedicated lines and docks,and constructed a comprehensive logistics service platform covering unitised transportation, bonded warehousing,transfer and storage at stations and terminals, realising the improvement of logistics efficiency and the stability oflogistics costs.

3. Product advantages

The Company is an enterprise that offers the widest product range in the paper making industry. The product seriesinclude cultural paper, white paper board, coated paper, copy paper, household paper, thermal paper, etc., with eachmajor product ranking among the best in terms of market share. The Company is committed to fulfilling market demandand refining its products through technological innovation and process optimisation to continuously enhance the addedvalue of its products, and brand value and benefits.

4. Industry layout advantages

Closely centring on the pulp and paper integration strategy, the Company has integrated resources and establishedits production bases in the core target market to promote the coordinated development of all regions. Currently, theCompany adopts the market-oriented approach and has six production bases in Shandong, Guangdong, Hubei, Jiangxi,Jilin and other places. With all products sold in close proximity, the Company substantially reduces transportation costswhile improving service efficiency, achieving a※win-win§ between the Company and its users.

5. Advantages in technical equipment

The Company highly values the introduction and upgrades of technical equipment and boasts the largest and mostadvanced pulping and paper making production line in the world. The Company*s major production equipment hasbeen imported from internationally renowned manufacturers, including Metso and Valmet of Finland, Voith of Germany,Andritz of Austria, etc. and reached the advanced international level. Currently, the Company has three production lineswith a paper width of more than 11 metres, which ensures production efficiency and product quality.

6. Advantages in research and innovation

The Company attaches great importance to technology research and development and currently has scientific researchinstitutions including the national enterprise technology centre, the post-doctoral working station, the state certifiedCNAS pulp and paper testing centre. The Company has obtained over 370 national patents, and taken the lead inobtaining the ISO9001 quality system certification, the ISO14001 environmental protection system certification andthe FSC-COC international forest system certification among domestic peers. At the same time, the Company activelycarries out in-depth industry-university-research cooperation with prestigious domestic universities and researchinstitutes, continuously improves technical innovation capabilities and scientific research and development levels,and develops a series of new products with high technology contents and high added value as well as proprietarytechnologies. The Company and its subsidiaries Zhanjiang Chenming, Shouguang Meilun, Jiangxi Chenming, JilinChenming, Huanggang Chenming and Wuhan Chenming are high and new technology enterprises.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

III Management Discussion and Analysis

III. Analysis of Core Competitiveness (Cont*d)

7. Team management advantages

With a reasonable and balanced professional structure, the Company possesses a complete and reasonable talentstructure consisting of experienced personnel, including high-end talents specialising in production, technology, sales,finance, laws, etc. In the course of business operations, the stable core team has developed an internal corporateculture that ties in with the Company*s development, summarised management experience with industry characteristics,and formed a team advantage combining management and culture, allowing it to accurately grasp the industrydevelopment trend and direction. At the same time, the Company has paid attention to the construction of a talentreserve cultivation mechanism. With advanced business concepts and enormous development space, the Company hasattracted an array of high-calibre professionals and improved the level of talent pool, providing solid guarantee for theCompany*s long-term sustainable development.

8. Advantages in environmental governance capacity

The Company has actively upheld the concept of※lucid waters and lush mountains are invaluable assets§, adhered tothe development idea of※placing green development and environmental protection as its priority§, always regardedenvironmental protection as the※life project§, clung to the green development model of clean production and resourcerecycling, and earnestly shouldered the corporate responsibility of environmental protection. In recent years, theCompany and its subsidiaries have invested more than RMB8 billion in total in environmental protection, and haveconstructed the pollution treatment facilities including the alkali recovery system, middle water treatment system, middlewater reuse system, white water recovery system and black liquor comprehensive utilisation system. The environmentalindicators of the Company rank high in China and in the world. At present, the Company adopts the world*s mostadvanced※ultrafiltration membrane + reverse osmosis membrane§technology to complete the reclaimed waterrecycling membrane treatment project, which is the largest middle water reuse project in the domestic paper industry.The reclaimed water recycle rate reaches more than 75%. The reclaimed water quality meets drinking water standards,which can save fresh water of 170,000 cubic metres every day. Meanwhile, in response to the※dual carbon§policy, theCompany actively introduces photovoltaic power generation and biomass power generation, continuously optimises theenergy structure and improves the level of low-carbon production.

INTERIM REPORT 2022

III Management Discussion and Analysis

IV. Analysis of principal operationsOverviewPlease see※I. Principal activities of the Company during the Reporting Period§ for relevant information.Year-on-year changes in major financial information

Unit: RMBThe reporting period

The correspondingperiod of the prior year

Increase/decreaseyear on yearReason for the changeRevenue16,676,428,365.8317,172,816,354.53-2.89%Mainly due to a year-on-year decrease of the

selling prices of machine-made paper during thereporting period.Operating costs14,054,949,279.2011,861,060,977.9218.50%Mainly due to a year-on-year price rise of raw

materials such as wood chips, raw coal andchemicals during the reporting period.Selling and distribution expenses138,055,763.65147,622,738.74-6.48%General and administrative expenses422,766,365.85492,048,555.49-14.08%Finance expenses1,021,034,604.661,318,942,156.16-22.59%Mainly due to a year-on-year decrease of

interest expenses during the reporting period.Income tax expenses1,378,726.69274,057,779.20-99.50%Mainly due to a year-on-year decrease of total

profit of the Company during the reporting

period.Investment income-24,138,176.9098,631,701.79-124.47%Mainly due to a year-on-year decrease in income

from long-term equity investments accounted

for using the equity method during the reporting

period, and the expenses on derecognition of

financial assets accounted for under investment

income during the current reporting period.Gains on changes in fair value-58,813,415.49-99,119,691.8940.66%Mainly due to the change of the shares of China

Bohai Bank during the reporting period.Net cash flows from operating

activities

998,264,209.454,747,185,521.94-78.97%Mainly due to a year-on-year price rise of raw

materials such as wood chips, raw coal and

chemicals, and a significant increase of the

cash payment for purchase of goods by the

Company.Net cash flows from investing

activities

-806,624,723.83-905,349,346.9710.90%Net cash flows from financing

activities

-242,119,047.65-3,585,858,074.3193.25%Mainly due to a year-on-year decrease of

liabilities falling due for repayment during thereporting period.Significant change in structure or source of profit of the Company during the reporting period Applicable ﹟ Not applicableThere was no significant change in structure or source of profit of the Company during the reporting period.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

III Management Discussion and Analysis

IV. Analysis of principal operations (Cont*d)Components of revenue

Unit: RMBThe reporting period

The corresponding periodof the prior year

Increase/

decreaseyear on yearAmount% of revenueAmount% of revenueTotal revenue16,676,428,365.83100%17,172,816,354.53100%-2.89%By industryMachine-made paper14,440,493,130.3186.59%14,822,885,135.3986.32%-2.58%Pulp239,810,290.101.44%75,966,302.860.44%215.68%Power and steam195,203,273.891.17%133,159,820.590.78%46.59%Construction materials128,912,692.240.77%174,782,023.021.02%-26.24%Hotel and property rents104,267,757.090.63%75,025,417.150.44%38.98%Financial leasing84,916,541.080.51%203,237,206.721.18%-58.22%Chemicals70,973,693.130.43%71,994,410.870.42%-1.42%Others1,411,850,987.998.47%1,615,766,037.939.41%-12.62%By productWhite paper board5,228,447,295.2731.35%5,031,520,246.6529.30%3.91%Duplex press paper3,784,089,225.0022.69%3,729,414,241.1421.72%1.47%Coated paper2,191,460,241.6513.14%2,407,632,283.0014.02%-8.98%Electrostatic paper1,913,990,734.5111.48%1,840,465,965.2910.72%3.99%Anti-sticking raw paper512,600,898.293.07%572,174,748.363.33%-10.41%Thermal paper280,590,566.031.68%260,673,220.951.52%7.64%Other machine-made paper529,314,169.563.17%981,004,430.005.71%-46.04%Pulp239,810,290.101.44%75,966,302.860.44%215.68%Power and steam195,203,273.891.17%133,159,820.590.78%46.59%Construction materials128,912,692.240.77%174,782,023.021.02%-26.24%Hotel and property rents104,267,757.090.63%75,025,417.150.44%38.98%Financial leasing84,916,541.080.51%203,237,206.721.18%-58.22%Chemicals70,973,693.130.43%71,994,410.870.42%-1.42%Others1,411,850,987.998.47%1,615,766,037.939.41%-12.62%By geographical segmentMainland China12,792,521,541.6576.71%15,414,291,096.6889.76%-17.01%Other countries and regions3,883,906,824.1823.29%1,758,525,257.8510.24%120.86%By sales modelDistribution9,791,607,394.3358.72%10,769,034,693.3162.71%-9.08%Direct sales6,884,820,971.5041.28%6,403,781,661.2237.29%7.51%Industries, products or regions accounting for over 10% of revenue or operating profit of the Company

﹟ Applicable Not applicable

INTERIM REPORT 2022

III Management Discussion and Analysis

IV. Analysis of principal operations (Cont*d)

Components of revenue (Cont*d)

Unit: RMB

RevenueOperating costs

Gross profitmargin

Increase/decrease ofrevenue ascompared to thecorrespondingperiod of theprior year

Increase/decrease of

operating

costs ascompared to the

corresponding

period ofthe prior year

Increase/decrease ofgross profit

margin ascompared to thecorresponding

period ofthe prior yearBy industryMachine-made paper14,440,493,130.3112,182,198,556.9715.64%-2.58%22.87%-17.47%By productWhite paper board5,228,447,295.274,293,503,654.8217.88%3.91%55.33%-27.18%Duplex press paper3,784,089,225.003,376,791,343.9410.76%1.47%19.86%-13.70%Coated paper2,191,460,241.651,790,989,074.3018.27%-8.98%17.46%-18.40%Electrostatic paper1,913,990,734.511,563,151,783.7118.33%3.99%11.26%-5.33%By geographical segmentMainland China12,792,521,541.6510,838,037,361.3415.28%-17.01%3.81%-16.99%Other countries and regions3,883,906,824.183,216,911,917.8617.17%120.86%126.34%-2.00%By sales modelDistribution9,791,607,394.338,302,552,500.2715.21%-9.08%11.99%-15.95%Direct sales6,884,820,971.505,752,396,778.9316.45%7.51%29.35%-14.10%Under the circumstances that the statistics specification for the Company*s principal operations data experienced adjustmentin the reporting period, the principal activity data upon adjustment of the statistics specification as at the end of the reportingperiod in the latest year Applicable ﹟ Not applicableExplanation on why the related data varied by more than 30%

﹟ Applicable Not applicable

Revenue from other countries and regions increased by 120.86% as compared to the corresponding period of the prior yearmainly due to a significant year-on-year increase of orders as a result of the improvement of the overseas markets during thereporting period.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

III Management Discussion and Analysis

V. Analysis of non-principal operations

Applicable ﹟ Not applicableVI. Analysis of assets and liabilities

1. Material changes of asset items

Unit: RMBAs at the end of the reporting periodAs at the end of the prior year

Amount

As apercentage of

total assetsAmount

As apercentage oftotal assets

Percentage

changeDescriptionMonetary funds14,958,681,361.9117.56%14,119,782,939.6617.04%0.52%Mainly due to a year-on-year

increase of the Company*s existingfinancing deposits as at the end ofthe reporting period.Accounts receivable3,344,874,025.143.93%2,656,517,150.463.21%0.72%Mainly due to an increase

in accounts receivable fromcustomers as at the end of thereporting period.Accounts receivablefinancing

912,727,537.751.07%435,459,341.760.53%0.54%Mainly due to an increase in the

number of bills held as at the end ofthe reporting period as comparedto the beginning of the year.Fixed assets34,390,613,468.1840.37%35,653,492,676.1543.04%-2.67%Mainly due to the equipment

relocation of Wuhan Chenmingduring the reporting period.Construction in progress802,407,685.010.94%197,749,526.050.24%0.70%Mainly due to the equipment

relocation of Wuhan Chenmingand equipment technologicaltransformation of Meilun during thereporting period.Short-term borrowings36,359,663,944.5742.68%33,523,025,186.2240.47%2.21%Mainly due to an increase of

guaranteed borrowings and creditborrowings as at the end of thereporting period.Bills payable4,035,081,278.854.74%3,089,512,327.403.73%1.01%Mainly due to an increase of

payment for goods with bills bythe Company during the reportingperiod.Non-current liabilities due

within one year

4,558,351,674.185.35%6,601,311,227.987.97%-2.62%Mainly due to the repayment of

long-term borrowings and bondspayable due within one year bythe Company during the reportingperiod.Long-term payables3,383,399,934.073.97%2,358,901,022.992.85%1.12%Mainly due to a year-on-year

increase in finance lease paymentsas at the end of the reportingperiod.

INTERIM REPORT 2022

III Management Discussion and Analysis

VI. Analysis of assets and liabilities (Cont*d)

2. Major Assets Overseas

Applicable ﹟ Not applicable

3. Assets and liabilities measured at fair value

﹟ Applicable Not applicable

Unit: RMB

ItemOpening balance

Profit or lossfrom changein fair valueduring the period

Cumulative fairvalue changecharged to

equity

Impairmentprovidedduring the

period

Purchasesduring theperiodDisposal duringthe period

OtherchangesClosing balance

1. Held-for-trading financial assets

(excluding derivative financialassets)110,886,182.88-59,853,131.31-144,651,765.5851,033,051.57

2. Other non-current financial assets519,927,003.2557,510,000.00519,927,003.25

3. Consumable biological assets

measured at fair value1,519,305,850.773,309,448.0927,587,382.4023,333,133.5945,408,287.981,500,540,144.47Whether there were any material changes on the measurement attributes of major assets of the Company during thereporting period Yes ﹟ No

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

Unit: RMBItem

Carrying amount as at

the end of the periodReasons for such restrictionMonetary funds11,749,299,176.80As, among others, deposits for bank acceptance bills and letter

of credit, and deposit reservesAccounts receivable

financing

10,925,711.40As collateral for letters of guarantee and letters of creditAccounts receivables250,000,000.00As deposits to obtain loansFixed assets12,634,559,687.51As collateral for bank borrowings and long-term payablesIntangible assets1,184,321,483.40As collateral for bank borrowings and long-term payablesInvestment property4,964,639,998.32As collateral for bank borrowingsTotal30,793,746,057.43

VII. Analysis of Investments

1. Overview

﹟ Applicable Not applicable

Investments during the reporting period (RMB)

Investments during thecorresponding period of

the prior year (RMB)Change10,000,000.00882,210,000.00-98.87%

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

III Management Discussion and Analysis

VII. Analysis of Investments (Cont*d)

2. Material equity investments during the reporting period

﹟ Applicable Not applicable

Unit: RMBName of investeePrincipal activities

Form ofinvestment

InvestmentamountShareholding

Source offundPartner(s)

Period ofinvestmentProduct type

Progress as atthe date ofbalance sheet

EstimatedreturnProfit or lossfrom investmentfor the periodInvolvementin lawsuitDate ofdisclosure(if any)Disclosure index (if any)Jiangxi Chenming Tea Co., Ltd.*()

Tea planting andsales

Newly established10,000,000.00100%Self-owned

fundsSubsidiaryLong termProduction and

sales of agriculturalfood

CompletedN/A-1,468,863.22NoNot applicableNot applicable

3. Material non-equity investments during the reporting period

Applicable ﹟ Not applicable

4. Financial asset investment

(1) Security investments

﹟ Applicable Not applicable

Unit: RMB

Type of security

StockcodeAbbreviation ofstock name

Initialinvestment cost

Accountingmeasurementmodel

Book value at thebeginning of thereporting period

Profit or lossfrom changes infair value in thecurrent period

Accumulatedchanges in fairvalue included

in equity

Purchasedamount in thecurrent period

Sold amount

in thecurrent period

Profit or loss

during thereporting period

Book valueat the end of thereporting period

Classificationin accountsSource of fundDomestic and foreign shares09668China Bohai Bank195,684,817.15Measured at fair value110,886,182.88-59,853,131.31-144,651,765.580.000.00-59,853,131.3151,033,051.57Held-for-trading

financial assets

Self-owned fundsTotal195,684,817.15每110,886,182.88-59,853,131.31-144,651,765.580.000.00-59,853,131.3151,033,051.57每每Disclosure date of announcement in relation to the consideration and approval of securities investments by the Board

20 June 2020Disclosure date of announcement in relation to the consideration and approval of securities investments by the shareholders* general meeting (if any)

Not applicable

(2) Derivatives investments

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

5. Use of proceeds

Applicable ﹟ Not applicableThe Company did not use any proceeds during the reporting period.

INTERIM REPORT 2022

III Management Discussion and Analysis

VIII. Disposal of material assets and equity interest

1. Disposal of material assets

Applicable ﹟ Not applicable

2. Disposal of material equity interest

Applicable ﹟ Not applicableIX. Analysis of major subsidiaries and investees

﹟ Applicable Not applicable

Major subsidiary and investees accounting for over 10% of the net profit of the Company

Unit: RMBName of company

Type ofcompanyPrincipal activities

RegisteredcapitalTotal assetsNet assetsRevenueOperating profitNet profitZhanjiang Chenming Pulp & Paper

Co., Ltd.

SubsidiaryProduction and sale

of duplex press paper,electrostatic paper,and white paper board

5,765,833,333.0028,464,228,927.798,685,900,409.625,841,511,419.81193,779,599.63181,827,121.84Shouguang Meilun Paper Co., Ltd.SubsidiaryProduction and sale of

coated paper, culturalpaper, householdpaper and chemicalpulp

4,801,045,519.0016,433,184,621.658,422,340,984.803,956,822,454.56111,605,218.12114,261,960.45

Huanggang Chenming Pulp &Paper Co., Ltd.

SubsidiaryProduction and sale

of chemical pulp

2,850,000,000.007,599,389,040.763,370,012,386.771,492,106,761.2890,133,357.6486,400,500.60Acquisition and disposal of subsidiaries during the reporting period

﹟ Applicable Not applicable

Name of company

Methods to acquire anddispose of subsidiariesduring the reporting period

Effect on overall production andoperation and resultsJiangxi Chenming Tea Co., Ltd. * ()Newly establishedNet profit decreased by RMB1.47 million.Qingdao Chenming Pulp & Paper Electronic CommoditySpot Trading Co., Ltd.

DeregisteredNet profit increased by RMB6,800.Particulars of major subsidiaries and investees

1. As the subsidiaries of the Company with a higher level of complementary pulp and paper production, Zhanjiang

Chenming and Shouguang Meilun enjoyed significant cost advantages due to their pulp and paper integration withhigher profitability.

2. The profitability of Huanggang Chenming became significant as the pulp price remained relatively high during the

reporting period.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

III Management Discussion and Analysis

X. Structured entities controlled by the Company

Applicable ﹟ Not applicableXI. Risk factors of the Company and the measures to be taken

1. Macroeconomic and policy risk

As a basic raw materials industry, the papermaking industry is supported by national industry policies in many ways. Itsprosperity is closely related to national macroeconomic policies. With a view to improving industry structure, enhancingproduct technology standard, energy saving and emission reduction, and eliminating outdated production capacityrelevant departments have issued the Policy on the Development of Papermaking Industry to promote the high-qualitydevelopment of the papermaking industry. If the support of relevant national industrial policies is weakened in the futureor the above-mentioned industrial policies, or economic policies such as fiscal, financial, taxation, and import and exportpolicies are adjusted, the operation and development of the Company will be affected.The Company pays attention to various policies and regulations of relevant industries in China in a timely manner, andactively adjusts its business development strategy in a timely manner based on the policy orientation. While focusingon the development of its principal activities, i.e. pulp production and paper making, the Company adheres to itsinnovation-driven strategy and comprehensively optimise its industrial structure and regional layout. thus ensuringthat the development of its principal activities is in compliance with the requirements of the policies of the industries,and realising steady growth in its operating results. The Company will also strengthen the financial information systemconstruction, regulate financial management, expand financing channels, lower capital cost and strengthen its aversioncapability against macro-economic risk.

2. Environmental protection risk

The paper making industry is a heavily polluting industry listed by the Ministry of Environmental Protection. As China*secological civilisation construction enters a critical period of focusing on carbon reduction, promoting synergy ofpollution reduction and carbon reduction, promoting comprehensive green transformation of economic and socialdevelopment, and realising the improvement of ecological environment quality from quantitative changes to qualitativechanges, relevant departments have successively formulated and issued a series of policies such as Guiding Opinionson Accelerating the Establishment of a Sound Economic System with Green, Low-carbon and Circular Development, theAnnouncement on Adjusting the Catalogue of Prohibited Products in Processing Trade, the 14th Five-Year Plan for theImplementation of National Clean Production, and the Implementation Plan for Carbon Peaking in the Industrial Sector.Environmental protection requirements are becoming more and more stringent. With the higher national environmentalprotection standards, the Company further increases its investment in pollution governance, which will increase theCompany*s operating costs in the short term.The Company always adheres to the development idea of※placing green development and environmental protectionas its priority§, widely adopts new technologies for energy saving and emission reduction, fully implements cleanproduction and strives to achieve its waste emission target. In recent years, the Company has invested RMB8,000million in total, and actively supported the construction of projects such as alkali recycling, middle water treatment,and middle water reuse. Relying on technological innovation, the Company comprehensively carries out environmentalprotection governance. At present, the Company adopts the world*s most advanced※ultrafiltration membrane + reverseosmosis membrane§technology to complete the reclaimed water recycling membrane treatment project. The reclaimedwater recycle rate reaches more than 75% and the reclaimed water quality meets drinking water standards. At thesame time, the Company actively explores the comprehensive utilisation of innovative resources and industrial recyclingdevelopment models, and built three major circular economy ecological chains of※resources-products-renewableresources§, further improving its green level.

INTERIM REPORT 2022

III Management Discussion and Analysis

XI. Risk factors of the Company and the measures to be taken (Cont*d)

3. Risk of price fluctuation of raw materials

Wood pulp and wood clips are the major raw materials of the industry. If the prices of wood pulp and wood chipsfluctuate sharply in the future, they will bring upward pressure on the production costs of enterprises, which will have acertain impact on the normal production and operation of enterprises in the industry.The Company strives to implement the development strategy of pulp and paper integration. At present, its productioncapacity of pulp has reached 4.3 million tonnes, and it has cultivated a strong self-sufficiency of wood pulp. At the sametime, the Company has established a more comprehensive supply chain management mechanism, and practiced sourceprocurement to reduce procurement costs. The Company continued to improve its production technology, improved theutilisation rate of raw materials, and optimised operational efficiency to reduce the risk of raw material price fluctuationsto the Company.

4. Risk of intensifying market competition

As a strategic and fundamental industry closely related to the national economy, the papermaking industry continuouslymatures along with the steady development of the Chinese economy. Although the papermaking industry hasaccelerated the elimination of outdated production capacity after several rounds of environmental protection policiesand its structure has been optimised, there remains the phenomena of a large number of enterprises, excess andscattered production capacity, a large number of mid- and low-end products, and product homogeneity. In addition,technological upgrade in the papermaking industry is relatively rapid, and related products are replaced quite often, thuscausing a fierce market competition.The Company actively studies the development trend of the industry, correctly grasps the market dynamics in atimely manner, and reduces its production costs and achieves increased production and efficiency by adjusting andoptimising technological processes. It adheres to being market-oriented, enhances its R&D and innovation capabilities,produces products that meet market demand, and enriches products types and application fields. It also improves theprofessional level of its sales staff, expands sales channels, strengthens business cooperation with customers, providescomprehensive customer services, and increases its market share.

5. Risk on financial leasing business

The Company may suffer from loss if the lessees of its financial leasing business cannot make full rental payment ontime due to any reason and there are abuses on equipment or any other short-term behaviour. Although the risk of suchrental being unrecoverable is minimal, the Company will also make bad debt provision as required under its accountingpolicy. If such amounts cannot be recovered on time, the Company may be exposed to risk of bad debts.Chenming Leasing has comprehensive risk prevention and control measures for the financial leasing business, withstrong risk resistance and low risk of default. At present, Chenming Leasing continues to implement the businessstrategy of continuous reduction which effectively put risk exposures under control.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

IV Corporate Governance

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

1. General meetings during the reporting period

MeetingType of meeting

Attendance

rate ofinvestorsConvening dateDisclosure dateResolutions of meeting2021 annual general meetingAnnual general meeting20.22%11 May 202212 May 2022http://www.cninfo.com.cn2022 first extraordinary general meetingExtraordinary general meeting19.81%15 June 202216 June 2022http://www.cninfo.com.cn

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

Applicable ﹟ Not applicableII. Changes of Directors, Supervisors and Senior Management of the Company

﹟ Applicable Not applicable

NamePositionTypeDateReasonChen HongguoChairman

and generalmanager

Appointed15 June 2022Appointed as the general manager of the Company at the first

meeting of the tenth session of the Board of the CompanyLi WeixianDirector and

deputy generalmanager

Elected15 June 2022Election of the new session of the Board of the CompanyLi ZhihuiIndependent

Director

Elected15 June 2022Election of the new session of the Board of the CompanyLi FengDirector and

deputy generalmanager

Appointed15 June 2022Appointed as a deputy general manager of the Company at the

first meeting of the tenth session of the Board of the CompanyLi MingtangDeputy general

manager

Appointed15 June 2022Appointed as a deputy general manager of the Company at the

first meeting of the tenth session of the Board of the CompanyGe GuangmingDeputy general

manager

Appointed15 June 2022Appointed as a deputy general manager of the Company at the

first meeting of the tenth session of the Board of the CompanyChen GangGeneral

manager

Resignedupon expiryof the term

15 June 2022Resigned upon expiry of the term

III. Profit distribution and conversion of capital reserves into share capital during the reporting

period Applicable ﹟ Not applicableThe Company does not propose distribution of cash dividends and bonus shares, and increase of share capital from reservesfor the interim period.

INTERIM REPORT 2022

IV Corporate Governance

IV. Implementation of the equity incentive plan, employee shareholding plan or other employeeincentive measure of the Company

﹟ Applicable Not applicable

1. Equity incentive

On 30 March 2020, the ninth extraordinary meeting of the ninth session of the Board of the Company considered andapproved the Resolution in Relation to the 2020 Restricted Share Incentive Scheme of Shandong Chenming PaperHoldings Limited (Draft) and Its Summary and other resolutions. On the same date, the fourth extraordinary meetingof the ninth session of the Supervisory Committee of the Company considered and approved the above resolutionsand verified the list of proposed participants of the incentive scheme. Independent Directors of the Company issuedindependent opinions on the incentive scheme.On 3 April 2020, the Company announced the list of participants through the Company*s internal website for a periodfrom 3 April 2020 to 12 April 2020. During the period, the Supervisory Committee of the Company and relevantdepartments did not receive any objection against the proposed participants. The Supervisory Committee verified thelist of participants under the grant of the incentive scheme.On 15 May 2020, the Resolution in Relation to the 2020 Restricted Share Incentive Scheme of Shandong ChenmingPaper Holdings Limited (Draft) and Its Summary and other resolutions were considered and approved at the 2020second extraordinary general meeting, the 2020 first class meeting for holders of domestic-listed shares and the 2020first class meeting for holders of overseas-listed shares of the Company. On 16 May 2020, the Company disclosed theSelf-Examination Report for the Trading of Shares of the Company by Insiders and Participants of the 2020 Restricted AShare Incentive Scheme.On 29 May 2020, the Resolution on the Matters Relating to Adjustments to the 2020 Restricted A Share IncentiveScheme of the Company and the Resolution in Relation to the Grant of Restricted Shares to the Participants wereconsidered and approved at the tenth extraordinary meeting of ninth session of the Board and the fifth extraordinarymeeting of the ninth session of the Supervisory Committee of the Company, approving the grant of 79,600,000 restrictedA shares to 111 participants at the grant price of RMB2.85 per share on 29 May 2020.On 15 July 2020, the 79,600,000 restricted A shares granted to the participants were listed.

2. Implementation of the employee shareholding plan

Applicable ﹟ Not applicable

3. Other employee incentive measure

Applicable ﹟ Not applicable

V. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of

Hong Kong Limited

(I) Compliance with the Code on Corporate Governance

The Company maintained high standards of corporate governance practices through various internal controls. TheBoard reviews the corporate governance practices of the Company from time to time to enhance the corporategovernance standards of the Company. The Company had fully complied with all the principles and code provisionsof the Code on Corporate Governance as set out in Appendix 14 to the Hong Kong Listing Rules during the reportingperiod.

(II) Securities transactions by Directors

The Directors of the Company confirmed that the Company had adopted the Model Code for Securities Transactionsby Directors of Listed Companies as set out in Appendix 10 to the Hong Kong Listing Rules. Having made adequateenquiries with all Directors of the Company, the Company was not aware of any information that reasonably suggestedthat the Directors had not complied with the requirements as stipulated in this code during the reporting period.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

V Environmental and Social Responsibility

I. Major environmental protection mattersAre the Company and its subsidiaries classified as key pollutant discharging unit as specified by environmental protectionauthority?

﹟ Yes No

Name of companyor subsidiary

Name of majorpollutants andspecific pollutants

Way ofemission

Number ofemission

outlets

Distribution ofemission outlets

Emissionconcentration

PollutantemissionstandardsimplementedTotal emissions

Approved totalemissions

ExcessiveemissionsShandong Chenming Paper

Holdings Limited

SO

Organisedemission

2Chenming IndustrialPark

Power plant no. 1:

9.51mg/m

Power plant no. 2:

8.77mg/m

35mg/m

Power plant no. 1:

7.89tPower plant no. 2:

8.01t

160.32t/yearNo

NOxOrganisedemission

2Chenming IndustrialPark

Power plant no. 1:

39.1mg/m

Power plant no. 2:

40.3mg/m

50mg/m

Power plant no. 1:

33.2tPower plant no. 2:

37.3t

233.91t/yearNo

ParticulatesOrganised

emission

2Chenming Industrial

Park

Power plant no. 1:

0.344mg/m

Power plant no. 2:

0.707mg/m

5mg/m

Power plant no. 1:

0.283tPower plant no. 2:

0.657t

23.39t/yearNo

CODIndirect emission2Chenming Industrial

Park

Sewage outlet no. 1:

182mg/LSewage outlet no. 2:

164mg/L

300mg/LSewage outlet no. 1:

794tSewage outlet no. 2:

852t

6,510.74t/yearNoAmmonia nitrogenIndirect emission2Chenming Industrial

Park

Sewage outlet no. 1:

7.26mg/L

Sewage outlet no. 2:

1.14mg/L

30mg/LSewage outlet no. 1:

31.4tSewage outlet no. 2:

5.93t

650.7t/yearNo

Shouguang Meilun Paper

Co., Ltd.

SO

Organisedemission

4Chenming IndustrialPark

Power plant no. 1:

10.2mg/m

Power plant no. 2:

10.5mg/m

Alkali recovery:

2.24mg/m

Lime kiln:

5.74mg/m

35mg/m

(self-ownedpower plant),50mg/m

(Chemicalpulp mill)

Power plant no. 1:

13.9tPower plant no. 2:

10.1tAlkali recovery:

10.6tLime kiln:

4.35t

342.89t/yearNo

NOxOrganisedemission

4Chenming Industrial

Park

Power plant no. 1:

30.6mg/m

Power plant no. 2:

31.8mg/m

Alkali recovery:

77mg/m

Lime kiln:

32.3mg/m

50mg/m

(self-ownedpower plant),

100mg/m

(Chemicalpulp mill)

Power plant no. 1:

40.1tPower plant no. 2:

30.6tAlkali recovery:

365tLime kiln:

23.9t

1,202.75t/yearNo

ParticulatesOrganised

emission

4Chenming IndustrialPark

Power plant no. 1:

0.432mg/m

Power plant no. 2:

0.989mg/m

Alkali recovery:

0.655mg/m

Lime kiln:

0.413mg/m

5mg/m

(self-ownedpower plant),10mg/m

(Chemicalpulp mill)

Power plant no. 1:

0.595tPower plant no. 2:

0.946tAlkali recovery:

3.03tLime kiln:

0.35t

121.979 t/yearNo

INTERIM REPORT 2022

V Environmental and Social Responsibility

Name of companyor subsidiary

Name of majorpollutants andspecific pollutants

Way ofemission

Number of

emission

outlets

Distribution ofemission outlets

Emissionconcentration

PollutantemissionstandardsimplementedTotal emissions

Approved totalemissions

ExcessiveemissionsWuhan Chenming HanyangPaper Holdings Co., Ltd.

SO

Organisedemission

2Within Qianneng Electric

Power factory area

130T/h furnace:

3.25mg/m

75T/h furnace:

7.36mg/m

50mg/m

1.44381t102.58t/yearNo

NOxOrganisedemission

2Within Qianneng ElectricPower factory area

130T/h furnace:

55.13mg/m

75T/h furnace:

46.15mg/m

100mg/m

14.8345t205.16t/yearNo

ParticulatesOrganised

emission

2Within Qianneng ElectricPower factory area

130T/h furnace:

1.57mg/m

75T/h furnace:

5.18mg/m

20mg/m

0.89747t41.032t/yearNo

CODDirect emission1Total wastewater

discharge

40.16mg/L80mg/L28.67t184.3t/yearNoAmmonia nitrogenDirect emission1Total wastewater

discharge

1.812mg/L8mg/L0.44t17.3t/yearNoJiangxi Chenming Paper

Co., Ltd.

SO

Organisedemission

1Thermal power plant240T/h furnace:

11.6049mg/m

200mg/m

23.7425t806t/yearNo

NOxOrganisedemission

1Thermal power plant240T/h furnace:

57.7725mg/m

200mg/m

33.9278t806t/yearNo

ParticulatesOrganised

emission

1Thermal power plant240T/h furnace:

6.3513mg/m

30mg/m

11.0874t135t/yearNo

CODDirect emission1Total sewage discharge44.75mg/L90mg/L83.3817t1,260t/yearNoAmmonia nitrogenDirect emission1Total sewage discharge1.74mg/L8mg/L2.118t112t/yearNoJilin Chenming Paper Co.,

Ltd.

SO

Organisedemission

(2 in use,1 spare)

Within factory area4.38mg/m

100mg/m

2.10t97t/yearNo

NOxOrganisedemission

(2 in use,1 spare)Within factory area27.92mg/m

100mg/m

12.69t213t/yearNo

ParticulatesOrganised

emission

(2 in use,1 spare)

Within factory area7.28mg/m

30mg/m

2.77t51.66t/yearNo

CODIndirect emission1Total sewage discharge129.45mg/L500mg/L279.16t6,000t/yearNoAmmonia nitrogenIndirect emission1Total sewage discharge1.82mg/L45mg/L3.99t500t/yearNoZhanjiang Chenming Pulp &Paper Co., Ltd.

SO

Organisedemission

5Within factory areaPower plant 1#:

5.834mg/m

Power plant 2#:

6.338mg/m

Power plant 3#:

3.669mg/m

Power plant 4#:

8.956mg/m

1#2#3#4#circulatingfluidised bed

boilers:

35mg/m

26.435t620t/yearNo

I. Major environmental protection matters (Cont*d)

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

V Environmental and Social Responsibility

Name of companyor subsidiary

Name of majorpollutants andspecific pollutants

Way ofemission

Number ofemission

outletsDistribution ofemission outlets

Emissionconcentration

PollutantemissionstandardsimplementedTotal emissions

Approved total

emissions

ExcessiveemissionsNOxOrganisedemission

5Within factory areaAlkali recovery:

125.546mg/m

Power plant 1#:

10.244mg/m

Power plant 2#:

11.74mg/m

Power plant 3#:

9.852mg/m

Power plant 4#:

4.206mg/m

Alkali recovery:

200mg/m

1#2#3#4#circulatingfluidisedbed boilers:

50mg/m

600.254t2,169.7t/yearNo

ParticulatesOrganised

emission

5Within factory areaPower plant 1#:

1.952mg/m

Power plant 2#:

1.461mg/m

Power plant 3#:

1.228mg/m

Power plant 4#:

1.471mg/m

1#2#3#4#circulating

fluidisedbed boilers:

10mg/m

8.117t195.06t/yearNo

CODDirect emission1Within factory area37.83mg/L90mg/L382.492t1,943t/yearNoAmmonia nitrogenDirect emission1Within factory area1.43mg/L8mg/L13.575t43.9t/yearNoTotal nitrogenDirect emission1Within factory area5.11mg/L12mg/L51.318t320.4t/yearNoHuanggang Chenming Pulp

& Paper Co., Ltd.

SO

Organisedemission

1Lime kiln chimney38.28mg/m

80mg/m

9.57t142.872t/yearNo

SO

Organisedemission

1Alkali furnace chimney5.52mg/m

200mg/m

6.81t328.417t/yearNo

NOxOrganisedemission

1Lime kiln chimney131.73mg/m

180mg/m

55.69t181.887t/yearNo

NOxOrganisedemission

1Alkali furnace chimney176.22mg/m

200mg/m

337.42t950.829t/yearNo

ParticulatesOrganised

emission

1Lime kiln chimney37.60mg/m

200mg/m

7.49t45.311t/yearNo

ParticulatesOrganised

emission

1Alkali furnace chimney25.09mg/m

30mg/m

24.61t83.759t/yearNo

CODIndirect emission1Total wastewater

discharge

15.03mg/L150mg/L64.83t398.911t/yearNoAmmonia nitrogenIndirect emission1Total wastewater

discharge

0.09mg/L14mg/L0.39t39.891t/yearNo

I. Major environmental protection matters (Cont*d)

INTERIM REPORT 2022

V Environmental and Social Responsibility

I. Major environmental protection matters (Cont*d)

Construction and operation of facilities for pollution prevention and control

(1) The Company and its subsidiaries strictly comply with laws, regulations and relevant rules regarding environmental

protection of the central and local government. The construction of projects strictly adheres to the※three simultaneities§

on environmental protection. In order to ensure pollutants are discharged strictly in accordance with the requirementsunder laws and regulations and disposed properly, production and operation strictly comply with the national Law onthe Prevention and Control of Environmental Pollution, Law on the Prevention and Control of Water Pollution, Law onthe Prevention and Control of Air Pollution, Action Plan for Prevention and Control of Water Pollution and Law on thePrevention and Control of Environmental Pollution by Solid Waste and other laws.

(2) The Company and its subsidiaries are equipped with perfect environmental protection treatment facilities, the main

process of sewage treatment is: pre-treatment 每 anaerobic 每 aerobic 每 deep treatment process, which can achieve thestandard discharge of sewage; and each subsidiary is equipped with water reuse system, reuse the treated sewage asmuch as possible to reduce the pollution of emissions. The Company has built nine sewage treatment plants with a dailytreatment capacity of 350,000 cubic meters; and every quarter, government departments regularly visit the Company tocompare the online monitoring data, and the data comparison is qualified.

(3) Each subsidiary

*s organised emission outlets are equipped with an online monitoring system for real-time monitoring.All subsidiaries have their own power plants. Each self-owned plant has its own environmental protection facilitiesfor dedusting, desulphurisation and denitrification. Denitrification is conducted through SCR or SNCR, whiledesulphurisation is primarily conducted through gypsum desulphurisation (ammonia desulphurisation is adopted in theself-owned plant of Jiangxi Chenming). Substantially all of the emissions indicators are below the national and localexecution standards. Other alkali recovery boilers and lime kilns are also in compliance with the emission standards.Environmental impact assessment of construction projects and other environmental protection administrativelicensingThe Company has strictly complied with the environmental laws and regulations all along to carry out environmental impactassessment of construction projects. The construction projects are all subject to environmental impact assessment. During theconstruction process, a reasonable environmental protection project construction plan is formulated and strictly implemented.The environmental protection facilities and the main project are designed, constructed and put into operation at the sametime. At present, all construction projects put into production have obtained environmental impact assessment approvals andacceptance approvals.In June 2017, the Company and its subsidiaries completed the formalities for new discharge permits in accordance with theMeasures for the Administration of Pollutant Discharge Permits of the Ministry of Environmental Protection, and the dischargepermits of the new projects were renewed according to the environmental protection requirements in a timely manner.Emergency plan for emergency environmental incidentsThe Company has strictly implemented emergency regulations for emergency environmental incidents, and formulated variousemergency plans for emergency environmental incidents according to the technical requirements in the※Technical Guidelinesfor Emergency Environmental Pollution Accidents§. The plans are reviewed by and filed with the Environmental ProtectionBureau, and regular emergency training and emergency drills are conducted. Emergency measures in relation to dangerouschemicals are formulated in accordance with the environmental protection requirements. At the same time, necessaryemergency supplies are provided with regular inspections and updates.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

V Environmental and Social Responsibility

I. Major environmental protection matters (Cont*d)

Environmental self-monitoring programme

The Company has strictly complied with self-monitoring laws and regulations, and conducted self-monitoring in accordancewith the environmental protection requirements to establish and perfect the corporate environmental management ledgersand materials. At present, self-monitoring is a combination of manual monitoring and automatic monitoring. At the same time,qualified units are engaged to conduct regular monitoring. Automatically monitored items include: total wastewater discharge(COD, ammonia nitrogen, flow rate, total phosphorus, total nitrogen and PH); power plant, alkali recovery boilers and limekiln exhaust emissions (sulphur dioxide, nitrogen oxide and smoke). Manually monitored items include: daily monitoring ofCOD, ammonia nitrogen, SS, chroma, PH, total phosphorus and total nitrogen indicators. Sewage and other monitoring items,unorganised exhaust emission, solid waste, and noise at the plant boundary, are monitored on a monthly or quarterly basis byqualified units engaged in accordance with the local environmental protection requirements in relation to each subsidiary.The self-monitoring data and environmental monitoring programmes for pollutants discharge of various subsidiaries arepublished on the national key pollution source information disclosure website and the provincial key pollution sourceinformation disclosure websites.Administrative penalty for environmental problems during the reporting periodName of companyor subsidiary

Reasons forpenaltyViolationsPenalty results

Impact on theproduction andoperation of thelisted company

Corrective measuresof the CompanyJiangxi Chenming Paper

Co., Ltd.

Excessiveemission ofpolluted water

On 12 September 2021,the Nanchang MunicipalEcological EnvironmentBureau conducted an on-site inspection of JiangxiChenming. After testing,the suspended solids of thewastewater samples collectedfrom the wastewater dischargeoutlet amounted to 59.33mg/L, and the chromaticityamounted to 64, which were

0.98 times and 0.28 times

higher than the standard,respectively. Therefore,the wastewater dischargeexceeded the standard.

On 7 January 2022,the NanchangMunicipal EcologicalEnvironment Bureauissued the Decisionon AdministrativePenalty and imposeda fine of RMB401,000on Jiangxi Chenming.

Jiangxi Chenminghad completedrectification, andpaid the fine ontime. There was nosignificant adverseimpact on the listedcompany.

Control at source ensuredthat the indicators of eachsection reached the requiredrange through strict controlon the operation of the watertreatment system. Waterintake stabilisation avoidedthe impact of excessive watervolume to affect the indicatorof suspended solids in theeffluent. The monitoringof drainage indicators wasstrengthened. They wereadjusted on time to ensurethat the discharge met thestandards.

Other environmental information to be disclosedThe relevant environmental protection information of the pollutant discharge permit information and the pollutant dischargepermit requirements is announced on the national sewage discharge permit management information platform.Measures taken to reduce its carbon emissions during the reporting period and their effectiveness

﹟ Applicable Not applicable

INTERIM REPORT 2022

V Environmental and Social Responsibility

I. Major environmental protection matters (Cont*d)Measures taken to reduce its carbon emissions during the reporting period and their effectiveness (Cont*d)

(1) The Group measured the content of carbon elements in a monthly manner, purchased coal with higher calorific value,

and increased electricity purchases to reduce coal consumption.

(2) The Group implemented the conversion of old and new energy sources, eliminated high energy-consuming equipment,

replaced high-efficiency inverter and energy-saving motors, and reduced energy consumption.

(3) For moisture content of screening unit and squeezing unit of paper machine, the Group reduced out of the press

moisture and the amount of steam used of drying unit.by adjusting the lip plate flow rate, retention rate and linepressure and other measures. According to the zero position of the air cover of the paper machine dryer, the Groupreduced the frequency of the fan appropriately to improve the zero position and the drying efficiency and save electricityconsumption.

(4) The Group strengthened daily energy-saving management by developing a system for temperature of air conditioning

and switching on and off of various power supplies, with tracking and inspection.

(5) The Group vigorously developed clean energy and energy recycling projects to reduce carbon emissions. The

Shouguang Chenming 33 MW and Zhanjiang Chenming 30 MW photovoltaic power generation projects were beingimplemented.

(6) The Group carried out energy saving and emission reduction at different factories, so that the amount of clean water

was under strict control, the amount of water produced by membrane treatment was increased and the amount ofwastewater recycled was increased.Other environmental protection related informationOther environmental protection related information is announced on the Company*s website.

II. Social responsibility

1. Protecting the rights of shareholders

During the reporting period, the Company strictly followed laws and regulations such as the Company Law, theSecurities Law, the Shenzhen Stock Exchange Listing Rules and the relevant provisions of the Articles of Association,operated efficiently in accordance with laws and regulations, and actively safeguarded the rights and interests ofshareholders. The Company adopted a combination of on-site and online voting to convene general meetings to ensurethe right of shareholders to know, participate and vote on the Company*s major issues, especially for the minorityshareholders. The Company held the 2021 Annual Performance Briefing to extensively listen to investors*opinions andsuggestions, to communicate and answer questions that investors were generally concerned about, so that investorshad a more comprehensive and clear understanding of the Company. The Company strictly fulfilled its informationdisclosure obligations, disclosed information to all investors in a true, accurate, complete, timely and fair manner, andcontinuously improved the Company*s transparency to effectively protect the rights and interests of shareholders.

