SHANDONG CHENMING PAPER HOLDINGS LIMITED Interim Report 2024
SHANDONG CHENMING PAPER HOLDINGS LIMITED
Interim Report 2024
August 2024
INTERIM REPORT 2024
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 this 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. Investor should be aware of investment risks. For further details, please refer to the risk exposures of the Company andthe 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 2024
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 Governance26VEnvironmental and Social Responsibility29VIMaterial Matters40VIIChanges in Share Capital and Shareholders54VIIIPreference Shares62IXBonds63XFinancial Report64
INTERIM REPORT 2024
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 ofthe 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 asapproved by the China Securities Regulatory Commission during the reporting period;(IV) the interim report disclosed on The Stock Exchange of Hong Kong Limited; and(V) other relevant information.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
I Important Notice, Table of Contents and Definitions
DefinitionsItemDefinitionCompany, Group, Chenming Group,Chenming Paper or Chenming Paper Company
meansShandong Chenming Paper Holdings Limited and its subsidiaries
Parent Company or Shouguang Headquarters
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.Huanggang ChenmingmeansHuanggang Chenming Pulp & Paper Co., Ltd.Chenming (HK)meansChenming (HK) LimitedJilin ChenmingmeansJilin Chenming Paper Co., Ltd.Shouguang MeilunmeansShouguang Meilun Paper Co., Ltd.Chenming InvestmentmeansShandong Chenming Investment LimitedChenming LeasingmeansShandong Chenming Financial Leasing Co., Ltd. and its subsidiariesYujing HotelmeansShandong Yujing Grand Hotel Co., Ltd.Shanghai Chenming SalesmeansShanghai Chenming Pulp & Paper Sales Co., Ltd.reporting periodmeansthe period from 1 January 2024 to 30 June 2024the beginning of the year or the period
means1 January 2024the end of the interim period or the period
means30 June 2024
INTERIM REPORT 2024
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 changesNoneName in Chinese of the CompanyShort name in Chinese of the CompanyName in English of the CompanySHANDONG CHENMING PAPER HOLDINGS LIMITEDShort name in English of the CompanySCPHLegal representative of the CompanyChen HongguoII. Contact persons and contact methods
Secretary to the BoardRepresentatives for Security AffairsHong Kong Company SecretaryNameYuan XikunZhang ChuangyongChen LinChu Hon LeungEmail addresschenmmingpaper@163.comfriend537@163.comZQCL0536@163.comliamchu@li-partners.comCorrespondence Address
No. 2199 Nongsheng East Road,
Shouguang City, Shandong Province
No. 2199 Nongsheng East Road,
Shouguang City, Shandong Province
22nd Floor, World Wide House,Central, Hong KongTelephone0536-21580080536-215800800852-21629600Facsimile0536-21589770536-215897700852-25010028
III. Other information
1. Contact methods of the Company
Whether the registered address, office address, postal code, website, email and others of the Company changed duringthe reporting period Applicable √ Not applicableThere was no change of the registered address, office address, postal code, website, email and others of the Companyduring the reporting period. Please refer to the 2023 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 websites of the stock exchanges and the names and websites of the media where theCompany discloses its interim report, and places for inspection of the Company’s interim report during the reportingperiod. Please refer to the 2023 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 2024
II Company Profile and Key Financial Indicators
IV. Major accounting data and financial indicators
Retrospective adjustment to or restatement of the accounting data for prior years by the Company Yes √ No
The reporting period
The corresponding
period ofthe prior year
Increase/decreasefor the reportingperiod as comparedto the corresponding
period ofthe prior yearRevenue (RMB)13,884,731,519.0412,564,962,781.3110.50%Net profit attributable to shareholders of the Company (RMB)28,646,205.42-688,080,164.10104.16%Net profit after extraordinary gains or losses attributable to shareholders of the Company (RMB)-270,865,043.51-811,839,217.4966.64%Net cash flows from operating activities (RMB)1,992,499,393.071,783,087,747.5911.74%Basic earnings per share (RMB per share)0.01-0.25104.00%Diluted earnings per share (RMB per share)0.01-0.25104.00%Rate of return on weighted average net assets0.17%-4.15%
Increase by 4.32percentage 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)77,501,281,219.7379,487,052,953.58-2.50%Net assets attributable to shareholders of the Company (RMB)16,628,929,026.0816,692,175,196.53-0.38%
INTERIM REPORT 2024
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: RMBItemAmountDescriptionProfit or loss from disposal of non-current assets (including write-off of provision
for assets impairment)235,133,918.55Government grants (except for the government grants closely related to thenormal operation of the Company, granted in accordance with an establishedstandard and having an ongoing effect on the Company’s profit or loss incompliance with national policies and regulations) accounted for in profit orloss for the current period35,234,521.15Except for effective hedging business conducted in the ordinary course ofbusiness of the Company, gain or loss arising from the change in fair value offinancial assets and financial liabilities held by a non-financial company, aswell as gain or loss arising from disposal of its financial assets and financialliabilities-19,293,314.75Reversal of provision for impairment of receivables individually tested for
impairment26,150,527.36Profit or loss from debt restructuring3,502,149.44Profit or loss from changes in the fair value of consumable biological assets
subsequently measured at fair value5,184,193.11Other non-operating income and expenses other than the above items1,981,541.21Less: Effect of income tax-13,171,226.69
Effect of minority interests (after tax)1,553,513.83Total299,511,248.93
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
II Company Profile and Key Financial Indicators
Details of other gain or loss items that fall within the definition of extraordinary gain or loss:
Applicable √ Not applicableThe Company did not have details of other gain or loss items that fall 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 – Extraordinary Gains or Losses defined as its recurring gain or lossitems
√ Applicable Not applicable
ItemAmount involved (RMB)ReasonOther income29,066,863.89Government grants related to assets that are closely related to the
Company’s normal operations are subsequently amortised to other income,which has a continuing effect on the Company’s profit or loss and istherefore accounted for as recurring profit or loss.
INTERIM REPORT 2024
III Management Discussion and Analysis
I. Principal activities of the Company during the reporting period
1. Industry Situation
The paper making industry is an important industry closely related to the national economic development and socialculture building. As an important pillar industry, paper making industry has high correlation with other industries, variousfields such as publishing, printing, packaging, chemicals and