2. Protecting the Rights of Employees

During the reporting period, the Company stuck to the people-oriented concept, strictly complied with the Labour Law,the Labour Contract Law and other relevant laws and regulations, to fully protect the legitimate rights and interests of itsemployees. The Company continued to improve its human resources management system. Guided by the employmentconcept of※eliminating backwardness, rejecting mediocrity, and motivating advancement§, the Company optimised itssalary system and assessment and incentive mechanism, strengthened personal vocational training, and promoted theimprovement of employees* comprehensive ability. At the same time, the Company enriched employees*spare time bycarrying out the 2022 staff table tennis exchange competition, staff basketball competition, badminton competition andother activities. It also continued to improve the staff dining environment, distributed birthday cakes and greeting cardsand organised activities such as cool summer games to enhance employees*happiness and sense of belonging andsafeguard their rights and interests.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

V Environmental and Social Responsibility

II. Social responsibility (Cont*d)

3. Protecting the rights of suppliers and customers

The Company always adheres to the core values of※honesty, win-win and sharing§, and pays attention to protectingthe legitimate rights and interests of suppliers and customers. During the reporting period, the Company continuouslyestablished and improved the supply chain management system, optimised the Subsidiary Regional ProcurementManagement Measures, selected high-quality suppliers fairly and justly, strengthened source procurement, establishedlong-term cooperative relations, reduced procurement costs, and ensured the quality of raw materials and stable supply.The Company continued to be guided by market demand, strived to improve customer satisfaction, continuouslyimproved the level of scientific and technological research and development, provided customers with the most valuableproducts and services, and fully respected and protected the legitimate rights and interests of suppliers and customers.

4. Protecting the environment

The Company has always adhered to the concept of※green development, ecological Chenming§, thoroughlyimplemented the national energy conservation and environmental protection policy, actively implemented the※dualcarbon§strategy, and unswervingly followed the road of green, low-carbon and high-quality development. Duringthe reporting period, the Company further intensified its environmental protection work, strengthened publicity andeducation on energy conservation and environmental protection, and carried out a series of activities such as※EnergyConservation Publicity Week§and Low-Carbon Day to raise the awareness of all employees on energy conservationand environmental protection. The Company continued to improve risk management and control measures and hiddendanger management plans to strengthen environmental protection, and conducted daily hidden danger investigationof equipment to ensure the normalisation of※double prevention mechanism§. It continued to integrate environmentalprotection concepts into products, and strived to provide customers with more green and healthy products, amongwhich the Company developed poplar coated white cardboard, Xingzhilian tissue paper and Xingzhilian toilet paper,which had won the national※Green Design Products§award. The※Technology Development of Super-thick SpecialCoated Paper for Children*s Album§was a new technology, new achievement and new model promoted and appliedby the provincial light industry. In line with China*s goal of resources saving, the Company complied with sustainabledevelopment requirements. In 2022, the Company*products, including double-sided offset printing paper, light paper,and coated paper series, were selected by China Environmental Labelling Products again. The Company had beenawarded this honour for 10 consecutive years.

5. Participating in social welfare

The Company always sticks to※Creating high-quality paper products and sincerely repaying the society§as itsguiding policy, and pays attention to the creation of social value while pursuing economic benefits. Over the years, theCompany has been supporting education and public welfare for the disabled, participating in charitable activities suchas※Chaoyang Student Assistance§and※Love for the Disabled§, and helping poor students through the Love EducationFoundation. During the reporting period, the Company actively participated in the 32nd※National Day for Helping theDisabled§charitable donations. In addition, under frequent outbreaks of the COVID-19 epidemic in China, the Companyactively implemented epidemic prevention measures, improved the internal epidemic prevention system, and built asolid foundation for protecting its own safety. At the same time, the Company donated anti-epidemic materials and dailynecessities to areas that were affected by the epidemic, such as Mazhang District of Zhanjiang City and Longtan Districtof Jilin City, to support the local fight against COVID-19.The Company stays true to itself and shoulders its missions. In the first half of 2022, the Company actively assumedthe responsibility of protecting the rights and interests of stakeholders such as shareholders, customers and suppliers,practiced the※dual carbon§strategy, supported the fight against the epidemic, alleviated the poor and helped thedisabled, and effectively fulfilled its social responsibilities. In the future, the Company will continue to follow the guidanceof※Creating high-quality paper products and sincerely repaying the society§, focusing on the principal business of pulpproduction and paper making, to create social value and achieve organic integration of economic, social and ecologicalbenefits.

INTERIM REPORT 2022

VI Material Matters

I. Undertakings made by parties involved in undertakings including the Company*s beneficialcontrollers, shareholders, related parties, bidders and the Company during the reportingperiod or prior periods but subsisting to the end of the reporting period Applicable ﹟ Not applicableDuring the reporting period, there was no undertaking made by parties involved in undertakings including the Company*sbeneficial controllers, shareholders, related parties, bidders and the Company during the reporting period or prior periods butsubsisting to the end of the reporting period.II. Appropriation of funds of the Company by the controlling shareholder and other related

parties for non-operating purposes Applicable ﹟ Not applicableThere was no appropriation of funds of the Company by the controlling shareholder and other related parties for non-operatingpurposes during the reporting period.III. External guarantees against the rules and regulations Applicable ﹟ Not applicableThere was no external guarantee provided by the Company which was against the rules and regulations during the reportingperiod.IV. Engagement or dismissal of accounting firmsHas the interim financial report been audited? Yes ﹟ NoThe interim financial report is unaudited.

V. Opinions of the Board and the Supervisory Committee regarding the※modified auditor*sreport§ for the reporting period issued by the accountants Applicable ﹟ Not applicableVI. Opinions of the Board regarding the※modified auditor*s report§ for the prior year

Applicable ﹟ Not applicableVII. Matters related to bankruptcy and reorganisation

Applicable ﹟ Not applicable

There was no matter related to bankruptcy and reorganisation during the reporting period.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

VI Material Matters

VIII. Litigation

Material litigation and arbitration

﹟ Applicable Not applicable

General information onthe litigation (arbitration)Amount involved

Whetherprovisionsare madeProgressTrial results and impact

Enforcement ofjudgment

Date ofdisclosureDisclosure indexStatutory demand andwinding-up petition

HK$389,112,432.44YesOn 16 February 2022, the

Company appealed thejudgment of the Court ofAppeal of the High Court ofHong Kong dated 5 August2020. On 17 May 2022, thehearing of the appeal tookplace in the Hong KongCourt of Final Appeal. On14 June 2022, the HongKong Court of Final Appealmade a judgment.

On 14 June 2022, theHong Kong Court ofFinal Appeal made ajudgment, dismissingthe Company*s appealrequest, and instructed theCompany to pay a total ofHK$389,112,432.44 to thecourt previously orderedby the Court of FirstInstance Judge Harris as acondition of adjournmentof the winding-up petitionsubmitted by HKK2 againstthe Company, togetherwith the accrued interesttherein. The payment shallbe paid to ArjowigginsHKK2 Limited.

Being executed21 June 2022http://www.cninfo.com.cn

Other litigations Applicable ﹟ Not applicable

IX. Punishment and rectification

﹟ Applicable Not applicable

NameTypeReason

Type of investigationpunishmentConclusion (if any)Disclosure dateDisclosure indexJiangxi Chenming Paper

Co., Ltd.

SubsidiaryExcessive emission

of polluted water

General administrativepenalties

On 12 September 2021, the NanchangMunicipal Ecological Environment Bureauconducted an on-site inspection of JiangxiChenming. After testing, the suspendedsolids of the wastewater samplescollected from the wastewater dischargeoutlet amounted to 59.33 mg/L, and thechromaticity amounted to 64, which were

0.98 times and 0.28 times higher than

the standard, respectively. Therefore,the wastewater discharge exceeded thestandard. On 7 January 2022, the NanchangMunicipal Ecological Environment Bureauissued the Decision on AdministrativePenalty and imposed a fine of RMB401,000on Jiangxi Chenming. As at the disclosuredate of the Report, Jiangxi Chenming hadcompleted rectification, and paid the fine ontime.

Not applicableNot applicable

INTERIM REPORT 2022

VI Material Matters

IX. Punishment and rectification (Cont*d)Rectification

﹟ Applicable Not applicable

Rectification measures of Jiangxi Chenming

(1) Control at source ensured that the indicators of each section reached the required range through strict control on the

operation of the water treatment system. (2) Water intake stabilisation avoided the impact of excessive water volume to affectthe indicator of suspended solids in the effluent. (3) The monitoring of drainage indicators was strengthened. They wereadjusted on time to ensure that the discharge met the standards.X. Credibility of the Company, its controlling shareholders and beneficial controllers Applicable ﹟ Not applicable

XI. Significant related party transactions

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

﹟ Applicable Not applicable

Related party transactions

Relationshipwith theCompany

Types of therelated partytransactions

Subject matter ofthe related partytransactions

Pricingbasis of therelated partytransaction

Relatedpartytransactionprice

Amount ofrelated partytransactions(RMB*0,000)Percentageas the amount

of similartransactions

Amount oftransactions

approved(RMB*0,000)

Whetherexceedingapprovedcap

Settlement ofrelated partytransactions

Market priceof availablesimilartransaction

DisclosuredateDisclosure indexWeifang Sime Darby West Port

Co., Ltd.

Joint ventureLabour

service

Portmiscellaneousfees

Market priceMarket price3,235.517.47%10,000.00NoBank

acceptanceand telegraphictransfer

Notapplicable

31 March2022

http://www.cninfo.com.cnTotal每每3,235.51每10,000.00每每每每每Particulars on refund of bulk saleNilEstimated total amount for day-to-day related party transactions to be conducted during the period (by types of transactions) and

their actual implementing during the reporting period (if any)

NilReasons for large differences between transaction price and market reference price (if applicable)Not applicable

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

Applicable ﹟ Not applicableThere was no related party transaction of the Company in connection with purchase or sale of assets or equity interestduring the reporting period.

3. Related party transaction connected to joint external investment

Applicable ﹟ Not applicableThere was no related party transaction of the Company connected to joint external investment during the reportingperiod.

4. Related creditors

* rights and debts transactions

﹟ Applicable Not applicable

Was there any non-operating related creditors* rights and debts transaction

﹟ Yes No

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

VI Material Matters

XI. Significant related party transactions (Cont*d)

4. Related creditors

* rights and debts transactions (Cont*d)Creditor*s rights receivable from any related party

Related party

Relationship withthe CompanyReason

Was thereany non-operatingcapitaloccupation

Openingbalance(RMB*0,000)

Amountincreasedduring thecurrent period(RMB*0,000)

Amountrecoveredduring thecurrent period(RMB*0,000)Interest rate

Interestfor thecurrent period(RMB*0,000)

Closingbalance(RMB*0,000)Shouguang Meite Environmental TechnologyCo., Ltd.

A joint ventureFinancial supportNo1,729.920.000.006.00%49.191,779.11Weifang Sime Darby West Port Co., Ltd.A joint ventureFinancial supportNo8,066.800.001,296.626.00%204.556,974.73Effect of related creditors*rights on the operating results and

financial position of the Company

The above creditors*rights did not affect the ordinary operation of the Company. Moreover, they catered to the needs for development of existingbusinesses of Shouguang Meite Environmental and Weifang Sime Darby West Port and lowered the financing costs.Debts payable to any related party

Related party

Relationship withthe CompanyReason

Openingbalance(RMB*0,000)

Amountincreasedduring thecurrent period

(RMB*0,000)

Amount

repaidduring thecurrent period

(RMB*0,000)Interest rate

Interestfor thecurrent period

(RMB*0,000)

Closingbalance(RMB*0,000)Chenming Holdings Company LimitedThe controlling

shareholder

Financial support0.0015,500.0015,500.00Market

interest rate

33.210.00

Guangdong Nanyue Bank Co., Ltd.An associateBorrowing220,100.0042,500.0070,000.00Market

interest rate

6,466.85192,600.00Effect of related debts on the operating results and

financial position of the Company

Financial support was provided by Chenming Holdings without requiring any pledge or guarantee, which was a testament toits support and confidence in the future development of the Company, and helped the Company promote project constructionand satisfy its needs for working capital.

5. Deals with related financial companies

Applicable ﹟ Not applicableThere were no deposits, loans, credits, or other financial services between the Company, its related financial companiesand the related parties.

6. Deals between financial companies controlled by the company and related parties

Applicable ﹟ Not applicableThere were no deposits, loans, credits, or other financial services between the financial companies controlled by theCompany and the related parties.

7. Other significant related party transactions

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

INTERIM REPORT 2022

VI Material Matters

XII. Material contracts and implementation

1. Custody, contracting and leasing

(1) Custody

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

(2) Contracting

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

(3) Leasing

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

2. Significant guarantees

﹟ Applicable Not applicable

(1) Guarantees

During the reporting period, the Company provided guarantee to subsidiaries and the guarantee amount incurredwas RMB7,289.9312 million. The subsidiaries provided guarantee to their subsidiaries and the guarantee amountincurred was RMB93.4898 million.As at 30 June 2022, the balance of the external guarantee provided by the Company (including the guaranteeto its subsidiaries by the Company and the guarantee provided to subsidiaries by subsidiaries) amounted toRMB11,805.5395 million, representing 61.42% of the equity attributable to shareholders of the Company as at theend of June 2022.

Unit: RMB*0,000External guarantees of the Company and its subsidiaries (excluding guarantees to subsidiaries)Name of obligee

Date of the relatedannouncementdisclosing theguarantee amount

Amount ofguaranteeGuarantee date

Guarantee

provided

Type ofguarantee

Collateral(if any)

Counter-guarantee(if any)Term

Fulfilled

or not

Guaranteeto related

partiesor notWeifang Sime Darby West PortCo., Ltd

24 July 201711,740.0020 December 201711,740.00General

guarantee

Creditguarantee

Shareholders*

pro rataguarantee

10 yearsNoYesZhanjiang Runbao Trading Co., Ltd.30 March 202216,000.0025 April 202216,000.00Pledge34.64%

equity interestin WuhanChenming

Equity transferpayment ofRMB160 million

2 yearsNoNoZhanjiang Dingjin Trading Co., Ltd.4 December 202013,558.194 December 202013,558.19PledgePropertiesEquity transfer

payment ofRMB136 million

2 yearsNoNoTotal external guarantees approved during the reporting period (A1)16,000.00Total actual external guarantees during the reporting period (A2)16,000.00Total external guarantees approved at the end of the reporting period (A3)41,298.19Balance of total actual guarantees at the end of the reporting period (A4)41,298.19

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

VI Material Matters

XII. Material contracts and implementation (Cont*d)

2. Significant guarantees (Cont

*d)

(1) Guarantees (Cont

*d)

Guarantees between the Company and its subsidiariesName of obligee

Date of the relatedannouncementdisclosing theguarantee amount

Amount ofguaranteeGuarantee date

Guaranteeprovided

Type ofguarantee

Collateral(if any)

Counter-guarantee(if any)Term

Fulfilledor notGuaranteeto related

partiesor notZhanjiang Chenming Pulp &Paper Co., Ltd.

30 March 2019176,778.7027 December 2019176,778.70General

guarantee

Creditguarantee

5 yearsNoNoZhanjiang Chenming Pulp &

Paper Co., Ltd.

27 March 2020150,000.0016 October 2020150,000.00General

guarantee

Creditguarantee

5 yearsNoNoZhanjiang Chenming Pulp &

Paper Co., Ltd.

30 March 20221,050,000.008 April 2022142,226.44General

guarantee

Creditguarantee

1 yearNoNoShandong Chenming Group

Finance Co., Ltd.

30 March 202230,000.00General

guarantee

1 yearNoNoShandong Chenming Paper Sales

Co., Ltd.

30 March 201925,434.9915 February 202225,434.99General

guarantee

Creditguarantee

5 yearsNoNoShandong Chenming Paper Sales

Co., Ltd.

30 March 2022350,000.007 April 2022100,562.48General

guarantee

Creditguarantee

1 yearNoNoHuanggang Chenming Pulp &

Paper Co., Ltd.

30 March 201660,500.0019 July 202160,500.00General

guarantee

Creditguarantee

7 yearsNoNoHuanggang Chenming Pulp &Paper Co., Ltd.

30 March 2022350,000.0022 April 202211,000.00General

guarantee

Creditguarantee

1 yearNoNoJiangxi Chenming Paper Co., Ltd.30 March 201962,308.4231 August 202162,308.42General

guarantee

Creditguarantee

5 yearsNoNoJiangxi Chenming Paper Co., Ltd.30 March 2022400,000.0031 March 202298,684.99General

guarantee

Creditguarantee

1 yearNoNoShouguang Meilun Paper Co., Ltd.27 March 202093,138.117 July 202193,138.11General

guarantee

Creditguarantee

5 yearsNoNoShouguang Meilun Paper Co., Ltd.30 March 2022500,000.0030 April 202234,259.14General

guarantee

Creditguarantee

1 yearNoNoWuhan Chenming Hanyang Paper

Holdings Co., Ltd.

18 October 20193,000.0017 December 20213,000.00General

guarantee

Creditguarantee

3 yearsNoNoWuhan Chenming Hanyang Paper

Holdings Co., Ltd.

30 March 202250,000.00General

guarantee

1 yearNoNoChenming (HK) Limited25 March 202110,533.0928 March 202210,533.09General

guarantee

Creditguarantee

3 yearsNoNoChenming (HK) Limited30 March 2022200,000.001 April 202226,338.49General

guarantee

Creditguarantee

1 yearNoNoShouguang Chenming Import and

Export Trade Co., Ltd.

30 March 201910,000.0014 January 202210,000.00General

guarantee

Creditguarantee

5 yearsNoNoShouguang Chenming Import and

Export Trade Co., Ltd.

30 March 202250,000.00General

guarantee

1 yearNoNoJilin Chenming Paper Co., Ltd.30 March 20199,858.0013 January 20229,858.00General

guarantee

Creditguarantee

5 yearsNoNoJilin Chenming Paper Co., Ltd.30 March 202230,000.0023 May 20221,800.00General

guarantee

Creditguarantee

1 yearNoNoZhanjiang Chenming ArboricultureDevelopment Co., Ltd.

30 March 202230,000.00General

guarantee

1 yearNoNoNanchang Chenming ArboricultureDevelopment Co., Ltd.

30 March 202210,000.00General

guarantee

1 yearNoNo

INTERIM REPORT 2022

VI Material Matters

Guarantees between the Company and its subsidiariesName of obligee

Date of the relatedannouncementdisclosing theguarantee amount

Amount ofguaranteeGuarantee date

Guarantee

provided

Type ofguarantee

Collateral(if any)

Counter-guarantee(if any)Term

Fulfilled

or notGuaranteeto relatedpartiesor notShanghai Chenming Pulp & Paper

Sales Co., Ltd.

30 March 20193,000.0026 January 20223,000.00General

guarantee

Creditguarantee

5 yearsNoNoShanghai Chenming Pulp & PaperSales Co., Ltd.

30 March 2022150,000.0031 May 202212,000.00General

guarantee

Creditguarantee

1 yearNoNoShanghai Hongtai Property

Management Co., Ltd.

30 March 202210,000.00General

guarantee

1 yearNoNoChenming (Overseas) Co., Ltd.30 March 202240,000.00General

guarantee

1 yearNoNoChenming (Singapore) Co., Ltd.30 March 202240,000.0014 June 202211,061.13General

guarantee

Creditguarantee

1 yearNoNoHainan Chenming Technology

Co., Ltd.

30 March 2022100,000.0013 May 20225,000.00General

guarantee

Creditguarantee

1 yearNoNoHuanggang Chenming Paper

Technology Co., Ltd.

30 March 2022500,000.00General

guarantee

1 yearNoNoHuanggang Chenming Pulp &

Fiber Trading Co., Ltd.

30 March 202230,000.00General

guarantee

1 yearNoNoKunshan Tuoan Plastic Products

Co., Ltd.

30 March 202210,000.00General

guarantee

1 yearNoNoShouguang Chenming Art Paper

Co., Ltd.

30 March 202220,000.00General

guarantee

1 yearNoNoJiangxi Chenming Tea Co., Ltd.30 March 202210,000.00General

guarantee

1 yearNoNoShouguang Hongyi Decorative

Packaging Co., Ltd.

30 March 20225,000.00General

guarantee

1 yearNoNoShouguang Hongxiang Printing and

Packaging Co., Ltd.

30 March 20225,000.00General

guarantee

1 yearNoNoShouguang Chenming Modern

Logistic Co., Ltd.

30 March 20225,000.00General

guarantee

1 yearNoNoShandong Grand View Hotel

Co., Ltd.

30 March 20225,000.00General

guarantee

1 yearNoNoShouguang Chenming PapermakingMachine Co., Ltd.

30 March 20225,000.00General

guarantee

1 yearNoNoTotal amount of guarantee provided for subsidiaries approved during the reporting period (B1)3,985,000.00Total amount of guarantee provided for subsidiaries during the reporting

period (B2)

728,993.12Total amount of guarantee provided for subsidiaries approved as at the end of the reporting period (B3)4,589,551.31Total balance of guarantee provided for subsidiaries as at the end of the

reporting period (B4)

1,047,483.98

XII. Material contracts and implementation (Cont*d)

2. Significant guarantees (Cont

*d)

(1) Guarantees (Cont

*d)

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

VI Material Matters

XII. Material contracts and implementation (Cont*d)

2. Significant guarantees (Cont

*d)

(1) Guarantees (Cont

*d)

Guarantees between subsidiariesName of obligee

Date of the relatedannouncementdisclosing theguarantee amount

Amount ofguaranteeGuarantee date

Guaranteeprovided

Type ofguarantee

Collateral(if any)

Counter-guarantee(if any)Term

Fulfilledor notGuaranteeto relatedpartiesor notChenming (HK) Limited30 March 201913,422.8019 November 202113,422.80General

guarantee

Creditguarantee

5 yearsNoNoChenming (HK) Limited30 March 20199,348.9817 March 20229,348.98General

guarantee

Creditguarantee

5 yearsNoNoZhanjiang Chenming Pulp &

Paper Co., Ltd.

27 March 202012,000.0016 August 202112,000.00General

guarantee

Creditguarantee

1 yearNoNoShouguang Meilun Paper Co., Ltd.4 December 202036,400.004 December 202036,400.00PledgeProperties3 yearsNoNoWuhan Chenming Hanyang

Paper Holdings Co., Ltd

4 December 2020600.004 December 2020600.00PledgeProperties3 yearsNoNoHuanggang Chenming Pulp &

Paper Co., Ltd.

4 December 202020,000.004 December 202020,000.00PledgeProperties3 yearsNoNoTotal amount of guarantee provided for subsidiaries approved during the reporting period (C1)0.00Total amount of guarantee provided for subsidiaries during the reporting

period (C2)

9,348.98Total amount of guarantee provided for subsidiaries approved as at the end of the reporting period (C3)91,771.78Total balance of guarantee provided for subsidiaries as at the end of the

reporting period (C4)

91,771.78Total amount of guarantee provided (i.e. sum of the above three guarantee amount)Total amount of guarantee approved during the reporting period (A1+B1+C1)4,001,000.00Total amount of guarantee during the reporting period (A2+B2+C2)754,342.10Total amount of guarantee approved as at the end of the reporting period (A3+B3+C3)4,722,621.28Total balance of guarantee as at the end of the reporting period

(A4+B4+C4)

1,180,553.95The percentage of total amount of guarantee provided (i.e. A4+B4+C4) to the net assets of the Company61.42%Of which:

Balance of guarantee provided for shareholders, beneficial controllers and its related parties (D)0.00Balance of guarantee directly or indirectly provided for obligors with gearing ratio over 70% (E)152,737.47Total amount of guarantee provided in excess of 50% of net assets (F)219,535.09Sum of the above three amount of guarantee (D+E+F)372,272.56For the unexpired guarantee contract, the guarantee liability has occurred during the reporting period or there is evidence showing that it is possible to bear joint liability for repayment (if any)NoProviding external guarantees in violation of prescribed procedures (if any)No

3. Entrusted wealth management

Applicable ﹟ Not applicableThe Company did not have any entrusted wealth management during the reporting period.

4. Other material contracts

Applicable ﹟ Not applicableThe Company did not have any other material contracts during the reporting period.

INTERIM REPORT 2022

VI Material Matters

XIII. Other matters of significance

﹟ Applicable Not applicable

1. Recognition of the Company and its subsidiaries as high and new technology enterprises

The Company and its subsidiaries Shouguang Meilun and Zhanjiang Chenming have been recognised again as high andnew technology enterprises upon expiry of their original high and new technology enterprise certificates. The certificatenumbers are GR202137005666, GR202137005468 and GR202144001212, respectively, each with a valid term of threeyears. According to the Law of the People*s Republic of China on Enterprise Income Tax and the relevant tax policiesof the PRC for high and new technology enterprises, the Company, Shouguang Meilun and Zhanjiang Chenming aresubject to an enterprise income tax rate of 15% under the preferential income tax policy for high and new technologyenterprises for three years (i.e. 2021 to 2023) from the year in which they are recognised as high and new technologyenterprises.For details, please refer to the relevant announcement (announcement no.: 2022-002) of the Company published onCNINFO on 11 February 2022.

2. Election of new session of the Board and the Supervisory Committee

At the 2022 first extraordinary general meeting of the Company held on 15 June 2022, the Resolution in Relation to theElection of Candidates for Non-independent Directors of the Tenth Session of the Board, the Resolution in Relationto the Election of Candidates for Independent Non-executive Directors of the Tenth session of the Board and theResolution in Relation to the Election of Candidates for Shareholder Representative Supervisors of the Tenth Session ofthe Supervisory Committee were considered and approved. Mr. Chen Hongguo, Mr. Hu Changqing, Mr. Li Xingchun, Mr.Li Feng and Mr. Li Weixian were elected as the executive Directors of the tenth session of the Board of the Company;Mr. Han Tingde and Mr. Li Chuanxuan were elected as the non-executive Directors of the tenth session of the Board ofthe Company; Mr. Li Zhihui, Mr. Sun Jianfei, Mr. Yang Biao and Ms. Yin Meiqun were elected as the independent non-executive Directors of the tenth session of the Board of the Company; and Ms. Li Kang, Ms. Pan Ailing and Ms. ZhangHong were elected as the shareholder representative Supervisors of the tenth session of the Supervisory Committee ofthe Company. On the same date, the Company held the fourth meeting of the tenth session of the staff representativemeeting, at which Ms. Qiu Lanju and Ms. Sang Ailing were elected as the staff representative Supervisors of the tenthsession of the Supervisory Committee of the Company; the Company held the first meeting of the tenth session of theBoard and the first meeting of the tenth session of the Supervisory Committee, at which Mr. Chen Hongguo was electedas chairman of the Board, Mr. Hu Changqing and Mr. Li Xingchun were elected as vice chairmen of the Board, and Ms.Li Kang was elected as chairman of the Supervisory Committee. The election of the new session of the Board and theSupervisory Committee of the Company was completed.For details, please refer to the relevant announcements (announcement no.: 2022-049, 2022-050, 2022-051 and 2022-052) of the Company published on CNINFO on 16 June 2022.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

VI Material Matters

XIII. Other matters of significance (Cont*d)

3. Disclosure index for 2022 interim report

AnnouncementNo.Subject matter

Date ofpublicationPublication website and index2022-001Announcement on the Continued Pledge of

Shares held by Shareholders

15 January 2022http://www.cninfo.com.cn2022-002Announcement on the Recognition of the

Company and its Subsidiaries as High and NewTechnology Enterprises

11 February 2022http://www.cninfo.com.cn2022-003Announcement on the Development of

Equipment Financing Business by a Subsidiary

24 February 2022http://www.cninfo.com.cn2022-004The First Indicative Announcement on Adjustment

of Coupon Rate of※18 Chenming Bond 01§andImplementation Measures for Resale by Investors

25 February 2022http://www.cninfo.com.cn2022-005The Second Indicative Announcement on

Adjustment of Coupon Rate of※18 ChenmingBond 01§and Implementation Measures forResale by Investors

1 March 2022http://www.cninfo.com.cn2022-006The Third Indicative Announcement on

Adjustment of Coupon Rate of※18 ChenmingBond 01§and Implementation Measures forResale by Investors

3 March 2022http://www.cninfo.com.cn2022-007Announcement on Pledge of Shares and Partial

Release of Pledge of Shares by Shareholders

12 March 2022http://www.cninfo.com.cn2022-008Announcement on the Development of

Equipment Financing Business by a Subsidiary

14 March 2022http://www.cninfo.com.cn2022-009Announcement on the 2021 Annual Online

Performance Briefing

28 March 2022http://www.cninfo.com.cn2022-010Announcement on the Development of

Equipment Financing Business by a Subsidiary

29 March 2022http://www.cninfo.com.cn2022-011Announcement on Resolutions of the Twelfth

Meeting of the Ninth Session of the Board ofDirectors

31 March 2022http://www.cninfo.com.cn2022-012Announcement on Resolutions of the Twelfth

Meeting of the Ninth Session of the SupervisoryCommittee

31 March 2022http://www.cninfo.com.cn2022-013Notice of 2021 Annual General Meeting31 March 2022http://www.cninfo.com.cn2022-0142021 Annual Report Summary31 March 2022http://www.cninfo.com.cn2022-015Special Statement on Securities Investment in

2021

31 March 2022http://www.cninfo.com.cn2022-016Announcement on Appointment of Auditor for

2022

31 March 2022http://www.cninfo.com.cn2022-017Announcement on the Expected Continuing

Related Party Transaction in 2022

31 March 2022http://www.cninfo.com.cn2022-018Announcement on the Development of

Equipment Financing Business

31 March 2022http://www.cninfo.com.cn2022-019Announcement on Carrying out Factoring

Business of Accounts Receivable

31 March 2022http://www.cninfo.com.cn2022-020Announcement on Expected Provision of

Guarantees to Subsidiaries for 2022

31 March 2022http://www.cninfo.com.cn2022-021Special Statement on the Proposed Non-

Distribution of Profit for 2021

31 March 2022http://www.cninfo.com.cn

INTERIM REPORT 2022

VI Material Matters

AnnouncementNo.Subject matter

Date ofpublicationPublication website and index2022-022Announcement on the Amendments to the

Company*s Relevant Systems

31 March 2022http://www.cninfo.com.cn2022-023Announcement on the Provision of External

Guarantees

31 March 2022http://www.cninfo.com.cn2022-024Announcement on Loan Transfer and Related

Party Transaction

31 March 2022http://www.cninfo.com.cn2022-025Announcement on Results of Resale by

Bondholders of※18 Chenming Bond 01§

31 March 2022http://www.cninfo.com.cn2022-026Shandong Chenming Paper Holdings Limited

Announcement on Payment of 2022 Interest withRespect to the First Tranche of Corporate BondsPublicly Issued to Qualified Investors in 2018

31 March 2022http://www.cninfo.com.cn2022-027Announcement on Receipt of Government

Subsidies by Subsidiaries

1 April 2022http://www.cninfo.com.cn2022-028Announcement on the Proposed Resale of※

Chenming Bond 01§ Sale-back Bonds

7 April 2022http://www.cninfo.com.cn2022-029Announcement on Pledge of Shares and Partial

Release of Pledge of Shares by Shareholders

21 April 2022http://www.cninfo.com.cn2022-0302022 First Quarterly Report30 April 2022http://www.cninfo.com.cn2022-031Announcement on the Results of Resale of※

Chenming Bond 01§ Bonds

10 May 2022http://www.cninfo.com.cn2022-032Announcement on Resolutions of 2021 Annual

General Meeting

12 May 2022http://www.cninfo.com.cn2022-033Announcement on Resolutions of the Twenty-

fourth Extraordinary Meeting of the Ninth Sessionof the Board of Directors

24 May 2022http://www.cninfo.com.cn2022-034Announcement on Resolutions of the Seventh

Extraordinary Meeting of the Ninth Session of theSupervisory Committee

24 May 2022http://www.cninfo.com.cn2022-035Declaration by Nominator of Independent

Director (Li Zhihui)

24 May 2022http://www.cninfo.com.cn2022-036Declaration by Nominator of Independent

Director (Sun Jianfei)

24 May 2022http://www.cninfo.com.cn2022-037Declaration by Nominator of Independent

Director (Yang Biao)

24 May 2022http://www.cninfo.com.cn2022-038Declaration by Nominator of Independent

Director (Yin Meiqun)

24 May 2022http://www.cninfo.com.cn2022-039Declaration by Candidate for Independent

Director (Li Zhihui)

24 May 2022http://www.cninfo.com.cn

XIII. Other matters of significance (Cont*d)

3. Disclosure index for 2022 interim report (Cont

*d)

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

VI Material Matters

AnnouncementNo.Subject matter

Date ofpublicationPublication website and index2022-040Declaration by Candidate for Independent

Director (Sun Jianfei)

24 May 2022http://www.cninfo.com.cn2022-041Declaration by Candidate for Independent

Director (Yang Biao)

24 May 2022http://www.cninfo.com.cn2022-042Declaration by Candidate for Independent

Director (Yin Meiqun)

24 May 2022http://www.cninfo.com.cn2022-043Announcement on the Purchase of Liability

Insurance for Directors, Supervisors and SeniorManagement

24 May 2022http://www.cninfo.com.cn2022-044Notice of the First Extraordinary General Meeting

of 2022

24 May 2022http://www.cninfo.com.cn2022-045Announcement on Credit Rating Adjustment30 May 2022http://www.cninfo.com.cn2022-046Announcement on Resolutions of the Twenty-

fifth Extraordinary Meeting of the Ninth Sessionof the Board of Directors

31 May 2022http://www.cninfo.com.cn2022-047Notice on Cancellation of Certain Resolutions of

2022 First Extraordinary General Meeting andSupplementary Notice of the General Meeting

31 May 2022http://www.cninfo.com.cn2022-048Announcement on Receipt of Government

Subsidies by Subsidiaries

1 June 2022http://www.cninfo.com.cn2022-049Announcement on Resolutions of the First

Extraordinary General Meeting of 2022

16 June 2022http://www.cninfo.com.cn2022-050Announcement on the Election of Employee

Representative Supervisors

16 June 2022http://www.cninfo.com.cn2022-051Announcement on Resolutions of the First

Meeting of the Tenth Session of the Board ofDirectors

16 June 2022http://www.cninfo.com.cn2022-052Announcement on Resolutions of the First

Meeting of the Tenth Session of the SupervisoryCommittee

16 June 2022http://www.cninfo.com.cn2022-053Announcement on the Progress of Litigation21 June 2022http://www.cninfo.com.cn2022-054Announcement on the Continued Pledge of

Shares held by Shareholders

28 June 2022http://www.cninfo.com.cn2022-055Announcement on Resolutions of the First

Extraordinary Meeting of the Tenth Session ofthe Board

28 June 2022http://www.cninfo.com.cn2022-056Announcement on Capital Increase and

Introduction of Strategic Investors of a Majority-owned Subsidiary

28 June 2022http://www.cninfo.com.cn

XIII. Other matters of significance (Cont*d)

3. Disclosure index for 2022 interim report (Cont

*d)

INTERIM REPORT 2022

VI Material Matters

XIV. Matters of significant of subsidiaries of the Company

﹟ Applicable Not applicable

1. Introduction of strategic investors by Zhanjiang Chenming

On 27 June 2022, the first extraordinary meeting of the tenth session of the Board of the Company considered andapproved the Proposal on Capital Contribution and Introduction of Strategic Investors of a Majority-owned Subsidiary.Given the recognition of Zhanjiang Chenming for its bright development prospect, Xiamen International Trade IndustryDevelopment Equity Investment Fund Partnership (Limited Partnership) made capital contribution to ZhanjiangChenming in the amount of RMB400 million, of which RMB266,351,374 was included in the registered capital and theremaining RMB133,648,626 was included in the capital reserve.For details, please refer to the relevant announcements (announcement no.: 2022-055 and 2022-056) of the Companypublished on CNINFO on 28 June 2022.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

VII Changes in Share Capital and Shareholders

I. Changes in shares

1. Changes in shares

Unit: shareOpening balanceChange during the reporting period (+/-)Closing balanceAmountPercentageNew issueBonus issue

Sharesconvertedfrom reservesOthersSubtotalAmountPercentageI. Restricted shares84,733,5212.84%-144,313-144,31384,589,2082.83%

1. Shares held by other domestic investors84,733,5212.84%-144,313-144,31384,589,2082.83%Including: Shares held by domestic natural persons84,733,5212.84%-144,313-144,31384,589,2082.83%II. Non-restricted shares2,899,474,67997.16%144,313144,3132,899,618,99297.17%

1. RMB ordinary shares1,664,784,16355.79%144,313144,3131,664,928,47655.79%

2. Domestic listed foreign shares706,385,26623.67%706,385,26623.67%

3. Overseas listed foreign shares528,305,25017.70%528,305,25017.70%III. Total number of shares2,984,208,200100.00%2,984,208,200100.00%The reasons for such changes

﹟ Applicable Not applicable

During the reporting period, some of the restricted RMB ordinary shares (A shares) held by Mr. Geng Guanglin, amember of the Senior Management of the ninth session of the Board of the Company, became non-restricted sharesamounting to 179,238 shares due to his resignation for six months. Some of the non-restricted RMB ordinary shares (Ashares) held by Mr. Chen Gang became restricted shares amounting to 34,925 shares due to the expiration of his termof office.Approval of changes in shareholding Applicable ﹟ Not applicableTransfer of shares arising from changes in shareholding Applicable ﹟ Not applicableProgress of share repurchase Applicable ﹟ Not applicableProgress of decrease in the holding of repurchased shares by way of bidding Applicable ﹟ Not applicable

INTERIM REPORT 2022

VII Changes in Share Capital and Shareholders

I. Changes in shares (Cont*d)

1. Changes in shares (Cont

*d)The effects of changes in shareholding on financial indicators such as basic earnings per share, diluted earningsper share and net assets per share attributable to ordinary shareholders of the Company for the latest year and thelatest period Applicable ﹟ Not applicableOther information considered necessary by the Company or required by the securities regulatory authorities to bedisclosed Applicable ﹟ Not applicable

2. Changes in restricted shares

﹟ Applicable Not applicable

Unit: share

Name of shareholders

Restrictedshares at the

beginningof period

Restrictedshares releasedduring the period

Restrictedshares increasedduring the period

Restrictedshares at theend of period

Reason forrestriction

Date of releasefrom restrictionGeng Guanglin2,716,950179,23802,537,712Restricted shares of the

participants of the ShareIncentive Scheme Locked-up shares of Directors,Supervisors and SeniorManagement

In accordance with theequity incentive plan (draft)and relevant requirementsfor shares held by Directors,Supervisors and SeniorManagementChen Gang1,104,775034,9251,139,700Restricted share of the

participants of the ShareIncentive Scheme Locked-up shares of Directors,Supervisors and SeniorManagement

In accordance with theequity incentive plan (draft)and relevant requirementsfor shares held by Directors,Supervisors and SeniorManagementTotal3,821,725179,23834,9253,677,412每每

II. Issuance and listing of securities

Applicable ﹟ Not applicable

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

VII Changes in Share Capital and Shareholders

III. Total number of shareholders and shareholdings

Unit: shareTotal number of ordinary shareholdersas at the end of the reporting period

170,976, of which 148,205 were holders of A shares,

22,437 were holders of B shares and 334 wereholders of H shares

Total number of holders of preference shareswith restored voting right as at the end of thereporting period (if any)0Shareholdings of ordinary shareholders interested in more than 5% of the shares of the Company or Top 10 ordinary shareholders

Name of shareholderNature of shareholder

Percentage ofshareholding

Number ofordinaryshares heldat the end ofthe reportingperiod

Changes(increase or

decrease)during the

reportingperiod

Number ofrestrictedordinaryshares held

Number ofnon-restricted

ordinary

shares held

Share pledged, marked or

locked-upStatus of

sharesNumberCHENMING HOLDINGS COMPANY LIMITEDState-owned legal person15.32%457,322,91900457,322,919Pledged274,220,000HKSCC NOMINEES LIMITEDOverseas legal person12.51%373,381,375-125,0000373,381,375CHENMING HOLDINGS (HONG KONG) LIMITEDOverseas legal person12.20%364,131,56300364,131,563NINGBO ASIA PAPER TUBE & CARTON

CO., LTD.

Domestic non-state-owned

legal person

1.08%32,120,00032,120,000032,120,000Chen HongguoDomestic natural person1.04%31,080,044023,310,0337,770,011SHANDONG SUN HOLDINGS GROUP CO., LTD.Domestic non-state-owned

legal person

0.82%24,507,1178,119,300024,507,117HONG KONG SECURITIES CLEARING

COMPANY LIMITED

Overseas legal person0.54%16,218,7802,157,809016,218,780VANGUARD EMERGING MARKETS STOCK

INDEX FUND

Overseas legal person0.50%14,819,546805,900014,819,546VANGUARD TOTAL INTERNATIONAL STOCK

INDEX FUND

Overseas legal person0.50%14,771,9450014,771,945GUOTAI JUNAN SECURITIES (HONG KONG)

LIMITED

Overseas legal person0.40%11,857,7461,344,583011,857,746Strategic investors or general legal persons who

become the top ten ordinary shareholders dueto the placement of new shares (if any)

NilRelated party relationship or acting in concert

among the above shareholders

A shareholder, Chenming Holdings (Hong Kong) Limited, which is an overseas legal person, is a wholly-owned subsidiary of a shareholder,

Chenming Holdings Company Limited, which is a state-owned legal person. A shareholder, Chen Hongguo, is the legal representative,

chairman and general manager of Chenming Holdings Company Limited. Save for the above, it is not aware that any other shareholders

mentioned above are persons acting in concert. It is also not aware that any other shareholders mentioned above are related to each other.Explanation of the aforementioned shareholders*

entrusted/entrusted voting rights and waiver ofvoting rights

NilSpecial explanation for designated repurchaseaccounts among the top 10 shareholders

Nil

INTERIM REPORT 2022

VII Changes in Share Capital and Shareholders

III. Total number of shareholders and shareholdings (Cont*d)

Shareholdings of the top ten non-restricted ordinary shareholders

Name of shareholder

Number ofnon-restrictedordinary shares

held as at the

end of theClass of sharesreporting periodClass of sharesNumberCHENMING HOLDINGS COMPANY LIMITED457,322,919RMB ordinary shares457,322,919HKSCC NOMINEES LIMITED373,381,375Overseas listed foreign shares373,381,375CHENMING HOLDINGS (HONG KONG) LIMITED364,131,563Domestic listed foreign shares210,717,563

Overseas listed foreign shares153,414,000NINGBO ASIA PAPER TUBE & CARTON CO., LTD.32,120,000RMB ordinary shares32,120,000SHANDONG SUN HOLDINGS GROUP CO., LTD.24,507,117RMB ordinary shares24,507,117HONG KONG SECURITIES CLEARING COMPANYLIMITED

16,218,780RMB ordinary shares16,218,780VANGUARD EMERGING MARKETS STOCK

INDEX FUND

14,819,546Domestic listed foreign shares14,819,546VANGUARD TOTAL INTERNATIONAL STOCK

INDEX FUND

14,771,945Domestic listed foreign shares14,771,945GUOTAI JUNAN SECURITIES (HONG KONG)

LIMITED

11,857,746Domestic listed foreign shares11,857,746Agricultural Bank of China Limited 每 CSI 500

Trading Index Securities Investment Open-ended Fund

5,920,500RMB ordinary shares5,920,500Related party relationship or acting in concertamong the top ten non-restricted ordinaryshareholders, and between the top ten non-restricted ordinary shareholders and the top tenordinary shareholders

A shareholder, Chenming Holdings (Hong Kong) Limited, which is anoverseas legal person, is a wholly-owned subsidiary of a shareholder,Chenming Holdings Company Limited, which is a state-owned legalperson. Save for the above, it is not aware that any other shareholders oftradable shares are persons acting in concert. It is also not aware that anyother shareholders of tradable shares are related to each other.Securities margin trading of top 10 ordinaryshareholders, if any

Chenming Holdings Company Limited held 457,322,919 RMB ordinaryshares, of which 352,322,919 shares were held through ordinary accountand 105,000,000 shares were held through credit guarantee securityaccount. Ningbo Asia Paper Tube & Carton Co., Ltd. held 32,120,000RMB ordinary shares, of which no share was held through ordinaryaccount and 32,120,000 shares were held through credit guaranteesecurity account. Shandong Sun Holdings Group Co., Ltd. held24,507,117 RMB ordinary shares, of which no share was held throughordinary account and 24,507,117 shares were held through creditguarantee security account.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

VII Changes in Share Capital and Shareholders

III. Total number of shareholders and shareholdings (Cont*d)Whether an agreed repurchase transaction was entered into during the reporting period by the top 10ordinary shareholders and top 10 non-restricted ordinary shareholders of the Company Yes ﹟ NoThe top 10 ordinary shareholders and top 10 non-restricted ordinary shareholders of the Company did not enter into anyagreed repurchase transaction during the reporting period.IV. Changes in shareholding of Directors, Supervisors and Senior Management Applicable ﹟ Not applicableV. Change of controlling shareholders or beneficial controllers

Change of controlling shareholders during the reporting period Applicable ﹟ Not applicableThere was no change of controlling shareholders of the Company during the reporting period.

Change of beneficial controllers during the reporting period Applicable ﹟ Not applicableThere was no change of beneficial controllers of the Company during the reporting period.

VI. Securities interests held by Directors, Supervisors and chief executives disclosed in

accordance with the Listing Rules of Hong Kong Stock ExchangeAs at 30 June 2022, the interests and short positions held by each of the Directors, Supervisors and chief executives of theCompany in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaningof Part XV of the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong) (the※SFO§)) as recorded in theregister required to be kept under section 352 of the SFO, are set out as follows:

Company

NamePosition

Number of shares held as at the end

of the reporting period (shares)DirectorsChen Hongguo (Note 1)Chairman and general manager31,080,044 A sharesHu ChangqingExecutive Director and vice chairman5,042,857 A sharesLi XingchunExecutive Director and vice chairman5,000,000 A sharesLi FengExecutive Director and deputy general manager3,906,027 A sharesLi WeixianExecutive Director and deputy general manager2,081,200 A shares

159,000 H sharesHan TingdeNon-executive Director每Li ChuanxuanNon-executive Director每Li ZhihuiIndependent non-executive Director每Sun JianfeiIndependent non-executive Director每Yin MeiqunIndependent non-executive Director每Yang BiaoIndependent non-executive Director每SupervisorsLi KangChairman of the Supervisory Committee149,300 A sharesPan AilingSupervisor每Zhang HongSupervisor每Sang AilingSupervisor每Qiu LanjuSupervisor每

INTERIM REPORT 2022

VII Changes in Share Capital and Shareholders

VI. Securities interests held by Directors, Supervisors and chief executives disclosed inaccordance with the Listing Rules of Hong Kong Stock Exchange(Cont*d)Associated corporations

NamePosition

Name of associatedcorporations

Number ofshares held atthe beginningof the reportingperiod (shares)

Changeduring theperiod (+/-)

Number ofshares heldat the end ofthe reportingperiod (shares)Chen HongguoChairman and

General Manager

Shouguang HenglianEnterprise Investment Co. Ltd. (Note 2)

231,000,000每231,000,000Note 1: Save for the 31,080,044 A shares held personally, Chen Hongguo was deemed to be interested in the 3,861,322 A shares held by his spouse,

Li Xueqin.Note 2: Chen Hongguo and his spouse, Li Xueqin, collectively hold 76.79% equity interests in Shouguang Henglian Enterprise Investment Co. Ltd.,

(hereinafter referred to as※Shouguang Henglian§), and Shouguang Henglian is therefore deemed to be controlled by Chen Hongguo. As

a result, the 231,000,000 shares in Chenming Holdings (approximately 18.65% of the total share capital of Chenming Holdings) held by

Shouguang Henglian is also deemed to be held by Chen Hongguo.Save as disclosed above, as at 30 June 2022, none of the Directors, Supervisors and chief executives of the Companyhad any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associatedcorporations which were required to be filed in the register of the Company required to be maintained pursuant to section352 of the SFO or which were required to be notified to the Company and Hong Kong Stock Exchange pursuant to the ModelCode for Securities Transactions by Directors of Listed Issuers as contained in Appendix 10 to the Listing Rules of Hong KongStock Exchange.As at 30 June 2022, none of the Directors, Supervisors or chief executives or their respective spouses or children under theage of 18 held or exercised any rights to subscribe for the share capital or debentures of the Company or its associatedcorporations.VII. Interests and short position of substantial shareholders in shares and underlying shares

disclosed in accordance with the Listing Rules of Hong Kong Stock ExchangeAs at 30 June 2022, the following shareholders (other than the Directors, Supervisors or chief executives of the Company) hadinterests or short positions in the Company*s shares and underlying shares as shown in the share register maintained by theCompany in accordance with Section 336 of the SFO:

Name

Number of shares held

(shares)

Approximate shareholding as a percentage ofTotal share capital (%)Class of shares (%)Chenming Holdings Co., Ltd.457,322,919 A shares (L)15.3226.14Chenming Holdings (Hong Kong) Limited210,717,563 B shares (L)7.0629.83Chenming Holdings (Hong Kong) Limited153,414,000 H shares (L)5.1429.04(L) 每 Long position(S) 每 Short position(P) 每 Lending poolSave as disclosed above, as at 30 June 2022, no other person had interests or short positions in the Company*s shares andunderlying shares as recorded in the register maintained under section 336 of the SFO.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

VIII Preference Shares

Applicable ﹟ Not applicableThe Company had no preference shares during the reporting period.

INTERIM REPORT 2022

IX Bonds

﹟ Applicable Not applicable

I. Enterprise bonds Applicable ﹟ Not applicableThe Company had no enterprise bonds during the reporting period.

II. Corporate Bonds

﹟ Applicable Not applicable

1. Basic information on Corporate Bonds

Name of bond

Bondabbreviation

BondcodeIssue dateValue dateMaturity date

Outstandingamount ofthe bonds

(RMB)

InterestratePayment methodTrading venueThe public issuance of

the Corporate Bonds ofShandong ChenmingPaper Holdings Limited toqualified investors in 2018(phase I)

18 ChenmingBond 01

11264129 March

2018

2 April2018

2 April2023

350,000,000.006.50%Interest is paid annually.

The principal amount willbe paid on the maturitydate.

Shenzhen Stock Exchange

Investor eligibility arrangement (if any)Online subscription: Public investors with A share security account opened under China Securities Depository and Clearing Co., Ltd.

Offline subscription: Institutional investors with A share security account opened under China Securities Depository and Clearing Co., Ltd.Applicable trading mechanismDual listing and trading on the centralised bidding system and the Integrated Negotiated Trading Platform of the Shenzhen Stock ExchangeWhether there are delisting risks (if any) andcountermeasures

NoOverdue and outstanding bonds Applicable ﹟ Not applicable

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

IX Bonds

II. Corporate Bonds (Cont*d)

2. Triggering and execution of issuer

*s or investor*s option clause or investor protection clause

﹟ Applicable Not applicable

§18 Chenming Bond 01§is attached with options for the issuer to adjust the coupon rate and for investors to resell.The issuer of※18 Chenming Bond 01§has the right to determine the adjustment to the coupon rate for the following3 years at the end of the second year and the adjustment to the coupon rate for the following year as the end of thefourth year. If the issuer does not exercise the option to adjust the coupon rate, the coupon rate for the subsequent termwill remain unchanged. After issuing the announcement on whether the coupon rate of the relevant tranche of bondswill be adjusted and the range of adjustment, the investors have the right to register for reselling during the period asannounced to resell all or part of the relevant tranche of bonds held to the issuer at par value.The Company chose to lower the coupon rate of※18 Chenming Bond 01§to 6.50% at the end of the fourth year asagreed in the Prospectus on the Public Issuance of the Corporate Bonds of Shandong Chenming Paper HoldingsLimited to Qualified Investors in 2018 (phase I). Bondholders of※18 Chenming Bond 01§could declare resale in wholeor in part for※18 Chenming Bond 01§bonds they held on 28 February, 1 March, 2 March, 3 March and 4 March 2022at a resale price of RMB100 per bond (interests exclusive). According to the data provided by the Shenzhen Branch ofChina Securities Depository and Clearing Corporation Limited, the amount of the※18 Chenming Bond 01§for this resalewas 1,955,000.00, and the total amount of the resale was RMB195,500,000.00 (interests exclusive) with a remainingcustodial amount of 1,545,000.00.From 8 April 2022 to 30 April 2022, the Company handled the resale of bonds to be resold in accordance with relevantregulations. The number of resale bonds completed was 1,955,000.00 at an average resale price of RMB100 per bond.Upon the completion of the resale, there were no bonds that had not been resold, and the remaining custodial amountof※18 Chenming Bond 01§ was 3,500,000.00.For details, please refer to the relevant announcements (announcement no.: 2022-004, 2022-005, 2022-006, 2022-025,2022-028 and 2022-031) of the Company published on CNINFO on 25 February, 1 March, 3 March, 31 March, 7 Apriland 10 May 2022.

3. Adjustment of credit rating results during the reporting period

﹟ Applicable Not applicable

On 26 May 2022, China Chengxin International Credit Rating Co., Ltd. (※China Chengxin International§) issued theFollow-up Rating Report (2022) with Respect to the Public Issuance of the Corporate Bonds of Shandong ChenmingPaper Holdings Limited to Qualified Investors in 2018 (phase I) (Xin Ping Wei Han Zi [2022] Gen Zong No. 0343). ChinaChengxin International adjusted the issuer credit rating of the Company at AA+, the credit rating of※18 Chenming Bond

§at AA+, and the negative rating outlook, to: the issuer credit rating of the Company at AA+ and the credit rating of※

Chenming Bond 01§ at AA+ unchanged, and the issuer and debt credit ratings included in the credit rating watch list.For further details, please refer to the Follow-up Rating Report (2022) with Respect to the Public Issuance of theCorporate Bonds of Shandong Chenming Paper Holdings Limited to Qualified Investors in 2018 (phase I) disclosed onCNINFO on 26 May 2022.

4. Implementation of and changes in guarantee, debt repayment plan and other repayment guarantee

measures during the reporting period and their impacts on the rights and interests of bond investors

﹟ Applicable Not applicable

§18 Chenming Bond 01§bonds are unsecured bonds. During the reporting period, the Company was able to strictlyimplement the debt repayment plan, and paid the interest on time and in full according to the time stipulated in theprospectus. Its debt repayment plan and other debt repayment guarantee measures remained changed, and wereconsistent with the relevant commitments in the prospectus.

INTERIM REPORT 2022

IX Bonds

III. Non-financial corporate debt financing instruments

﹟ Applicable Not applicable

1. Basic information of non-financial corporate debt financing instruments

Name of bond

BondabbreviationBond codeIssue dateValue date

Maturitydate

Outstandingamount ofthe bonds

(RMB)Interest ratePayment methodTrading venue2017 first tranche ofmedium-term notes ofShandong ChenmingPaper Holdings Limited

17 LuChenmingMTN001

10177900111 July

2017

12 July2017

N/A1,000,000,000.008.97%Perpetual mid-term

notes. Interest is paidannually and the principalis repaid upon maturity.

Inter-bank bondmarket2019 first tranche ofmedium-term notes ofShandong ChenmingPaper Holdings Limited

19 LuChenmingMTN001

10190093015 July

2019

17 July2019

17 July2022

700,000,000.006.5%Interest is paid annually

and the principal isrepaid upon maturity.

Inter-bank bondmarket2019 second tranche of

medium-term notes ofShandong ChenmingPaper Holdings Limited

19 LuChenmingMTN002

1019010589 August

2019

13 August2019

13 August2022

500,000,000.006.5%Interest is paid annually

and the principal isrepaid upon maturity.

Inter-bank bondmarketInvestor eligibility arrangement (if any)NilApplicable trading mechanismInter-bank bond market trading mechanismWhether there are delisting risks (if any) and countermeasuresN/AOverdue and outstanding bonds Applicable ﹟ Not applicable

2. Triggering and execution of issuer

*s or investor*s option clause or investor protection clause Applicable ﹟ Not applicable

3. Adjustment of credit rating results during the reporting period

﹟ Applicable Not applicable

On 26 May 2022, China Chengxin International issued the Follow-up Rating Report of Shandong Chenming PaperHoldings Limited 2022 (Xin Ping Wei Han Zi [2022] Gen Zong No. 0345). China Chengxin International adjusted the issuercredit rating of the Company at AA+, the credit ratings of※17 Lu Chenming MTN001§,※18 Lu Chenming MTN002§,※

Lu Chenming MTN001§and※19 Lu Chenming MTN002§at AA+, and the negative rating outlook, to: the issuer creditrating of the Company at AA+ and the credit ratings of※17 Lu Chenming MTN001§,※18 Lu Chenming MTN002§,※19 LuChenming MTN001§and※19 Lu Chenming MTN002§at AA+ unchanged, and the issuer and debt credit ratings includedin the credit rating watch list.For further details, please refer to the Follow-up Rating Report of Shandong Chenming Paper Holdings Limited 2022disclosed on Chinamoney on 26 May 2022.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

IX Bonds

III. Non-financial corporate debt financing instruments (Cont*d)

4. Implementation of and changes in guarantee, debt repayment plan and other repayment guarantee

measures during the reporting period and their impacts on the rights and interests of bond investors

﹟ Applicable Not applicable

※17 Lu Chenming MTN001§,※19 Lu Chenming MTN001§and※19 Lu Chenming MTN002§are not guaranteed. During thereporting period, the Company was able to strictly implement the debt repayment plans, and paid the interest on timeand in full according to the time stipulated in the prospectuses. Their debt repayment plans and other debt repaymentguarantee measures remained changed, which were consistent with the relevant commitments in the prospectuses.IV. Convertible bonds Applicable ﹟ Not applicableThe Company had no convertible bonds during the reporting period.

V. The loss in the scope of the consolidated financial statements during the reporting period

exceeding 10% of the net assets as at the end of the prior year Applicable ﹟ Not applicable

VI. Major accounting data and financial indicators of the Company over the past two years as at

the end of the reporting period

Unit: RMB*0,000

Item

As at the end ofthe reporting period

As at the end ofthe prior year

Increase/decreaseas at the end ofthe reporting periodas compared tothe end of theprior yearCurrent ratio68.50%65.05%3.45%Gearing ratio72.89%72.78%0.11%Quick ratio58.10%54.59%3.51%

The reporting period

The correspondingperiod of the

prior year

Increase/decrease

of the reporting

period ascompared tocorresponding

period of the

prior yearNet profit after extraordinary gains or losses17,340.79196,471.82-91.17%Proportion of EBITDA to total debts4.25%8.97%-4.72%Interest coverage ratio1.332.99-55.52%Cash interest coverage ratio2.114.70-55.11%EBITDA interest coverage ratio2.724.00-32.00%Loans payment ratio100.00%100.00%0.00%Interest payment ratio100.00%100.00%0.00%

INTERIM REPORT 2022

X Financial Report

I. Auditors* Report

Is the interim report audited Yes ﹟ NoThe interim financial report is unaudited.

II. Financial Statements

The unit in the notes to the financial statements is: RMB

1. Consolidated Balance Sheet

Prepared by: Shandong Chenming Paper Holdings Limited

30 June 2022

Unit: RMBItem30 June 202231 December 2021CURRENT ASSETS:

Monetary funds14,958,681,361.9114,119,782,939.66 Financial assets held for trading51,033,051.57110,886,182.88 Bills receivable742,590,000.00每 Accounts receivable3,344,874,025.142,656,517,150.46 Accounts receivable financing912,727,537.75435,459,341.76 Prepayments1,029,462,815.63891,485,078.46 Other receivables2,211,345,141.222,252,864,083.00 Including: Interest receivable每每

Dividend receivable3,501,220.33每 Inventories5,388,568,445.285,282,631,922.12 Non-current assets due within one year5,216,044,182.275,216,934,172.61 Other current assets1,415,587,270.631,903,929,492.85Total current assets35,270,913,831.4032,870,490,363.80NON-CURRENT ASSETS:

Long-term receivables1,727,573,276.151,788,759,975.35 Long-term equity investments1,924,214,471.311,866,587,685.35 Other non-current financial assets519,927,003.25519,927,003.25 Investment property6,357,996,507.326,473,538,431.91 Fixed assets34,390,613,468.1835,653,492,676.15 Construction in progress802,407,685.01197,749,526.05 Bearer biological assets10,398,523.90每 Right-of-use assets188,830,653.76197,429,176.44 Intangible assets1,870,500,853.551,592,672,934.54 Goodwill26,946,905.3826,946,905.38 Long-term prepaid expenses47,413,231.2949,141,773.14 Deferred income tax assets1,164,178,754.331,114,781,456.78 Other non-current assets884,665,880.41489,936,694.10Total non-current assets49,915,667,213.8449,970,964,238.44Total assets85,186,581,045.2482,841,454,602.24

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

Item30 June 202231 December 2021CURRENT LIABILITIES:

Short term borrowings36,359,663,944.5733,523,025,186.22 Bills payable4,035,081,278.853,089,512,327.40 Accounts payable3,268,986,931.663,871,131,345.34 Receipts in advance26,735,329.1938,274,028.20 Contract liabilities1,334,133,746.951,382,289,597.54 Employee benefits payable130,627,751.53169,899,008.01 Taxes payable176,062,048.68321,495,480.67 Other payables1,544,415,534.741,538,013,585.93 Including: Interest payable65,975,461.6155,437,777.80

Dividend payable每每 Non-current liabilities due within one year4,558,351,674.186,601,311,227.98 Other current liabilities每每Total current liabilities51,434,058,240.3550,534,951,787.29NON-CURRENT LIABILITIES:

Long-term borrowings5,363,235,057.035,276,340,154.98 Bonds payable每155,000,000.00 Including: Preference shares每每

Perpetual Bonds每每 Lease liabilities54,751,617.0557,281,205.81 Long-term payables3,383,399,934.072,358,901,022.99 Provisions325,259,082.28325,259,082.28 Deferred income1,521,325,740.881,573,681,684.25 Deferred income tax liabilities12,761,398.9513,210,529.74 Other non-current liabilities每每Total non-current liabilities10,660,732,830.269,759,673,680.05Total liabilities62,094,791,070.6160,294,625,467.34OWNERS* EQUITY:

Share capital2,984,208,200.002,984,208,200.00 Other equity instruments996,000,000.00996,000,000.00 Including: Preference shares每每

Perpetual Bonds996,000,000.00996,000,000.00 Capital reserves5,250,084,902.325,282,805,114.62 Less: Treasury shares226,860,000.00226,860,000.00 Other comprehensive income-596,159,006.77-445,582,729.36 Surplus reserves1,212,009,109.971,212,009,109.97 General risk provisions76,825,918.6076,825,918.60 Retained profit9,524,268,170.629,210,372,613.81Total equity attributable to owners of the Company19,220,377,294.7419,089,778,227.64Minority interest3,871,412,679.893,457,050,907.26Total owners* equity23,091,789,974.6322,546,829,134.90Total liabilities and owners* equity85,186,581,045.2482,841,454,602.24Legal Representative:Financial controller:Head of the financial department:

Chen HongguoDong LianmingZhang Bo

II. Financial Statements (Cont*d)

1. Consolidated Balance Sheet (Cont

*d)

INTERIM REPORT 2022

X Financial Report

II. Financial Statements (Cont*d)

2. Balance sheet of the Company

Unit: RMBItem30 June 202231 December 2021CURRENT ASSETS:

Monetary funds7,063,348,459.376,827,656,382.37 Bills receivable3,955,040,000.003,625,270,000.00 Accounts receivable1,214,929,356.15141,601,245.51 Accounts receivable financing343,168,472.497,923,732.09 Prepayments452,913,807.74239,461,509.15 Other receivables8,021,857,221.768,900,179,262.54 Including: Interest receivable每每

Dividend receivable每126,325,018.50 Inventories691,539,694.58639,423,803.30 Non-current assets due within one year13,795,169.59每 Other current assets142,455,846.7844,894,366.29Total current assets21,899,048,028.4620,426,410,301.25NON-CURRENT ASSETS:

Long-term receivables14,401,926.5513,612,038.99 Long-term equity investments18,826,252,125.8718,806,029,815.18 Other non-current financial assets119,927,003.25119,927,003.25 Fixed assets3,638,101,674.933,753,927,591.49 Construction in progress120,165,950.0394,436,880.66 Intangible assets512,652,321.51520,068,337.11 Deferred income tax assets409,761,599.79393,918,032.54 Other non-current assets48,375,235.237,000,000.00Total non-current assets23,689,637,837.1623,708,919,699.22Total assets45,588,685,865.6244,135,330,000.47CURRENT LIABILITIES:

Short-term borrowings14,903,735,390.9313,761,223,259.09 Bills payable9,210,957,194.289,725,713,524.15 Accounts payable1,824,630,352.591,129,675,956.85 Receipts in advance每每 Contract liabilities1,338,045,087.62888,114,906.08 Staff remuneration payables59,016,682.9357,487,223.39 Tax payables10,423,309.95115,257,929.68 Other payables670,688,794.45970,585,670.47 Including: Interest payable77,790,375.0155,437,777.80

Dividend receivable每每 Non-current liabilities due within one year1,901,997,326.572,111,092,964.34 Other current liabilities每每Total current liabilities29,919,494,139.3228,759,151,434.05

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

Item30 June 202231 December 2021NON-CURRENT LIABILITIES:

Long-term borrowings1,838,330,770.831,779,135,700.00 Bonds payable每155,000,000.00 Long-term payables293,666,383.2452,376,768.35 Provisions325,259,082.28325,259,082.28 Deferred income34,111,573.9635,232,490.83 Deferred income tax liabilities每每 Other non-current liabilities每每Total non-current liabilities2,491,367,810.312,347,004,041.46Total liabilities32,410,861,949.6331,106,155,475.51OWNERS* EQUITY:

Share capital2,984,208,200.002,984,208,200.00 Other equity instruments996,000,000.00996,000,000.00 Including: Preference shares每每

Perpetual Bonds996,000,000.00996,000,000.00 Capital reserves5,147,515,323.535,154,365,336.31 Less: Treasury shares226,860,000.00226,860,000.00 Other comprehensive income每每 Surplus reserves1,199,819,528.061,199,819,528.06 Retained profit3,077,140,864.402,921,641,460.59Total owners* equity13,177,823,915.9913,029,174,524.96Total liabilities and owners* equity45,588,685,865.6244,135,330,000.47

II. Financial Statements (Cont*d)

2. Balance sheet of the Company (Cont

*d)

INTERIM REPORT 2022

X Financial Report

II. Financial Statements (Cont*d)

3. Consolidated Income Statement

Unit: RMBItemFirst half of 2022First half of 2021I. Total revenue16,676,428,365.8317,172,816,354.53

Including: Revenue16,676,428,365.8317,172,816,354.53II. Total operating costs16,436,429,464.8414,740,489,809.82

Including: Operating costs14,054,949,279.2011,861,060,977.92

Taxes and surcharges116,108,890.55163,794,026.94Sales and distribution expenses138,055,763.65147,622,738.74General and administrative expenses422,766,365.85492,048,555.49Research and development expense683,514,560.93757,021,354.57Finance expenses1,021,034,604.661,318,942,156.16 Including: Interest expenses991,475,816.561,399,107,777.11

Interest income150,582,370.85221,507,514.16

Plus: Other income149,264,611.68123,098,748.58Investment income (※-§ denotes loss)-24,138,176.9098,631,701.79Including: In vestment income from associates and

joint ventures26,616,556.5882,955,115.52Ga in on change in fair value(※-§ denotes loss)-58,813,415.49-99,119,691.89Credit impairment loss (※-§ denotes loss)-25,363,341.17-279,757,983.46Lo ss on impairment of assets

(※-§ denotes loss)1,936,644.09每Ga in on disposal of assets

(※-§ denotes loss)1,605,314.4948,920,358.12III. Operating profit (※-§ denotes loss)284,490,537.692,324,099,677.85Plus: Non-operating income1,093,429.3318,721,283.64Less: Non-operating expenses10,202,739.602,332,530.96IV. Total profit (※-§ denotes loss)275,381,227.422,340,488,430.53Less: Income tax expenses1,378,726.69274,057,779.20V. Net profit (※-§ denotes loss)274,002,500.732,066,430,651.33(I) Classification according to the continuity of operation

1. Net profit from continuing operations

(※-§ denotes loss)274,002,500.732,066,430,651.33

2. Net profit from discontinued operations

(※-§ denotes loss)每每(II) Classification according to ownership

1. Net profit attributable to shareholders of

the Company230,141,463.762,021,095,417.54

2. Profit or loss of minority interest43,861,036.9745,335,233.79VI. Net other comprehensive income after tax-150,576,277.4150,956,682.73

Net other comprehensive income after tax attributable to shareholders of the Company-150,576,277.4150,956,682.73(I) Other comprehensive income that cannot be

reclassified to profit and loss in subsequent periods每每(II) Other comprehensive income that will be reclassified

to profit and loss in subsequent periods-150,576,277.4150,956,682.73

1. Other comprehensive income that may be

reclassified to profit or loss under the equitymethod4,743,150.54每

2. Exchange differences arising from translation

of financial statements denominated inforeign currencies-155,319,427.9550,956,682.73Other comprehensive income, net of tax attributable to non-controlling interests每每

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

ItemFirst half of 2022First half of 2021VII. Total comprehensive income123,426,223.322,117,387,334.06To tal comprehensive income attributable to shareholders ofthe Company79,565,186.352,072,052,100.27Total comprehensive income attributable to minority interest43,861,036.9745,335,233.79VIII. Earnings per share:

(I) Basic earnings per share0.0640.604(II) Diluted earnings per share0.0640.604

Legal Representative:Financial controller:Head of the financial department:

Chen HongguoDong LianmingZhang Bo

II. Financial Statements (Cont*d)

3. Consolidated income statement (Cont

*d)

INTERIM REPORT 2022

X Financial Report

II. Financial Statements (Cont*d)

4. Income statement of the Company

Unit: RMBItemFirst half of 2022First half of 2021I. Revenue3,746,662,856.504,683,453,465.64Less: Operating costs3,381,230,045.733,511,074,075.94

Taxes and surcharges14,470,073.8542,172,707.76Sales and distribution expenses3,847,240.056,054,328.93General and administrative expenses89,156,653.40133,937,050.37Research and development expense165,518,080.69183,256,544.45Finance expenses210,696,803.24206,076,531.65 Including: Interest expenses333,394,473.97442,271,605.59

Interest income230,217,851.40304,371,806.49Plus: Other income24,145,213.862,494,987.66Investment income (※-§ denotes loss)237,259,432.752,679,672,292.80In cluding: Investment income from associates and jointventures-5,337,689.31-4,587,981.17Gains on changes in fair value (※-§ denotes loss)每每Credit impairment loss (※-§ denotes loss)-722,675.7529,056,014.19Loss on impairment of assets (※-§ denotes loss)每每Gain on disposal of assets (※-§ denotes loss)172,652.984,656,034.96II. Operating profit (※-§ denotes loss)142,598,583.383,316,761,556.15Plus: Non-operating income61,000.00486,916.50Less: Non-operating expenses3,003,746.82389,511.26III. Total profit (※-§ denotes total loss)139,655,836.563,316,858,961.39Less: Income tax expenses-15,843,567.2574,345,014.02IV. Net profit (※-§ denotes net loss)155,499,403.813,242,513,947.37(I) Net profit from continuing operations

(※-§ denotes net loss)155,499,403.813,242,513,947.37V. Net other comprehensive income after tax每每

(I) Other comprehensive income that cannot be

reclassified to profit and loss in subsequent periods每每(II) Other comprehensive income that will be

reclassified to profit and loss in subsequent periods每每VI. Total comprehensive income155,499,403.813,242,513,947.37VII. Earnings per share:

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

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

II. Financial Statements (Cont*d)

5. Consolidated cash flow statement

Unit: RMBItemFirst half of 2022First half of 2021I. Cash flows from operating activities:

Cash received from sales of goods and rendering of services16,841,914,152.3719,245,544,236.25Tax rebates received697,745,590.841,118,668.30Cash received relating to other operating activities833,956,367.801,036,500,713.48Subtotal of cash inflows from operating activities18,373,616,111.0120,283,163,618.03

Cash paid for goods and services15,019,129,399.8212,689,406,657.79Cash paid to and for employees721,958,063.20639,736,604.16Payments of taxes and surcharges635,688,016.571,207,344,439.05Cash paid relating to other operating activities998,576,421.97999,490,395.09Subtotal of cash outflows from operating activities17,375,351,901.5615,535,978,096.09Net cash flows from operating activities998,264,209.454,747,185,521.94II. Cash flows from investing activities:

Cash received from investments每20,000,000.00Cash received from investment income4,740,000.0036,500,000.00Net cash received from disposal of fixed assets, intangibleassets and other long-term assets3,921,115.56104,108,628.71Ne t cash received from disposal of subsidiaries andother business units每4,503,417.80Cash received relating to other investing activities每251,414,794.52Subtotal of cash inflows from investing activities8,661,115.56416,526,841.03

Ca sh paid for purchase of fixed assets, intangible assetsand other long-term assets815,285,839.39221,876,188.00Cash paid on investments每1,100,000,000.00Subtotal of cash outflows from investing activities815,285,839.391,321,876,188.00Net cash flows from investing activities-806,624,723.83-905,349,346.97

INTERIM REPORT 2022

X Financial Report

ItemFirst half of 2022First half of 2021III. Cash flows from financing activities:

Cash received from investments400,000,000.002,500,000,000.00Including: Cash received from subsidiaries from minority investment400,000,000.002,500,000,000.00Cash received from borrowings17,740,613,294.1815,114,516,924.13Cash received relating to other financing activities2,078,910,644.822,734,332,351.51Subtotal of cash inflows from financing activities20,219,523,939.0020,348,849,275.64Cash repayments of amounts borrowed16,096,915,969.1916,987,908,936.87Ca sh paid for dividend and profit distribution or interestpayment1,053,952,956.061,427,506,125.27In cluding: Dividend and profit paid by subsidiaries tominority shareholders每48,309,125.87Cash paid relating to other financing activities3,310,774,061.405,519,292,287.81Subtotal of cash outflows from financing activities20,461,642,986.6523,934,707,349.95Net cash flows from financing activities-242,119,047.65-3,585,858,074.31IV. Effect of foreign exchange rate changes on cash andcash equivalents24,169,806.97-19,367,887.88V. Net increase in cash and cash equivalents-26,309,755.06236,610,212.78Pl us: Balance of cash and cash equivalents as at thebeginning of the period3,168,915,847.024,389,169,963.79VI. Balance of cash and cash equivalents as at the end ofthe period3,142,606,091.964,625,780,176.57

II. Financial Statements (Cont*d)

5. Consolidated cash flow statement (Cont

*d)

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

II. Financial Statements (Cont*d)

6. Cash flow statement of the Company

Unit: RMBItemFirst half of 2022First half of 2021

1. Cash flows from operating activities:

Cash received from sales of goods and rendering of services3,937,092,906.315,570,459,385.98Tax rebates received9,335,732.7890,900.00Cash received relating to other operating activities268,488,989.46163,966,043.41Subtotal of cash inflows from operating activities4,214,917,628.555,734,516,329.39Cash paid for goods and services3,559,003,036.923,201,957,139.47Cash paid to and for employees168,707,495.45175,948,976.35Payments of taxes and surcharges146,897,297.11176,576,815.11Cash paid relating to other operating activities255,001,227.95301,406,268.10Subtotal of cash outflows from operating activities4,129,609,057.433,855,889,199.03Net cash flows from operating activities85,308,571.121,878,627,130.36II. Cash flows from investing activities:

Cash received from investments每20,000,000.00Cash received from investment income401,816,698.062,284,760,273.97Ne t cash received from disposal of fixed assets, intangibleassets and other long-term assets3,527,572.65847,248.68Cash received relating to other investing activities每251,414,794.52Subtotal of cash inflows from investing activities405,344,270.712,557,022,317.17

Ca sh paid for purchase of fixed assets, intangible assets

and other long-term assets12,870,064.02每Cash paid on investments每882,210,000.00Cash paid relating to other investing activities每每Subtotal of cash outflows used in investing activities12,870,064.02882,210,000.00Net cash flows from investing activities392,474,206.691,674,812,317.17

INTERIM REPORT 2022

X Financial Report

ItemFirst half of 2022First half of 2021III. Cash flows from financing activities:

Cash received from borrowings10,531,501,508.2010,020,478,661.27Cash received relating to other financing activities247,000,000.00156,665,920.24Subtotal of cash inflows from financing activities10,778,501,508.2010,177,144,581.51Cash repayments of amounts borrowed10,584,544,305.538,736,105,095.52Ca sh paid for dividend and profit distribution orinterest payment320,363,139.80219,435,214.79Cash paid relating to other financing activities307,022,816.274,871,112,670.18Subtotal of cash outflows from financing activities11,211,930,261.6013,826,652,980.49Net cash flows from financing activities-433,428,753.40-3,649,508,398.98IV. Effect of foreign exchange rate changes on cash and cash

equivalents6,179,448.152,460,284.82V. Net increase in cash and cash equivalents50,533,472.56-93,608,666.63Pl us: Balance of cash and cash equivalents as at thebeginning of the period893,454,314.56301,284,723.52VI. Balance of cash and cash equivalents as at the end of the

period943,987,787.12207,676,056.89

II. Financial Statements (Cont*d)

6. Cash flow statement of the Company (Cont

*d)

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

II. Financial Statements (Cont

*d)

7. Consolidated statement of changes in owners

* equity

Amounts for the period

Unit: RMB

ItemFirst half of 2022

Equity attributable to owners of the Company

Other equity instruments

CapitalreservesLess:

treasury shares

OthercomprehensiveincomeSpecial

reservesSurplusreservesGeneral risk

provisionsRetained

profitOthersSubtotal

MinorityinterestTotal

owners

* equityShare capital

Preference

sharesPerpetual

BondsOthers

I. Balance as at the end of the prior year

2,984,208,200.00每996,000,000.00每5,282,805,114.62226,860,000.00-445,582,729.36每1,212,009,109.9776,825,918.609,210,372,613.81每19,089,778,227.643,457,050,907.2622,546,829,134.90

Plus: Others每每每每-55,547,014.21每每每每每83,754,093.05每28,207,078.84每28,207,078.84II. Balance as at the beginning of the year

2,984,208,200.00每996,000,000.00每5,227,258,100.41226,860,000.00-445,582,729.36每1,212,009,109.9776,825,918.609,294,126,706.86每19,117,985,306.483,457,050,907.2622,575,036,213.74

III. Changes in the period (※-§ denotes decrease)

每每每每22,826,801.91每-150,576,277.41每每每230,141,463.76每102,391,988.26414,361,772.63516,753,760.89

(I) Total comprehensive income

每每每每每每-150,576,277.41每每每230,141,463.76每79,565,186.3544,038,587.32123,603,773.67

(II) Capital paid in and reduced by owners

每每每每22,826,801.91每每每每每每每22,826,801.91370,323,185.31393,149,987.22

1. Ordinary shares paid by owners

每每每每每每每每每每每每每370,323,185.31370,323,185.31

2. Capital paid by holders of other equity

instruments每每每每每每每每每每每每每每每

3.

Amount of share-based payments

recognised in owners* equity每每每每-6,850,012.78每每每每每每每-6,850,012.78每-6,850,012.78

4. Others

每每每每29,676,814.69每每每每每每每29,676,814.69每29,676,814.69

(III) Profit distribution

每每每每每每每每每每每每每每每

(IV) Transfer within owners* equity

每每每每每每每每每每每每每每每

IV. Balance as at the end of the period

2,984,208,200.00每996,000,000.00每5,250,084,902.32226,860,000.00-596,159,006.77每1,212,009,109.9776,825,918.609,524,268,170.62每19,220,377,294.743,871,412,679.8923,091,789,974.63

INTERIM REPORT 2022

X Financial Report

Amounts for the prior year

Unit: RMB

ItemFirst half of 2021

Equity attributable to owners of the Company

Other equity instruments

Capital

reservesLess:

treasury shares

Othercomprehensive

incomeSpecial

reservesSurplusreservesGeneral risk

provisionsRetained

profitOthersSubtotal

MinorityinterestTotal

owners

* equityShare capital

Preference

sharesPerpetual

BondsOthers

I. Balance as at the end of the prior year

2,984,208,200.004,477,500,000.00996,000,000.00每5,321,911,413.75226,860,000.00-561,686,607.66每1,212,009,109.9774,122,644.209,999,764,028.74每24,276,968,789.001,523,294,926.2425,800,263,715.24

II. Balance as at the beginning of the year

2,984,208,200.004,477,500,000.00996,000,000.00每5,321,911,413.75226,860,000.00-561,686,607.66每1,212,009,109.9774,122,644.209,999,764,028.74每24,276,968,789.00 1,523,294,926.24 25,800,263,715.24

III. Changes in the period (※-§ denotes decrease)

每-2,238,750,000.00每每-62,515,691.49每57,905,699.87 每每每1,261,950,931.88每-981,409,059.74 2,414,621,834.30 1,433,212,774.56

(I) Total comprehensive income

每每每每每每57,905,699.87每每每2,021,095,417.54每2,079,001,117.41 45,335,233.79 2,124,336,351.20

(II) Capital paid in and reduced by owners

每-2,238,750,000.00每每-62,515,691.49每每每每每每每-2,301,265,691.49 2,417,595,726.38 116,330,034.89

1. Ordinary shares paid by owners

每每每每每每每每每每每每每2,417,595,726.38 2,417,595,726.38

2. Capital paid by holders of other equity

instruments每-2,238,750,000.00每每-11,250,000.00每每每每每每每-2,250,000,000.00每-2,250,000,000.00

3.Amount of share-based payments

recognised in owners* equity每每每每26,330,034.89每每每每每每每26,330,034.89每26,330,034.89

4. Others

每每每每-77,595,726.38每每每每每每每-77,595,726.38每-77,595,726.38

(III) Profit distribution

每每每每每每每每每每-759,144,485.66每-759,144,485.66 -48,309,125.87 -807,453,611.53

1. Distribution to owners (or shareholders)每每每每每每每每每每-759,144,485.66每-759,144,485.66 -48,309,125.87 -807,453,611.53

IV. Balance as at the end of the period

2,984,208,200.002,238,750,000.00996,000,000.00每5,259,395,722.26226,860,000.00-503,780,907.79每1,212,009,109.9774,122,644.20 11,261,714,960.62 每23,295,559,729.26 3,937,916,760.54 27,233,476,489.80

II. Financial Statements (Cont

*d)

7. Consolidated statement of changes in owners

* equity (Cont

*d)

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

II. Financial Statements (Cont

*d)

8. Statement of changes in owners

* equity of the Company

Amounts for the period

Unit: RMB

ItemFirst half of 2022

Other equity instruments

Share capital

Less:

Treasury shares

OthercomprehensiveincomeSpecial

reservesSurplus

reservesRetained profitOthers

Total

owners

* equityShare capital

Preference

sharesPerpetual

BondsOthers

I. Balance as at the end of the prior year2,984,208,200.00每996,000,000.00每5,154,365,336.31226,860,000.00每每1,199,819,528.062,921,641,460.59每13,029,174,524.96II.

Balance as at the beginning of the year2,984,208,200.00每996,000,000.00每5,154,365,336.31226,860,000.00每每1,199,819,528.062,921,641,460.59每13,029,174,524.96III.

Changes in the period(※-§ denotes decrease)每每每每-6,850,012.78每每每每155,499,403.81每148,649,391.03

(I)

Total comprehensive income每每每每每每每每每155,499,403.81每155,499,403.81

(II)

Capital paid in and reduced by owners每每每每-6,850,012.78每每每每每每-6,850,012.781.

Amount of share-based paymentsrecognised in owners* equity每每每每-6,850,012.78每每每每每每每6,850,012.78

(III)

Profit distribution每每每每每每每每每每每每

(IV)

Transfer within owners* equity每每每每每每每每每每每每

IV.

Balance as at the end of the period2,984,208,200.00每996,000,000.00每5,147,515,323.53226,860,000.00每每1,199,819,528.063,077,140,864.40每13,177,823,915.99

INTERIM REPORT 2022

X Financial Report

Amounts for the prior year

Unit: RMB

ItemFirst half of 2021

Other equity instruments

Share capital

Less:

Treasury shares

Other

comprehensiveincomeSpecial

reservesSurplusreservesRetained profitOthers

Total

owners

* equityShare capital

Preference

sharesPerpetual

BondsOthers

I. Balance as at the end of the prior year2,984,208,200.004,477,500,000.00996,000,000.00每5,124,308,464.42226,860,000.00每每1,199,819,528.06718,245,947.72每15,273,222,140.20II. Balance as at the beginning of the year2,984,208,200.004,477,500,000.00996,000,000.00每5,124,308,464.42226,860,000.00每每1,199,819,528.06718,245,947.72每15,273,222,140.20III. Changes in the period(※-§ denotes decrease)每-2,238,750,000.00每每15,080,034.89每每每每2,483,369,461.71每259,699,496.60(I) Total comprehensive income每每每每每每每每每3,242,513,947.37每3,242,513,947.37(II) Capital paid in and reduced by owners每-2,238,750,000.00每每15,080,034.89每每每每每每-2,223,669,965.11

1. Capital paid by holders of other

equity instruments每-2,238,750,000.00每每-11,250,000.00每每每每每每-2,250,000,000.00

2. Amount of share-based payments

recognised in owners* equity每每每每26,330,034.89每每每每每每26,330,034.89

(III) Profit distribution每每每每每每每每每-759,144,485.66每-759,144,485.66

1. Distribution to owners (or

shareholders)每每每每每每每每每-759,144,485.66每 -759,144,485.66

IV. Balance as at the end of the period2,984,208,200.002,238,750,000.00996,000,000.00每5,139,388,499.31 226,860,000.00 每每1,199,819,528.063,201,615,409.43每15,532,921,636.80

II. Financial Statements (Cont

*d)

8. Statement of changes in owners

* equity of the Company (Cont

*d)

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

III. General Information of the Company

1. Company overview

The predecessor of Shandong Chenming Paper Holdings Limited (hereinafter referred to as the※Company§) wasShandong Shouguang Paper Mill Corporation, which was changed as a joint stock company with limited liability throughoffering to specific investors in May 1993. In December 1996, with approval by Lu Gai Zi [1996] No. 270 issued by thePeople*s Government of Shandong Province and Zheng Wei [1996] No. 59 of the Securities Committee of the StateCouncil, the Company was changed as a joint stock company with limited liability established by share offer.In May 1997, with approval by Zheng Wei Fa [1997] No. 26 issued by the Securities Committee of the State Council,the Company issued 115,000,000 domestic listed foreign shares (B shares) under public offering, which were listed andtraded on Shenzhen Stock Exchange from 26 May 1997.In September 2000, with approval by Zheng Jian Gong Si Zi [2000] No. 151 issued by the China Securities RegulatoryCommission, the Company issued an additional 70,000,000 RMB ordinary shares (A shares), which were listed andtraded on Shenzhen Stock Exchange from 20 November 2000.In June 2008, with approval by the Stock Exchange of Hong Kong Limited, the Company issued 355,700,000 H shares.At the same time, 35,570,000 H shares were allocated to the National Council for Social Security Fund by our relevantstate-owned shareholder and converted into overseas listed foreign shares (H shares) for the purpose of reducing thenumber of state-owned shares. The additionally issued H shares were listed and traded on Hong Kong Stock Exchangeon 18 June 2008.As at 30 June 2022, the total share capital of the Company was changed to 2,984,208,200 shares. For details, pleaserefer to Note VII. 39.The Company has established a corporate governance structure comprising the general meeting, the board of directorsand the supervisory committee, and has manufacturing business centre, supply chain management centre, businessdepartment, marketing department, financial capital management centre, enterprise management centre, public utilitiescentre, securities investment department, audit department and other departments.The Company and its subsidiaries are principally engaged in, among other things, processing and sale of paperproducts (including machine-made paper and paper board), paper making raw materials and machinery; generationand sale of electric power and thermal power; forestry, saplings growing, processing and sale of timber; manufacturing,processing and sale of wood products; and hotel service, and equipment financial and operating leasing, investmentproperties and property service.The financial statements and notes thereto were approved at the second meeting of the tenth session of the board ofdirectors of the Company (the※Board§) on 30 August 2022.

2. Scope of consolidation

Subsidiaries of the Company included in the scope of consolidation in 2022 totalled 75. For details, please refer toNote IX※Equity in other entities§. The scope of consolidation of the Company during the year had one more companyincluded and one company less compared to the prior year. For details, please refer to Note VIII※Changes in the scopeof consolidation§.

INTERIM REPORT 2022

X Financial Report

IV. Basis of Preparation of the Financial Statements

1. Basis of preparation

These financial statements are prepared in accordance with the accounting standards for business enterprises, theapplication guidelines thereof, interpretations and other related rules (hereinafter referred to as※ASBEs§) promulgatedby the Ministry of Finance. In addition, the Company also discloses relevant financial information in accordance with thePreparation Rules for Information Disclosure by Companies Offering Securities to the Public No. 15 - General Provisionson Financial Reports (revised in 2014) of the CSRC.The financial statements are presented on a going concern.The Company*s financial statements have been prepared on an accrual basis. Except for certain financial instruments,the financial statements are prepared under the historical cost convention. In the event that depreciation of assetsoccurs, a provision for impairment is made accordingly in accordance with the relevant regulations

2. Going concern

No facts or circumstances comprise a material uncertainty about the Company*s going concern basis within 12 monthssince the end of the reporting period.V. Significant Accounting Policies and Accounting EstimatesSpecific accounting policies and accounting estimates are indicated as follows:

The Company and its subsidiaries are principally engaged in machine-made paper, electricity and heat, construction materials,paper making chemical products, financial leasing, hotel management and other operations. The Company and its subsidiariesformulated certain specific accounting policies and accounting estimates for the transactions and matters such as revenuerecognition, determination of performance progress and R&D expenses based on their actual production and operationcharacteristics pursuant to the requirements under the relevant accounting standards for business enterprises. For details,please refer to this Note V. 36※Revenue§. For the critical accounting judgments and estimates made by the management,please refer to Note V. 40※Change of Significant accounting policies and accounting estimates§.

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

These financial statements have been prepared in conformity with the ASBEs, which truly and fully reflect the financialposition of the consolidated entity and the Company as at 30 June 2022 and relevant information such as the operatingresults and cash flows of the consolidated entity and the Company for the first half of 2022.

2. Accounting period

The accounting period of the Company is from 1 January to 31 December of each calendar year.

3. Operating cycle

The operating cycle of the Company lasts for 12 months.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

V. Significant Accounting Policies and Accounting Estimates (Cont*d)

4. Functional currency

The functional currency of the Company and its domestic subsidiaries is Renminbi (※RMB§). Overseas subsidiaries of theCompany recognise U.S. dollar (※USD§or※US$§), Japanese yen (※JPY§), Euro (※EUR§) and South Korean Won (※KRW§)as their respective functional currency according to the general economic environment in which these subsidiariesoperate. The Company prepares the financial statements in RMB.

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

(1) Business combination under common control

For the business combination involving entities under common control, the assets and liabilities of the party beingmerged that are obtained in the business combination by the absorbing party shall be measured at the carryingamounts as recorded by the ultimate controlling party in the consolidated financial statements at the combinationdate, except for the adjustments of different accounting policies. The difference between the carrying amountof the consideration paid for the combination (or the aggregate nominal value of shares issued as consideration)and the carrying amount of the net assets obtained in the combination is charged to the capital reserve (sharecapital premium/capital premium). If the capital reserve (share capital premium/capital premium) is not sufficient toabsorb the difference, any excess shall be adjusted against retained earnings.Business combinations involving entities under common control and achieved in stagesIn the separate financial statements, the initial investment cost is calculated based on the shareholding portionof the assets and liabilities obtained and are measured at the carrying amounts as recorded by the party beingmerged at the combination date. The difference between the initial investment cost and the sum of the carryingamount of the original investment cost prior to the combination and the carrying amount of consideration paid forthe combination is adjusted to the capital reserve (share capital premium/capital premium), if the capital reserve isnot sufficient to absorb the difference, the excess difference shall be adjusted to retained earnings.In the consolidated financial statements, the assets and liabilities of the party being merged that are obtainedat the combination by the absorbing party shall be measured at the carrying value as recorded by the ultimatecontrolling party in the consolidated financial statements at combination date, except for adjustments of differentaccounting policies. The difference between the sum of the carrying value from original shareholding portionand the new investment cost incurred at combination date and the carrying value of net assets obtained atcombination date shall be adjusted to capital reserve (share capital premium/capital premium), if the balance ofcapital reserve is not sufficient to absorb the differences, any excess is adjusted to retained earnings. The long-term investment prior to the absorbing party obtaining the control of the party being merged, the recognised profitor loss, comprehensive income and other change of owners*equity at the closer date of the acquisition date andcombination date under common control shall separately offset the opening balance of retained earnings andprofit or loss during comparative statements.

(2) Business combination not under common control

For business combinations involving entities not under common control, the cost for each combination ismeasured at the aggregate fair value at acquisition date, of assets given, liabilities incurred or assumed, andequity securities issued by the acquirer in exchange for control of the acquiree. At acquisition date, the acquiredassets, liabilities or contingent liabilities of acquiree are measured at their fair value.

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

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

(Cont*d)

(2) Business combination not under common control (Cont

*d)Where the cost of combination exceeds the acquirer*s interest in the fair value of the acquiree*s identifiable netassets, the difference is recognised as goodwill, and subsequently measured on the basis of its cost minusaccumulative impairment provision; Where the cost of combination is less than the acquirer*s interest in the fairvalue of the acquiree*s identifiable net assets, the difference is recognised in profit or loss for the current periodafter reassessment.Business combinations involving entities not under common control and achieved in stagesIn the separate financial statements, the initial investment cost of the investment is the sum of the carrying amountof the equity investment held by the entity prior to the acquisition date and the additional investment cost at theacquisition date. The disposal accounting policy of other comprehensive income related with equity investmentprior to the acquisition date recognised under equity method shall be compliance with the method when theacquiree disposes the related assets or liabilities. Owners* equity due to the changes of other owners*equity otherthan the changes of net profit, other comprehensive income and profit distribution shall be transferred to profit orloss for current period when disposed of. If the equity investment held by the entity prior to the acquisition date ismeasured at fair value, the cumulative changes in fair value recognised in other comprehensive income shall betransferred to retained earnings for current period when accounted for using cost method.In the consolidation financial statements, the combination cost is the sum of consideration paid at acquisition dateand fair value of the acquiree*s equity investment held prior to acquisition date; the cost of equity of the acquireeheld prior to acquisition date shall be remeasured at the fair value at acquisition date, the difference between thefair value and carrying amount shall be recognised as investment income or loss for the current period. Othercomprehensive income and changes of investment equity related with acquiree*s equity held prior to acquisitiondate shall be transferred to investment profit or loss for current period at acquisition date, except for the othercomprehensive income incurred by the changes of net assets or net liabilities due to the remeasurement ofdefined benefit plans.

(3) Transaction fees attribution during business combination

The audit, legal, valuation advisory and other intermediary fees and other relevant administrative expenses arisingfrom business combinations are recognised in profit or loss when incurred. Transaction costs of equity or debtsecurities issued as the considerations of business combination are included in the initial recognition amounts.

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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, andintracompany 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 profit or loss 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 profit or lossstatement, and cash flows are included in the consolidated cash flow statement from the acquisition date to theend of the reporting period.The shareholders*equity of the subsidiaries that is not attributable to the Company is presented undershareholders*equity in the consolidated balance sheet as minority interest. The portion of net profit or loss ofsubsidiaries for the period attributable to minority interest is presented in the consolidated income statementunder the※profit or loss of minority interest§. When the amount of loss attributable to the minority shareholders ofa subsidiary exceeds the minority shareholders* portion of the opening balance of owners*equity of the subsidiary,the excess amount shall be allocated against minority interest.

(3) Acquisition of non-controlling interests in subsidiaries

The difference between the long-term equity investments costs acquired by the acquisition of non-controllinginterests and the share of the net assets from subsidiaries from the date of acquisition or the date of combinationbased on the new shareholding ratio, as well as the difference between the proceeds from the partial disposalof the equity investment without losing control over its subsidiary and the disposal of the long-term equityinvestment corresponding to the share of the net assets of the subsidiaries from the date of acquisition or the dateof combination, is adjusted to the capital reserve (share capital premium), if the capital reserve is not sufficient,any excess is adjusted to retained earnings.

(4) Accounting treatment for loss of control over subsidiaries

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

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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 theCompany comprise joint operations and joint ventures.

(1) Joint operations

Joint operations refer to a joint arrangement during which the Company is entitled to relevant assets andobligations of this arrangement.The Company recognises the following items in relation to its interest in a joint operation and accounts for them inaccordance with the relevant ASBEs:

A. the assets held solely by it and assets held jointly according to its share;B. the liabilities assumed solely by it and liabilities assumed jointly according to its share;C. the revenue from sale of output from joint operations;D. the revenue from sale of output from joint operations according to its share;E. the fees solely incurred by it and fees incurred from joint operations according to its share.

(2) Joint ventures

Joint ventures refer to a joint arrangement during which the Company only is entitled to net assets of thisarrangement.The Company accounts for its investments in joint ventures in accordance with the requirements relating toaccounting treatment using equity method for long-term equity investments.

8. Standards for recognising cash and cash equivalents

Cash refers to cash on hand and deposits readily available for payment purpose. Cash equivalents refer to short-termand highly liquid investments held by the Company which are readily convertible into known amount of cash and whichare subject to insignificant risk of value change.

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

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

(1) Foreign currency operations

The foreign currency operations of the Company are translated into the functional currency at the prevailing spotexchange rate on the date of exchange.On the balance sheet date, foreign currency monetary items shall be translated at the spot exchange rate onthe balance sheet date. The exchange difference arising from the difference between the spot exchange rateon the balance sheet date and the spot exchange rate upon initial recognition or the last balance sheet date willbe recognised in profit or loss for the period. The foreign currency non-monetary items measured at historicalcost shall still be measured by the functional currency translated at the spot exchange rate on the date of thetransaction. Foreign currency non-monetary items measured at fair value are translated at the spot exchangerate on the date of determination of the fair value. The difference between the amounts of the functional currencybefore and after the translation will be recognised in profit or loss or other comprehensive income for the periodbased on the nature of the non-monetary items.

(2) Translation of financial statements denominated in foreign currency

When translating the financial statements denominated in foreign currency of overseas subsidiaries, assets andliabilities on the balance sheet are translated at the spot exchange rate prevailing at the balance sheet date;owner*s equity items except for※retained profit§are translated at the spot exchange rates at the dates on whichsuch items arose.Income and expenses items in the profit or loss statement are translated at the prevailing spot exchange rate onthe transaction date.All items in the cash flow statements shall be translated at the prevailing spot exchange rate on the date thatthe cash flow transaction occurred. Effects arising from changes of exchange rate on cash shall be presentedseparately as the※effect of foreign exchange rate changes on cash and cash equivalents§item in the cash flowstatements.The differences arising from translation of financial statements shall be included in the※other comprehensiveincome§ item in owners* equity in the balance sheet.On disposal of foreign operations and loss of control, exchange differences arising from the translation of financialstatements denominated in foreign currencies related to the disposed foreign operations which has been includedin 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.

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

10. Financial instruments

A financial instrument is a contract that gives rise to a financial asset of one party and a financial liability or equity instrumentof another party.

(1) Recognition and derecognition of financial instruments

Financial asset or financial liability will be recognised when the Company became one of the parties under afinancial instrument contract.Financial asset that satisfied any of the following criteria shall be derecognised:

the contract right to receive the cash flows of the financial asset has terminated;the financial asset has been transferred and meets the derecognition criteria for the transfer of financialasset as described below.A financial liability (or a part thereof) is derecognised only when the present obligation is discharged in full or inpart. If an agreement is entered between the Company (debtor) and a creditor to replace the existing financialliabilities with new financial liabilities, and the contractual terms of the new financial liabilities are substantiallydifferent from those of the existing financial liabilities, the existing financial liabilities shall be derecognised and thenew financial liabilities shall be recognised.Conventionally traded financial assets shall be recognised and derecognised at the trading date.

(2) Classification and measurement of financial assets

The Company classifies the financial assets according to the business model for managing the financial assetsand characteristics of the contractual cash flows as follows: financial assets measured at amortised cost, financialassets measured at fair value through other comprehensive income, and financial assets measured at fair valuethrough profit or loss.Financial assets measured at amortised 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 Company*s business model for managing such financial assets is to collect contractual cash flows;The contractual terms of the financial asset stipulate that cash flows generated on specific dates are solelypayments of principal and interest on the principal amount outstanding.Subsequent to initial recognition, such financial assets are measured at amortised cost using the effective interestmethod. A gain or loss on a financial asset that is measured at amortised cost and is not part of a hedgingrelationship shall be recognised in profit or loss for the current period when the financial asset is derecognised,amortised using the effective interest method or with impairment recognised.

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

10. Financial instruments (Cont

*d)

(2) Classification and measurement of financial assets (Cont

*d)

Financial assets measured at fair value through other comprehensive 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 Company*s business model for managing such financial assets is achieved both by collecting collectcontractual cash flows and selling such financial assets;The contractual terms of the financial asset stipulate that cash flows generated on specific dates are solelypayments of principal and interest on the principal amount outstanding.Subsequent to initial recognition, such financial assets are subsequently measured at fair value. Interest calculatedusing the effective interest method, impairment losses or gains and foreign exchange gains and losses arerecognised in profit or loss for the current period, and other gains or losses are recognised in other comprehensiveincome. On derecognition, the cumulative gain or loss previously recognised in other comprehensive income isreclassified from other comprehensive income to profit or loss.Financial assets measured at fair value through profit or lossThe Company classifies the financial assets other than those measured at amortised cost and measured at fairvalue through other comprehensive income as financial assets measured at fair value through profit or loss. Uponinitial recognition, the Company irrevocably designates certain financial assets that are required to be measuredat amortised cost or at fair value through other comprehensive income as financial assets measured at fair valuethrough profit or loss in order to eliminate or significantly reduce accounting mismatch.Upon initial recognition, such financial assets are measured at fair value. Except for those held for hedgingpurposes, gains or losses (including interests and dividend income) arising from such financial assets arerecognised in the profit or loss for the current period.The business model for managing financial assets refers to how the Company manages its financial assets inorder to generate cash flows. That is, the Company*s business model determines whether cash flows will resultfrom collecting contractual cash flows, selling financial assets or both. The Company determines the businessmodel for managing financial assets on the basis of objective facts and specific business objectives for managingfinancial assets determined by key management personnel.The Company assesses the characteristics of the contractual cash flows of financial assets to determine whetherthe contractual cash flows generated by the relevant financial assets on a specific date are solely payments ofprincipal and interest on the principal amount outstanding. The principal refers to the fair value of the financialassets at the initial recognition. Interest includes consideration for the time value of money, for the credit riskassociated with the principal amount outstanding during a particular period of time and for other basic lendingrisks, costs and profits. In addition, the Company evaluates the contractual terms that may result in a change inthe time distribution or amount of contractual cash flows from a financial asset to determine whether it meets therequirements of the above contractual cash flow characteristics.

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

10. Financial instruments (Cont

*d)

(2) Classification and measurement of financial assets (Cont

*d)Financial assets measured at fair value through profit or loss(Cont*d)

All affected financial assets are reclassified on the first day of the first reporting period following the change inthe business model where the Company changes its business model for managing financial assets; otherwise,financial assets shall not be reclassified after initial recognition.Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair valuethrough profit or loss, relevant transaction costs are directly recognised in profit or loss for the current period.For other categories of financial assets, relevant transaction costs are included in the amount initially recognised.Accounts receivable or notes receivable arising from sales of goods or rendering services, without significantfinancing component are initially recognised based on the transaction price expected to be entitled by theCompany.

(3) Classification and measurement of financial liabilities

At initial recognition, financial liabilities of the Company are classified as financial liabilities measured at fair valuethrough profit or loss and financial liabilities measured at amortised cost. For financial liabilities not classifiedas measured at fair value through profit or loss, relevant transaction costs are included in the amount initiallyrecognised.Financial liabilities measured at fair value through profit or lossFinancial liabilities measured at fair value through profit or loss comprise held-for-trading financial liabilities andfinancial liabilities designated at fair value through profit or loss upon initial recognition. Such financial liabilitiesare subsequently measured at fair value, and the gains or losses from the change in fair value and the dividend orinterest expenses related to the financial liabilities are included in the profit or loss of the current period.Financial liabilities measured at amortised costOther financial liabilities are subsequently measured at amortised cost using the effective interest rate method,and the gains or losses arising from derecognition or amortisation are recognised in profit or loss for the currentperiod.Classification between financial liabilities and equity 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.

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

10. Financial instruments (Cont

*d)

(3) Classification and measurement of financial liabilities (Cont

*d)

Classification between financial liabilities and equity instruments(Cont*d)Equity instruments are any contract that evidences a residual interest in the assets of an entity after deducting allof its liabilities.If the Company cannot unconditionally avoid the performance of a contractual obligation by paying cash ordelivering other financial assets, the contractual obligation meets the definition of financial liabilities.Where a financial instrument must or may be settled with the Company*s own equity instruments, the Company*sown equity instruments used to settle such instrument should be considered as to whether it is as a substitutefor cash or other financial assets or for the purpose of enabling the holder of the instrument to be entitled to theremaining interest in the assets of the issuer after deducting all of its liabilities. For the former, it is a financialliability of the Company; for the latter, it is the Company*s own equity instruments.

(4) Fair value of financial instruments

The methods for determining the fair value of the financial assets or financial liabilities are set out in Note V. 41.

(5) Impairment of financial assets

The Company makes provision for impairment based on expected credit losses (ECLs) on the following items:

Financial assets measured at amortised cost;Receivables and debt investments measured at fair value through other comprehensive income;Contract assets as defined in the Accounting Standards for Business Enterprises No. 14 每 Revenue;Lease receivables;Financial guarantee contracts (except those measured at fair value through profit or loss or formed by continuinginvolvement of transferred financial assets or the transfer does not qualify for derecognition).

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

10. Financial instruments (Cont

*d)

(5) Impairment of financial assets (Cont

*d)Measurement of ECLsECLs are the weighted average of credit losses of financial instruments weighted by the risk of default. Creditlosses refer to the difference between all contractual cash flows receivable according to the contract anddiscounted according to the original effective interest rate and all cash flows expected to be received, i.e. thepresent value of all cash shortages.The Company takes into account reasonable and well-founded information such as past events, current conditionsand forecasts of future economic conditions, and calculates the probability-weighted amount of the present valueof the difference between the cash flows receivable from the contract and the cash flows expected to be receivedweighted by the risk of default.The Company measures ECLs of financial instruments at different stages. If the credit risk of the financialinstrument did not increase significantly upon initial recognition, it is at the first stage, and the Company makesprovision for impairment based on the ECLs within the next 12 months; if the credit risk of a financial instrumentincreased significantly upon initial recognition but has not yet incurred credit impairment, it is at the second stage,and the Company makes provision for impairment based on the lifetime ECLs of the instrument; if the financialinstrument incurred credit impairment upon initial recognition, it is at the third stage, and the Company makesprovision for impairment based on the lifetime ECLs of the instrument.For financial instruments with low credit risk on the balance sheet date, the Company assumes that the creditrisk did not increase significantly upon initial recognition, and makes provision for impairment based on the ECLswithin the next 12 months.Lifetime ECLs represent the ECLs resulting from all possible default events over the expected life of a financialinstrument. The 12-month ECLs are the ECLs resulting from possible default events on a financial instrumentwithin 12 months (or a shorter period if the expected life of the financial instrument is less than 12 months) afterthe balance sheet date, and is a portion of lifetime ECLs.The maximum period to be considered when estimating ECLs is the maximum contractual period over which theCompany is exposed to credit risk, including renewal options.For the financial instruments at the first and second stages and with low credit risks, the Company calculatesthe interest income based on the book balance and the effective interest rate before deducting the impairmentprovisions. For financial instruments at the third stage, interest income is calculated based on the amortised costafter deducting impairment provisions made from the book balance and the effective interest rate.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

10. Financial instruments (Cont

*d)

(5) Impairment of financial assets (Cont

*d)Bills receivable and accounts receivableFor bills receivable and accounts receivable, regardless of whether there is a significant financing component, theCompany always makes provision for impairment at an amount equal to lifetime ECLs.When the Company is unable to assess the information of ECLs for an individual financial asset at a reasonablecost, it classifies bills receivable and accounts receivable into portfolios based on the credit risk characteristics,and calculates the ECLs on a portfolio basis. The basis for determining the portfolios is as follows:

A. Bills receivableBills receivable portfolio 1: Bank acceptance billsBills receivable portfolio 2: Commercial acceptance billsB. Accounts receivableAccounts receivable portfolio 1: Due from related party customersAccounts receivable portfolio 2: Receivables from non-related party customersAccounts receivable portfolio 3: Factoring receivablesFor bills receivable and contract assets classified as a portfolio, the Company refers to the historical credit lossexperience, combined with the current situation and the forecast of future economic conditions, to calculate theECLs based on default risk exposure and lifetime ECL rate.For accounts receivable classified as a portfolio, the Company refers to the historical credit loss experience,combined with the current situation and the forecast of future economic conditions, to prepare a comparison tableof the ageing/overdue days of accounts receivable and the lifetime ECL rate to calculate the ECLs.Other receivablesThe Company classifies other receivables into portfolios based on credit risk characteristics, and calculates theECLs on a portfolio basis. The basis for determining the portfolios is as follows:

Other receivables portfolio 1: Amount due from government authoritiesOther receivables portfolio 2: Amount due from related partiesOther receivables portfolio 3: Other receivablesFor other receivables classified as a portfolio, the Company calculates the ECLs based on default risk exposureand the ECL rate over the next 12 months or the entire lifetime.

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

10. Financial instruments (Cont

*d)

(5) Impairment of financial assets (Cont

*d)Long-term receivables

The Company*s long-term receivables include finance lease receivables and deposits receivable.The Company classifies the finance lease receivables, deposits receivable and other receivables into portfoliosbased on the credit risk characteristics, and calculates the ECLs on a portfolio basis. The basis for determiningthe portfolios is as follows:

A. Finance lease receivablesFinance lease receivables portfolio 1: Receivables not past dueFinance lease receivables portfolio 2: Overdue receivablesB. Other long-term receivablesOther long-term receivables portfolio 1: Deposits receivableOther long-term receivables portfolio 2: Other receivablesFor deposits receivable and receivables for construction projects, the Company refers to the historical credit lossexperience, combined with the current situation and the forecast of future economic conditions, and calculatesthe ECLs based on default risk exposure and lifetime ECL rate.Except for those of finance lease receivables and deposits receivable, the ECLs of other receivables and long-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 investments

For debt investments and other debt investments, the Company measures the ECLs based on the nature of theinvestment, the types of counterparty and risk exposure, and default risk exposure and ECL rate within the next12 months or the entire lifetime.

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

10. Financial instruments (Cont

*d)

(5) Impairment of financial assets (Cont

*d)Assessment of significant increase in credit riskIn assessing whether the credit risk of a financial instrument has increased significantly upon initial recognition, theCompany compares the risk of default of the financial instrument at the balance sheet date with that at the dateof initial recognition to determine the relative change in risk of default within the expected lifetime of the financialinstrument.In determining whether the credit risk has increased significantly upon initial recognition, the Company considersreasonable and well-founded information, including forward-looking information, which can be obtained withoutunnecessary extra costs or efforts. Information considered by the Company includes:

The debtor*s failure to make payments of principal and interest on their contractually due dates;An actual or expected significant deterioration in a financial instrument*s external or internal credit rating (if any);An actual or expected significant deterioration in the operating results of the debtor;Existing or expected changes in the technological, market, economic or legal environment that have a significantadverse effect on the debtor*s ability to meet its obligation to the Company.Depending on the nature of the financial instruments, the Company assesses whether there has been a significantincrease in credit risk on either an individual basis or a collective basis. When the assessment is performed on acollective basis, the financial instruments are grouped based on their common credit risk characteristics, such aspast due information and credit risk ratings.The Company determines that the credit risk on a financial asset has increased significantly if it is more than 30days past due.

Credit-impaired financial assets

At balance sheet date, the Company assesses whether financial assets measured at amortised cost and debtinvestments measured at fair value through other comprehensive income are credit-impaired. A financial asset iscredit-impaired when one or more events that have an adverse effect on the estimated future cash flows of thefinancial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observableevents:

Significant financial difficulty of the issuer or debtor;A breach of contract by the debtor, such as a default or delinquency in interest or principal payments;For economic or contractual reasons relating to the debtor*s financial difficulty, the Company having granted tothe debtor a concession that would not otherwise consider;It becoming probable that the debtor will enter bankruptcy or other financial reorganisation;The disappearance of an active market for that financial asset because of financial difficulties of the issuer ordebtor.

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

10. Financial instruments (Cont

*d)

(5) Impairment of financial assets (Cont

*d)Presentation of provisions for ECLsECLs are remeasured at each balance sheet date to reflect changes in the financial instrument*s credit risk uponinitial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit or loss forthe current period. For financial assets measured at amortised cost, the provisions of impairment is deductedfrom the carrying amount of the financial assets presented in the balance sheet; for debt investments at fair valuethrough other comprehensive income, the Company makes provisions of impairment in other comprehensiveincome without reducing the carrying amount of the financial asset.Write-offsThe book balance of a financial asset is directly written off to the extent that there is no realistic prospect ofrecovery of the contractual cash flows of the financial asset (either partially or in full). Such write-off constitutesderecognition of such financial asset. This is generally the case when the Company determines that the debtordoes not have assets or sources of income that could generate sufficient cash flows to repay the amounts subjectto the write-off. However, financial assets that are written off could still be subject to enforcement activities inorder to comply with the Company*s procedures for recovery of amounts due.If a write-off of financial assets is subsequently recovered, the recovery is credited to profit or loss in the period inwhich the recovery occurs.

(6) Transfer of financial assets

Transfer of financial assets refers to the transfer or delivery of financial assets to another party other than theissuer of such financial assets (the transferee).If the Company transfers substantially all the risks and rewards of ownership of the financial asset to thetransferee, the financial asset shall be derecognised. If the Company retains substantially all the risks and rewardsof ownership of a financial asset, the financial asset shall not be derecognised.If the Company neither transfers nor retains substantially all the risks and rewards of ownership of the financialasset, it accounts for the transaction as follows: if the Company does not retain control, it derecognises thefinancial asset and recognises any resulting assets or liabilities; if the control over the financial asset is not waived,the relevant financial asset is recognised according to the extent of its continuing involvement in the transferredfinancial asset and the relevant liability is recognised accordingly.

(7) Offset of financial assets and financial liabilities

If the Company owns the legitimate rights of offsetting the recognised financial assets and financial liabilities,which are enforceable currently, and the Company plans to realise the financial assets or to clear off the financialliabilities on a net amount basis or simultaneously, the net amount of financial assets and financial liabilities shallbe presented in the balance sheet upon offsetting. Otherwise, financial assets and financial liabilities are presentedseparately in the balance sheet without offsetting.

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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 customersThis group comprises receivables with their ageing as credit risk

characteristics.

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

13. Accounts receivable financing

As for notes receivable and Accounts receivable that classified as measured at fair value through other comprehensiveincome, the portion within one year (inclusive) from the date of acquisition is presented as financing receivables. Forrelevant accounting policies, please refer to note V. 10. Financial instruments.

14. 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 agenciesThis 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.

15. Inventories

(1) Classification of inventories

Inventories of the Company mainly include raw materials, work in progress, goods in stock, development productsand consumable biological assets, etc.

(2) Pricing of inventories dispatched

Inventories of the Company are measured at their actual cost when obtained. Cost of raw materials, goods instock and others will be calculated with weighted average method when being dispatched.Consumable biological assets refer to biological assets held-for-sale which include growing timber. Consumablebiological assets without a stock are stated at historical cost at initial recognition, and subsequently measuredat fair value when there is a stock. Changes in fair values shall be recognised as profit or loss in the currentperiod. The cost of self-planting, self-cultivating consumable biological assets is the necessary expensesdirectly attributable to such assets prior to canopy closure, including borrowing costs eligible for capitalisation.Subsequent expenses such as maintenance cost incurred after canopy closure shall be included in profit or lossfor the current period.The cost of consumable biological assets shall, at the time of harvest or disposal, be carried forward at carryingamount using the stock volume proportion method.

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15. 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 estimated costincurred upon completion, estimated sales expenses and taxes and levies. The realisable value of inventories shallbe determined on the basis of definite evidence, purpose of holding the inventories and effect of after-balance-sheet-date events.At the balance sheet date, provision for inventory impairment is made when the cost is higher than the netrealisable value. The Company usually make provision for inventory impairment based on categories of inventories.At the balance sheet date, in case the factors causing inventory impairment no longer exists, the original provisionfor inventory impairment shall be reversed.

(4) Inventory stock taking system

The Company implements permanent inventory system as its inventory stock taking system.

(5) Amortisation of low-value consumables and packaging materials

The low-value consumables of the Group are amortised when issued for use.Packaging materials for turnover are amortised when issued for use.

16. Contract assets

Contract assets are the Company*s right to consideration in exchange for goods that the Company has transferred tocustomers when that right is conditioned on something other than the passage of time. The Company*s unconditionalright to receive consideration from customers (only the passage of time is required) is accounted for as accountsreceivable.The methods for determination and accounting treatment of the ECLs on contract assets are detailed in Note V. 10Financial instruments.

17. Contract costs

Contract costs are either the incremental costs of obtaining a contract with a customer or the costs to fulfil a contractwith a customer.Incremental costs of obtaining a contract are those costs that the Company incurs to obtain a contract with a customerthat it would not have incurred if the contract had not been obtained e.g. an incremental sales commission. TheCompany recognises as an asset the incremental costs of obtaining a contract with a customer if it expects to recoverthose costs. Other costs of obtaining a contract are expensed when incurred.If the costs to fulfil a contract with a customer are not within the scope of inventories or other accounting standards,the Company recognises an asset from the costs incurred to fulfil a contract only if those costs meet all of the followingcriteria:

the costs relate directly to an existing contract or to a specifically identifiable anticipated contract, including direct

labour, direct materials, allocations of overheads (or similar costs), costs that are explicitly chargeable to thecustomer and other costs that are incurred only because the Group entered into the contract;the costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy)

performance obligations in the future; the costs are expected to be recovered.

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17. Contract costs (Cont

*d)

Assets recognised for the incremental costs of obtaining a contract and assets recognised for the costs to fulfil acontract (the※assets related to contract costs§) are amortised on a systematic basis that is consistent with the transferto the customer of the goods or services to which the assets relate and recognised in profit or loss for the currentperiod. An expense is recognised when incurred if the amortisation period is less than one year.The Company recognises an impairment loss in profit or loss to the extent that the carrying amount of an asset relatedto contract costs exceeds:

remaining amount of consideration that the Company expects to receive in exchange for the goods or services towhich the asset relates; the cost estimated to be happened for the transfer of related goods or services.The costs of contract performance recognised as assets, if the amortisation period is less than one year or a normaloperating cycle upon the initial recognition, are presented as※Inventories§item, and if the amortisation period is morethan one year or a normal operating cycle upon the initial recognition, are presented as※Other non-current assets§ item.The contract obtaining costs recognised as assets, if the amortisation period is less than one year or a normal operatingcycle upon the initial recognition, are presented as※Other current assets§item, and if the amortisation period is morethan one year or a normal operating cycle upon the initial recognition, are presented as※Other non-current assets§ item.

18. Assets held for sale

A non-current asset or disposal group is classified as held for sale if its carrying amount will be recovered principallythrough a sale transaction (including a non-monetary asset exchange with commercial substance) rather than throughcontinuing use.The aforesaid non-current asset does not include the investment property subsequently measured at fair value, thebiological assets measured at the net amount of the fair value deducting the sales expense, the assets generated fromremuneration, 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 a transaction, andliabilities directly associated with those assets that will be transferred in the transaction. In certain circumstances, thedisposal 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: thenoncurrent asset or disposal group is available for immediate sale in its present condition subject only to terms thatare usual and customary for sales of such asset or disposal group; the sale is highly probable, i.e. a sale plan has beenresolved and a firm purchase commitment has been obtained, and the sale is expected to be completed within one year.When the Group loses control of a subsidiary due to reasons such as disposal of investment in a subsidiary, regardlessof whether the Group retains part of the equity investment after the disposal, when the investment in a subsidiaryintended to be disposed of meets the conditions for classification as held for sale, the investment in a subsidiary isclassified as held for sale as a whole in the separate financial statements, and all assets and liabilities of the subsidiaryare classified as held for sale in the consolidated financial statements.When the non-current assets or disposal groups held for sale are initially measured or remeasured at the balance sheetdate, the excess of the carrying amount over the net amount of the fair value less selling expenses is recognised asasset impairment loss. For the amount of impairment loss recognised on disposal groups held for sale, the carryingamount of the goodwill of the disposal group shall be offset against first, and then be offset against the carrying amountof non-current assets according to the proportion of the carrying amount of non-current assets.

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18. Assets held for sale (Cont

*d)If the net amount of the fair value of the non-current assets or disposal groups held for sale less the selling expensesincreases on the subsequent balance sheet date, the amount previously written down shall be recovered and reversedin the amount of asset impairment loss recognised after be classified as held for sale, and the reversed amount shall beincluded in the current profit and loss. The carrying amount of goodwill written off shall not be reversed.Non-current assets held for sale and assets in disposal group held for sale are not depreciated or amortised. Interestand other expenses of a disposal group classified as held for sale continue to be recognised. For all or part of aninvestment in an associate or a joint venture that is classified as held for sale, the part of being classified as held for saleshall cease to be accounted for using the equity method, while any retained portion (not classified as held for sale) shallcontinue to be accounted for using the equity method; The Group ceases to use the equity method from the date whenthe 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 criteria forbeing classified as held for sale, the Group shall cease to classify it as held for sale and measure it at the lower of:

(1) the carrying amount of the asset or disposal group before being classified as held for sale is adjusted by the

depreciation, amortisation or impairment that would have been recognised if the asset or disposal group had notbeen classified as held for sale;

(2) recoverable amount.

19. 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 dueThe group is comprised of long-term receivables not yet past due with

normal exposures.Long-term receivables overdueThis group is comprised of long-term receivables with higher past due

exposures.

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20. Long-term equity investments

Long-term equity investments include the equity investments in subsidiaries, joint ventures and associates. Associatesof the Company are those investees that the Company imposes significant influence over.

(1) Determination of initial investment cost

Long-term equity investments acquired through business combinations: for a long-term equity investmentacquired through a business combination involving enterprises under common control, the investment cost shallbe the absorbing party*s share of the carrying amount of the owners*equity under the consolidated financialstatements of the ultimate controlling party on the date of combination. For a long-term equity investmentacquired through a business combination involving enterprises not under common control, the investment cost ofthe long-term equity investment shall be the cost of combination.Long-term equity investments acquired through other means: for a long-term equity investment acquired by cashpayment, the initial investment cost shall be the purchase cost actually paid; for a long-term equity investmentacquired by issuing equity securities, the initial investment cost shall be the fair value of equity securities issued.

(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 Company*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 in thecapital reserves (other capital reserves). The Company shall recognise its share of the investee*s net profits orlosses based on the fair values of the investee*s individual separately identifiable assets at the time of acquisition,after making appropriate adjustments thereto according to the accounting policies and accounting periods of theCompany.

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20. 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 fair valueof previously held equity investment and additional investment cost on the date of transfer. For investmentsin non-trading equity instruments that were previously classified as at fair value through other comprehensiveincome, the cumulative fair value changes associated with them that were previously included in othercomprehensive income are transferred to retained earnings upon the change to the equity method of accounting.In the event of loss of common control or significant influence over investee due to partial disposal of equityinvestment, the remaining equity interest after disposal shall be accounted for according to the AccountingStandard for Business Enterprises No. 22 每 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 每 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 Company and its associates and joint ventures, the share of unrealisedgain or loss arising from internal transactions shall be eliminated by the portion attributable to the Company.Investment gain or loss shall be recognised accordingly. However, any unrealised loss arising from internaltransactions between the Company and an investee is not eliminated to the extent that the loss is impairment lossof the transferred assets.

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20. 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 Company owns less than 20% of the voting sharesof the investee, it is generally considered that it has not significantly influenced on the investee, unless there isconcrete evidence to prove that it can participate in the production and operation decision-making of the investeeand cannot pose significant influence in this situation.

(4) Held-for-sale equity investments

The equity investments to associates or joint ventures are all or partially classified as assets held for sale.The remaining equity investments that are not classified as assets held for sale shall be accounted for using equitymethod.The equity investments to associates or joint ventures already classified as held for sale no longer meet theconditions of assets held for sale shall be adjusted retroactively using equity method from the date of beingclassified as assets held for sale.

(5) Impairment test method and Impairment provision

For the method for making impairment provision for the investment in subsidiaries, associates and joint ventures,please refer to Note V. 28.

21. Investment property

Investment property refers to real estate held to earn rentals or for capital appreciation, or both. The investment propertyof the Company includes leased land use rights, land use rights held for sale after appreciation, and leased buildings.The investment property of the Company is measured initially at cost upon acquisition, and subject to depreciation oramortisation in the relevant periods according to the relevant provisions on fixed assets or intangible assets.For the method for making impairment provision for the investment property adopted cost method for subsequentmeasurement, please refer to Note V. 28.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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22. Fixed assets

(1) Conditions for recognition

Fixed assets represent the tangible assets held by the Company using in the production of goods, rendering ofservices and for operation and administrative purposes with useful life over one year.Fixed assets are recognised when it is probable that the related economic benefits will flow to the Company andthe costs can be reliably measured.The Company*s fixed assets are initially measured at the actual cost at the time of acquisition.Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probablethat the associated economic benefits will flow to the Company and the related cost can be reliably measured.The cost of routine repairs of fixed assets that do not qualify as capitalised subsequent expenditure is charged tocurrent profit or loss or included in the cost of the related assets in accordance with the beneficiary object whenincurred. The carrying amount of the replaced part is derecognised.

(2) Depreciation method

The Company adopts the straight-line method for depreciation. Provision for depreciation will be started when thefixed asset reaches its expected usable state, and stopped when the fixed asset is derecognised or classified as anon-current asset held for sale. Without regard to the depreciation provision, the Company determines the annualdepreciation rate by category, estimated useful lives and estimated residual value of the fixed assets as below:

Category

Depreciationmethod

Useful livesof depreciation

(Year)

Estimatedresidualvalue (%)

Annualdepreciationrate (%)Housing and building structureStraight-line

method

20-405-102.25-4.75Machinery and equipmentStraight-line

method

8-205-104.50-11.88Transportation equipmentStraight-line

method

5-85-1011.25-19.00Electronic equipment and othersStraight-line

method

55-1018.00-19.00Where, for the fixed assets for which impairment provision is made, to determine the depreciation rate, theaccumulated amount of the fixed asset impairment provision that has been made shall be deducted.

(3) The impairment test method and impairment provision method of the fixed assets are set out in Note V. 28.

(4) The Company will re-check the useful lives, estimated net residual value and depreciation method of the fixed

assets at the end of each year.When there is any difference between the useful lives estimate and the originally estimated value, the usefullives of the fixed asset shall be adjusted. When there is any difference between the estimated net residual valueestimate and the originally estimated value, the estimated net residual value shall be adjusted.

(5) Disposal of fixed assets

A fixed asset is derecognised on disposal or when it is expected that there shall be no economic benefit arisingfrom using or after disposal. Where the fixed assets are sold, transferred, retired or damaged, the income receivedafter disposal after deducting the carrying amount and related taxes are recognised in profit or loss for the currentperiod.

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23. Construction in progress

Construction in progress of the Company is recognised based on the actual construction cost, including all necessaryexpenditures incurred for construction projects, capitalised borrowing costs for the construction in progress before ithas reached the working condition for its intended use, and other related expenses during the construction period.A construction in progress is reclassified to fixed assets when it has reached the working condition for its intended use.The method for impairment provision of construction in progress is set out in Note V. 28.

24. Borrowing costs

(1) Recognition principle for the capitalisation of the borrowing costs

The borrowing costs incurred by the Company directly attributable to the acquisition, construction or productionof a qualifying asset will be capitalised and included in the cost of relevant asset. Other borrowing costs will berecognised as expenses when incurred according to the incurred amount, and included in the profit or loss for thecurrent period. When the borrowing costs meet all the following conditions, capitalisation shall be started:

The capital expenditure has been incurred, which includes the expenditure incurred by paying cash,transferring non-cash assets or undertaking interest-bearing liabilities for acquiring, constructing orproducing the qualifying assets; The borrowing costs have been incurred;The acquisition, construction or production activity necessary for the asset to be ready for its intended useor sale has been started.

(2) Capitalisation period of borrowing costs

When a qualifying asset acquired, constructed or produced by the Company is ready for its intended use or sale,the capitalisation of the borrowing costs shall discontinue. The borrowing costs incurred after a qualifying assetis ready for its intended use or sale shall be recognised as expenses when incurred according to the incurredamount, and included in the profit or loss for the current period.Capitalisation of borrowing costs shall be suspended during periods in which the acquisition, construction orproduction of a qualifying asset is interrupted abnormally, when the interruption is for a continuous period of morethan 3 months. The capitalisation of the borrowing costs shall be continued in the normal interruption period.

(3) Calculation methods for capitalisation rate and capitalised amount of the borrowing costs

Where funds are borrowed for a specific purpose, the amount of interest to be capitalised shall be the actualinterest expense incurred on that borrowing for the period less any bank interest earned from depositing theborrowed funds before being used into banks or any investment income on the temporary investment of thosefunds. Where funds are borrowed for general purpose, the Company shall determine the amount of interestto be capitalised on such borrowings by applying a capitalisation rate to the weighted average of the excessamounts of cumulative expenditures on the asset over and above the amounts of specific-purpose borrowings.The capitalisation rate shall be the weighted average of the interest rates applicable to the general-purposeborrowings.During the capitalisation period, exchange differences on a specific purpose borrowing denominated in foreigncurrency shall be capitalised. Exchange differences related to general-purpose borrowings denominated in foreigncurrency shall be included in profit or loss for the current period.

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25. Biological assets

Bearer biological assets refer to biological assets held for the purpose of producing agricultural products, providinglabour services or renting, including economic forests, firewood forests, productive livestock and draught animals.Bearer biological assets are initially measured at cost. The cost of a planted or propagated bearer biological assetincludes the expenses directly attributable to the asset and necessarily incurred before the asset is ready for its intendedproduction and operation, including the borrowing costs that are eligible for capitalisation.The management, protection and feeding costs of a biological asset subsequent to crown closure or after the asset isready for its intended production and operation are expensed and recognised in profit or loss as incurred.Depreciation of bearer biological assets is calculated using the straight-line method over the estimated useful life ofeach biological asset less its residual value.

26. Right-of-use assets

Conditions for recognition of right-of-use assetsRight-of-use assets are defined as the right of underlying assets in the lease term for the Company as a lessee.Right-of-use assets are initially measured at cost at the commencement date of the lease. The cost includes the amountof the initial measurement of lease liability; lease payments made at or before the inception of the lease less any leaseincentives enjoyed; initial direct costs incurred by the Company as lessee; costs to be incurred in dismantling andremoving the underlying assets, restoring the site on which it is located or restoring the underlying asset to the conditionrequired by the terms and conditions of the lease incurred by the Company as lessee. As a lessee, the Companyrecognises and measures the costs of dismantling and restoration in accordance with the Accounting Standard forBusiness Enterprises No. 13 每 Contingencies. Subsequently, the lease liability is adjusted for any remeasurement of thelease liability.Depreciation method of right-of-use assetsThe Company uses the straight-line method for depreciation. Where the Company, 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 remaining usefullife of the leased asset. Where ownership of the lease assets during the lease term cannot be reasonably determined,right-of-use assets are depreciated over the lease term or the remainder of useful lives of the lease assets, whichever isshorter.For the methods of impairment test and impairment provision of right-of-use assets, please refer to Note V. 28.

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27. Intangible assets

The intangible assets of the Company 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 life (year)Method of amortisationRemarkLand use rights50-70Straight-line methodSoftware5-10Straight-line methodCertificates of third party right3Straight-line methodThe Company reviews the useful life and amortisation method of the intangible assets with finite useful life at the end ofeach year. If it is different from the previous estimates, the original estimates will be adjusted, and will be treated as achange in accounting estimate.If it is estimated on the balance sheet date that certain intangible asset can no longer bring future economic benefit tothe company, the carrying amount of the intangible asset will be entirely transferred into the profit or loss for the currentperiod.The impairment method for the intangible assets is set out in Note V. 28.

28. Asset impairment

Impairment of long-term equity investments in subsidiaries, associates and joint ventures, asset impairment oninvestment property, fixed assets, construction in progress, materials for project, right-of-use assets, intangible assets,goodwill and others (excluding inventories, deferred tax assets and financial assets) subsequently measured at cost isdetermined as follows:

The Company determines if there is any indication of asset impairment as at the balance sheet date. If there is anyevidence indicating that an asset may be impaired, recoverable amount shall be estimated for impairment test. Goodwillarising from business combinations, intangible assets with an indefinite useful life and intangible assets not ready foruse will be tested for impairment annually, regardless of whether there is any indication of impairment.The recoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of thefuture cash flows expected to be derived from the asset. The Company estimates the recoverable amount of anindividual asset. If it is not possible to estimate the recoverable amount of the individual asset, the Company shalldetermine the recoverable amount of the asset group to which the asset belongs. The determination of an asset groupis based on whether major cash inflows generated by the asset group are independent of the cash inflows from otherassets or asset groups.

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28. Asset impairment (Cont

*d)

When the recoverable amount of an asset or an asset group is less than its carrying amount, the carrying amount isreduced to its recoverable amount. The reduction amount is charged to profit or loss and an impairment provision ismade accordingly.For the purpose of impairment test of goodwill, the carrying amount of goodwill acquired in a business combination isallocated to the relevant asset groups on a reasonable basis from the acquisition date; where it is difficult to allocateto the related asset groups, it is allocated to the combination of related asset groups. The related asset groups orcombination of asset groups are those which can benefit from the synergies of the business combination and are notlarger than the reportable segments identified by the Company.In the impairment test, if there is any indication that an asset group or a combination of asset groups related to goodwillmay be impaired, the 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.

29. Long-term prepaid expenses

The long-term prepaid expenses incurred by the Company shall be recognised based on the actual cost, and evenlyamortised over the estimated benefit period. For the long-term prepaid expense that cannot benefit the subsequentaccounting periods, its value after amortisation shall be entirely included in the profit or loss for the current period.

30. 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.

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31. 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.

(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 by the Company as a liability during the accounting period when the employees renderservices, with a corresponding charge to profit or loss or included in the cost of assets where appropriate. Wherethe payment of liability is expected not to be fully settled within 12 months after the end of the annual reportingperiod in which the employees render the related services, and the financial impact would be material, theseliabilities 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 postemploymentbenefit plan other than a defined contribution plan.

Defined contribution plans

Defined contribution plans include basic pension insurance and unemployment insurance.During the accounting period when an employee renders services, 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 Company provides termination benefits to employees, employee benefits liabilities arising fromtermination benefits are recognised in profit or loss for the current period at the earlier of the following dates: whenthe Company cannot revoke unilaterally compensation for dismissal due to the cancellation of labour relationshipplans and employee redundant proposals; the Company recognises cost and expenses related to payment ofcompensation for dismissal and restructuring.For the early retirement plans, economic compensations before the actual retirement date were classified astermination benefits. During the period from the date of cease of render of services to the actual retirementdate, relevant wages and contribution to social insurance for the employees proposed to be paid are recognisedin profit or loss on a one-off basis. Economic compensation after the official retirement date, such as normalpension, is accounted for as post-employment benefits.

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

32. Lease liabilities

(1) Initial measurement

At the commencement date of a lease term, the Company shall initially measure the lease liabilities at the presentvalue of the lease payments that are not paid at that date.

1) Lease payments

The lease payments mean the payments made by the Company to a lessor for the right to use the leasedassets during the lease term, including: fixed payments and in-substance fixed payments, less any leaseincentives receivable; variable lease payments that depend on an index or a rate, initially measured usingthe index or rate as at the commencement date of the lease term; the exercise price of a purchase optionif the Company is reasonably certain to exercise that option; payments for terminating the lease, if thelease term reflects the Company exercising an option to terminate the lease; amounts expected to bepayable by the Company under residual value guarantees.

2) Discount rate

The present value of the lease payments shall be calculated using the Company*s incremental borrowingrate.

(2) Subsequent measurement

After the commencement date of a lease term, the Company shall subsequently measure the lease liabilities by:

increasing the carrying amount to reflect interest on the lease liabilities; reducing the carrying amount to reflectthe lease payments made; remeasuring the carrying amount to reflect the change in the lease payments due toany reassessment or lease modifications.The interest expense on the lease liabilities in each period during the lease term is calculated using a constantperiodic rate of interest and is recognised in profit or loss for the current period, except for the interest expense tobe capitalised. The periodic rate of interest is the discount rate used by the Company in the initial measurement oflease liabilities, or the revised discount rate used by the Company when the Company has to remeasure the leaseliabilities based on a revised discount rate due to a change in the lease payments or lease modifications.

(3) Remeasurement

After the commencement date of a lease term, the Company shall remeasure the lease liabilities using thechanges to the lease payments and the revised discount rate, and adjust the carrying amount of the right-of-useassets accordingly in the circumstances set out below. If the carrying amount of the right-of-use assets is reducedto zero and there is a further reduction in the measurement of the lease liabilities, the Company shall recogniseany remaining amount of the remeasurement in profit or loss: there is any change in the amount of in-substancefixed payments; there is any change in the amounts expected to be payable under a residual value guarantee;there is any change in the index or rate used to determine the lease payments; there is any change in theassessment results in the purchase option; and there is any change in the assessment results or the exercise ofthe extension option or termination option.

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

33. Provisions

Obligations pertinent to the contingencies which satisfy the following conditions are recognised by the Company asprovisions:

(1) the obligation is a current obligation borne by the Company;

(2) it is likely that an outflow of economic benefits from the Company will be resulted from the performance of the

obligation;

(3) the amount of the obligation can be reliably measured.

The provisions shall be initially measured based on the best estimate for the expenditure required for the performanceof the current obligation, after taking into account relevant risks, uncertainties, time value of money and otherfactors pertinent to the contingencies. If the time value of money has significant influence, the best estimates shallbe determined after discounting the relevant future cash outflow. The Company reviews the carrying amount of theprovisions on the balance sheet date and adjust the carrying amount to reflect the current best estimates.If all or some expenses incurred for settlement of recognised provisions are expected to be borne by the third party,the compensation amount shall, on a recoverable basis, be recognised as asset separately, and compensation amountrecognised shall not be more than the carrying amount of provisions.

34. Share-based payments

(1) Category of share-based payment

The Company*s share-based payment is either equity-settled or cash-settled.

(2) Determination of fair value of equity instruments

For the existence of an active market for options and other equity instruments granted by the Company, the fairvalue is determined at the quoted price in the active market. For options and other equity instruments with noactive market, option pricing model shall be used to estimate the fair value of the equity instruments. The followingfactors shall be taken into account using option pricing models: A. the exercise price of the option; B. the validityperiod of the option; C. the current market price of the share; D. the expected volatility of the share price; E.predicted dividend of the share; and F. risk-free rate of the option within the validity period.

(3) Recognition of vesting of equity instruments based on the best estimate

On each balance sheet date within the vesting period, the estimated number of equity instruments expected tovest is revised based on the best estimate made by the Company according to the latest available subsequentinformation as to changes in the number of employees with exercisable rights. On the vesting date, the finalestimated number of equity instruments expected to vest should equal the actual number of equity instrumentsexpected to vest.

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34. Share-based payments (Cont

*d)

(4) Accounting treatment of implementation, modification and termination of share-based payment

Equity-settled share-based payment shall be measured at the fair value of the equity instruments granted toemployees. For those may immediately vest after the grant, the fair value of equity instrument at the grant dateshall be included in the relevant costs or expenses, and the capital reserve shall be increased accordingly. If theright may not be exercised until the vesting period comes to an end or until the specified performance conditionsare met, within the vesting period, the services obtained in the current period shall, based on the best estimate ofthe number of vested equity instruments, be included in the relevant costs or expenses and the capital reserve atthe fair value of the equity instrument at the grant date. After the vesting period, relevant costs or expenses andtotal shareholders* equity which have been recognised will not be adjusted.Cash-settled share-based payment shall be measured in accordance with the fair value of liability calculatedand recognised based on the shares or other equity instruments undertaken by the Company. For those mayimmediately vest after the grant, the fair value of the liability undertaken by the Company shall, on the date of thegrant, be included in the relevant costs or expenses, and the liabilities shall be increased accordingly. If the rightmay not be exercised until the vesting period comes to an end or until the specified performance conditions aremet, within the vesting period, the services obtained in the current period shall, based on the best estimate ofthe information about the exercisable right, be included in the relevant costs or expenses and the correspondingliabilities at the fair value of the liability undertaken by the Company. For each of the balance sheet date andsettlement date before the settlement of the relevant liabilities, fair value of the liabilities shall be remeasured andthe changes will be included in the profit or loss for the current period.When there are changes in Company*s share-based payment plans, if the modification increases the fair value ofthe equity instruments granted, corresponding recognition of service increase in accordance with the increase inthe fair value of the equity instruments; if the modification increases the number of equity instruments granted,the increase in fair value of the equity instruments is recognised as a corresponding increase in service achieved.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 Company cancelled some or all of theequity instruments granted.During the vesting period, if the cancelled equity instruments (except for failure to meet the conditions of thenon-market vesting conditions) granted by the Company to cancel the equity instruments granted amounttreated as accelerated vesting of the remaining period should be recognised immediately in profit or loss, whilerecognising capital reserves. If employees or other parties can choose to meet non-vesting conditions but they arenot met in the vesting period, the Company will treat them as cancelled equity instruments granted.

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

35. Preference shares, Perpetual Bonds and other financial instruments

(1) Classification of financial liabilities and equity instruments

Financial instruments issued by the Company are classified into financial assets, financial liabilities or equityinstruments on the basis of the substance of the contractual arrangements and the economic nature not onlyits legal form, together with the definition of financial asset, financial liability and equity instruments on initialrecognition.

(2) Accounting treatment of preference shares, Perpetual Bonds and other financial instruments

Financial instruments issued by the Company are initially recognised and measured in accordance with thefinancial instrument standards; thereafter, interest or dividends are accrued on each balance sheet date andaccounted for in accordance with relevant specific ASBEs, i.e. to determine the accounting treatment for interestexpenditure or dividend distribution of the instrument based on the classification of the financial instrument issued.For financial instruments classified as equity instruments, their interest expenses or dividend distributions aretreated as profit distribution of the Company, and their repurchases and cancellations are treated as changes inequity; for financial instruments classified as financial liabilities, their interest expenses or dividend distribution arein principle accounted for with reference to borrowing costs, and the gains or losses arising from their repurchasesor redemption are included in the profit or loss for the current period.For the transaction costs such as fees and commissions incurred by the Company for issuing financialinstruments, if such financial instruments are classified as debt instruments and measured at amortised cost, theyare included in the initial measured amount of the instruments issued; if such financial instruments are classifiedas equity instruments, they are deducted from equity.

36. Revenue

(1) General principles

The Company recognises revenue when it satisfies a performance obligation in the contract, i.e. when thecustomer obtains control of the relevant goods or services.Where a contract has two or more performance obligations, the Company allocates the transaction price to eachperformance obligation based on the percentage of respective unit price of goods or services guaranteed byeach performance obligation, and recognises as revenue based on the transaction price that is allocated to eachperformance obligation.If one of the following conditions is fulfilled, the Company performs its performance obligation within a certainperiod; otherwise, it performs its performance obligation at a point of time:

when the customer simultaneously receives and consumes the benefits provided by the Company when the

Company performs its obligations under the contract;when the customer is able to control the goods in progress in the course of performance by the Company

under the contract;when the goods produced by the Company under the contract are irreplaceable and the Company has the

right to payment for performance completed to date during the whole contract term.For performance obligations performed within a certain period, the Company recognises revenue by measuringthe progress towards complete of that performance obligation within that certain period. When the progressof performance cannot be reasonably determined, if the costs incurred by the Company are expected to becompensated, the revenue shall be recognised at the amount of costs incurred until the progress of performancecan be reasonably determined.

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

36. Revenue (Cont

*d)

(1) General principles (Cont

*d)

For performance obligation performed at a point of time, the Company recognises revenue at the point of time atwhich the customer obtains control of relevant goods or services. To determine whether a customer has obtainedcontrol of goods or services, the Company considers the following indications:

The Company has the current right to receive payment for the goods, which is when the customer has thecurrent payment obligations for the goods.The Company has transferred the legal title of the goods to the customer, which is when the clientpossesses the legal title of the goods.The Company has transferred the physical possession of goods to the customer, which is when thecustomer obtains physical possession of the goods.The Company has transferred all of the substantial risks and rewards of ownership of the goods to thecustomer, which is when the customer obtain all of the substantial risks and rewards of ownership of thegoods to the customer. The customer has accepted the goods. Other information indicates that the customer has obtained control of the goods.The Company*s right to consideration in exchange for goods or services that the Company has transferred tocustomers (and such right depends on factors other than passage of time) is accounted for as contract assets,and contract assets are subject to impairment based on ECLs (Note V. 10). The Company*s unconditional right toreceive consideration from customers (only depends on passage of time) is accounted for as accounts receivable.The Company*s obligation to transfer goods or services to customers for which the Company has received orshould receive consideration from customers is accounted for as contract liabilities.Contract assets and contract liabilities under the same contract are presented on a net basis. Where the netamount has a debit balance, it is presented in※contract assets§or※other non-current assets§according to itsliquidity. Where the net amount has a credit balance, it is presented in※contract liabilities§or※other non-currentliabilities§ according to its liquidity.

(2) Specific methods

Specific method for revenue recognition of machine-made paper business of the Company: in terms of domesticsales of machine-made paper, revenue is recognised when goods are delivered to the customers and suchdeliveries are confirmed; while in terms of overseas sales of machine-made paper, revenue is recognised on theday when goods are loaded on board and declared.Specific method for recognition of finance lease income of the Company: according to the repayment schedule,the income is recognised by instalments according to the effective interest rate.Specific method for recognition of revenue from real estate of the Company: revenue is recognised by amortisingthe rental income on a straight-line basis over the lease term.

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

37. Government grants

A government grant is recognised when the grant will be received and that the Company will comply with the conditionsattaching to the grant.If a government grant is in the form of a monetary asset, it is measured at the amount received or receivable. If agovernment grant is in the form of non-monetary asset, it is measured at fair value; if the fair value cannot be obtained ina reliable way, it is measured at the nominal amount of RMB1.Government grants obtained for acquisition or construction of long-term assets or other forms of long-term assetformation are classified as government grants related to assets, while the remaining government grants are classified asgovernment grants related to revenue.Regarding the government grant not clearly defined in the official documents and can form long-term assets, the partof government grant which can be referred to the value of the assets is classified as government grant related to assetsand the remaining part is government grant related to revenue. For the government grant that is difficult to distinguish,the entire government grant is classified as government grant related to revenue.A government grant related to an asset shall be recognised as deferred income, and evenly amortised to profit or lossover the useful life of the asset in a reasonable and systematic manner. For a government grant related to revenue, ifthe grant is a compensation for related costs, expenses or losses incurred, the grant shall be recognised in profit 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 Company 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.

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

38. Deferred income tax assets/deferred income tax liabilities

Income tax comprises current income tax expense and deferred income tax expense, which are included in profit orloss for the current period as income tax expenses, except for deferred tax related to transactions or events that aredirectly recognised in owners* equity which are recognised in owners*equity, and deferred tax arising from a businesscombination, which is adjusted against the carrying amount of goodwill.Temporary differences arising from the difference between the carrying amount of an asset or liability and its tax baseat the balance sheet date of the Company shall be recognised as deferred income tax using the balance sheet liabilitymethod.All the taxable temporary differences are recognised as deferred income tax liabilities except for those incurred in thefollowing transactions:

(1) The initial recognition of goodwill, and the initial recognition of an asset or liability in a transaction which is neither

a business combination nor affects accounting profit or taxable profit (or deductible loss) when the transactionoccurs;

(2) The taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, and

the Company is able to control the timing of the reversal of the temporary difference and it is probable that thetemporary difference will not reverse in the foreseeable future.The Company recognises a deferred income tax asset for the carry forward of deductible temporary differences,deductible losses and tax credits to subsequent periods, to the extent that it is probable that future taxable profitswill be available against which the deductible temporary differences, deductible losses and tax credits can be utilised,except for those incurred in the following transactions:

(1) The transaction is neither a business combination nor affects accounting profit or taxable profit (or deductible loss)

when the transaction occurs;

(2) The deductible temporary differences associated with investments in subsidiaries, associates and joint ventures,

the corresponding deferred income tax asset is recognised when both of the following conditions are satisfied: it isprobable that the temporary difference will reverse in the foreseeable future, and it is probable that taxable profitswill be available in the future, against which the temporary difference can be utilised.At the balance sheet date, deferred income tax assets and deferred income tax liabilities are measured at the taxrates that are expected to apply to the period when the asset is realised or the liability is settled, and their tax effect isreflected accordingly.At the balance sheet date, the Company reviews the carrying amount of a deferred income tax asset. If it is probablethat sufficient taxable profits will not be available in future periods to allow the benefit of the deferred tax asset to beutilised, the carrying amount of the deferred tax asset is reduced. Any such reduction in amount is reversed when itbecomes probable that sufficient taxable profits will be available.

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

39. Lease

(1) Identification of leases

On the beginning date of the contract, the Company (as a lessee or lessor) assesses whether the customer inthe contract has the right to obtain substantially all of the economic benefits from use of the identified assetthroughout the period of use and has the right to direct the use of the identified asset throughout the period ofuse. If a contract conveys the right to control the use of an identified asset and multiple identified assets for aperiod of time in exchange for consideration, the Company identifies such contract is, or contains, a lease.

(2) The Company as lessee

On the beginning date of the lease, the Company recognises right-of-use assets and lease liabilities for all leases,except for short-term lease and low-value asset lease with simplified approach.The accounting policy for right-of-use assets is set out in Note V. 26.The lease liability is initially measured at the present value of the lease payments that are not paid at the beginningdate of the lease using the interest rate implicit in the lease. Where the interest rate implicit in the lease cannot bedetermined, the incremental borrowing rate is used as the discount rate. Lease payments include fixed paymentsand in-substance fixed payments, less any lease incentives receivable; variable lease payments that are basedon an index or a rate; the exercise price of a purchase option if the lessee is reasonably certain to exercisethat option; payments for terminating the lease, if the lease term reflects the lessee exercising that option ofterminating; and amounts expected to be payable by the lessee under residual value guarantees. Subsequently,the interest expense on the lease liability for each period during the lease term is calculated using a constantperiodic rate of interest and is recognised in profit or loss for the current period. Variable lease payments notincluded in the measurement of lease liabilities are charged to profit or loss in the period in which they actuallyarise. The Company calculates the interest expense of the lease liability for each period of the lease term basedon the fixed periodic interest rate and is included in the current profit and loss. The variable lease payments thatare not included in the measurement of the lease liability are recognised in profit or loss when incurred.

Short-term lease

Short-term leases refer to leases with a lease term of less than 12 months from the commencement date, exceptfor those with a purchase option.Lease payments on short-term leases are recognised in the cost of related assets or current profit or loss on astraight-line basis over the lease term.For short-term leases, the Company chooses to adopt the above simplified approach for the following types ofassets that meet the conditions of short-term lease according to the classification of leased assets.

Low-value equipment

Transportation vehicles

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

39. Lease (Cont

*d)

(2) The Company as lessee (Cont

*d)

Low-value asset lease

A low-value asset lease is a lease that the value of a single leased asset is below RMB40,000 when it is a newasset.Lease payments on low-value asset leases are recognised on a straight-line basis over the lease term, and eitherincluded in the cost of the related asset or charged to profit or loss for the current period.For a low-value asset lease, the Company chooses the above simplified approach based on the specificcircumstances of each lease.Lease modificationThe Company accounts for a lease modification as a separate lease when the modification occurs and thefollowing conditions are met: the lease modification expands the scope of lease by adding the right to useone or more of the leased assets; and the increase in consideration is equivalent to the separate price for theexpanded scope of lease adjusted for that contractual situation.Where a lease modification is not accounted for as a separate lease, at the effective date of the lease modification,the Company reallocates the consideration of the modified contract, re-determines the lease term and remeasuresthe lease liability based on the present value of the lease payments after the modification and the revised discountrate.If a lease modification results in a reduction in the scope of the lease or a shortening of the lease term, theCompany reduces the carrying amount of the right-of-use asset accordingly and includes in the profit or loss forthe period the gain or loss associated with the partial or complete termination of the lease.Where other lease modifications result in a remeasurement of the lease liability, the Company adjusts the carryingamount of the right-of-use asset accordingly.

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

39. Lease (Cont

*d)

(3) The Company as lessor

When the Company is a lessor, a lease is classified as a finance lease whenever the terms of the lease transfersubstantially all the risks and rewards of asset ownership to the lessee. All leases other than financial leases areclassified as operating leases.

Finance leases

Under finance leases, the Company accounts for finance lease receivables at the beginning of the lease term atthe net lease investment, which is the sum of the unsecured residual value and the present value of the leasereceipts outstanding at the commencement date of the lease, discounted at the interest rate implicit in the lease.The Company as lessor calculates and recognises interest income for each period of the lease term based ona fixed periodic interest rate. Variable lease payments acquired by the Company as lessor that are not includedin the net measurement of lease investments are included in profit or loss for the period when they are actuallyincurred.Derecognition and impairment of finance lease receivables are accounted for in accordance with the requirementsunder the Accounting Standard for Business Enterprises No. 22 每 Recognition and Measurement of FinancialInstruments and the Accounting Standards for Business Enterprises No. 23 每 Transfer of Financial Assets.Operating leaseLease payments under operating leases are recognised in profit or loss on a straight-line basis over the lease term.Initial direct costs incurred in relation to operating leases are capitalised and amortised over the lease term on thesame basis as rental income and recognised in profit or loss for the current period. The variable lease paymentsobtained in relation to operating leases that are not included in the lease payments are recognised in profit or lossin the period in which they actually incurred.Lease modificationThe Company accounts for a modification in an operating lease as a new lease from the effective date of themodification and the amount of lease receipts received in advance or receivable in respect of the lease prior to themodification is treated as a receipt under the new lease.The Company accounts for a modification in a finance lease as a separate lease when the change occurs andthe following conditions are met: the modification expands the scope of lease by adding the right to use oneor more of the leased assets; and the increase in consideration is equivalent to the separate price for theexpanded scope of lease adjusted for that contractual situation.Where a finance lease is modified and not accounted for as a separate lease, the Company accounts for themodified lease in the following circumstances: If the modification takes effect on the lease commencementdate, the lease will be classified as an operating lease, the Company will account for it as a new lease from theeffective date of the lease modification, and use the net lease investment before the effective date of the leasemodification; If the modification takes effect on the lease commencement date, the lease will be classified as afinance lease, and the Company will conduct accounting treatment in accordance with the Accounting Standardsfor Business Enterprises No. 22 每 Recognition and Measurement of Financial Instruments on modifying orrenegotiating contracts.

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

39. Lease (Cont

*d)

(4) Sublease

When the Company is an intermediate lessor, the sublease is classified with reference to the right-of-use assetsarising from the head lease. If the head lease is a short-term lease for which the Company adopts a simplifiedapproach, then the Company classifies the sublease as an operating lease.

(5) Sale and leaseback

The lessee and the lessor shall assess and determine whether the transfer of assets in a sale and leasebacktransaction is a sale in accordance with the requirements of the Accounting Standard for Business Enterprises No.14 每 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 每 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 每 Recognition and Measurement of Financial Instruments.

40. Changes in significant accounting policies and accounting estimates

(1) Changes in significant accounting policies

Applicable ﹟ Not Applicable

(2) Changes in significant accounting estimates

Applicable ﹟ Not Applicable

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V. Significant Accounting Policies and Accounting Estimates (Cont*d)

41. Others

The fair value refers to the price that will be received when selling an asset or the price to be paid to transfer a liability inan orderly transaction between market participants on the date of measurement.The Group measures the relevant assets or liabilities at fair value, assuming that the orderly transaction of selling theassets or transferring the liabilities is conducted in the main market of the relevant assets or liabilities; in the absence ofthe main market, the Group assumes that the transaction is conducted in the most advantageous market for the relevantasset or liability. The main (or the most advantageous) market must be accessible to by the Group on the measurementdate. The Group uses assumptions that market participants would use when pricing the asset or liability, assuming thatmarket participants act in their economic best interest.For financial assets or financial liabilities exist in an active market, fair value is determined based on the quoted pricein such market. While financial instruments do not exist in an active market, the fair value is determined using valuationtechniques.Fair value measurement for a non-financial asset takes into account a market participant*s ability to generate economicbenefits by using the asset in its best use or by selling it to another market participant that would use the asset in itsbest use.The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data areavailable to measure fair value, and gives priority to relevant observable inputs. Unobservable inputs are used only whenrelevant observable inputs are not accessible or the access to which is impracticable.All assets and liabilities measured at fair value or disclosed in the financial statements are categorised within the fairvalue hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurementas a whole: Level 1 inputs are available quoted prices (unadjusted) in active markets for identical assets or liabilities atthe measurement date; Level 2 inputs are inputs, other than Level 1 inputs, that are observable for the asset or liability,either directly or indirectly; Level 3 inputs are unobservable inputs for the asset or liability.For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the Groupreassess them at each balance sheet date to determine whether transfers have occurred between levels in the hierarchy.

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VI. Taxation

1. Main tax types and tax rates

Tax typeTax BaseTax rate (%)Value added tax (VAT)Taxable income13/9/6Property taxRental income and property price12/1.2Urban maintenance and construction taxTurnover tax payable7Enterprise income tax (EIT)Taxable income25Disclosure of taxable entities subject to different EIT tax ratesName of taxable entityEIT tax rate (%)Shandong Chenming Paper Holdings Limited15Shouguang Meilun Paper Co., Ltd.15Jilin Chenming Paper Co., Ltd.15Jiangxi Chenming Paper Co., Ltd.15Zhanjiang Chenming Pulp & Paper Co., Ltd.15Wuhan Chenming Hanyang Paper Holdings Co., Ltd.15Huanggang Chenming Pulp & Paper Co., Ltd.15Kunshan Tuoan Plastic Products Co., Ltd.15Shouguang Shun Da Customs Declaration Co., Ltd.20Shouguang Chenming Papermaking Machine Co., Ltd.20Shouguang Wei Yuan Logistics Company Limited20Jiangxi Chenming Tea Co., Ltd.20Zhanjiang Chenming Arboriculture Development Co., Ltd.Exempt from EITNanchang Chenming Arboriculture Development Co., Ltd.Exempt from EITChenming Arboriculture Co., Ltd.Exempt from EITYangjiang Chenming Arboriculture Development Co., Ltd.Exempt from EIT

2. Tax incentives

(1) Enterprise income tax

On 15 December 2021, the Company received a high and new technology enterprise certificate with a certificationnumber of GR202137005666. Pursuant to the requirements under the Law of the People*s Republic of China onEnterprise Income Tax and the relevant policies, the Company is subject to a corporate income tax rate of 15% oftaxable income, and is entitled to the preferential treatment from 2021 to 2023.Shouguang Meilun Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprisecertificate with a certification number of GR202137005468 on 15 December 2021. Pursuant to the requirementsunder the Law of the People*s Republic of China on Enterprise Income Tax and the relevant policies, ShouguangMeilun is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to the preferentialtreatment from 2021 to 2023.Jilin Chenming Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprisecertificate with a certification number of 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, JilinChenming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to the preferentialtreatment from 2019 to 2021.

INTERIM REPORT 2022

X Financial Report

VI. Taxation (Cont*d)

2. Tax incentives (Cont

*d)

(1) Enterprise income tax (Cont

*d)Jiangxi Chenming Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprisecertificate with a certification number of GR201936002184 on 3 December 2019. Pursuant to the requirementsunder the Law of the People*s Republic of China on Enterprise Income Tax and the relevant policies, JiangxiChenming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to the preferentialtreatment from 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 GR202144001212 on 20 December 2021. Pursuant to therequirements under the Law of the People*s Republic of China on Enterprise Income Tax and the relevant policies,Zhanjiang Chenming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to thepreferential treatment from 2021 to 2023.Wuhan Chenming Hanyang Paper Holdings Co., Ltd., a subsidiary of the Company, received a high and newtechnology enterprise certificate with a certification number of GR202042001502 on 1 December 2020. Pursuantto the requirements under the Law of the People*s Republic of China on Enterprise Income Tax and the relevantpolicies, Wuhan Chenming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled tothe preferential treatment from 2020 to 2022.Huanggang Chenming Pulp & Paper Co., Ltd., a subsidiary of the Company, received a high and new technologyenterprise certificate with a certification number of GR202042001471 on 1 December 2020. Pursuant to therequirements under the Law of the People*s Republic of China on Enterprise Income Tax and the relevant policies,Huanggang Chenming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to thepreferential treatment from 2020 to 2022.Kunshan Tuoan Plastic Products Co., Ltd., a subsidiary of the Company, received a high and new technologyenterprise certificate with a certification number of GR202032004526 on 2 December 2020. Pursuant to therequirements under the Law of the People*s Republic of China on Enterprise Income Tax and the relevant policies,Kunshan Tuoan is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to thepreferential treatment from 2020 to 2022.Pursuant to the requirements of Rule 27(1) of Law of the People*s Republic of China on Enterprise Income Tax andRule 86(1) of regulations for the Implementation of Law of the People*s Republic of China on Enterprise IncomeTax, Zhanjiang Chenming Arboriculture Development Co., Ltd., Yangjiang Chenming Arboriculture DevelopmentCo., Ltd., Nanchang Chenming Arboriculture Development Co., Ltd. and Chenming Arboriculture Co., Ltd., whichare the subsidiaries of the Company, have completed the filings for EIT reduction for exemption from EIT.Shouguang Shun Da Customs Declaration Co., Ltd., Shouguang Chenming Papermaking Machine Co., Ltd.,Shouguang Wei Yuan Logistics Company Limited, and Jiangxi Chenming Tea Co., Ltd., subsidiaries of theCompany, is a small and micro enterprise. Pursuant to the Notice on Implementing the Inclusive Tax Deductionand Exemption Policies for Micro and Small Enterprises (Cai Shui [2019] No. 13), the annual taxable income of asmall low-profit enterprise that is less than RMB1 million shall be included in its taxable income at a reduced rateof 12.5%, with the applicable enterprise income tax rate of 20%. The annual taxable income of a small low-profitenterprise that is more than RMB1 million but not exceeding RMB3 million shall be included in its taxable incomeat a reduced rate of 50%, with the applicable enterprise income tax rate of 20%.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VI. Taxation (Cont*d)

2. Tax incentives (Cont

*d)

(1) Enterprise income tax (Cont

*d)Guangdong Chenming Panels Co., Ltd., a subsidiary of the Company, meets the requirements of Rule 99 of theRegulations for the Implementation of Law of the People*s Republic of China on Enterprise Income Tax (DecreeNo. 512 of the State Council of the People*s Republic of China) and the Notice of the Ministry of Finance andthe State Taxation Administration on Issues Concerning the Implementation of the Catalogue of Preferential TaxTreatments for Comprehensive Resource Utilisation Enterprises (Cai Shui [2008] No. 47): since 1 January 2008,for enterprises that derive income from the products listed in the Catalogue which are in line with related nationalor industry standards by making use of the resources listed in the Catalogue as the main raw materials, taxableincome will be calculated at a reduced rate of 90% of the total revenue for that year. To be entitled to the abovetax benefits, the ratio of the resources listed in the Catalogue and the raw materials used for the product shall beconsistent with the required technical standards stated in the Catalogue.

(2) Value-added Tax (

※VAT§)Pursuant to Rule 10 of the Interim Regulation of the People*s Republic of China on Value Added Tax, ZhanjiangChenming Arboriculture Development Co., Ltd., Yangjiang Chenming Arboriculture Development Co., Ltd.,Nanchang Chenming Arboriculture Development Co., Ltd. and Chenming Arboriculture Co., Ltd., which aresubsidiaries of the Company, are exempt from VAT, and have completed the filings for VAT reduction forexemption from VAT.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. Guangdong Chenming Panels Co., Ltd., a subsidiaryof the Company, produces products applying integrated use of resources, and is therefore subject to theimmediate VAT refund policy in 2022.

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements

1. Monetary funds

Unit: RMBItemClosing balanceOpening balanceTreasury cash3,313,516.532,926,080.68Bank deposit3,139,292,575.433,166,431,843.70Other monetary funds11,816,075,269.9510,950,425,015.28Total14,958,681,361.9114,119,782,939.66 Of which: Total deposits in overseas banks505,963,325.58462,952,909.20 Total restricted amount due to mortgages, pledges or freezes11,749,299,176.8010,756,936,714.59Other explanations:

Other monetary funds of RMB8,944,327,842.85 were the guarantee deposit for the application for bankacceptance bills with the banks by the Company.Other monetary funds of RMB2,240,431,110.52 were the guarantee deposit for the application for letter of creditwith the banks by the Company.Other monetary funds of RMB219,580,223.43 were the guarantee deposit for the application for bank guaranteeswith the banks by the Company.Other monetary funds of RMB184,100,000.00 were the guarantee deposit for the application for bank loans withthe banks by the Company. Other monetary funds of RMB160,860,000.00 were the Company*s statutory reserve deposits at the banks. Other monetary funds included interest receivable of RMB66,776,093.15.

2. Financial assets held for trading

Unit: RMBItemClosing balanceOpening balanceFinancial assets measured at fair value through profit or loss51,033,051.57110,886,182.88Of which:

Equity instrument investments51,033,051.57110,886,182.88Total51,033,051.57110,886,182.88Other explanation: Financial assets held for trading were shares of China Bohai Bank subscribed by the Group.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

3. Bill receivable

Unit: RMBClosing balanceOpening balanceBill typeBook balance

Bad debtprovisionBook valueBook balance

Bad debtprovisionBook valueCommercial acceptance bills742,590,000.00742,590,000.00Total742,590,000.00742,590,000.00

4. Accounts receivable

(1) Disclosure of accounts receivable by category

Unit: RMBClosing balanceBook balanceBad debt provisionCategoryAmount

Percentage(%)Amount

ECL rate

(%)

CarryingamountAccounts receivable assessed

individually for impairment208,785,301.745.53208,785,301.74100.000.00Accounts receivable assessed

collectively for impairment3,565,457,344.0694.47220,583,318.926.193,344,874,025.14Of which:

Accounts receivable from relatedparty customers7,158,599.980.1949,344.500.697,109,255.48

Accounts receivable from non-relatedparty customers2,344,160,892.8162.1182,782,886.753.532,261,378,006.06

Factoring receivables1,214,137,851.2732.17137,751,087.6711.351,076,386,763.60Total3,774,242,645.80100.00429,368,620.6611.383,344,874,025.14

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

4. Accounts receivable (Cont

*d)

(1) Disclosure of accounts receivable by category (Cont

*d)Continued:

Unit: RMBOpening balanceBook balanceBad debt provisionCategoryAmount

Percentage(%)Amount

ECL rate(%)Carrying amountAccounts receivable assessed

individually for impairment224,831,742.247.24224,831,742.24100.000.00Accounts receivable assessedcollectively for impairment2,880,986,860.2492.76224,469,709.787.792,656,517,150.46Of which:

Accounts receivable from related

party customers109,385.420.004109,385.42

Accounts receivable from non-relatedparty customers1,855,021,764.8259.7384,870,622.114.581,770,151,142.71

Factoring receivables1,025,855,710.0033.03139,599,087.6713.61886,256,622.33Total3,105,818,602.48100.00449,301,452.0214.472,656,517,150.46Items assessed individually for bad debt provision:

Unit: RMBClosing balanceNameBook balance

Bad debtprovision

ProvisionpercentageProvision reasonHengfeng Hongyuan Real Estate Holdings

Co., Ltd.45,493,811.4045,493,811.40100.00%Long outstandingNingxia Lingwu Baota Dagu Storage and

Transportation Co., Ltd.27,600,000.0027,600,000.00100.00%Long outstandingFoshan Shunde Xingchen Paper Co., Ltd.26,236,528.7026,236,528.70100.00%Long outstandingZhengzhou Hongyang Paper Products

Co., Ltd.15,293,432.9315,293,432.93100.00%Long outstandingShandong Bisheng Printing Materials Co.,

Ltd.14,813,369.2714,813,369.27100.00%Long outstandingHenan Yibang Technology Trading Co.,

Ltd.13,396,601.2213,396,601.22100.00%Long outstanding92 companies including Shandong Yiming

New Material Technology Corp Co., Ltd.65,951,558.2265,951,558.22100.00%Long outstandingTotal208,785,301.74208,785,301.74

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

4. Accounts receivable (Cont

*d)

(1) Disclosure of 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

Provisionpercentage (%)Within 1 year7,158,599.9849,344.50 0.69Total7,158,599.9849,344.50Accounts receivable with collective provision for bad debts based on receivables from non-related partycustomers

Unit: RMBClosing balanceType

Accountsreceivable

Bad debtprovision

Provisionpercentage (%)Within 1 year2,148,202,427.1414,981,402.810.701 to 2 years92,569,331.04 12,882,446.17 13.922 to 3 years6,643,408.49 1,634,371.19 24.60Over 3 years96,745,726.14 53,284,666.58 55.08Total2,344,160,892.8182,782,886.753.53

Accounts receivable with collective provision for bad debts based on factoring receivables

Unit: RMBClosing balanceNameBook balanceBad debt provisionBook balanceWithin 1 year1,008,798,807.91 98,200,166.66 9.73%1 to 2 years148,138,960.00 23,565,896.00 15.91%2 to 3 years33,486,237.90 8,748,229.36 26.12%Over 3 years23,713,845.46 7,236,795.65 30.52%Total1,214,137,851.27 137,751,087.67 11.35%

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

4. Accounts receivable (Cont

*d)

(1) Disclosure of accounts receivable by category (Cont

*d)

Disclosure by ageing

Unit: RMBAgeingClosing balanceWithin 1 year (including 1 year)3,164,159,835.031 to 2 years240,708,291.042 to 3 years40,129,646.39Over 3 years329,244,873.34Subtotal3,774,242,645.80Bad debt provision429,368,620.66Total3,344,874,025.14The basis used by the ageing analysis of the accounts receivable of the Company: the ageing of accountsreceivable is the length of time of the Company*s outstanding accounts receivable based on invoice date. Theclosing balance is recognised one by one from the end of the period onwards until the amounts add up to thebalance. It is also broken up by intervals of within 1 year, 1-2 years, 2-3 years, 3-4 years, 4-5 years and over 5years.

(2) Provision, recovery or reversal of bad debt provision for the period

Bad debt provision for the period:

Unit: RMBChanges in the periodCategory

OpeningbalanceProvision

Recoveryor reversalWrite-offOthers

ClosingbalanceAccounts receivable with provision for bad debts449,301,452.0224,272,047.1744,204,878.53429,368,620.66Total449,301,452.0224,272,047.1744,204,878.53429,368,620.66

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

4. Accounts receivable (Cont

*d)

(3) Top five accounts receivable based on closing balance of debtors

The total amount of the Company*s top five accounts receivable based on closing balance of debtors for theperiod was RMB993,954,677.24, which accounted for 26.34% of the closing balance of the total accountsreceivable. The closing balance of corresponding bad debt provision amounted to RMB84,278,220.02.

Unit: RMBName of entity

Closing balance

of accountsreceivable

Percentage toclosing balance ofother receivables

Closingbalance of baddebt provisionCustomer I362,603,555.55 9.61 36,260,355.56Customer II216,616,666.63 5.74 21,661,666.66Customer III162,551,050.61 4.31 1,137,857.35Customer IV148,138,960.00 3.92 14,813,896.00Customer V104,044,444.45 2.76 10,404,444.45Total993,954,677.24 26.34 84,278,220.02

5. Accounts receivable financing

Unit: RMBItemClosing balanceOpening balanceBills receivable912,727,537.75435,459,341.76Total912,727,537.75435,459,341.76Changes (increase or decrease) during the period and change in fair value of accounts receivable financing Applicable ﹟ Not applicableIf the provision for impairment of accounts receivable financing is made in accordance with the general model ofECLs, please disclose the information about provision for impairment with reference to the way of disclosure of otherreceivables:

Applicable ﹟ Not applicable

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

6. Prepayments

(1) Disclosure of prepayments stated according to ageing analysis

Unit: RMBClosing balanceOpening balanceAgeingAmountPercentageAmountPercentageWithin 1 year930,868,811.4390.42%803,771,958.8190.16%1 to 2 years98,594,004.209.58%87,713,119.659.84%Total1,029,462,815.63100.00%891,485,078.46100.00%

(2) Top five prepayments according to closing balance of prepaid units

The total amount of the Company*s top five prepayments according to closing balance of prepaid units forthe period amounted to RMB414,189,015.01, which accounted for 40.24% of the closing balance of the totalaccounts payable.

Unit: RMB

Name of entity

Closing balanceof prepayments

Percentage tothe closingbalance of thetotal prepaymentsCustomer I135,575,807.4813.17%Customer II81,192,939.577.89%Customer III69,416,290.746.74%Customer IV66,168,628.326.43%Customer V61,835,348.906.01%Total414,189,015.0140.24%

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

7. Other receivables

Unit: RMBItemClosing balanceOpening balanceDividend receivables3,501,220.33Other receivables2,207,843,920.892,252,864,083.00Total2,211,345,141.222,252,864,083.00

(1) Dividends receivable

1) Classification of dividends receivable

Unit: RMBItem (or investee)Closing balanceOpening balanceChina Bohai Bank3,501,220.33Total3,501,220.33

(2) Other receivables

1) Other receivables by nature

Unit: RMBNature

Closingbook balance

Openingbook balanceOpen credit2,705,407,288.822,692,253,554.58Guarantee deposit11,961,247.355,125,826.96Reserve and borrowings16,402,849.4911,980,522.29Others15,821,988.1680,560,739.46Total2,749,593,373.822,789,920,643.29

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

7. Other receivables (Cont

*d)

(2) Other receivables (Cont

*d)

2) Particulars of bad debt provision

Unit: RMBStage 1Stage 2Stage 3Bad debt provision

ECLs forthe next12 months

Lifetime ECLs(not credit-impaired)

LifetimeECLs (credit-

impaired)TotalBalance as at 1 January 202265,083,288.44471,973,271.85537,056,560.29Balance as at 1 January 2022 for the periodProvision during the period10,373,371.224,214,604.4114,587,975.63Reversal during the period7,277,542.092,244,712.909,522,254.99Transfer during the periodWrite-off during the period372,828.00372,828.00Other changesBalance as at 30 June 202268,179,117.57473,570,335.36541,749,452.93Disclosed by ageing

Unit: RMBAgeingClosing balanceOpening balanceWithin 1 year (including 1 year)367,852,664.64797,531,460.411 to 2 years1,375,315,037.381,344,225,352.932 to 3 years840,340,601.74484,647,394.76Over 3 years166,085,070.06163,516,435.19Total2,749,593,373.822,789,920,643.29

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

7. Other receivables (Cont

*d)

(2) Other receivables (Cont

*d)

3) Provision, recovery or reversal of bad debt provision for the period

Bad debt provision for the period:

Unit: RMBChanges in the periodCategory

OpeningbalanceProvision

Recoveryor reversalWrite-offOthers

ClosingbalanceBad debt provision for other receivables537,056,560.2914,587,975.639,522,254.99372,828.00541,749,452.93Total537,056,560.2914,587,975.639,522,254.99372,828.00541,749,452.93

4) Top five other receivables according to closing balance of debtors

The total amount of the Company*s top five other receivables based on closing balance of debtorsfor the period amounted to RMB2,048,197,406.04 in total, accounting for 74.49% of the total closingbalance of other receivables. The closing balance of the corresponding bad debt provision amounted toRMB349,073,379.24 in total.

Unit: RMB

Name of entityNatureClosing balanceMaturity

Percentage toclosing balance

of otherreceivables

Closingbalanceof bad debtprovisionCustomer IOpen credit684,000,000.001-2 years24.88%102,600,000.00Customer IIOpen credit533,800,000.001-2 years and 2-3

years

19.41%53,380,000.00

Customer IIIOpen credit467,402,316.852-3 years17.00%121,524,602.38Customer IVOpen credit219,054,783.562-3 years7.97%21,905,478.36Customer VOpen credit143,940,305.63Within 1 year and

1-2 years

5.23%49,663,298.50

Total2,048,197,406.0474.49%349,073,379.24

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

8. Inventories

Whether the Company needs to comply with the disclosure requirements for real estate industriesNo

(1) Categories of inventories

Unit: RMBClosing balanceOpening balance

ItemBook balance

Impairmentprovision forinventories orperformancecosts

CarryingamountBook balance

Impairmentprovision forinventories orperformancecostsCarrying amountRaw materials2,230,492,487.7122,724,323.232,207,768,164.481,734,387,984.2124,660,967.321,709,727,016.89Work-in-process products256,923,076.05 256,923,076.05 148,489,098.95148,489,098.95Goods in stock1,428,278,746.934,941,686.651,423,337,060.281,910,051,642.164,941,686.651,905,109,955.51Consumable biological assets1,500,540,144.471,500,540,144.471,519,305,850.771,519,305,850.77Total5,416,234,455.1627,666,009.885,388,568,445.285,312,234,576.0929,602,653.975,282,631,922.12

(2) Impairment provision for inventories or performance costs

Unit: RMBIncrease during the periodDecrease during the periodItemOpening balanceProvisionOthers

Reversal ortransferOthersClosing balanceRaw materials24,660,967.321,936,644.0922,724,323.23Goods in stock4,941,686.654,941,686.65Total29,602,653.971,936,644.0927,666,009.88Basis for recognition of net realisable value: Ageing spare part inventories were provided for full impairment, andhousehold paper with negative gross profit and ageing household paper inventories were provided for partialimpairment.Reversal or transfer of impairment provision for inventories during the period was due to: Transfer of impairedspare parts sold to impairment provision for inventories during the period.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

9. Non-current assets due within one year

Unit: RMBItemClosing balanceOpening balanceLong-term receivables due within one year5,216,044,182.275,216,934,172.61Total5,216,044,182.275,216,934,172.61

Notes: Long-term receivables due within one year amounting to RMB5,190,934,992.72 (amount for the prior year:

RMB5,188,103,553.61) were financial lease receivables;Long-term receivables due within one year amounting to RMB25,109,189.55 (amount for the prior year: RMB28,830,619.00)

were deposits receivable.

10. Other current assets

Unit: RMBItemClosing balanceOpening balancePrepaid expenses560,638,082.42195,453,994.69Factoring receivables due within one year319,166,361.74303,281,361.74Receivables under financial lease due within one year301,173,453.77388,156,667.35Prepaid tax131,125,749.80132,297,740.90Input tax amount to be deducted 36,815,815.92807,004,437.68Other payments66,667,806.9877,735,290.49Total1,415,587,270.631,903,929,492.85

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

11. Long-term receivables

(1) Particulars of long-term receivables

Unit: RMBClosing balanceOpening balanceItem

Carryingbalance

Bad debtprovision

Carryingamount

Carryingbalance

Bad debtprovision

Carryingamount

Discountrate rangeFinance lease payments8,305,095,187.791,277,639,823.587,027,455,364.218,344,107,765.881,211,551,549.727,132,556,216.164%-12%Less: Unrealised financing income386,924,782.60386,924,782.60366,945,292.53366,945,292.53Deposit for equipment lease financing339,646,696.64339,646,696.64272,996,696.64272,996,696.64Less: Unrealised financing income36,559,819.8336,559,819.8332,913,472.3132,913,472.31Subtotal8,221,257,282.001,277,639,823.586,943,617,458.428,217,245,697.681,211,551,549.727,005,694,147.96Less: lo ng-term receivables duewithin one year6,322,849,988.471,106,805,806.205,216,044,182.276,244,230,790.741,027,296,618.135,216,934,172.61Total1,898,407,293.53170,834,017.381,727,573,276.151,973,014,906.94184,254,931.591,788,759,975.35

Particulars of bad debt impairment provision

Unit: RMBStage 1Stage 2Stage 3Bad debt provision

ECLs forthe next12 months

Lifetime ECLs

(not credit-

impaired)

Lifetime ECLs

(credit-impaired)TotalBalance as at 1 January 2022453,675.00183,801,256.59184,254,931.59Balance as at 1 January 2022 during the periodProvisions during the periodOther changes-13,420,914.21-13,420,914.21Balance as at 30 June 2022453,675.00170,380,342.38170,834,017.38Note: Other changes represented the transfer of the bad debt provision for long-term financing lease payments

due within one year from long-term receivables to non-current assets due within one year during the period.Changes in carrying book balances with significant changes in loss provision for the period Applicable ﹟ Not applicable

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

12. Long-term equity investments

Unit: RMBChange for the periodInvestee

Opening balance(carrying amount)

Additionalcontribution

Withdrawncontribution

Investmentgain or lossrecognised underequity method

Adjustment of

othercomprehensiveincomeOther changesin equityinterest

Distribution ofcash dividend orprofit declared

Impairment

provisionOthers

Closing balance(carrying amount)

Closingbalance ofimpairmentprovisionI. Joint venturesShouguang Chenming Huisen New-style Construction Materials Co.,Ltd.6,902,869.87-215,525.031,000,000.005,687,344.84Weifang Sime Darby West Port

Co., Ltd.77,370,998.75-3,008,474.8274,362,523.93Shouguang Meite Environmental

Technology Co., Ltd.14,616,124.71-2,841,259.4211,774,865.29Weifang Xingxing United Chemical

Co., Ltd.84,623,787.747,250,597.3891,874,385.12Subtotal183,513,781.071,185,338.111,000,000.00183,699,119.18II. AssociatesZhuhai Dechen New Third Board

Equity Investment Fund Company

(Limited Partnership)36,967,896.31-2,003,052.1534,964,844.16Ningbo Kaichen Huamei Equity

Investment Fund Partnership

(Limited Partnership)197,297,485.59-3,217.73197,294,267.86Jiangxi Chenming Port Co., Ltd.554,582.45-61,479.47493,102.98Goldtrust Futures Co., Ltd.185,452,462.50-2,317,934.80183,134,527.70Chenming (Qingdao) Asset

Management Co., Ltd.6,933,668.14-107,419.58940,000.005,886,248.56Guangdong Nanyue Bank Co., Ltd.1,255,867,809.2929,924,322.204,743,150.54-55,547,014.2183,754,093.051,318,742,360.87Subtotal1,683,073,904.2825,431,218.474,743,150.54-55,547,014.21940,000.0083,754,093.051,740,515,352.13Total1,866,587,685.3526,616,556.584,743,150.54-55,547,014.211,940,000.0083,754,093.051,924,214,471.31Explanation: For other changes of Guangdong Nanyue Bank Co., Ltd., please refer to VII. 46. Retained profit.

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

13. Other non-current financial assets

Unit: RMBItemClosing balanceOpening balanceInvestment in debt instruments400,000,000.00400,000,000.00Investment in equity instruments119,927,003.25119,927,003.25Total519,927,003.25519,927,003.25

14. Investment property

(1) Investment property under the cost method

﹟ Applicable Not applicable

Unit: RMBItem

Buildings andstructuresTotalI.Original carrying value

1.Opening balance7,196,809,856.627,196,809,856.62

2.Increase during the period

3.Decrease during the period34,204,125.5834,204,125.58

(1) Disposal34,204,125.5834,204,125.58

4.Closing balance7,162,605,731.047,162,605,731.04II.Accumulated depreciation and accumulated amortisation

1.Opening balance723,271,424.71723,271,424.71

2.Increase during the period97,852,182.5997,852,182.59

(1) Provision or amortisation97,852,182.5997,852,182.59

3.Decrease during the period16,514,383.5816,514,383.58

(1) Disposal16,514,383.5816,514,383.58

4.Closing balance804,609,223.72804,609,223.72III.Impairment provisionIV.Carrying amount

1.Closing carrying amount6,357,996,507.326,357,996,507.32

2.Opening carrying amount6,473,538,431.916,473,538,431.91

Note: Investment properties under the Company primarily include:

Pujiang International Finance Plaza, located at No. 1098, Dongdaming Road, Hongkou District, Shanghai, is a long-term held office

property of Shanghai Hongtai Real Estate Co., Ltd., a subsidiary of the Company, mainly used for external rental or office purposes;Jinan Chenming Finance Building (), located in No. 7 Zone, Hanyu Financial Business Center, No. 7000, Jingshi

Road, Jinan Innovation Zone, is a long-term held office property of Shandong Chenming Investment Limited, a subsidiary of the

Company, mainly used for external rental or office purposes;Fatum Apartment (), located at No. 463, Anbo Road, No. 22, Lane 467, Anbo Road, Yangpu District, Shanghai, is a

long-term held apartment property of Shanghai Herui Investment Co., Ltd., a subsidiary of the Company, mainly used for external

rental purposes;Guangzhou Zhengjia Plaza (), located at Room 3901-3926, No. 372, Huanshi East Road, Yuexiu District, Guangzhou,

is a long-term held office property of Guangzhou Chenming Financial Leasing Co., Ltd., a subsidiary of the Company, mainly used

for external rental purposes;Shenzhen Zhuoyue Baozhong Times Square (), located at Room 3201-3210, Building C, Zhuoyue Baozhong

Times Square (Phase 2), Xin*an Sub-district, Bao*an District, Shenzhen, is a long-term held office property of Guangzhou Chenming

Financial Leasing Co., Ltd., a subsidiary of the Company, mainly used for external rental purposes.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

14. Investment property (Cont

*d)

(2) Investment property under the fair value method

Applicable ﹟ Not applicable

15. Fixed assets

Unit: RMBItemClosing balanceOpening balanceFixed assets34,234,454,423.7435,653,492,676.15Disposal of fixed assets156,159,044.44Total34,390,613,468.1835,653,492,676.15

(1) Particulars of fixed assets

Unit: RMBItem

Housing andbuildingstructure

Machinery and

equipmentVehicles

Electronicequipment and

othersTotalI.Original carrying amount:

1.Opening balance10,673,297,551.1143,798,170,683.63296,201,440.65457,044,021.4755,224,713,696.86

2.Increase during the period13,020,952.59199,719,424.324,390,603.452,238,220.64219,369,201.00

(1) Acquisition10,631,731.64182,387,984.584,390,603.452,238,220.64199,648,540.31

(2) Transferred from construction in

progress2,389,220.9517,331,439.7419,720,660.69

3.Decrease during the period285,863,638.92976,732,568.6413,779,612.5559,767,224.051,336,143,044.16

(1) Disposal or retirement285,863,638.92103,807,390.966,949,954.655,394,800.07402,015,784.60

(2) Transfer to construction in progress872,925,177.686,829,657.9054,372,423.98934,127,259.56

4.Closing balance10,400,454,864.7843,021,157,539.31286,812,431.55399,515,018.0654,107,939,853.70II.Accumulated depreciation

1.Opening balance2,302,130,749.0916,572,843,548.56190,913,517.71300,377,759.6119,366,265,574.97

2.Increase during the period139,516,595.65882,260,896.5112,239,386.696,311,342.201,040,328,221.05

(1) Provision139,516,595.65882,260,896.5112,239,386.696,311,342.201,040,328,221.05

3.Decrease during the period127,122,561.19546,256,740.8612,042,168.4152,642,341.34738,063,811.80

(1) Disposal or retirement127,122,561.1956,609,567.136,206,488.674,937,781.19194,876,398.18

(2) Transfer to construction in progress489,647,173.735,835,679.7447,704,560.15543,187,413.62

4.Closing balance2,314,524,783.5516,908,847,704.21191,110,735.99254,046,760.4719,668,529,984.22III.Impairment provision

1.Opening balance27,808,852.79169,697,469.9013,889.137,435,233.92204,955,445.74

2.Increase during the period

3.Decrease during the period

4.Closing balance27,808,852.79169,697,469.9013,889.137,435,233.92204,955,445.74IV.Carrying amount

1.Closing carrying amount8,058,121,228.4425,942,612,365.2095,687,806.43138,033,023.6734,234,454,423.74

2.Opening carrying amount8,343,357,949.2327,055,629,665.17105,274,033.81149,231,027.9435,653,492,676.15Other explanation: The fixed assets transferred to construction in progress during the period were mainly theequipment relocation of Wuhan Chenming.

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

15. Fixed assets (Cont

*d)

(2) Particulars of temporarily idle fixed assets

Unit: RMBItem

Originalcarrying value

Accumulateddepreciation

Impairmentprovision

CarryingamountRemarkHousing and building structure72,585,434.3723,096,137.953,093,008.6446,396,287.78Machinery and equipment913,076,851.75545,378,538.71150,706,985.59216,991,327.45Electronic equipment and others754,860.94704,151.457,187.2743,522.22Total986,417,147.06569,178,828.11153,807,181.50263,431,137.45

(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.)

1,053,074,557.83Under applicationHousing and building structure (Huanggang Chenming Pulp & Paper

Co., Ltd.)

644,514,086.42Under applicationHousing and building structure (Shouguang Meilun Paper Co., Ltd.)470,055,885.46Under applicationHousing and building structure (Jilin Chenming Paper Co., Ltd.)380,384,086.36Under applicationHousing and building structure (Jiangxi Chenming Paper Co., Ltd.)202,694,998.89Under applicationHousing and building structure (Shandong Chenming Paper HoldingsLimited)

109,652,457.94Under application

(4) Disposal of fixed assets

Unit: RMBItemClosing balanceOpening balanceHousing and building structure156,159,044.44Total156,159,044.44

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

16. Construction in progress

Unit: RMBItemClosing balanceOpening balanceConstruction in progress794,536,482.04189,818,292.48Materials for project7,871,202.977,931,233.57Total802,407,685.01197,749,526.05

(1) Particulars of construction in progress

Unit: RMBClosing balanceOpening balanceItem

Carryingbalance

Impairmentprovision

Carryingamount

Carryingbalance

Impairmentprovision

CarryingamountWuhan relocation project331,878,795.25331,878,795.25Technological transformation project247,802,083.62247,802,083.6250,534,096.0450,534,096.04Fly ash cement ceramsite production project (Shandong Chenming)54,246,139.1954,246,139.1954,246,139.1954,246,139.19Relocation of Wuhan household paper project (Phase II) (Meilun)74,442,135.9674,442,135.9628,705,483.2528,705,483.25Integrated forestry, pulp and paper project (Huanggang Pulp & Paper)27,288,850.2027,288,850.2016,687,683.2916,687,683.29Others80,017,149.5821,138,671.7658,878,477.8260,783,562.4721,138,671.7639,644,890.71Total815,675,153.8021,138,671.76794,536,482.04210,956,964.2421,138,671.76189,818,292.48

(2) Changes in material construction in progress projects for the period

Unit: RMB

Project nameBudget

Openingbalance

Increase

duringthe period

Transfer to

fixedassetsduringthe period

Othersdeductions

duringthe period

Closingbalance

Projectaccumulated

investmentto budget

Projectprogress

Accumulated

capitalised

interest

Of which:

Capitalised

Interestamountduring the

period

Capitalisation

rate of the

interestamount forthe period

Sourcesof fundRelocation of Wuhanhousehold paperproject (Phase II) (Meilun)

109,000,000.0028,705,483.2545,736,652.7174,442,135.9668.30%90.00%Self-owned funds

and borrowingsIntegrated forestry, pulpand paper project(Huanggang Pulp and Paper)

70,000,000.0016,687,683.2910,601,166.9127,288,850.2095.00%99.00%Self-owned funds

Total179,000,000.0045,393,166.5456,337,819.62101,730,986.16

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

16. Construction in progress (Cont

*d)

(3) Project materials

Unit: RMBClosing balanceOpening balanceItem

Carryingbalance

Impairmentprovision

Carryingamount

Carryingbalance

Impairment

provision

CarryingamountSpecial materials7,871,202.977,871,202.977,931,233.577,931,233.57Total7,871,202.977,871,202.977,931,233.577,931,233.57

17. Bearer biological assets

(1) Bearer biological assets under the cost method

﹟ Applicable Not applicable

Unit: RMBItemTea industriesTotalI.Original carrying amount:

1.Opening balance

2.Increase during the period10,398,523.9010,398,523.90

(1) Purchase10,398,523.9010,398,523.90

3.Decrease during the period

4.Closing balance10,398,523.9010,398,523.90II.Accumulated depreciationIII.Impairment provisionIV.Carrying amount

1.Closing carrying amount10,398,523.9010,398,523.90

2.Opening carrying amount

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

18. Right-of-use assets

Unit: RMBItem

Landuse rights

Buildings andstructuresTotalI.Original carrying value

1.Opening balance218,097,859.065,571,378.54223,669,237.60

2.Increase during the period

3.Decrease during the period7,855,845.8112,385.327,868,231.13

(1) Sublease to finance lease

(2) Transfer or held for sale

(3) Other deductions7,855,845.8112,385.327,868,231.13

4.Closing balance210,242,013.255,558,993.22215,801,006.47II.Accumulated depreciation

1.Opening balance25,467,932.29772,128.8726,240,061.16

2.Increase during the period3,777,115.05139,064.743,916,179.79

(1) Provision3,777,115.05139,064.743,916,179.79

3.Decrease during the period3,185,888.243,185,888.24

(1) Sublease to finance lease

(2) Transfer or held for sale

(3) Other deductions3,185,888.243,185,888.24

4.Closing balance26,059,159.10911,193.6126,970,352.71III.Impairment provisionIV.Carrying amount

1.Closing carrying amount184,182,854.154,647,799.61188,830,653.76

2.Opening carrying amount192,629,926.774,799,249.67197,429,176.44Other explanation: Other deductions during the period were mainly the termination of certain lease contracts ofZhanjiang Arboriculture and Yangjiang Arboriculture.

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

19. Intangible assets

(1) Particulars of intangible assets

Unit: RMBItemLand use rightsSoftwarePatents

Certificates ofthird party rightTotalI.Original carrying value

1.Opening balance2,040,126,983.3521,946,825.6427,358,613.0515,908,674.872,105,341,096.91

2.Increase during the period305,847,919.65107,606.09305,955,525.74

(1) Acquisition305,847,919.65107,606.09305,955,525.74

3.Decrease during the period

4.Closing balance2,345,974,903.0022,054,431.7327,358,613.0515,908,674.872,411,296,622.65II.Accumulated amortisation

1.Opening balance474,004,742.7621,814,590.97940,153.7715,908,674.87512,668,162.37

2.Increase during the period22,827,920.24239,840.765,059,845.7328,127,606.73

(1) Provision22,827,920.24239,840.765,059,845.7328,127,606.73

3.Decrease during the period

4.Closing balance496,832,663.0022,054,431.735,999,999.5015,908,674.87540,795,769.10III.Impairment provisionIV.Carrying amount

1.Closing carrying amount1,849,142,240.0021,358,613.551,870,500,853.55

2.Opening carrying amount1,566,122,240.59132,234.6726,418,459.281,592,672,934.54

20. Goodwill

(1) Original carrying amount of goodwill

Unit: RMBName of investee or event generating goodwill

Openingbalance

Additions

duringthe period

Deductions

duringthe period

ClosingbalanceJilin Chenming Paper Co., Ltd.14,314,160.6014,314,160.60Kunshan Tuoan Plastic Products Co., Ltd.26,946,905.3826,946,905.38Total41,261,065.9841,261,065.98

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

20. Goodwill (Cont

*d)

(2) Provision for impairment of goodwill

Unit: RMBName of investee or event generating goodwill

Openingbalance

Additions

duringthe period

Deductions

duringthe period

ClosingbalanceJilin Chenming Paper Co., Ltd.14,314,160.6014,314,160.60Total14,314,160.6014,314,160.60

Note: The Company assessed the recoverable amount of goodwill and determined that the goodwill related to the Company*s plasticbusiness was not impaired. The Company determines the reporting segments based on the category of the principal activitiesand categorises Kunshan Tuoan Plastic Products Co., Ltd. as an asset group. The recoverable amount is determined based onthe current value of the estimated future cash flows. Future cash flows are determined based on the financial budget for 2022 to2026 as approved by the management, and adopts a discount rate of 7.28%, the interest rate of the 5-year bonds issued by theCompany in 2018. The cash flows for more than 5 years are calculated based on the growth rate of 5%. Other key assumptionsused in estimating future cash flows include the estimated sales and gross profit based on the performance of such asset group inthe past and the expectation to market development by the management. The management believed that any reasonable changein the above assumptions will not result in the total carrying value of the asset group Kunshan Tuoan Plastic Products Co., Ltd.exceeding its recoverable amount.

21. Long-term prepaid expenses

Unit: RMBItem

Openingbalance

Increase

duringthe period

Amortisation

duringthe period

Othersdeductions

ClosingbalanceWoodland expenses8,387,048.73330,907.018,056,141.72Others40,754,724.41327,354.381,724,989.2239,357,089.57Total49,141,773.14327,354.382,055,896.2347,413,231.29

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

22. Deferred income tax assets/deferred income tax liabilities

(1) Deferred income tax assets before offsetting

Unit: RMBClosing balanceOpening balanceItem

Deductibletemporarydifferences

Deferredtax assets

Deductibletemporarydifferences

Deferredtax assetsProvision for asset impairment2,455,477,182.77563,980,277.582,323,311,804.03544,452,793.22Unrealised profit arising from intra-group transactions12,642,619.203,160,654.80110,621,031.6027,655,257.90Outstanding payables538,978,299.8481,648,513.55646,596,211.5397,758,308.63Deferred income95,262,644.0614,289,396.61202,273,476.7630,341,021.50Deductible losses3,035,129,439.03496,416,204.062,508,683,883.40409,890,367.80Debt reconstructing18,734,830.914,683,707.7318,734,830.914,683,707.73Total6,156,225,015.811,164,178,754.335,810,221,238.231,114,781,456.78

(2) Deferred income tax liabilities before offsetting

Unit: RMBClosing balanceOpening balanceItem

Taxabletemporarydifferences

Deferredincome tax

liabilities

Taxabletemporarydifferences

Deferredincome tax

liabilitiesAsset valuation increment from businesscombinations involving entities not under common control20,900,574.285,225,143.5722,697,097.445,674,274.36Debt reconstructing30,145,021.527,536,255.3830,145,021.527,536,255.38Total51,045,595.8012,761,398.9552,842,118.9613,210,529.74

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

22. Deferred income tax assets/deferred income tax liabilities (Cont

*d)

(3) Breakdown of unrecognised deferred income tax assets

Unit: RMBItemClosing balanceOpening balanceDeductible temporary differences1,813,440.181,671,856.52Deductible losses562,971,551.27730,122,476.10Total564,784,991.45731,794,332.62

(4) Expiry of deductible loss of unrecognised deferred income tax assets falls in the periods as follows

Unit: RMBYearClosing amountOpening amountRemark2022166,532,843.732023129,503,478.05129,523,478.05202483,139,688.1990,461,838.252025249,241,618.81249,242,062.93202691,781,165.8094,362,253.1420279,305,600.42Total562,971,551.27730,122,476.10

23. Other non-current assets

Unit: RMBClosing balanceOpening balanceItem

Carryingbalance

Impairment

provision

Carryingamount

Carryingbalance

Impairment

provision

CarryingamountLand transfer fees2,612,250.682,612,250.68298,072,250.68298,072,250.68Consideration for acquisition of companies127,500,000.00127,500,000.00127,500,000.00127,500,000.00Payments for engineering and equipment754,553,629.73754,553,629.7364,364,443.4264,364,443.42Total884,665,880.41884,665,880.41489,936,694.10489,936,694.10

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

24. Short-term borrowings

(1) Classification of short-term borrowings

Unit: RMBItemClosing balanceOpening balanceDiscounted borrowings16,105,340,000.0016,194,790,000.00Credit borrowings10,398,695,390.938,847,850,884.15Guaranteed borrowings9,290,708,673.837,734,756,765.41Pledged borrowings494,919,879.81675,627,536.66Mortgage borrowings70,000,000.0070,000,000.00Total36,359,663,944.5733,523,025,186.22Explanation of the classification of short-term borrowings: For classification and amount of mortgageborrowings and mortgage assets, please see 1. Monetary funds and 65. Assets with restricted ownerships orright to use in Note VII. For classification and amount of pledged borrowings and mortgage assets, please see

1. Monetary funds and 65. Assets with restricted ownerships or right to use in Note VII. Overdue outstanding

short-term borrowings: total outstanding short-term borrowings overdue as at the end of the period amounted toRMB0.00. Short-term borrowings included interest payable of RMB20,223,803.64.

25. Accounts payable

(1) Particulars of accounts payable

Unit: RMBItemClosing balanceOpening balancePayment for goods2,914,753,971.613,074,700,464.48Payment for engineering157,856,765.00307,195,168.83Payment for equipment149,196,495.80249,371,719.69Others47,179,699.25239,863,992.34Total3,268,986,931.663,871,131,345.34

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

25. Accounts payable (Cont

*d)

(2) Disclosure by ageing

Unit: RMBAgeing Closing balanceOpening balanceWithin 1 year (including 1 year)2,758,073,611.383,282,236,529.521-2 years 209,075,559.49229,465,372.732-3 years 99,325,225.63164,915,158.41Over 3 years 202,512,535.16194,514,284.68Total 3,268,986,931.663,871,131,345.34The basis used by the ageing analysis of the accounts payable of the Company: the ageing of accounts payableis the length of time of the Company*s outstanding accounts payable based on invoice date. The closing balanceis recognised one by one from the end of the period onwards until the amounts add up to the balance. It is alsobroken up by intervals of within 1 year, 1-2 years, 2-3 years, 3-4 years, 4-5 years and over 5 years.

(3) Significant accounts payable aged over 1 year

Unit: RMBItemClosing balance

Reason foroutstanding ornot transferWeifang Xingxing United Chemical Co., Ltd.26,905,494.34Not due for paymentOmya Haiming (Nanchang) Chemical Co., Ltd.16,000,000.00Not due for paymentFujian Jingyun Development Co., Ltd.13,939,237.55Not due for paymentJiangsu Ronghai International Logistics Co., Ltd.11,159,904.40Not due for paymentZhejiang Jndia Pipeline Industry Co., Ltd.10,556,896.91Not due for paymentTotal78,561,533.20

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

26. Bills payable

Unit: RMBCategoryClosing balanceOpening balanceCommercial acceptance bills2,201,811,787.061,398,922,636.21Bank acceptance bills1,833,269,491.791,690,589,691.19Total4,035,081,278.853,089,512,327.40

27. Receipts in advance

(1) Particulars of receipts in advance

Unit: RMBItemClosing balanceOpening balancePrepaid property rents26,735,329.1938,274,028.20Total26,735,329.1938,274,028.20

28. Contract liabilities

Unit: RMBItemClosing balanceOpening balancePayment for goods in advance1,334,133,746.951,382,289,597.54Total1,334,133,746.951,382,289,597.54

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

29. Staff remuneration payables

(1) Particulars of staff remuneration payables

Unit: RMBItem

Openingbalance

Additionsduringthe period

Deductionsduringthe period

Closing

balanceI.Short-term remuneration169,854,249.70576,356,055.71620,357,407.71125,852,897.70II.Retirement benefit plan-definedcontribution scheme44,758.31103,813,852.4399,083,756.914,774,853.83III.Termination benefits266,898.58266,898.58Total169,899,008.01680,436,806.72719,708,063.20130,627,751.53

(2) Particulars of short-term remuneration

Unit: RMBItem

Openingbalance

Additionsduringthe period

Deductionsduringthe period

Closing

balance

1.Salaries, bonuses, allowances and

subsidies160,186,039.82460,654,365.60509,443,300.19111,397,105.23

2.Staff welfare22,624,020.7322,624,020.73

3.Social insurance premiums346,948.6847,034,549.7147,123,115.79258,382.60

Of which: Medical insurance

premium344,352.1642,514,565.0742,648,640.07210,277.16Work-related injury

insurance premium98.442,814,757.902,766,750.9048,105.44 Maternity insurance2,498.081,705,226.741,707,724.82

4.Housing provident funds5,094,807.6736,592,873.3835,777,051.485,910,629.57

5.Union funds and staff education

expenses1,488,335.517,402,901.613,130,084.565,761,152.56

6.Short-term paid holiday2,738,118.022,047,344.682,259,834.962,525,627.74Total169,854,249.70576,356,055.71620,357,407.71125,852,897.70

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

29. Staff remuneration payables (Cont

*d)

(3) Defined contribution plan

Unit: RMBItem

Openingbalance

Additionsduringthe period

Deductions

duringthe period

Closingbalance

1.Basic pension insurance43,609.9499,150,737.4694,576,886.304,617,461.10

2.Unemployment insurance1,148.374,663,114.974,506,870.61157,392.73Total44,758.31103,813,852.4399,083,756.914,774,853.83

30. Taxes payable

Unit: RMBItemClosing balanceOpening balanceValue added tax84,803,146.51125,522,336.03Enterprise income tax33,920,551.3289,597,918.41Property tax24,095,481.0413,083,934.41Land use tax9,411,113.149,240,921.98Urban maintenance and construction tax4,251,472.393,748,576.77Resource tax4,000,000.004,500,000.00Environmental protection tax3,906,160.203,959,856.45Stamp duty3,890,115.113,456,472.38Educational surcharges and others3,761,962.182,931,140.78Land appreciation tax2,024,028.204,076,160.22Individual income tax1,998,018.5961,378,163.24Total176,062,048.68321,495,480.67

31. Other payables

Unit: RMBItemClosing balanceOpening balanceInterest payable65,975,461.6155,437,777.80Other payables1,478,440,073.131,482,575,808.13Total1,544,415,534.741,538,013,585.93

Note: Other payables in the above table refer to other payables net of interest payable and dividends payable.

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X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

31. Other payables (Cont

*d)

(1) Interest payable

Unit: RMBItemClosing balanceOpening balanceInterest on Corporate Bonds4,268,152.7721,132,222.24Interest on medium-term notes61,707,308.8434,305,555.56Total65,975,461.6155,437,777.80

(2) Other payables

1) Other payables by nature

Unit: RMBItemClosing balanceOpening balancePayments389,694,955.91550,223,956.81Deposit351,639,653.97261,990,665.03Accrued expenses386,192,674.26341,923,505.85The obligation to repurchase shares under the share incentive scheme226,860,000.00226,860,000.00Others124,052,788.99101,577,680.44Total1,478,440,073.131,482,575,808.13

2) Significant other payables aged over 1 year

Unit: RMBItemClosing balance

Reason for outstanding

or not transferZhanjiang Runbao Trading Co., Ltd.160,000,000.00Not due for paymentShanghai Shuilan Property Management Co., Ltd.136,000,000.00Not due for paymentNine Dragons Dawei Holdings Co., Ltd.30,000,000.00Not due for paymentWeifang Xingxing United Chemical Co., Ltd.16,860,000.00Not due for paymentWuhan Tianrui Paper Co., Ltd.7,941,708.00Not due for paymentTotal350,801,708.00

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X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

32. Non-current liabilities due within one year

Unit: RMBItemClosing balanceOpening balanceLong-term payables due within one year1,729,422,560.821,543,620,543.60Long-term borrowings due within one year1,469,717,511.112,583,730,366.67Other non-current liabilities due within one year1,004,483,257.041,198,716,666.67Bonds payable due within one year350,000,000.001,270,636,933.46Lease liabilities due within one year4,728,345.214,606,717.58Total4,558,351,674.186,601,311,227.98

33. Long-term borrowings

(1) Types of long-term borrowings

Unit: RMBItemClosing balanceOpening balanceMortgage borrowings3,571,078,975.823,921,048,883.74Guaranteed borrowings2,187,641,710.382,028,979,800.00Credit borrowings1,074,231,881.941,910,041,837.91Less: Long-term borrowings due within one year1,469,717,511.112,583,730,366.67Total5,363,235,057.035,276,340,154.98Other explanation:

For classification and amount of pledged assets of pledged borrowings, please see 1. Monetary funds and

65. Assets with restricted ownerships or right to use in Note VII.

Long-term borrowings included interest payable of RMB15,766,964.86.

34. Bonds payable

Unit: RMBItemClosing balanceOpening balance18 Chenming Bond 01 每 Chenming Group155,000,000.00Chenming USD BondsTotal155,000,000.00

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

34. Bonds payable (Cont

*d)

(1) Increase/decrease in bonds payable

Unit: RMBBond namePar valueDate of issueTermIssue amount18 Chenming Bond 01 每 Chenming Group350,000,000.002 April 20185 years350,000,000.00Chenming USD Bonds1,137,120,600.006 August 20192.6 years1,125,276,863.46Total1,487,120,600.001,475,276,863.46

Unit: RMBBond nameOpening balance

Issuance

duringthe period

Interest atpar value

Amortisation ofpremium/discount

Repaymentduringthe period

Changes in gainsand losses fromforeign exchangeClosing balance18 Chenming Bond 01 每 Chenming Group350,000,000.008,627,597.228,627,597.22350,000,000.00Chenming USD Bonds1,075,636,933.4630,847,102.561,019,717.031,109,532,202.564,067,883.57Subtotal1,425,636,933.4639,474,699.781,019,717.031,118,159,799.784,067,883.57350,000,000.00Less: Bonds payable due within one year1,270,636,933.46350,000,000.00Total155,000,000.0039,474,699.781,019,717.031,118,159,799.784,067,883.57

35. Lease liabilities

Unit: RMBItemClosing balanceOpening balanceLease payments payable77,669,999.5381,362,458.45Less: Unrecognised financing expenses18,190,037.2719,474,535.06Subtotal59,479,962.2661,887,923.39Less: Lease liabilities due within one year4,728,345.214,606,717.58Total54,751,617.0557,281,205.81

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

36. Long-term payables

Unit: RMBItemClosing balanceOpening balanceLong-term payables3,383,399,934.072,358,901,022.99Total3,383,399,934.072,358,901,022.99

(1) Long-term payables by nature

Unit: RMBItemClosing balanceOpening balanceFinancial leasing4,426,322,494.893,188,521,566.59China Development Bank Special Funds460,500,000.00488,000,000.00Contributions by other partners225,000,000.00225,000,000.00Retention for the financial leasing operations1,000,000.001,000,000.00Subtotal5,172,822,494.893,902,521,566.59Less: Long-term payables due within one year1,729,422,560.821,543,620,543.60Total3,383,399,934.072,358,901,022.99

37. Provisions

Unit: RMBItemClosing balanceOpening balanceReasonPending litigation325,259,082.28325,259,082.28Losses from Arjo*s lawsuitTotal325,259,082.28325,259,082.28Explanation: In February 2017, Arjowiggins HKK2 Limited (※HKK2 Company§) submitted a H share winding-up petitionagainst the Company to Hong Kong High Court due to a joint venture dispute, which required a compensation foreconomic loss of RMB167 million and interest thereon, and legal costs of USD3.54 million and arbitration fee of HK$3.3million and interest thereon to HKK2. The Company made provision of RMB320 million for such pending litigation in2017. On 5 August 2020, Hong Kong High Court rejected the Company*s appeal. On 14 June 2022, Hong Kong Courtof Final Appeal rejected the Company*s appeal, and directed that the sum of HK$389,112,432.44, together with interestaccrued thereon, previously deposited with the Court as a stay of the conditions of the winding up petition filed by HKK2against the Company pursuant to the order of the Judge of the Court of First Instance, Mr. HARRIS Jonathan Russell,shall be paid to HKK2.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

38. Deferred income

Unit: RMBItem

Openingbalance

Increase duringthe period

Decrease during

the period

ClosingbalanceReasonGovernment grants1,573,681,684.2552,355,943.371,521,325,740.88Financial provisionTotal1,573,681,684.2552,355,943.371,521,325,740.88Items in respect of government grants:

Unit: RMBLiabilities item

Openingbalance

New grants for the period

Include in otherincome forthe periodOther changes

Closingbalance

Asset-related/income-relatedProject fund for National technological

support scheme

1,123,125.0082,350.001,040,775.00Asset-related government

grantsInfrastructure and environmental

protection projects

219,273,225.526,019,465.67213,253,759.85Asset-related government

grantsHuanggang forestry-pulp paper project496,846,742.4112,513,108.90484,333,633.51Asset-related government

grantsZhanjiang forestry-pulp paper project50,806,597.192,047,316.4648,759,280.73Asset-related government

grantsFinancial subsidies for technological

transformation project

144,150,333.365,767,903.86138,382,429.50Asset-related government

grantsFunding for environmental protection627,047,425.6825,296,070.94601,751,354.74Asset-related government

grantsOthers34,434,235.09629,727.5433,804,507.55Asset-related government

grantsTotal1,573,681,684.2552,355,943.371,521,325,740.88

39. Share capital

Unit: RMB

Opening balance

Increase/decrease during the year (+/-)

ClosingbalanceNew issueBonus issueSharesconverted from

reservesOthersSubtotalTotal number of shares2,984,208,200.002,984,208,200.00

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

40. Other equity instruments

(1) Perpetual Bonds outstanding at the end of the period

Unit: RMBOutstanding financialinstruments

Year ofissuance

Accountingclassification

Dividendor interestrate

Issue priceIssue size

Amount

(RMB)Maturity dateor renewalstatus

ConditionforconversionConversion17 Lu Chenming MTN0012017Equity

instrument

8.97%100.0010,000,000.001,000,000,000.00No defined

maturity date

NoneNon-convertibleTotal10,000,000.001,000,000,000.00

(2) Changes in Perpetual Bonds outstanding at the end of the period

Unit: RMBBeginning of the periodIncrease during the periodDecrease during the periodEnd of the periodOutstanding financialinstrumentsNumber

CarryingamountNumber

CarryingamountNumber

CarryingamountNumber

Carryingamount17 Lu Chenming MTN00110,000,000.00996,000,000.0010,000,000.00996,000,000.00Total10,000,000.00996,000,000.0010,000,000.00996,000,000.00Changes (increase or decrease) in other equity instruments during the period, the reasons for such changes, andthe basis for relevant accounting treatment:

The Company issued medium-term notes amounting to RMB1,000 million on 12 July 2017 at a coupon rate of

6.80%. The proceeds net of issue costs amounted to RMB996.00 million. The notes are debts without a defined

maturity date and will continue indefinitely until the exercise of the right of redemption by the Company. Theinterest rate of the bills is determined by the basic interest rate + the initial interest rate + 300BP. It has the featureof capped interest rates and the capped interest rate does not exceed the average interest rate level of the sametype of instruments in the same industry in the same period; The Company has the right to defer any payment ofinterest. The right of redemption of the notes is vested in the Company so that it is up to the Company to decidewhether to redeem or not; the priority of repayment of the principal and interest of medium-term notes for theperiod is the same as other outstanding debt financing instruments of the issuers in the event of winding up,because there is low probability of bankruptcy that the Company will not be liable for contractual obligations todeliver cash or other financial assets expected.Based on the above, the notes do not contain any term giving rise to any contractual obligation to deliver cashor other financial assets to any other entity, or to exchange any financial asset or financial liability with any otherentity under potential adverse circumstances. Consequently, they are eligible to be recognised and accounted foras equity instruments and included under other equity instruments 每 Perpetual Bonds.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

41. Capital reserves

Unit: RMBItemOpening balance

Increase during

the period

Decrease duringthe periodClosing balanceCapital premium (share premium)4,471,891,796.0829,676,814.694,501,568,610.77Other capital reserves755,366,304.336,850,012.78748,516,291.55Total5,227,258,100.4129,676,814.696,850,012.785,250,084,902.32Other explanations, including changes (increase or decrease) during the period and reasons for such changes:

The Company estimated that due to the second batch of 30% restricted shares, the capital surplus recognised inprevious years was eliminated in the current period, and the final share-based payment was recognised as a reductionof capital surplus of RMB6,850,012.78; a capital increase of Zhanjiang Chenming Pulp & Paper Co., Ltd., a subsidiaryof the Company, was contributed on the part of other investors, causing a decrease in the Company*s shareholdingwithout loss of control, and an increase of capital reserves of RMB29,676,814.69; in 2021, Guangdong NanyueBank Co., Ltd., an associate of the Company, introduced investment on the part of other investors, which diluted theCompany*s equity interest, and as the 2021 annual report of Guangdong Nanyue Bank Co., Ltd. was disclosed laterthan the Company, the Company reduced the capital reserves by RMB55,547,014.21 based on the audited amount inthe 2021 annual report of Guangdong Nanyue Bank Co., Ltd.

42. Treasury shares

Unit: RMBItemOpening balance

Increase during

the period

Decrease during

the periodClosing balanceShare incentive226,860,000.00226,860,000.00Total226,860,000.00226,860,000.00

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

43. Other comprehensive income

Unit: RMB

ItemOpening balance

During the period

Closing balanceIncurredbefore income

tax forthe period

Less:

Transferredfrom othercomprehensiveincome in priorperiods toprofit or lossduringthe period

Less:

Transferredfrom othercomprehensiveincome in priorperiods toretainedearnings during

the period

Less: Incometax expenses

Attributable toparentcompanyafter tax

Attributableto minorityshareholders

after taxI.Other comprehensive income that cannot be

reclassified to profit or loss in subsequent periodsII.Other comprehensive income that will be reclassified

to profit and loss in subsequent periods

-445,582,729.36-150,398,727.06-150,576,277.41177,550.35-596,159,006.77Of which: Other comprehensive income that may be

reclassified to profit or loss under the equity method-10,512,532.564,743,150.544,565,600.19177,550.35-5,946,932.37Translation differences of financial statements

denominated in foreign currency-435,070,196.80-155,141,877.60-155,141,877.60-590,212,074.40Total other comprehensive income-445,582,729.36-150,398,727.06-150,576,277.41177,550.35-596,159,006.77

44. General risk reserves

Unit: RMBItem

Openingbalance

Increase during

the period

Decrease during

the period

ClosingbalanceGeneral risk reserves76,825,918.6076,825,918.60Total76,825,918.6076,825,918.60

45. Surplus reserves

Unit: RMBItem

Openingbalance

Increase during

the period

Decrease during

the period

ClosingbalanceStatutory surplus reserves1,212,009,109.971,212,009,109.97Total1,212,009,109.971,212,009,109.97

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

46. Retained profit

Unit: RMBItemThe periodThe prior periodRetained profit as at the end of the prior year before adjustment9,210,372,613.819,999,764,028.74Adjustment to opening balance of retained earnings (increase +, decrease -)83,754,093.05-1,887,031,763.57Opening balance of retained profit after adjustment9,294,126,706.868,112,732,265.17Plus: Net profit for the period attributable to shareholders of the parentcompany230,141,463.762,065,513,108.71Less: Transfer of statutory surplus reserves Transfer of discretionary surplus reserves Transfer of general risk reserves2,703,274.40 Ordinary dividend payable552,078,517.01 Perpetual Bonds interest payable89,700,000.00 Preference shares interest payable323,390,968.66Retained profit as at the end of the period9,524,268,170.629,210,372,613.81Breakdown of adjustments to opening balance of retained earnings:

The Company implemented the new financial instrument standard earlier than the Company*s associate, GuangdongNanyue Bank Co., Ltd., but during the period in which the associate had yet to implement the new standard, theCompany did not adjust the financial statements of associates or joint ventures in accordance with the new standardwhen it adopted the equity method of accounting due to objective limitations. The associate adjusted the openingbalances of the financial statements in accordance with the convergence requirements of the new standard since1 January 2021, and pursuant to the Fifth Batch of Questions and Answers on the Implementation of AccountingStandards for Enterprises for 2021 每 (I) Questions and Answers on the Implementation of Long-term Equity InvestmentStandards of the Accounting Department of the Ministry of Finance, the Company should adjust the opening balancesof its 2021 financial statements accordingly when adopting the equity method of accounting. As the Company*s 2021annual report was disclosed earlier than that of Guangdong Nanyue Bank Co., Ltd., the Company adjusted the openingbalance of retained earnings based on the unaudited data of Guangdong Nanyue Bank Co., Ltd. in its 2021 annualreport, and adjust the opening balance for the period based on the difference in the opening net assets after GuangdongNanyue Bank Co., Ltd. had issued the official auditors* report.

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

47. Revenue and operating costs

Unit: RMBItemAmount for the periodAmount for the prior period

RevenueCostsRevenueCostsPrincipal activities16,170,535,559.2413,622,445,474.8016,368,937,751.5911,107,531,244.57Other activities505,892,806.59432,503,804.40803,878,602.94753,529,733.35Total16,676,428,365.8314,054,949,279.2017,172,816,354.5311,861,060,977.92Information related to revenue:

Unit: RMBCategory of contract

Machine-made

paperFinancial services

Hotel andproperty rentalsOthersTotalType of goods16,091,824,702.93 125,629,976.14 108,076,112.11 350,897,574.65 16,676,428,365.83 Including:

Machine-made paper14,440,493,130.3114,440,493,130.31 Pulp239,810,290.10239,810,290.10 Financial leasing84,916,541.0884,916,541.08 Electricity and steam195,203,273.89195,203,273.89 Construction materials128,912,692.24128,912,692.24 Paper chemicals70,973,693.1370,973,693.13 Hotel and property rentals104,267,757.09104,267,757.09 Others1,145,344,315.5040,713,435.063,808,355.02221,984,882.411,411,850,987.99By geographical area16,091,824,702.93125,629,976.14 108,076,112.11350,897,574.65 16,676,428,365.83 Including:

Mainland China12,207,917,878.75125,629,976.14108,076,112.11350,897,574.65 12,792,521,541.65 Other countries and regions3,883,906,824.183,883,906,824.18By the timing of delivery16,091,824,702.93125,629,976.14108,076,112.11350,897,574.6516,676,428,365.83 Including:

Goods (at a point in time)15,885,198,027.995,870,305.78350,897,574.65 16,241,965,908.42 Services (within a certain period)195,203,273.89125,481,352.2824,330,678.09345,015,304.26 Leasing income11,423,401.05148,623.8677,875,128.2489,447,153.15

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

48. Taxes and surcharges

Unit: RMBItem

Amount forthe period

Amount forthe prior periodProperty tax41,715,466.8037,450,589.35Stamp duty24,637,949.8018,130,742.66Urban maintenance and construction tax17,218,814.4927,858,367.33Educational surcharges and local education surcharge11,612,306.7919,989,461.94Environmental protection Tax6,793,722.7910,751,303.03Water resource tax5,678,351.1015,486,250.50Land use tax4,547,575.8024,349,448.93Vehicle and vessel tax1,998,845.5785,669.29Cultural undertaking development tax1,528,301.88Water conservation funds350,123.53516,687.03Land appreciation tax27,432.009,175,506.88Total116,108,890.55163,794,026.94

49. Selling and distribution expenses

Unit: RMBItem

Amount for

the period

Amount forthe prior periodWages and surcharges72,692,606.4170,949,714.14Business hospitality expenses22,786,567.8125,673,227.63Travel expenses8,535,839.649,694,437.71Selling commissions6,883,405.067,029,390.00Depreciation expenses5,541,590.425,712,298.99Rental expenses2,478,458.255,295,433.81Office expenses1,108,123.521,299,490.73Warehouse expenses503,789.82252,549.57Others17,525,382.7221,716,196.16Total138,055,763.65147,622,738.74

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

50. General and administrative expenses

Unit: RMBItem

Amount for

the period

Amount forthe prior periodWages and surcharges113,861,878.26169,081,336.44Production interruption loss69,598,970.3148,338,437.27Depreciation expenses47,710,740.4451,326,963.11Hospitality expenses38,886,989.8527,155,232.97Welfare expenses35,507,840.5734,628,571.86Amortisation of intangible assets25,828,580.2425,323,097.56Repair fees9,615,210.7713,610,506.54Insurance premium9,449,472.1714,955,132.42Others72,306,683.24107,629,277.32Total422,766,365.85492,048,555.49

51. R&D expenses

Unit: RMBItem

Amount forthe period

Amount forthe prior periodConsumption of raw materials264,700,948.65366,439,019.85Utilities105,357,973.1886,755,891.97Consumption of semi-finished products98,638,775.6766,656,701.37Consumption of auxiliary materials89,924,013.81100,156,151.93Wages and surcharges76,633,329.1083,767,837.01Depreciation expenses23,781,607.5327,969,754.45Insurance premium15,220,882.8115,104,675.76Welfare expenses4,712,671.385,060,144.67Housing provident funds2,698,047.922,786,507.56Union funds625,136.54815,212.59Installation expenses513,779.36372,517.00Other expenses707,394.981,136,940.41Total683,514,560.93757,021,354.57

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

52. Finance expenses

Unit: RMBItem

Amount for

the period

Amount forthe prior periodInterest expenses991,475,816.561,399,107,777.11Less: capitalised interest amountInterest income150,582,370.85221,507,514.16Foreign exchange gains and losses-21,746,160.65-35,419,357.17Bank charges and others201,887,319.60176,761,250.38Total1,021,034,604.661,318,942,156.16

53. Other income

Unit: RMBSource of other income

Amount forthe period

Amount forthe prior periodGovernment grants 每 amortised deferred income included in profit or loss52,355,943.3752,913,447.76Government grants 每 directly included in profit or loss96,908,668.3170,185,300.82Total149,264,611.68123,098,748.58

54. Investment income

Unit: RMBItem

Amount for

the period

Amount forthe prior periodIncome from long-term equity investments accounted for using the equity method26,616,556.5882,955,115.52Investment income on holding financial assets held for trading and other non-current financial assets6,301,220.3315,000,000.00Investment gain on disposal of long-term equity investments6,812.52676,586.27Gain on debt restructuring-754,806.87Investment gain on derecognition of financial assets-56,307,959.46Total-24,138,176.9098,631,701.79

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

55. Gain on change in fair value

Unit: RMBSource of gain on change in fair value

Amount for

the period

Amount forthe prior periodFinancial assets held for trading-62,122,863.58-89,980,570.69Of which: Gain on change in fair value from derivative financial instrumentsGain on change in fair value of consumable biological assets measured at fair value3,309,448.09-9,139,121.20Total-58,813,415.49-99,119,691.89

56. Credit impairment loss

Unit: RMBItem

Amount forthe period

Amount forthe prior periodBad debt loss of accounts receivable-25,363,341.17-279,757,983.46Total-25,363,341.17-279,757,983.46

57. Loss on impairment of assets

Unit: RMBItem

Amount forthe period

Amount forthe prior periodLoss on inventory impairment and loss on impairment of costs of contract performance1,936,644.09Total1,936,644.09

58. Asset disposal income

Unit: RMBSource of asset disposal income

Amount for

the period

Amount forthe prior periodGain on disposal of non-current assets1,605,314.496,731,452.88Gain on disposal of intangible assets42,188,905.24Total1,605,314.4948,920,358.12

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

59. Non-operating income

Unit: RMB

Item

Amount forthe period

Amount forthe prior period

Amount included inextraordinary gains

or losses forthe periodFine income215,595.32215,595.32Gain on damage and retirement of non-current assets23,874.291,255,005.7623,874.29Exempted debts11,345.804,275,104.9211,345.80Government grants2,045,973.21Others842,613.9211,145,199.75842,613.92Total1,093,429.3318,721,283.641,093,429.33

60. Non-operating expenses

Unit: RMB

Item

Amount forthe period

Amount forthe prior period

Included innon-recurring

profit or lossin the periodLoss on damage and retirement of non-current assets5,557,464.332,177,197.005,557,464.33Default penalty4,626,610.27每4,626,610.27Donation5,000.0080,000.005,000.00Others13,665.0075,333.9613,665.00Total10,202,739.602,332,530.9610,202,739.60

61. Income tax expenses

(1) Particulars of income tax expenses

Unit: RMBItem

Amount for

the period

Amount forthe prior periodIncome tax expenses for the period51,225,155.03283,824,021.53Deferred income tax expenses-49,846,428.34-9,766,242.33Total1,378,726.69274,057,779.20

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

61. Income tax expenses (Cont

*d)

(2) Reconciliation between accounting profit and income tax expenses

Unit: RMBItem

Amount for

the periodTotal profit275,381,227.42Income tax expenses calculated at statutory/applicable tax rates41,307,184.11Effect of different tax rates applicable to subsidiaries57,264,569.19Effect of adjustments for income tax for prior periods-15,518,260.26Profit and loss of joint ventures and associates accounted for using the equity method-3,992,483.50Effect of income not subject to tax-25,462,500.00Non-deductible costs, expenses and losses4,592,825.70Effect of utilisation of previously unrecognised deductible loss on deferred income tax assets-12,954,253.46Effect of current unrecognised deductible temporary difference or deductible loss arising from deferred tax income assets24,390,555.43Tax effect of R & D fee deduction-68,248,910.52Income tax expense1,378,726.69

62. Items on statements of cash flow

(1) Cash received relating to other operating activities

Unit: RMBItem

Amount for

the period

Amount forthe prior periodInterest income147,503,480.13208,877,644.50Net proceedings from the financial leasing business125,816,344.91616,398,096.59Government support fund94,023,387.98111,501,713.53Open credit and other income466,613,154.7899,723,258.86Total833,956,367.801,036,500,713.48

(2) Cash paid relating to other operating activities

Unit: RMBItem

Amount for

the period

Amount forthe prior periodExpenses and open credit998,576,421.97999,490,395.09Total998,576,421.97999,490,395.09

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

62. Items on statements of cash flow (Cont

*d)

(3) Cash received relating to other investing activities

Unit: RMBItem

Amount forthe period

Amount forthe prior periodReceipt of consideration for equity transfer251,414,794.52Total251,414,794.52

(4) Cash received relating to other financing activities

Unit: RMBItem

Amount forthe period

Amount forthe prior periodEquipment financing2,068,410,644.82574,665,920.24Recovery of deposit for financial leasing10,500,000.00Decrease in restricted bank deposits during the period1,526,876,431.27Resale of medium-term notes400,000,000.00Contribution from government platforms to GDR Fund and Chendu Fund232,790,000.00Total2,078,910,644.822,734,332,351.51

(5) Cash paid relating to other financing activities

Unit: RMBItem

Amount for

the period

Amount forthe prior periodPurchase or repayment of short-term commercial paper and MTNs200,000,000.002,145,000,000.00Repayment of equipment sale and leaseback961,427,794.77996,692,287.81Redemption of Preference shares2,250,000,000.00Payment of Preference shares dividend98,100,000.00Payment for equity in China Development Bank funds27,500,000.0029,500,000.00Repayment of USD Bonds1,078,685,100.00Increase of restricted bank deposits992,161,166.63Payment for finance lease deposits51,000,000.00Total3,310,774,061.405,519,292,287.81

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X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

63. 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 profit274,002,500.732,066,430,651.33Plus: Provision for impairment of assets23,426,697.08279,757,983.46Depreciation of fixed assets, depletion of oil and gasassets, and depreciation of bearer biological assets andinvestment property1,138,180,403.641,164,573,912.37Depreciation of right-of-use assets3,916,179.793,959,539.44Amortisation of intangible assets28,127,606.7327,645,672.10Amortisation of long-term prepaid expenses2,055,896.231,793,632.06Loss on disposal of fixed assets, intangible assets andother long-term assets (※-§ denotes gain)-1,605,314.49-47,998,166.88Loss on retirement of fixed assets (※-§ denotes gain)5,533,590.04Loss on changes in fair value (※-§ denotes gain)58,813,415.4999,119,691.89Finance expenses (※-§ denotes gain)991,475,816.561,399,107,777.11Investment loss (※-§ denotes gain)24,138,176.90-98,631,701.79Decrease in deferred income tax assets

(※-§ denotes increase)-49,397,297.559,766,242.33Increase in deferred income tax liabilities

(※-§ denotes decrease)-449,130.79-449,130.80Decrease in inventories (※-§ denotes increase)-105,936,523.16-1,766,629,170.47Decrease in operating receivables (※-§ denotes increase)-1,497,590,484.791,272,002,689.91Increase in operating payables (※-§ denotes decrease)103,572,677.04336,735,899.88OthersNet cash flows from operating activities998,264,209.454,747,185,521.94

2.Major investing and financing activities not involving cash

settlements:

3.Net change in cash and cash equivalents:

Closing balance of cash3,142,606,091.964,625,780,176.57Less: Opening balance of cash3,168,915,847.024,389,169,963.79Plus: Closing balance of cash equivalentsLess: Opening balance of cash equivalentsNet increase in cash and cash equivalents-26,309,755.06236,610,212.78

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

63. Supplementary information on cash flow statement (Cont

*d)

(2) Cash and cash equivalents composition

Unit: RMBItemClosing balanceOpening balanceI.Cash3,142,606,091.964,625,780,176.57Of which: Treasury cash3,313,516.532,903,620.96

Bank deposit that can be used for payment at any time3,139,292,575.434,622,876,555.61II.Cash equivalentsOf which: Bond investment with maturity within 3 monthsIII.Balance of cash and cash equivalent at end of period3,142,606,091.964,625,780,176.57

64. Notes to items of statements of changes in owners

* equityThe Company implemented the new financial instrument standard earlier than the Company*s associate, GuangdongNanyue Bank Co., Ltd., but during the period in which the associate had yet to implement the new standard, theCompany did not adjust the financial statements of associates or joint ventures in accordance with the new standardwhen it adopted the equity method of accounting due to objective limitations. The associate adjusted the openingbalances of the financial statements in accordance with the convergence requirements of the new standard since1 January 2021, and pursuant to the Fifth Batch of Questions and Answers on the Implementation of AccountingStandards for Enterprises for 2021 每 (I) Questions and Answers on the Implementation of Long-term Equity InvestmentStandards of the Accounting Department of the Ministry of Finance, the Company should adjust the opening balancesof its 2021 financial statements accordingly when adopting the equity method of accounting. As the Company*s2021 annual report was disclosed earlier than that of Guangdong Nanyue Bank Co., Ltd., the Company adjusted theopening balance of retained earnings based on the unaudited data of Guangdong Nanyue Bank Co., Ltd. in its 2021annual report, and adjusted the opening balance for the period based on the difference in the opening net assets afterGuangdong Nanyue Bank Co., Ltd. had issued the official auditors* report.

65. Assets with restricted ownerships or right to use

Unit: RMBItem

Closingcarrying amountReasons for such restrictionMonetary funds11,749,299,176.80As deposits for bank acceptance bills and letters of credit,

deposit reserves, etc. (Note VII. 1)Accounts receivable financing10,925,711.40As collateral for letters of guarantee and letters of credit (Note

VII. 5)Accounts receivable250,000,000.00As collateral for borrowings (Note VII. 4)Fixed assets12,634,559,687.51As collateral for bank borrowings and long-term payables

(Note VII. 15)Intangible assets1,184,321,483.40As collateral for bank borrowings and long-term payables

(Note VII. 19)Investment property4,964,639,998.32As collateral for bank borrowings (Note VII. 14)Total30,793,746,057.43

INTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

66. Foreign currency items

(1) Foreign currency items

Unit: RMBItem

Closing foreigncurrency balanceExchange rate

Closing balance

in RMBMonetary fundsOf which: USD60,330,919.536.7114404,904,933.33

EUR7,227,874.607.008450,655,836.35HKD191,298.300.8552163,598.31GBP8,886.648.136572,306.15JPY1,197.000.049158.77Accounts receivablesOf which: USD47,107,957.836.7114316,160,348.18

EUR11,881,530.357.008483,270,517.30JPY146,734,998.000.04917,204,688.40Other receivablesOf which: USD2,144,521.606.711414,392,742.27

EUR45,880.077.0084321,545.88Accounts payableOf which: USD54,043,508.066.7114362,707,599.99

EUR398,021.677.00842,789,495.07

JPY187,909.000.04919,226.33Other payablesOf which: USD489,888.046.71143,287,834.59

EUR1,695,629.897.008411,883,652.52

JPY8,800.000.0491432.08Short-term borrowingsOf which: USD142,725,968.196.7114957,891,062.91Non-current liabilities due within one yearOf which: USD119,000,000.006.7114798,656,600.00

(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

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

VII. Notes to items of the consolidated financial statements (Cont*d)

67. Government grants

(1) General information of government grants

Unit: RMBTypeAmountReporting item

Amount includedin the currentprofit and lossProject funding for National Key Technology

Research and Development Program

1,040,775.00Deferred income82,350.00Infrastructure and environmental protectionprojects

213,253,759.85Deferred income6,019,465.67Huanggang forestry-pulp-paper project484,333,633.51Deferred income12,513,108.90Zhanjiang forestry-pulp-paper project48,759,280.73Deferred income2,047,316.46Financial subsidies for technological transformationproject

138,382,429.50Deferred income5,767,903.86Funding for environmental protection601,751,354.74Deferred income25,296,070.94Others33,804,507.55Deferred income629,727.54Enterprise reform and development subsidies35,694,431.07Other income35,694,431.07Financial subsidies for technological transformationproject

39,864,749.67Other income39,864,749.67Refund of VAT upon assessment2,882,861.67Other income2,882,861.67Employment stabilisation subsidies1,139,637.40Other income1,139,637.40Subsidies for social insurance320.34Other income320.34Refund of tax3,786,175.32Other income3,786,175.32Government rewards1,070,000.00Other income1,070,000.00Subsidies for the pandemic1,500.00Other income1,500.00Subsidies for forestation1,651,396.64Other income1,651,396.64Others10,817,596.20Other income10,817,596.20Total1,618,234,409.19149,264,611.68

INTERIM REPORT 2022

X Financial Report

VIII. Change in scope of consolidationDuring the period, the scope of consolidation had 1 newly established subsidiary, namely Jiangxi Chenming Tea Co., Ltd. (

), and 1 deregistered subsidiary, namely Qingdao Chenming Pulp & Paper Electronic Commodity SpotTrading Co., Ltd.IX. Interest in other entities

1. Interest in subsidiaries

(1) Constitution of the Group

ShareholdingName of subsidiary

Principle place

of business

Place of

incorporation

Nature of

business

Type of legal

personDirectIndirectAcquisition

Issued debtsecurities

Issued sharecapitalZhanjiang Chenming Pulp &

Paper Co., Ltd.

ZhanjiangZhanjiangPaper makingFor-profit

corporation

91.77%Establishment0Shouguang Meilun Paper

Co., Ltd.

ShouguangShouguangPaper makingFor-profit

corporation

62.4864%Establishment00Jilin Chenming Paper Co.,

Ltd.

JilinJilinPaper makingFor-profit

corporation

100.00%Acquisition00Huanggang Chenming Pulp

& Paper Co., Ltd.

HuanggangHuanggangPaper makingFor-profit

corporation

70.15%29.85%Establishment00Shandong Chenming Paper

Sales Co., Ltd.

ShouguangShouguangSales of paper

product

For-profit

corporation

100.00%Establishment00Shouguang Chenming

Import and Export TradeCo., Ltd

ShouguangShouguangTradingFor-profit

corporation

100.00%Establishment00Jiangxi Chenming Supply

Chain Management Co.,Ltd

JiangxiJiangxiTradingFor-profit

corporation

70.00%Establishment00Chenming GmbHGermanyGermanyTradingFor-profit

corporation

100.00%Establishment00Shouguang Chenming

Papermaking MachineCo., Ltd.

ShouguangShouguangMachinery

manufacturing

For-profit

corporation

100.00%Establishment00Shouguang Hongxin Printing

and Packaging Co., Ltd

ShouguangShouguangPrinting and

packaging

For-profitcorporation

100.00%Acquisition00Shouguang Chenming

Modern Logistic Co., Ltd.

ShouguangShouguangLogisticsFor-profit

corporation

100.00%Establishment00Jinan Chenming Paper Sales

Co., Ltd.

JinanJinanInvestment

management/Paper producttrading

For-profitcorporation

100.00%Establishment00Huanggang ChenmingArboricultureDevelopment Co., Ltd.

HuanggangHuanggangArboricultureFor-profit

corporation

100.00%Establishment00Chenming Arboriculture Co.,

Ltd.

WuhanWuhanArboricultureFor-profit

corporation

100.00%Establishment00Chenming Paper Korea Co.,

Ltd.

KoreaKoreaPaper product

trading

For-profit

corporation

100.00%Establishment00Shouguang Shun Da

Customs Declaration Co.,Ltd.

ShouguangShouguangCustoms

declaration

For-profit

corporation

100.00%Establishment00Shanghai Chenming Industry

Co., Ltd.

ShanghaiShanghaiProperty

investment andmanagement

For-profit

corporation

100.00%Establishment00

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

ShareholdingName of subsidiary

Principle place

of business

Place of

incorporation

Nature of

business

Type of legal

personDirectIndirectAcquisition

Issued debt

securities

Issued sharecapitalShanghai Chenyin Trading

Co., Ltd.

ShanghaiShanghaiTradingFor-profit

corporation

51.00%Establishment00Shandong Chenming GroupFinance Co., Ltd.

JinanJinanFinanceFor-profit

corporation

80.00%20.00%Establishment00Jiangxi Chenming PaperCo., Ltd.

NanchangNanchangPaper makingFor-profit

corporation

100.00%Establishment00Nanchang Shengheng

Trading Co. Ltd.

NanchangNanchangTradingFor-profit

corporation

100.00%Establishment00Nanchang Kunheng TradingCo. Ltd.

NanchangNanchangTradingFor-profit

corporation

100.00%Establishment00Shouguang Chenming ArtPaper Co., Ltd.

ShouguangShouguangPaper makingFor-profit

corporation

75.00%Establishment00Hailaer Chenming PaperCo., Ltd.

HailaerHailaerPaper makingFor-profit

corporation

75.00%Establishment00Shandong Grand View HotelCo., Ltd.

ShouguangShouguangCateringFor-profit

corporation

70.00%Establishment00Wuhan Chenming Hanyang

Paper Holdings Co., Ltd.

WuhanWuhanPaper makingFor-profit

corporation

65.21%34.64%Establishment00Shanghai Chenming

Financial Leasing Co.,Ltd.

JinanJinanFinancial leasingFor-profit

corporation

100.00%Establishment00Qingdao Chenming Nonghai

Financial Leasing Co., Ltd

QingdaoQingdaoFinancial leasingFor-profit

corporation

100.00%Establishment00Chenming (HK) LimitedHong KongHong KongPaper product

trading

For-profit

corporation

100.00%Establishment00Shouguang Hongyi

Decorative PackagingCo., Ltd.

ShouguangShouguangPackagingFor-profit

corporation

100.00%Merger and

acquisition

Shouguang Xinyuan Coal

Co., Ltd.

ShouguangShouguangCoalFor-profit

corporation

100.00%Merger and

acquisition

Shouguang City Run Sheng

Wasted Paper RecycleCo., Ltd.

ShouguangShouguangPurchase and sale

of waste

For-profit

corporation

100.00%Merger and

acquisition

Shouguang Wei Yuan

Logistics CompanyLimited

ShouguangShouguangLogisticsFor-profit

corporation

100.00%Merger and

acquisition

Wuhan Chenming QiannengElectric Power Co., Ltd

WuhanWuhanThermal powerFor-profit

corporation

51.00%Establishment00Shandong ChenmingInvestment Limited

JinanJinanInvestmentFor-profit

corporation

100.00%Establishment00Japan Chenming Paper Co.,

Ltd.

JapanJapanPaper product

trading

For-profit

corporation

100.00%Establishment00Chenming International Co.,

Ltd.

the United Statesthe United StatesPaper product

trading

For-profit

corporation

100.00%Establishment00Zhanjiang Chenming

ArboricultureDevelopment Co., Ltd.

ZhanjiangZhanjiangForestryFor-profit

corporation

100.00%Establishment00Yangjiang Chenming

ArboricultureDevelopment Co., Ltd.

YangjiangYangjiangArboricultureFor-profit

corporation

100.00%Establishment00

IX. Interest in other entities (Cont*d)

1. Interest in subsidiaries (Cont

*d)

(1) Constitution of the Group (Cont

*d)

INTERIM REPORT 2022

X Financial Report

ShareholdingName of subsidiary

Principle place

of business

Place of

incorporation

Nature of

business

Type of legal

personDirectIndirectAcquisition

Issued debt

securitiesIssued share

capitalNanchang Chenming

ArboricultureDevelopment Co., Ltd.

NanchangNanchangArboricultureFor-profit

corporation

100.00%Establishment00Guangdong HuiruiInvestment Co., Ltd

ZhanjiangZhanjiangInvestmentFor-profit

corporation

100.00%Establishment00Jilin Chenming New-style

Wall Materials Co., Ltd

JilinJilinWall materialsFor-profit

corporation

100.00%Establishment00Jilin Chenming Logistics

Co., Ltd.

JilinJilinLogisticsFor-profit

corporation

100.00%Establishment00Jiangxi Chenming LogisticsCo., Ltd.

NanchangNanchangLogisticsFor-profit

corporation

100.00%Establishment00Fuyu Chenming Paper Co.,Ltd.

FuyuFuyuPaper makingFor-profit

corporation

100.00%Establishment00Zhanjiang Meilun Pulp &Paper Co., Ltd.

ZhanjiangZhanjiangPaper makingFor-profit

corporation

100.00%Establishment00Shandong ChenmingFinancial Leasing Co.,Ltd.

ShanghaiShanghaiFinancial leasingFor-profit

corporation

100.00%Establishment00Wuhan Junheng PropertyManagement Co. Ltd.

WuhanWuhanPropertyFor-profit

corporation

100.00%Merger and

acquisition

Guangzhou Chenming

Financial Leasing Co.,Ltd.

GuangzhouGuangzhouFinancial leasingFor-profit

corporation

100.00%Establishment00Shanghai Hongtai Real

Estate Co., Ltd.

ShanghaiShanghaiReal estateFor-profit

corporation

100.00%Merger and

acquisition

Shanghai Hongtai Property

Management Co., Ltd.

ShanghaiShanghaiPropertyFor-profit

corporation

100.00%Merger and

acquisition

Shandong Chenming

Commercial FactoringCo., Ltd.

JinanJinanBusiness factoringFor-profit

corporation

100.00%Establishment00Guangzhou Chenming

Commercial FactoringCo., Ltd

GuangzhouGuangzhouBusiness factoringFor-profit

corporation

51.00%Establishment00Jiangxi Chenming Tea Co.,

Ltd.

JiangxiJiangxiTeaFor-profit

corporation

100.00%Establishment00Zhanjiang Chenming Port

Co., Ltd.

ZhanjiangZhanjiangPortFor-profit

corporation

100.00%Establishment00Beijing Chenming Financial

Leasing Co., Ltd.

BeijingBeijingFinancial leasingFor-profit

corporation

100.00%Establishment00Chenming Paper USA Inc.the United Statesthe United StatesPaper product

trading

For-profitcorporation

100.00%Establishment00Guangdong Chenming

Panels Co., Ltd.

GuangdongGuangdongPanelsFor-profit

corporation

100.00%Establishment00Shanghai Chenming Pulp &

Paper Sales Co., Ltd.

ShanghaiShanghaiPaper product

trading

For-profit

corporation

100.00%Establishment00Meilun (BVI) LimitedCaymanCaymanCommerceFor-profit

corporation

100.00%Establishment00Weifang Chenming Growth

Driver ReplacementEquity Investment FundPartnership (LimitedPartnership)

WeifangWeifangFundFor-profit

corporation

79.00%Establishment00

IX. Interest in other entities (Cont*d)

1. Interest in subsidiaries (Cont

*d)

(1) Constitution of the Group (Cont

*d)

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

ShareholdingName of subsidiary

Principle place

of business

Place of

incorporation

Nature of

business

Type of legal

personDirectIndirectAcquisition

Issued debtsecurities

Issued share

capitalNanjing Chenming Culture

Communication Co., Ltd.

NanjingNanjingMarketingFor-profit

corporation

100.00%Establishment00Chenming (Overseas) Co.,Ltd.

Hong KongHong KongPaper product

trading

For-profit

corporation

100.00%Establishment00Chenming (Singapore) Co.,Ltd.

SingaporeSingaporePaper product

trading

For-profit

corporation

100.00%Establishment00Kunshan Tuoan PlasticProducts Co., Ltd.

KunshanKunshanRubber and

plastic

For-profit

corporation

100.00%Merger and

acquisition

Hubei Changjiang

Chenming HuanggangEquity Investment FundPartnership (LimitedPartnership)

HuanggangHuanggangFundFor-profit

corporation

59.97%Establishment00

Hainan Chenming

Technology Co., Ltd.

HaikouHaikouWholesale and

retail

For-profit

corporation

100.00%Establishment00Qingdao Chenming Import

and Export Trade Co.,Ltd.

QingdaoQingdaoTradingFor-profit

corporation

100.00%Establishment00Shanghai Herui Investment

Co., Ltd.

ShanghaiShanghaiBusiness servicesFor-profit

corporation

100.00%Merger and

acquisition

Hubei Huanggang Chenming

Equity Investment FundManagement Co., Ltd.

HuanggangHuanggangCapital market

services

For-profit

corporation

60.00%Establishment00Shandong Dingkun Asset

Management Partnership(Limited Partnership)

ShouguangShouguangBusiness servicesFor-profit

corporation

99.90%Establishment00Huanggang Chenming

Paper Technology Co.,Ltd.

HuanggangHuanggangPaper makingFor-profit

corporation

100.00%Establishment00Huanggang Chenming Port

Co., Ltd.

HuanggangHuanggangPort servicesFor-profit

corporation

51.00%Establishment00Weifang Chendu Equity

Investment Partnership(Limited Partnership)

ShouguangShouguangCapital market

services

For-profit

corporation

79.75%Establishment00Huanggang Chenming Pulp

& Fiber Trading Co., Ltd.

HuanggangHuanggangTradingFor-profit

corporation

100.00%Establishment00

(2) Major non-wholly owned subsidiaries

Unit: RMB

Name of subsidiary

Minorityinterest

Gain or lossattributable tominority interestduring the period

Dividend tominority interestdeclared during

the period

Closingbalance ofminority interestShouguang Chenming Art Paper Co., Ltd.25.00%-335,609.7494,958,580.73Shouguang Meilun Paper Co., Ltd.37.5136%49,134,340.152,608,632,811.11Zhanjiang Chenming Pulp & Paper Co., Ltd.8.23%6,806,334.65660,942,447.96

IX. Interest in other entities (Cont*d)

1. Interest in subsidiaries (Cont

*d)

(1) Constitution of the Group (Cont

*d)

INTERIM REPORT 2022

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 assets

Non-currentassetsTotal assetsCurrent liabilities

Non-current

liabilitiesTotal liabilitiesCurrent assets

Non-currentassetsTotal assetsCurrent liabilities

Non-currentliabilitiesTotal liabilities

Shouguang Chenming Art Paper Co., Ltd.483,938,164.98480,442,349.41964,380,514.39584,546,191.52584,546,191.52664,927,705.80499,632,230.381,164,559,936.18783,383,174.36783,383,174.36Shouguang Meilun Paper Co., Ltd.5,728,525,683.0410,704,658,938.6116,433,184,621.656,260,233,659.441,750,609,977.418,010,843,636.857,009,260,465.1110,720,308,671.1317,729,569,136.247,685,982,114.281,735,507,997.619,421,490,111.89Zhanjiang Chenming Pulp & Paper Co., Ltd.15,287,252,786.9213,176,976,140.8728,464,228,927.7917,406,654,158.302,371,674,359.8719,778,328,518.1711,650,935,934.5712,965,150,000.4124,616,085,934.9814,550,859,440.021,994,649,794.0316,545,509,234.05

Unit: RMB

Amount for the periodAmount for the prior period

Name of subsidiaryRevenueNet profit

TotalcomprehensiveincomeCash flowsfrom operatingactivitiesRevenueNet profit

TotalcomprehensiveincomeCash flowsfrom operatingactivities

Shouguang Chenming Art Paper Co., Ltd.322,720,534.36-1,342,438.95-1,342,438.95133,667,925.23344,898,772.3412,205,171.2012,205,171.203,726,791.43Shouguang Meilun Paper Co., Ltd.3,956,822,454.56114,261,960.45114,261,960.451,167,059,642.564,447,905,629.92232,335,249.64232,335,249.64542,602,634.96Zhanjiang Chenming Pulp & Paper Co., Ltd.5,841,511,419.81181,827,121.84181,827,121.841,308,835,701.846,537,009,866.501,063,189,798.931,063,189,798.931,751,078,279.88

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

IX. Interest in other entities (Cont*d)

2. Transaction changing shareholding in but not causing to loss of control over subsidiaries

(1) Changing in shareholding in subsidiaries

The Company previously held 96.26% equity interest in Zhanjiang Chenming Pulp & Paper Co., Ltd. In June 2022,Xiamen International Trade Industry Development Equity Investment Fund Partnership (Limited Partnership) madea unilateral capital contribution to Zhanjiang Chenming Pulp & Paper Co., Ltd. Upon completion of the capitalincrease, its equity interest in Zhanjiang Chenming Pulp & Paper Co., Ltd. was 4.40%, and the transaction did notresult in the loss of control over Zhanjiang Chenming Pulp & Paper Co., Ltd. by the Company. The transactionresulted in an increase in capital reserves of RMB29.6768 million.

(2) Effect of transactions on minority interest and equity attributable to the owners of the parent company

Unit: RMBUnilateral capital contribution intoZhanjiang Chenming Pulp & PaperCo., Ltd. by Xiamen InternationalTrade Industry DevelopmentEquity Investment Fund Partnership

(Limited Partnership)Amount of capital increase400,000,000.00Share of net assets of the Company after the capital increase7,262,988,678.16Share of net assets of the Company before the capital increase7,233,311,863.47Difference29,676,814.69Of which: capital reserve adjustment29,676,814.69

3. Interest in joint arrangements or associates

(1) Major joint ventures and associates

Name of joint venture and associate

Principle place

of business

Place ofincorporation

Nature ofbusiness

Shareholding

Accounting method

for investment injoint ventures orDirectIndirectassociatesWeifang Sime Darby West Port Co., Ltd.WeifangWeifangPort construction50.00%Equity methodNingbo Kaichen Huamei Equity Investment Fund

Partnership (Limited Partnership)

NingboNingboInvestment

management

40.00%Equity methodWeifang Xingxing United Chemical Co., Ltd.WeifangWeifangChemical50.00%Equity methodZhuhai Dechen New Third Board Equity

Investment Fund Company (Limited Partnership)

ZhuhaiZhuhaiInvestment

management

50.00%Equity methodGoldtrust Futures Co., Ltd.ChangshaChangshaFutures35.43%Equity methodGuangdong Nanyue Bank Co., Ltd.GuangdongGuangdongBank6.76%Equity method

INTERIM REPORT 2022

X Financial Report

IX. Interest in other entities (Cont*d)

3. Interest in joint arrangements or associates (Cont

*d)

(2) Key financial information of major joint ventures

Unit: RMBWeifang Sime Darby West Port Co., Ltd.

Closing balance/

amount forthe period

Opening balance/amount for the

prior periodCurrent assets25,297,253.8221,774,345.85Of which: Cash and cash equivalents5,881,297.457,054,019.11Non-current assets499,047,444.00507,959,459.20Total assets524,344,697.82529,733,805.05Current liabilities28,199,178.1612,094,403.33Non-current liabilities362,562,252.51377,812,252.49Total liabilities390,761,430.67389,906,655.82Equity interest attributable to shareholders of the parent company133,583,267.15139,827,149.23Share of net assets based on shareholding66,791,633.5869,913,574.62Adjustments每 Unrealised profit arising from intra-group transactions7,570,890.357,457,424.14Carrying amount of equity investment in joint ventures74,362,523.9377,370,998.75Fair value of equity investment in joint ventures where publicly quoted prices existRevenue31,433,562.9137,344,708.25Finance expenses10,778,949.5610,648,523.23Income tax expensesNet profit-6,013,863.17-181,542.45Net profit from discontinued operationsOther comprehensive incomeTotal comprehensive income-6,013,863.17-181,542.45Dividends received from joint ventures during the year

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

IX. Interest in other entities (Cont*d)

3. Interest in joint arrangements or associates (Cont

*d)

(2) Key financial information of major joint ventures (Cont

*d)Weifang Xingxing United Chemical Co., Ltd.

Closing balance/amount forthe period

Opening balance/amount for the

prior periodCurrent assets114,838,677.84100,024,598.36Of which: Cash and cash equivalents47,230,710.0710,187,071.60Non-current assets15,936,927.6120,299,403.19Total assets130,775,605.45120,324,001.55Current liabilities29,133,526.3927,883,399.22Non-current liabilities7,272,868.9612,417,862.06Total liabilities36,406,395.3540,301,261.28Minority interestEquity interest attributable to shareholders of the parent company94,369,210.1080,022,740.27Share of net assets based on shareholding47,184,605.0540,011,370.14Adjustments每 Others44,689,780.0744,612,417.61Carrying amount of equity investment in joint ventures91,874,385.1284,623,787.74Fair value of equity investment in joint ventures where publicly quoted prices existRevenue9,070,496.70404,300.88Finance expenses-374,801.93-121,109.94Income tax expensesNet profit7,126,354.85-1,450,118.81Net profit from discontinued operationsOther comprehensive incomeTotal comprehensive income7,126,354.85-1,450,118.81Dividends received from joint ventures during the year

(3) Key financial information of major associates

Unit: RMBNingbo Kaichen Huamei Equity Investment Fund Partnership(Limited Partnership)

Closing balance/

amount forthe period

Opening balance/

amount for the

prior periodCurrent assets4,370,525.234,378,938.81Non-current assets189,276,814.94189,276,706.00Total assets193,647,340.17193,655,644.81Current liabilitiesTotal liabilitiesEquity interest attributable to shareholders of the parent company193,647,600.17193,655,644.81Share of net assets based on shareholding77,455,941.7077,459,159.43Adjustments每 Others119,838,326.16119,838,326.16Carrying amount of equity investment in associates197,294,267.86197,297,485.59Net profit-8,044.64858,903.93Total comprehensive income-8,044.64858,903.93

INTERIM REPORT 2022

X Financial Report

IX. Interest in other entities (Cont*d)

3. Interest in joint arrangements or associates (Cont

*d)

(3) Key financial information of major associates (Cont

*d)Zhuhai Dechen New Third Board Equity Investment Fund Company(Limited Partnership)

Closing balance/amount forthe period

Opening balance/amount for theprior periodCurrent assets9,149,573.997,991,295.94Non-current assets60,792,108.0065,956,891.00Total assets69,941,681.9973,948,186.94Current liabilities5,000.005,000.00Total liabilitiesEquity interest attributable to shareholders of the parent company69,936,681.9973,943,186.94Share of net assets based on shareholding34,964,844.1636,967,896.31Carrying amount of equity investment in associates34,964,844.1636,967,896.31Net profit-4,006,504.95-12,211,392.16Total comprehensive income-4,006,504.95-12,211,392.16

Goldtrust Futures Co., Ltd.

Closing balance/

amount forthe period

Opening balance/amount for the

prior periodCurrent assets737,682,309.63764,880,728.01Non-current assets21,605,294.0820,791,974.11Total assets759,287,603.71785,672,702.12Current liabilities532,162,303.07556,373,303.71Non-current liabilities39,771,231.8734,269,041.10Total liabilities571,933,534.94590,642,344.81Equity interest attributable to shareholders of the parent company187,354,068.77195,030,357.31Share of net assets based on shareholding66,379,546.5769,099,255.59Adjustments每 Goodwill104,073,292.25104,073,292.25每 Others12,681,688.8812,279,914.66Carrying amount of equity investment in associates183,134,527.70185,452,462.50Revenue27,108,619.259,407,419.49Net profit-7,109,291.31-17,089,018.40Total comprehensive income-7,109,291.31-17,089,018.40

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

IX. Interest in other entities (Cont*d)

3. Interest in joint arrangements or associates (Cont

*d)

(3) Key financial information of major associates (Cont

*d)

Guangdong Nanyue Bank Co., Ltd.

Closing balance/

amount forthe period

Opening balance/amount for theprior periodCurrent assets198,800,828,582.08146,917,546,535.28Non-current assets9,025,487,530.3758,633,124,899.89Total assets207,826,316,112.45205,550,671,435.17Current liabilities159,787,424,749.38163,449,937,524.03Non-current liabilities28,880,840,271.3223,509,056,497.47Total liabilities188,668,265,020.70186,958,994,021.50Equity interest attributable to shareholders of the parent company19,158,051,091.7518,591,677,413.67Share of net assets based on shareholding1,294,126,351.251,255,867,809.29AdjustmentsOthers24,616,009.62Carrying amount of equity investment in associates1,318,742,360.871,255,867,809.29Revenue13,809,608,464.832,009,057,538.56Net profit365,449,485.74734,646,824.76Other comprehensive income70,787,018.40Total comprehensive income436,236,504.14Dividends received from associates during the year21,000,000.00

(4) Summary financial information of non-major joint ventures and associates

Unit: RMBClosing balance/amount forthe period

Opening balance/

amount for the

prior periodJoint ventures:

Total carrying amount of investment17,462,210.1321,518,994.58Total amount of the following items based on shareholding每 Net profit-3,056,784.45791,377.16Associates:

Total carrying amount of investment6,379,351.547,488,250.59Total amount of the following items based on shareholding每 Net profit-168,899.05-223,836.86

(5) 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

Accumulatedunrecognisedloss as at theend of the periodArjo Wiggins Chenming Specialty Paper Co., Ltd.7,308,869.167,308,869.16Xuchang Chenming Paper Co., Ltd.79,793,370.4331,161,297.89110,954,668.32

INTERIM REPORT 2022

X Financial Report

X. Risk relating to financial instruments

The main financial instruments of the Company include monetary funds, accounts receivable, accounts receivable financing,other receivables, non-current assets due within one year, other current assets, financial assets held for trading, othernon-current financial assets, long-term receivables, bills payable, accounts payable, other payables, short-term borrowings,non-current liabilities due within one year, long-term borrowings, lease liabilities and long-term payables. Details of eachfinancial instrument have been disclosed in the relevant notes to the financial statements. The risks associated with thesefinancial instruments and the risk management policies adopted by the Company to mitigate these risks are described below.The management of the Company manages and monitors these exposures to ensure that the above risks are controlled in alimited extent.

1. Goal and policies of risk management

The Company aims to seek the appropriate balance between the risks and benefits in order to mitigate the adverseeffects on the Company*s financial performance from financial risk. Based on such objectives, the Company*s riskmanagement policies are established to identify and analyse the risks faced by the Company, to set appropriate risklimits and devise corresponding internal control procedures, and to monitor risks faced by the Company. Such riskmanagement policies and internal control systems are reviewed regularly to adapt to changes in market conditionsand the Company*s activities. The internal audit department of the Company also undertakes both regular and ad-hocreviews of the implementation of internal control systems in compliance with risk management policies.Risks associated with the financial instruments of the Company mainly include credit risk, liquidity risk and market risk(including exchange rate risk, interest rate risk and commodity price risk).The Board is responsible for planning and establishing the risk management structure of the Company, formulating riskmanagement policies and related guidelines, and supervising the implementation of risk management. The Companyhas already formulated risk management policies to identify and analyse risks that the Company face. These policiesmentioned specific risks, covering market risk, credit risk, liquidity risk, etc. The Company regularly assesses the marketenvironment and the changes of the operating activities of the Company to determine as to making alteration to therisk management policies and systems. The Company*s risk management is implemented by the Risk ManagementCommittee according to the policies approved by the Board. The Risk Management Committee works closely with otherbusiness department of the Company to identify, assessing and avoiding certain risks. The internal audit department ofthe Company undertakes regular reviews of risk management controls and procedures, and report the audit results tothe audit committee of the Company.The Company spreads the risks from financial instruments by diversified investment and business portfolio, anddevelops risk management policies accordingly to mitigate the risk of over-concentration on any single industry,particular region or particular counterparties

(1) Credit risk

Credit risk is the risk that a counterparty will cause a financial loss for the Company by failing to discharge acontractual obligation.The Company manages credit risk by collective classification. Credit risks are mainly attributable to bank deposit,bills receivable, accounts receivable, other receivables and long-term receivables etc.The Company*s bank deposit is mainly held with state-owned banks and other large and medium-sized listedbanks. The Company anticipates that the bank deposit does not have significant credit risk.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

X. Risk relating to financial instruments (Cont*d)

1. Goal and policies of risk management (Cont

*d)

(1) Credit risk (Cont

*d)For bill receivable, accounts receivables, other receivables and long-term receivables, the Company sets relatedpolicies to control exposure of credit risks. The Company assesses its clients*credit quality and sets the relatedcredit periods based on its clients*financial position, credit records and other factors such as the current marketconditions. The Company monitors the credit record of its clients. For the clients with poor credit record, theCompany ensure the credit risk of the Company in general is under control by means of written notice of paymentcollection, reducing credit periods or cancelling credit periods.The Company*s debtors of accounts receivable are the customers across different industries and regions.The Company continuously conducts credit assessment on the financial position of accounts receivable andpurchases credit guarantee insurance if necessary.The maximum credit risk exposure of the Company is the carrying amount of each financial asset in the balancesheet. The Company do not provide any other financial guarantee which may result in credit risks.Among the accounts receivable of the Company, the accounts receivable attributable to the top five customersaccounted for 26.34% (2021: 24.95%) of the Company*s total accounts receivables. Among the other receivablesof the Company, the other receivables attributable to the top five customers accounted for 74.49% (2021: 72.71%)of the Company*s total other receivables.

(2) Liquidity risk

Liquidity risk is the risk that the Company may encounter deficiency of funds in meeting obligations settled withcash or other financial assets delivery.In managing liquidity risk, the Company ensures to monitor the cash and cash equivalent the managementconsidered as sufficient, in order to meet the Company*s needs for operation, and lower the effects fromfluctuation of cash flow. The management of the Company monitors the usage of bank borrowings and ensurescompliance with the borrowing agreements. In the meantime, the Company obtains commitments from majorfinancial institutions to provide sufficient standby funds to meet short-term and long-term funding needs.The Company finances its working capital with capital generated from operating activities and bank and otherborrowings. As at 30 June 2022, the Company*s unutilised bank loan facility was RMB40,650.0 million (31December 2021: RMB42,832.1880 million).

INTERIM REPORT 2022

X Financial Report

X. Risk relating to financial instruments (Cont*d)

1. Goal and policies of risk management (Cont

*d)

(2) Liquidity risk (Cont

*d)

As at the end of the period, the financial assets, financial liabilities and off-balance sheet guarantee held by theCompany are analysed by their maturity date as below at their remaining undiscounted contractual cash flows (inten thousand RMB):

2022.06.30ItemWithin 1 year1-2 years2-3 years3-4 yearsOver 4 yearsTotalFinancial assets:

Monetary funds1,489,190.531,489,190.53Accounts receivable377,424.26377,424.26Accounts receivable financing91,272.7591,272.75Other receivables274,959.34274,959.34Long-term receivables175,087.968,519.677,000.001,500.00192,107.63Other current assets141,558.73141,558.73Non-current assets due within one year521,604.42521,604.42Total financial assets2,896,010.03175,087.968,519.677,000.001,500.003,088,117.66Financial liabilities:

Short-term borrowings3,635,966.393,635,966.39Bills payable403,508.13403,508.13Accounts payable326,898.69326,898.69Other payables147,844.01147,844.01Non-current liabilities due within one year455,835.17455,835.17Long-term borrowings206,515.5130,929.0020,675.00278,204.00536,323.51Lease liabilities623.41659.67659.675,351.417,294.16Long-term payables184,070.43127,498.7342,560.1815,207.33369,336.68Total financial liabilities and contingent liabilities4,970,052.39 391,209.35159,087.4063,894.85298,762.745,883,006.74

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

X. Risk relating to financial instruments (Cont*d)

1. Goal and policies of risk management (Cont

*d)

(2) Liquidity risk (Cont

*d)

As at the beginning of the period, the financial assets, financial liabilities and off balance sheet guarantee held bythe Company are analysed by their maturity date as below at their remaining undiscounted contractual cash flows(in ten thousand RMB):

2021.12.31ItemWithin 1 year1-2 years2-3 years3-4 yearsOver 4 yearsTotalFinancial assets:

Monetary funds1,411,978.291,411,978.29Accounts receivable310,581.86310,581.86Accounts receivable financing43,545.9343,545.93Other receivables278,992.06278,992.06Long-term receivables201,047.518,329.675,600.00214,977.18Other current assets124,691.54124,691.54Non-current assets due within one year684,643.44684,643.44Total financial assets2,854,433.12201,047.518,329.675,600.003,069,410.30Financial liabilities:

Short-term borrowings3,352,302.523,352,302.52Bills payable308,951.23308,951.23Accounts payable387,113.13387,113.13Other payables148,257.58148,257.58Non-current liabilities due within one year694,976.96694,976.96Bonds payable15,500.0015,500.00Long-term borrowings124,525.0288,929.0010,929.00303,251.00527,634.02Lease liabilities472.831,312.991,312.994,594.137,692.94Long-term payables119,406.5589,244.1618,273.9422,500.00249,424.65Total financial liabilities and contingent liabilities4,891,601.42259,904.40179,486.1530,515.93330,345.135,691,853.03The financial liabilities disclosed above are based on cash flows that are not discounted and may differ from thecarrying amount of the line items of the balance sheet.Maximum guarantee amount for signed guarantee contracts does not represent the amount to be paid.

(3) Market risk

Market risk of financial instruments is the risk of fluctuation in the fair value of financial instruments or future cashflow arising from changes in market price. Market risk includes interest rate risk, exchange risk and other pricerisk.Interest rate risk

Interest rate risk is the risk of fluctuation in the fair value of financial asset or future cash flow arising from changesin market interest rate. Interest rate risk may arise in the recognised interest-bearing financial instruments andunrecognised financial instruments (e.g. some loan commitments).

INTERIM REPORT 2022

X Financial Report

X. Risk relating to financial instruments (Cont*d)

1. Goal and policies of risk management (Cont

*d)

(3) Market risk (Cont

*d)

Interest rate risk(Cont*d)The Company*s interest rate risk arises from long-term interest-bearing liabilities including long-term borrowingand bonds payable. Financial liabilities issued at floating rate expose the Company to cash flow interest raterisk. Financial liabilities issued at fixed rate expose the Company to fair value interest rate risk. The Companydetermines the relative proportions of its fixed rate and floating rate contracts depending on the prevailing marketconditions and to maintain an appropriate combination of financial instruments at fixed rate and floating ratethrough regular reviews and monitors.The Company closely monitors the interest rate risk due to changes in interest rate. At present, the Company doesnot adopt any interest rate hedging policies. However, the management is responsible for monitoring interest raterisk, and considers hedging significant interest rate risk as necessary. Interest rate hikes will increase the cost ofnew interest-bearing borrowings, and the interest expenses with respect to the Company*s outstanding floatingrate interest-bearing borrowings, and therefore could have a material adverse effect on the Company*s financialresult. The management will make adjustments with reference to the latest market conditions. These adjustmentsmay include interest swap arrangements to mitigate its exposure to the interest rate risk.Interest-bearing financial instruments held by the Company are as follows (in ten thousand RMB):

Item

Balance for

the year

Balance forthe prior yearFinancial instrument with fixed interest rateFinancial liabilitiesOf which: Short-term borrowings3,633,944.013,350,170.45

Long-term borrowings534,746.81526,438.53Bonds payable15,500.00Long-term borrowings due within one year146,971.75258,373.04Bonds payable due within one year35,000.00127,063.69Total4,350,662.574,277,545.71Financial instrument with float interest rateFinancial assetsOf which: Monetary funds313,929.26316,598.98Total313,929.26316,598.98The sensitivity analysis above indicates the instantaneous change in the net profit and equity that would ariseassuming that the change in interest rates had occurred at the balance sheet date and had been applied toremeasure those financial instruments held by the Company which expose the Company to fair value interestrate risk at the balance sheet date. In respect of the exposure to cash flow interest rate risk arising from floatingrate non-derivative instruments held by the Company at the balance sheet date, the impact on the net profit andequity is estimated as an annualised impact on interest expense or income of such a change in interest rates. Theanalysis is performed on the same basis for the previous year.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

X. Risk relating to financial instruments (Cont*d)

1. Goal and policies of risk management (Cont

*d)

(3) Market risk (Cont

*d)Exchange rate riskExchange rate risk refers to the risk that the fair value or future cash flow of a financial instrument will fluctuatedue to changes in foreign exchange rates. Exchange rate risk may arise from financial instruments denominated inforeign currencies other than the functional currency.The principal business of the Company is situated within the PRC and is denominated in RMB. However, foreignexchange risks still exist for the assets and liabilities in foreign currencies and future foreign currency transactionsas recognised by the Company (assets and liabilities in foreign currencies and foreign currency transactions aremainly denominated in US dollar, Japanese yen, South Korean Won, Euro, Hong Kong dollar and British pound).The following table details the financial assets and liabilities held by the Company which denominated in foreigncurrencies and amounted to RMB as at 30 June 2022 are as follows (in RMB ten thousands):

Liabilities denominated inforeign currency

Assets denominated in

foreign currencyItem

As atthe end ofthe period

As at thebeginning ofthe period

As atthe end ofthe period

As at thebeginning ofthe periodUSD212,254.31361,192.8473,545.8067,590.57EUR1,467.311,910.4113,424.793,929.49HKD4,055.5216.3669.89KRW7.04YEN0.97720.47812.91GBP7.23Total213,722.59367,158.7787,714.6572,409.90The Company closely monitors the impact of exchange rate changes on the Company*s foreign exchangerisk. The Company has not taken any measures to avoid foreign exchange risks. However, the management isresponsible for monitoring exchange rate risks and will consider hedging significant exchange rate risks whennecessary.With other variables unchanged, the after-tax effect of the possible reasonable changes in the exchange rate offoreign currency to RMB on the current profit and loss of the Company is as follows (in RMB ten thousands):

Increase (decrease) in after-tax profitsBalance for the yearBalance for the prior yearIncrease in exchange rate of USD5%-14,290.015%-14,680.11Decrease in exchange rate of USD-5%14,290.01-5%14,680.11Increase in exchange rate of Euro5%744.615%100.95Decrease in exchange rate of Euro-5%-744.61-5%-100.95

INTERIM REPORT 2022

X Financial Report

X. Risk relating to financial instruments (Cont*d)

2. Capital management

The objective of the Company*s capital risk management is to safeguard the Company*s ability to continue as a goingconcern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimalcapital structure to reduce the cost of capital.In order to maintain or adjust the capital structure, the Company may adjust its financing methods, adjust the numberof dividends paid to shareholders, return capital to shareholders, issue new shares or disposes assets to reduce itsliabilities.The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net liabilities divided by totalcapital. As at 30 June 2022, the Company*s gearing ratio is 72.89% (31 December 2021: 72.78%).XI. Fair value disclosure

Based on the inputs of the lowest level that are of great significance to the measurement as a whole in the fair valuemeasurement, the fair value can be categorised as:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.Level 2: Observable inputs other than the quoted market price of assets or liabilities in Level 1, either directly (the prices) orindirectly (derived from prices).Level 3: Any input that is not based on observable market data (unobservable inputs) is used for assets or liabilities.

1. Fair value of assets and liabilities measured at fair value as at the end of the period

As at 30 June 2022, assets and liabilities measured at fair value are listed as follows based on the three hierarchies asset out above:

Unit: RMBFair value measurements categorised intoItemLevel 1Level 2Level 3TotalI.Continuous measurement of fair value

(i) Financial assets held for trading51,033,051.5751,033,051.57

1. Equity instrument investments51,033,051.5751,033,051.57(ii) Accounts receivable financing912,727,537.75912,727,537.75(iii) Other non-current financial assets519,927,003.25519,927,003.25(iv) Biological assets1,500,540,144.471,500,540,144.47

1. Consumable biological assets1,500,540,144.471,500,540,144.47Total assets continuously measured at fair value51,033,051.572,933,194,685.472,984,227,737.04In the current year, there were no transfers between Level 1 and Level 2 or transfers into or out of Level 3 for the fairvalue measurements of the Company*s financial assets and financial liabilities.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

XI. Fair value disclosure (Cont*d)

2. Quantitative information about significant unobservable inputs used in the level 3 fair value

measurement that are significant

Unit: RMBItem

Fair value as at

the end ofthe period

ValuationtechniquesUnobservable inputsRangeEquity instrument investments:

Shandong Hongqiao Venture

Capital Co., Ltd.

72,510,000.00Cost methodConsumable biological assets:

Forestry1,500,540,144.47Replacement cost

method

Cost per mu for the first

year of Eucalyptus

806.00

(RMB/tonne)Cost per mu for the firstyear of Pines

590.00

(RMB/tonne)Roll back method ofmarket price

Unit price per tonne ofEucalyptus wood

590.00

(RMB/tonne)Unit price per tonne of

wet pine

525.00

(RMB/tonne)Unit price per tonne of

China fir

800.00

(RMB/tonne)

XII. Related parties and related party transactions

1. Parent company of the Company

Name of parent company

Place ofincorporationBusiness nature

Registered

capital(RMB*0,000)

Shareholdingof the parent

company inthe Company

Voting rightof the parent

company inthe CompanyChenming Holdings Co., Ltd.ShouguangInvestment in manufacture of

paper, electricity, steam, andarboriculture

123,878.7727.53%27.53%

The ultimate controller of the Company is Shouguang State-owned Assets Supervision and Administration Office.

2. Subsidiaries of the Company

For details of the Company*s subsidiaries, please refer to Note IX. 1.

INTERIM REPORT 2022

X Financial Report

XII. Related parties and related party transactions (Cont*d)

3. Joint ventures and associates of the Company

For details of material joint ventures and associates, please refer to Note IX. 3.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 associatesRelationWeifang Sime Darby West Port Co., Ltd.A joint venture of the CompanyShouguang Meite Environmental Technology Co., Ltd.A joint venture of the CompanyWeifang Xingxing United Chemical Co., Ltd.A joint venture of the CompanyShouguang Chenming Huisen New-style Construction Materials Co., Ltd.A joint venture of the CompanyAnhui Time Source CorporationAn associate of the CompanyLide Technology 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 CompanyGuangdong Nanyue Bank Co., Ltd.An associate of the Company

4. Other related parties

Name of other related partiesRelationShouguang Huixin Construction Materials Co., Ltd.A subsidiary of a company invested by the Directors

and senior management of the CompanyChen Hongguo, Hu Changqing, Li Xingchun, Li Feng, LiChuanxuan, Yuan Xikun, Li Xueqin, Li Zhenzhong, Li Weixianand Dong Lianming

Key management personnel of the Company

5. Related party transactions

(1) Purchase and sales of goods and rendering and receiving services

Table on purchase of goods/receiving of services

Unit: RMB

Related party

Details of related partytransaction

Amount for

the period

Transaction

facilityapproved

Whether theTransaction

facility isexceeded

Amount for the

prior periodWeifang Sime DarbyWest Port Co., Ltd.Port miscellaneous expenses32,355,133.76100,000,000.00No38,373,133.21

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

XII. Related parties and related party transactions (Cont*d)

5. Related party transactions (Cont

*d)

(1) Purchase and sales of goods and rendering and receiving services (Cont

*d)Table on sales of goods/providing of services

Unit: RMBRelated party

Details of relatedparty transaction

Amount for

the period

Amount forthe prior periodShouguang Chenming Huisen New-style Construction Materials Co., Ltd.Sales of electricity and steam8,581,891.974,489,589.98Shouguang Huixin Construction Materials Co., Ltd.Sales of cement, coal, oil, etc.26,377.861,183,941.17

(2) Related party guarantee

The Company as guarantor

Unit: RMBParty being guaranteed

Amountunder guarantee

Commencement

date ofguarantee

Expiry dateof guarantee

Whetherperformanceof guarantee is completedWeifang Sime Darby West Port Co., Ltd.117,400,000.002017-12-202027-12-20NoChenming (HK) Limited105,330,858.442022-3-282022-9-23NoChenming (HK) Limited19,043,008.172022-5-62022-8-31NoChenming (HK) Limited21,876,110.042022-4-12022-9-28NoChenming (HK) Limited8,339,395.512022-4-32022-9-30NoChenming (HK) Limited22,083,177.272022-4-62022-10-3NoChenming (HK) Limited10,155,458.742022-4-122022-10-9NoChenming (HK) Limited24,836,747.912022-4-252022-7-20NoChenming (HK) Limited23,392,524.432022-4-222022-10-19NoChenming (HK) Limited23,114,885.892022-5-302022-8-19NoChenming (HK) Limited22,023,296.552022-5-272022-11-23NoChenming (HK) Limited5,625,130.922022-5-312022-8-29NoChenming (HK) Limited8,513,110.772022-5-312022-8-29NoChenming (HK) Limited5,887,724.912022-5-312022-8-29NoChenming (HK) Limited19,702,993.692022-6-102022-7-29NoChenming (HK) Limited24,598,900.862022-6-132022-8-5NoChenming (HK) Limited5,699,846.922022-6-62022-9-6NoChenming (HK) Limited8,685,381.802022-6-62022-9-6NoChenming (HK) Limited9,807,185.202022-6-82022-9-6NoWuhan Chenming Hanyang Paper Holdings

Co., Ltd.

30,000,000.002021/12/172022/10/16NoHuanggang Chenming Pulp & Paper Co., Ltd.200,000,000.002021-8-302022-8-25NoHuanggang Chenming Pulp & Paper Co., Ltd.300,000,000.002021-12-232022/12/22NoHuanggang Chenming Pulp & Paper Co., Ltd.30,000,000.002021/7/192022/7/18NoHuanggang Chenming Pulp & Paper Co., Ltd.45,000,000.002021/8/92022/8/8NoHuanggang Chenming Pulp & Paper Co., Ltd.90,000,000.002022-5-192023-5-18NoHuanggang Chenming Pulp & Paper Co., Ltd.20,000,000.002022-4-222023-4-21No

INTERIM REPORT 2022

X Financial Report

Party being guaranteed

Amountunder guarantee

Commencement

date ofguarantee

Expiry dateof guarantee

Whetherperformanceof guarantee is completedHuanggang Chenming Pulp & Paper Co., Ltd.30,000,000.002021/7/282022/7/27NoJilin Chenming Paper Co., Ltd.98,580,000.002022-1-132022-7-11NoJilin Chenming Paper Co., Ltd.18,000,000.002022-5-232023-5-8NoJiangxi Chenming Paper Co., Ltd.10,000,000.002021-8-312022-8-24NoJiangxi Chenming Paper Co., Ltd.10,000,000.002021-9-12022-8-24NoJiangxi Chenming Paper Co., Ltd.20,000,000.002021-10-92022-9-28NoJiangxi Chenming Paper Co., Ltd.150,000,000.002021-12-162022-12-15NoJiangxi Chenming Paper Co., Ltd.27,000,000.002021-12-312022-12-23NoJiangxi Chenming Paper Co., Ltd.2,000,000.002022-1-192023-1-18NoJiangxi Chenming Paper Co., Ltd.28,000,000.002022-2-142023-1-18NoJiangxi Chenming Paper Co., Ltd.150,000,000.002022-2-222023-2-21NoJiangxi Chenming Paper Co., Ltd.94,450,000.002022-3-162023-3-15NoJiangxi Chenming Paper Co., Ltd.99,000,000.002022-3-192023-3-18NoJiangxi Chenming Paper Co., Ltd.12,500,000.002022-3-302022-9-26NoJiangxi Chenming Paper Co., Ltd.10,000,000.002022-3-312023-3-31NoJiangxi Chenming Paper Co., Ltd.20,134,200.002022-1-122022-7-11NoJiangxi Chenming Paper Co., Ltd.70,000,000.002022/4/252023/4/24NoJiangxi Chenming Paper Co., Ltd.49,000,000.002022/4/252023/4/24NoJiangxi Chenming Paper Co., Ltd.270,000,000.002022/5/192023/5/17NoJiangxi Chenming Paper Co., Ltd.73,000,000.002022/5/272023/5/26NoJiangxi Chenming Paper Co., Ltd.80,000,000.002022/6/172023/6/16NoJiangxi Chenming Paper Co., Ltd.10,000,000.002022/6/142023/6/12NoJiangxi Chenming Paper Co., Ltd.20,000,000.002022/6/212023/6/16NoJiangxi Chenming Paper Co., Ltd.28,317,695.392022/6/242023/6/20NoJiangxi Chenming Paper Co., Ltd.12,000,000.002022/6/242022/12/20NoJiangxi Chenming Paper Co., Ltd.250,000,000.002022/6/272023/6/24NoJiangxi Chenming Paper Co., Ltd.13,000,000.002022/6/292022/12/26NoJiangxi Chenming Paper Co., Ltd.100,000,000.002022/6/302023/6/30NoJiangxi Chenming Paper Co., Ltd.1,532,212.622022-6-242022-12-21NoShandong Chenming Paper Sales Co., Ltd.254,349,948.222022-2-152022-8-15NoShandong Chenming Paper Sales Co., Ltd.459,968,037.612022-4-72023-4-3NoShandong Chenming Paper Sales Co., Ltd.419,643,848.452022-4-212022-10-19NoShandong Chenming Paper Sales Co., Ltd.126,012,917.622022-4-212022-10-19NoShanghai Chenming Pulp & Paper Sales Co., Ltd.30,000,000.002022-1-262022-7-27NoShanghai Chenming Pulp & Paper Sales Co., Ltd.10,000,000.002022-5-312023-5-31NoShanghai Chenming Pulp & Paper Sales Co., Ltd.80,000,000.002022-6-12023-5-22NoShanghai Chenming Pulp & Paper Sales Co., Ltd.10,000,000.002022-6-22023-5-22NoShanghai Chenming Pulp & Paper Sales Co., Ltd.20,000,000.002022-6-212022-12-24NoShouguang Meilun Paper Co., Ltd.124,867,323.202021-7-72022-7-4NoShouguang Meilun Paper Co., Ltd.125,175,008.562022-1-252022-7-25NoShouguang Meilun Paper Co., Ltd.131,454,694.192022-6-102022-12-7NoShouguang Meilun Paper Co., Ltd.197,262,262.312022-1-72022-7-6NoShouguang Meilun Paper Co., Ltd.69,076,521.582022-1-182022-7-18NoShouguang Meilun Paper Co., Ltd.49,000,000.002022-4-302023-4-18No

XII. Related parties and related party transactions (Cont*d)

5. Related party transactions (Cont

*d)

(2) Related party guarantee (Cont

*d)

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

Party being guaranteed

Amountunder guarantee

Commencement

date ofguarantee

Expiry dateof guarantee

Whetherperformanceof guarantee is completedShouguang Meilun Paper Co., Ltd.162,136,733.492022-6-162022-12-13NoShouguang Meilun Paper Co., Ltd.285,000,000.002022-1-292022-7-28NoShouguang Meilun Paper Co., Ltd.100,000,000.002021-10-122022-10-11NoShouguang Meilun Paper Co., Ltd.30,000,000.002021-8-312022-8-31NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002021-7-132022-7-12NoZhanjiang Chenming Pulp & Paper Co., Ltd.49,500,000.002021-8-122022-8-8NoZhanjiang Chenming Pulp & Paper Co., Ltd.67,000,000.002021-9-152022-9-14NoZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002021-9-262022-9-25NoZhanjiang Chenming Pulp & Paper Co., Ltd.60,000,000.002021-10-182022-10-17NoZhanjiang Chenming Pulp & Paper Co., Ltd.60,000,000.002021-11-122022-11-11NoZhanjiang Chenming Pulp & Paper Co., Ltd.90,000,000.002021-11-162022-11-15NoZhanjiang Chenming Pulp & Paper Co., Ltd.60,000,000.002021-11-172022-11-16NoZhanjiang Chenming Pulp & Paper Co., Ltd.90,000,000.002021-11-232022-11-22NoZhanjiang Chenming Pulp & Paper Co., Ltd.30,000,000.002021-11-242022-11-23NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002021-12-152022-12-14NoZhanjiang Chenming Pulp & Paper Co., Ltd.9,000,000.002021-12-202022-12-19NoZhanjiang Chenming Pulp & Paper Co., Ltd.81,200,000.002021-12-222022-7-17NoZhanjiang Chenming Pulp & Paper Co., Ltd.36,912,700.002021-11-162022-11-15NoZhanjiang Chenming Pulp & Paper Co., Ltd.90,000,000.002022-1-62022-7-6NoZhanjiang Chenming Pulp & Paper Co., Ltd.89,900,100.002022-1-62022-7-6NoZhanjiang Chenming Pulp & Paper Co., Ltd.80,000,000.002022-1-132023-1-12NoZhanjiang Chenming Pulp & Paper Co., Ltd.63,000,000.002022-1-202023-1-20NoZhanjiang Chenming Pulp & Paper Co., Ltd.125,000,000.002022-1-212023-1-20NoZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002022-1-262023-12-22NoZhanjiang Chenming Pulp & Paper Co., Ltd.5,000,000.002022-1-272023-1-26NoZhanjiang Chenming Pulp & Paper Co., Ltd.40,000,000.002022-1-302023-1-26NoZhanjiang Chenming Pulp & Paper Co., Ltd.200,000,000.002022-2-182022-8-18NoZhanjiang Chenming Pulp & Paper Co., Ltd.200,000,000.002022-2-152023-2-14NoZhanjiang Chenming Pulp & Paper Co., Ltd.70,000,000.002022-2-222023-2-21NoZhanjiang Chenming Pulp & Paper Co., Ltd.20,000,000.002022-3-32023-3-2NoZhanjiang Chenming Pulp & Paper Co., Ltd.30,000,000.002022-3-222023-3-10NoZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002022-3-162023-3-15NoZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002022-3-72023-3-2NoZhanjiang Chenming Pulp & Paper Co., Ltd.26,845,600.002022-3-212023-3-3NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002022-4-82022-10-7NoZhanjiang Chenming Pulp & Paper Co., Ltd.20,000,000.002022-4-212023-4-11NoZhanjiang Chenming Pulp & Paper Co., Ltd.43,000,000.002022-4-272023-4-21NoZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002022-5-72023-4-28NoZhanjiang Chenming Pulp & Paper Co., Ltd.26,000,000.002022-5-132023-5-10NoZhanjiang Chenming Pulp & Paper Co., Ltd.80,000,000.002022-5-132022-11-18NoZhanjiang Chenming Pulp & Paper Co., Ltd.167,000,000.002022-5-122023-5-12NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002022-5-312024-5-30NoZhanjiang Chenming Pulp & Paper Co., Ltd.47,000,000.002022-6-222022-12-16NoZhanjiang Chenming Pulp & Paper Co., Ltd.70,000,000.002022-6-242023-6-23No

XII. Related parties and related party transactions (Cont*d)

5. Related party transactions (Cont

*d)

(2) Related party guarantee (Cont

*d)

INTERIM REPORT 2022

X Financial Report

Party being guaranteed

Amountunder guarantee

Commencement

date ofguarantee

Expiry dateof guarantee

Whetherperformanceof guarantee is completedZhanjiang Chenming Pulp & Paper Co., Ltd.48,500,000.002022-6-282023-6-10NoZhanjiang Chenming Pulp & Paper Co., Ltd.41,403,000.002022-6-292022-12-23NoZhanjiang Chenming Pulp & Paper Co., Ltd.67,000,000.002022-6-242023-6-23NoZhanjiang Chenming Pulp & Paper Co., Ltd.200,000,000.002022-6-282022-12-23NoZhanjiang Chenming Pulp & Paper Co., Ltd.31,543,580.002022-4-282023-4-21NoZhanjiang Chenming Pulp & Paper Co., Ltd.22,818,760.002022-5-132023-5-10NoZhanjiang Chenming Pulp & Paper Co., Ltd.49,664,360.002022-4-292022-7-28NoZhanjiang Chenming Pulp & Paper Co., Ltd.58,334,709.412022-5-102022-9-9NoZhanjiang Chenming Pulp & Paper Co., Ltd.664,428,600.002019-12-272022-12-27NoZhanjiang Chenming Pulp & Paper Co., Ltd.78,500,000.002020-10-162023-10-15NoZhanjiang Chenming Pulp & Paper Co., Ltd.113,500,000.002020-11-112023-11-10NoZhanjiang Chenming Pulp & Paper Co., Ltd.98,500,000.002020-12-102023-12-9NoZhanjiang Chenming Pulp & Paper Co., Ltd.99,500,000.002021-1-52024-1-4NoZhanjiang Chenming Pulp & Paper Co., Ltd.140,000,000.002021-12-232023-12-23NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002022-6-172025-6-16NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002022-6-172025-6-16NoHainan Chenming Technology Co., Ltd.50,000,000.002022-5-132022-11-14NoShouguang Chenming Import and Export TradeCo., Ltd

100,000,000.002022-1-142023-1-13NoChenming (Singapore) Limited26,861,649.642022-6-172022-9-15NoChenming (Singapore) Limited25,820,502.582022-6-242022-9-24NoChenming (Singapore) Limited26,043,881.192022-6-292022-9-27NoChenming (Singapore) Limited31,885,261.332022-6-142022-9-8NoChenming (HK) Limited134,228,000.002021-11-192022-11-4NoChenming (HK) Limited93,489,802.002022-3-172023-3-7NoZhanjiang Chenming Pulp & Paper Co., Ltd.120,000,000.002021-8-162022-8-15NoShouguang Meilun Paper Co., Ltd.364,000,000.002020-12-42023-10-30NoWuhan Chenming Hanyang Paper Holdings Co.,Ltd.

6,000,000.002020-12-42023-10-30NoHuanggang Chenming Pulp & Paper Co., Ltd.200,000,000.002020-12-42023-10-30NoZhanjiang Runbao Trading Co., Ltd.160,000,000.002022-4-252024-4-25NoZhanjiang Dingjin Trading Co., Ltd.135,581,900.002020-12-42022-11-22No

(3) Related party lending and borrowing

Unit: RMBRelated party

BorrowingamountStarting dateExpiry dateDescriptionBorrowing fromChenming Holdings Co., Ltd.155,000,000.002022-1-62022-4-26Controlling

shareholder Guangdong Nanyue Bank Co., Ltd.425,000,000.002022-1-202023-1-20Associate

XII. Related parties and related party transactions (Cont*d)

5. Related party transactions (Cont

*d)

(2) Related party guarantee (Cont

*d)

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

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 balanceItemRelated partyBook balanceBad debt provisionBook balanceBad debt provisionAccounts receivableShouguang Chenming Huisen

New-style Construction MaterialsCo., Ltd.2,047,252.0014,330.76Accounts receivableShouguang Meite Environmental

Technology Co., Ltd.5,001,962.5635,013.74Accounts receivableJiangxi Chenming Port Co., Ltd109,385.42109,385.42Other receivablesWeifang Sime Darby West Port

Co., Ltd.69,747,294.593,785,041.9680,667,961.327,423,984.26Other receivablesShouguang Meite Environmental

Technology Co., Ltd.19,025,633.681,803,768.9122,740,159.3221,348.69Payments in advanceShouguang Meite Environmental

Technology Co., Ltd.5,370,726.99

(2) Accounts payable

Unit: RMBItemRelated party

Closing book

balance

Opening book

balanceAccounts payableWeifang Xingxing United Chemical Co., Ltd.26,905,494.3426,905,494.34Other payablesWeifang Xingxing United Chemical Co., Ltd.16,860,000.0016,860,000.00Accounts payableWeifang Sime Darby West Port Co., Ltd.11,378,405.327,609,782.51Accounts payableJiangxi Chenming Port Co., Ltd.2,324,708.87Other payablesJiangxi Chenming Port Co., Ltd.6,630,800.00Contract liabilitiesAnhui Time Source Corporation1,570.101,570.10Other payablesLide Technology Co., Ltd.508,619.46508,619.46Other payablesChenming (Qingdao) Asset Management Co., Ltd.116,656.55115,633.42Receipts in advanceChenming (Qingdao) Asset Management Co., Ltd.49,539.63

INTERIM REPORT 2022

X Financial Report

XIII. Share-based payment

1. General information of share-based payment

﹟ Applicable Not applicable

Unit: RMBTotal exercised equity instruments of the Company during the period0.00Total invalid equity instruments of the Company during the period24,176,200.00Range of strike price and remaining periods of contracts of stock options excluding of which theCompany issues at the end of the period

See explanationfor detailsOther explanation: On 29 May 2020, the Resolution on the Matters Relating to Adjustments to the 2020 RestrictedA Share Incentive Scheme of the Company and the Resolution in Relation to the Grant of Restricted Shares to theParticipants were considered and approved at the tenth extraordinary meeting of ninth session of the Board and thefifth extraordinary meeting of the ninth session of the Supervisory Committee of the Company, by which 79.60 millionrestricted shares were granted. The grant date was 29 May 2020, and the fair value of the restricted shares was theex-rights price of the shares on the grant date. The Restricted Shares to be granted under the Incentive Scheme were※granted once and unlocked in batches§. For the period commencing from the first trading day after expiry of the24-month period from the date on which the registration of the grant of the Restricted Shares is completed and endingon the last trading day of the 36-month period from the date on which the registration of the grant of the RestrictedShares is completed, 40% of the Restricted Shares will be unlocked; for the period commencing from the first tradingday after expiry of the 36-month period from the date on which the registration of the grant of the Restricted Sharesis completed and ending on the last trading day of the 48-month period from the date on which the registration of thegrant of the Restricted Shares is completed, 30% of the Restricted Shares will be unlocked; for the period commencingfrom the first trading day after expiry of the 48-month period from the date on which the registration of the grant ofthe Restricted Shares is completed and ending on the last trading day of the 60-month period from the date on whichthe registration of the grant of the Restricted Shares is completed, 30% of the Restricted Shares will be unlocked.Meanwhile, during the three accounting years from 2021 to 2023, the Restricted Shares granted under the IncentiveScheme shall be subject to annual performance appraisal for unlocking (for details of specific performance evaluationconditions, please refer to the announcement of the Company). The Company estimated that the performance indicatorsfor 2022 cannot be fulfilled, and the corresponding second batch of the 30% Restricted Shares cannot be unlocked. Inaddition, 27,006,200 shares lapsed due to the resignation of some Senior Management members.

2. Equity-settled share-based payment

﹟ Applicable Not applicable

Unit: RMBThe method of determining the fair value of equity instrument on the grant dateEx-right price of

grant of sharesBasis for determining the quantity of exercisable equity instrumentsSee explanation

for detailsReasons for significant difference between the current estimate and previous estimateSee explanation

for detailsAccumulated amount of equity-settled share-based payment included in the capital reserve78,193,784.34Total amount of equity-settled share-based payment recognised in the current period-6,850,012.78

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

XIV. Undertaking and contingency

1. Significant commitments

Significant commitments as at the balance sheet date

Unit: RMBCapital commitments contracted for but not yetnecessary to be recognised on the balance sheetClosing balanceOpening balanceCommitments in relation to acquisition and construction of long-term assets285,099,655.45181,254,971.61

2. Contingency

(1) Significant contingency as at the balance sheet date

The Company had no material contingency as at the balance sheet date.

(2) To state that the company has no material contingency that needs to be disclosed

The Company had no material contingency that needs to be disclosed.XV. Post-balance sheet eventAs of 30 June 2022, the Company has no other events that should be disclosed after the balance sheet date.XVI. Other material matters

1. Segment information

(1) Basis for determination and accounting policies

According to the Company*s internal organisational structure, management requirements and internal reporting

system, the Group*s operating business is divided into 4 reporting segments. These report segments are

determined based on the financial information required by the company*s daily internal management. The

management of the Group regularly evaluates the operating results of these reporting segments to determine the

allocation of resources to them and evaluate their performance.

The Company*s reporting segments include:

(1) Machine-made paper and pulp segment, which is responsible for production and sales of machine-made

paper and pulp;

(2) Financial services segment, which provides financial services;

(3) Hotels and property rentals segment, which engages in property leasing;

(4) Other segments, which is responsible for the above segments otherwise.

Segment report information is disclosed in accordance with the accounting policies and measurement standards

adopted by each segment when reporting to management. These accounting policies and measurement basis are

consistent with the accounting policies and measurement basis used in preparing the financial statements.

INTERIM REPORT 2022

X Financial Report

XVI. Other material matters (Cont*d)

1. Segment information (Cont

*d)

(2) Financial Information of Reporting Segment

Unit: RMBCurrent period or endof current period

Machine-madepaper and pulpFinancial services

Hotels andproperty rentalsOthersEliminationTotalRevenue33,293,149,611.73313,686,272.81236,294,775.542,283,741,250.5019,450,443,544.7516,676,428,365.83Of which: revenue fromexternal transactions16,091,824,702.93125,629,976.14108,076,112.11350,897,574.65 16,676,428,365.83Revenue from inter-segmenttransactions17,201,324,908.80188,056,296.67128,218,663.431,932,843,675.8519,450,443,544.75Of which: Revenue fromprincipal activities32,655,617,824.79313,686,272.81125,577,301.791,020,944,232.4017,945,290,072.5516,170,535,559.24Operating costs32,033,269,370.91133,101,515.13117,317,417.16701,400,250.0018,930,139,274.0014,054,949,279.20Of which: Costs of principal

activities31,805,102,552.96133,101,515.1386,078,159.49542,878,138.7618,944,714,891.5413,622,445,474.80Operating expenses224,701,509.79 1,147,736.3910,424,163.113,838,184.36102,055,830.00138,055,763.65Of which: salaries68,341,155.74594,088.972,360,658.641,396,703.0672,692,606.41Depreciation expenses3,658,064.8620,589.151,854,394.088,542.335,541,590.42Office expenses1,105,011.633,111.891,108,123.52Travel expenses8,263,434.15133,127.96139,277.538,535,839.64Selling commissions3,043,011.693,521,573.18318,820.196,883,405.06Rental expenses2,433,614.8444,843.412,478,458.25Hospitality expenses22,109,421.79399,930.3118,718.00427,535.26169,037.5522,786,567.81Warehouse expenses297,908.54205,881.28503,789.82Others115,449,886.552,665,707.321,296,581.30101,886,792.4517,525,382.72Operating profit/(loss)393,913,359.61120,593,852.356,604,072.6216,318,802.39252,939,549.28284,490,537.69Total cost of construction in

progress incurred during

the period618,300,337.3320,617.48618,320,954.81Fixed assets acquired in the

current period196,803,355.58711,110.44410,171.641,723,902.65199,648,540.31Intangible assets acquired

during the period305,955,525.74305,955,525.74Total assets131,047,372,405.3921,036,519,263.198,008,176,271.167,256,995,196.5582,162,482,091.0585,186,581,045.24Total liabilities86,963,296,560.718,872,476,560.123,728,407,230.322,036,422,737.5639,505,812,018.1062,094,791,070.61Basis of accounting: The transfer prices between the Company's segments are based on market prices.

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

XVII. Major Item Notes of the Parent Company*s Financial Statements

1. Accounts receivable

(1) Disclosure of accounts receivable by category

Unit: RMBClosing balanceOpening balanceBook balanceBad debt provisionBook balanceBad debt provisionTypeAmountPercentageAmount

ProvisionproportionCarrying valueAmountPercentageAmount

ProvisionproportionCarrying valueAccounts receivable assessed

individually for bad debtprovisionOf which:

Accounts receivable assessedcollectively for bad debtprovision1,219,841,113.33100.00%4,911,757.180.40%1,214,929,356.15146,213,282.74100.00%4,612,037.233.15%141,601,245.51Of which:

Receivables from related partycustomers1,156,918,862.1094.84%1,156,918,862.10126,108,166.7586.25%126,108,166.75Receivables from non-relatedparty customers62,922,251.235.16%4,911,757.187.81%58,010,494.0520,105,115.9913.75%4,612,037.2322.94%15,493,078.76Total1,219,841,113.33100.00%4,911,757.180.40%1,214,929,356.15146,213,282.74100.00%4,612,037.233.15%141,601,245.51

INTERIM REPORT 2022

X Financial Report

XVII. Major Item Notes of the Parent Company*s Financial Statements (Cont*d)

1. Accounts receivable (Cont

*d)

(1) Disclosure of accounts receivable by category (Cont

*d)

Items assessed collectively for impairment:

Accounts receivable with collective provision for bad debts based on receivables from related parties

Unit: RMBClosing balanceNameBook balance

Bad debtprovision

ProvisionpercentageWithin 1 year1,156,918,862.10Total1,156,918,862.10

Accounts receivable with collective provision for bad debts based on receivables from non-related parties

Unit: RMBClosing balanceNameBook balance

Bad debtprovision

ProvisionpercentageWithin 1 year58,419,430.06408,936.010.70%1 to 2 years2 to 3 yearsOver 3 years4,502,821.174,502,821.17100.00%Total62,922,251.234,911,757.187.81%

Disclosure by ageing

Unit: RMBAgeingClosing balanceWithin 1 year (including 1 year)1,215,338,292.161 to 2 years2 to 3 yearsOver 3 years4,502,821.17Subtotal1,219,841,113.33Bad debt provision4,911,757.18Total1,214,929,356.15

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

XVII. Major Item Notes of the Parent Company*s Financial Statements (Cont*d)

1. Accounts receivable (Cont

*d)

(2) Provision, recovery or reversal of bad debt provision for the period

Bad debt provision for the period:

Unit: RMBChanges in the periodCategory

OpeningbalanceProvision

Recoveryor reversalWrite-offOthers

ClosingbalanceAccounts receivable with provision for bad debts4,612,037.232,047,859.771,748,139.824,911,757.18Total4,612,037.232,047,859.771,748,139.824,911,757.18

(3) Top five accounts receivable based on closing balance of debtors

The total amount of top five accounts receivable based on closing balance of debtors for the period amountedto RMB1,219,357,493.76 in total, accounting for 99.96% of the total closing balance of accounts receivable. Theclosing balance of the corresponding bad debt provision amounted to RMB4,828,712.22 in total.

Unit: RMB

Name of entity

Closing balance

of accounts

receivable

Percentage to

total closing

balance of

accountsreceivable

Closing balance

of bad debt

provisionCustomer I960,997,446.2878.78%Customer II190,921,415.8215.65%Customer III58,016,031.664.76%406,112.22Customer IV5,000,000.000.41%Customer V4,422,600.000.36%4,422,600.00Total1,219,357,493.7699.96%4,828,712.22

INTERIM REPORT 2022

X Financial Report

XVII. Major Item Notes of the Parent Company*s Financial Statements (Cont*d)

2. Other receivables

Unit: RMBItemClosing balanceOpening balanceInterest receivableDividends receivable126,325,018.50Other receivables8,021,857,221.768,773,854,244.04Total8,021,857,221.768,900,179,262.54

(1) Dividends receivable

1) Classification of dividends receivable

Unit: RMBItem (or investee)Closing balanceOpening balanceJiangxi Chenming Paper Co., Ltd.72,896,218.50Zhanjiang Chenming Pulp & Paper Co., Ltd.53,428,800.00Total126,325,018.50

(2) Other receivables

1) Classification of other receivables by nature

Unit: RMBNature

Closing bookbalance

Opening book

balanceOpen credit8,100,301,136.298,849,264,265.13Guarantee deposit1,467,526.34240,000.00Reserve and borrowings8,738,534.426,103,279.46Others5,487,933.4911,961,652.43Total8,115,995,130.548,867,569,197.02

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

XVII. Major Item Notes of the Parent Company*s Financial Statements (Cont*d)

2. Other receivables (Cont

*d)

(2) Other receivables (Cont

*d)

2) Particulars of bad debt provision

Unit: RMBStage 1Stage 2Stage 3Bad debt provision

ECLs for thenext 12 months

Lifetime ECLs(not credit-impaired)

Lifetime ECLs

(credit-impaired)TotalBalance as at 1 January 202241,288,305.2352,426,647.7593,714,952.98Balance as at 1 January 2022 for the period每 Transferred to stage 2每 Transferred to stage 3每 Reversed to stage 2每 Reversed to stage 1Provision for the period4,214,604.814,214,604.81Reversal for the period3,791,649.013,791,649.01Transfer for the periodWrite-off for the periodOther changesBalance as at 30 June 202237,496,656.2256,641,252.5694,137,908.78Changes in carrying book balances with significant changes in loss provision for the period Applicable ﹟ Not applicable

Disclosed by ageing

Unit: RMBAgeingClosing balanceWithin 1 year (including 1 year)8,016,966,084.121 to 2 years6,278,479.372 to 3 years10,499,017.28Over 3 years82,251,549.77Total8,115,995,130.54

INTERIM REPORT 2022

X Financial Report

XVII. Major Item Notes of the Parent Company*s Financial Statements (Cont*d)

2. 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 receivables93,714,952.984,214,604.813,791,649.0194,137,908.78Total93,714,952.984,214,604.813,791,649.0194,137,908.78

4) Top five other receivables according to closing balance of debtors

The top five other receivables based on closing balance of debtors for the period amounted toRMB5,329,828,506.01 in total, accounting for 65.67% of the total closing balance of other receivables. Theclosing balance of the corresponding bad debt provision amounted to RMB0.00 in total.

Unit: RMB

Name of entityNatureClosing balanceMaturity

Percentage to

total closingbalance of other

receivables

Closingbalanceof bad debt

provisionCustomer IOpen credit2,005,200,000.00Within 1 year24.71%0.00Customer IIOpen credit1,223,803,000.00Within 1 year15.08%0.00Customer IIIOpen credit865,510,075.00Within 1 year10.66%0.00Customer IVOpen credit857,550,893.00Within 1 year10.57%0.00Customer VOpen credit377,764,538.01Within 1 year4.65%0.00Total5,329,828,506.0165.67%0.00

3. Long-term equity investments

Unit: RMBClosing balanceOpening balanceItemBook balance

Impairment

provisionCarrying amountBook balance

Impairment

provisionCarrying amountInvestment in subsidiaries18,508,056,896.5218,508,056,896.5218,480,556,896.5218,480,556,896.52Investment in associates and joint ventures324,189,775.315,994,545.96318,195,229.35331,467,464.625,994,545.96325,472,918.66Total18,832,246,671.835,994,545.9618,826,252,125.8718,812,024,361.145,994,545.9618,806,029,815.18

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

XVII. Major Item Notes of the Parent Company*s Financial Statements (Cont*d)

3. Long-term equity investments (Cont

*d)

(1) Investment in subsidiaries

Unit: RMBChange for the periodInvestee

Opening balance(Carrying amount)

Additionalcontribution

Withdrawncontribution

ImpairmentprovisionOthers

Closing balance(Carrying amount)

Closing balanceof impairmentprovisionChenming Paper Korea Co., Ltd.6,143,400.006,143,400.00Chenming GmbH4,083,235.004,083,235.00Hailaer Chenming Paper Co., Ltd12,000,000.0012,000,000.00Huanggang Chenming Pulp & Paper Co., Ltd.2,302,000,000.002,302,000,000.00Huanggang Chenming Arboriculture Development Co., Ltd.70,000,000.0070,000,000.00Jinan Chenming Paper Sales Co., Ltd.100,000,000.00100,000,000.00Wuhan Chenming Hanyang Paper Holdings Co., Ltd.264,493,210.21264,493,210.21Shandong Grand View Hotel Co., Ltd.80,500,000.0080,500,000.00Zhanjiang Chenming Pulp & Paper Co., Ltd.5,110,000,000.0027,500,000.005,137,500,000.00Shouguang 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., Ltd250,000,000.00250,000,000.00Shouguang Chenming Papermaking Machine Co., Ltd.2,000,000.002,000,000.00Shouguang Hongxin Printing and Packaging Co., Ltd3,730,000.003,730,000.00Shandong Chenming Group Finance Co., Ltd.4,000,000,000.004,000,000,000.00Chenming Arboriculture Co., Ltd.45,000,000.0045,000,000.00Chenming Paper USA Inc.6,407,800.006,407,800.00Weifang Chenming Growth Driver Replacement Equity

Investment Fund Partnership (Limited Partnership)632,000,000.00632,000,000.00Weifang Chendu Equity Investment Partnership (Limited

Partnership)255,000,000.00255,000,000.00Total18,480,556,896.5227,500,000.0018,508,056,896.52

INTERIM REPORT 2022

X Financial Report

XVII. Major Item Notes of the Parent Company*s Financial Statements (Cont*d)

3. Long-term equity investments (Cont

*d)

(2) Investment in associates and joint ventures

Unit: RMBChange for the period

Investee

Openingbalance(Carryingamount)Additionalcontribution

Withdrawncontribution

Investmentgain or lossrecognisedunder equitymethod

Adjustmentof othercomprehensiveincome

Otherchangein equity

interest

Distribution

of cashdividendor profitdeclared

Impairment

provisionOthers

Closingbalance(Carryingamount)

Closingbalance ofimpairmentprovisionI. AssociatesShouguang Chenming HuisenNew-style ConstructionMaterials Co., Ltd.6,902,869.87-215,525.031,000,000.005,687,344.84Weifang Sime Darby WestPort Co., Ltd.77,370,998.75-3,008,474.8274,362,523.93Subtotal84,273,868.62-3,223,999.851,000,000.0080,049,868.77II. Joint venturesZhuhai Dechen New Third

Board Equity InvestmentFund Company (LimitedPartnership)36,967,896.31-2,003,052.1534,964,844.16Ningbo Kaichen Huamei

Equity Investment FundPartnership (LimitedPartnership)197,297,485.59-3,217.73197,294,267.86Chenming (Qingdao) Asset

Management Co., Ltd.6,933,668.14-107,419.58940,000.005,886,248.56Xuchang Chenming PaperCo., Ltd.5,994,545.96Subtotal241,199,050.04-2,113,689.46940,000.00238,145,360.585,994,545.96Total325,472,918.66-5,337,689.311,940,000.00318,195,229.355,994,545.96

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

XVII. Major Item Notes of the Parent Company*s Financial Statements (Cont*d)

4. Revenue and operating costs

Unit: RMBAmount for the periodAmount for the prior periodItemRevenueCostsRevenueCostsPrincipal activities3,140,980,202.712,884,740,920.894,032,722,509.282,973,878,062.69Other activities605,682,653.79496,489,124.84650,730,956.36537,196,013.25Total3,746,662,856.503,381,230,045.734,683,453,465.643,511,074,075.94Information related to revenue:

Unit: RMBCategory of contractMachine-made paperOthersTotalType of goods3,140,980,202.71605,682,653.793,746,662,856.50Including:

Machine-made paper2,740,277,450.492,740,277,450.49Material sales364,976,994.36364,976,994.36Leasing8,724,715.358,724,715.35Others400,702,752.22231,980,944.08632,683,696.30By geographical areaIncluding:

Mainland China3,140,980,202.71605,682,653.793,746,662,856.50Other countries and regionsBy the timing of deliveryIncluding:

Goods (at a point in time)3,140,980,202.71596,957,938.443,737,938,141.15Services (within a certain period)Leasing income8,724,715.358,724,715.35

5. Investment income

Unit: RMBItem

Amount for

the period

Amount forthe prior periodIncome from long-term equity investments accounted for using the cost method270,000,000.002,669,260,273.97Income from long-term equity investments accounted for using the equity method-5,337,689.31-4,587,981.17Investment gain on disposal of long-term equity investments751,679.56Investment gain on holding other non-current financial assets2,800,000.0015,000,000.00Investment gain on derecognition of financial assets-30,954,557.50Total237,259,432.752,679,672,292.80

INTERIM REPORT 2022

X Financial Report

XVIII. Supplementary information

1. Breakdown of extraordinary gains or losses for the current period

﹟ Applicable Not applicable

Unit: RMBItemAmountRemarkProfit or loss from disposal of non-current assets (including write-off ofprovision for asset impairment)-3,921,463.03Government grants (except for the government grants closely related to

the normal operation of the Company and granted constantly at a fixedamount or quantity in accordance with a certain standard in compliancewith national policies and regulations) accounted for in profit or loss forthe current period149,264,611.68Profit or loss from debt restructuring-754,806.87Except for effective hedging business conducted in the ordinary courseof business of the Company, gain or loss arising from the change in fairvalue of financial assets held for trading and financial liabilities held fortrading, as well as investment gains from disposal of financial assetsheld for trading, financial liabilities held for trading and financial assetsavailable for sale-62,122,863.58Consumable biological assets measured at fair value3,309,448.09Other gain or loss items within the definition of extraordinary gain or loss-3,575,720.23Less: Effect of income tax24,569,100.79Effect of minority interest (after tax)896,568.64Total56,733,536.63Details of other gain or loss items falling within the definition of extraordinary gain or loss:

Applicable ﹟ Not applicableThe Company did not have details of other gain or loss items falling within the definition of extraordinary gain or loss.Explanation on the extraordinary gain or loss items as illustrated in the Explanatory Announcement on InformationDisclosure for Companies Offering Their Securities to the Public No.1 每 Extraordinary Gains or Losses defined as itsrecurring gain or loss items Applicable ﹟ Not applicable

SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2022

X Financial Report

XVIII. Supplementary information (Cont*d)

2. Return on net assets and earnings per share

Earnings per shareProfit for the reporting period

Rate of returnon net assetson weightedaverage basis

Basic(RMBper share)

Diluted(RMBper share)Net profit attributable to ordinary shareholders of the Company1.02%0.0640.064Net profit after extraordinary gains or losses attributable to

ordinary shareholders of the Company0.71%0.0440.044Data specification: When calculating financial indicators such as earnings per share and rate of return on weightedaverage net assets, the interest on Perpetual Bonds of RMB44,481,369.86 from 1 January 2022 to 30 June 2022 arededucted.

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

The Board of Shandong Chenming Paper Holdings Limited

30 August 2022


  蜇璃ㄩ鼠豢埻恅
殿隙珜階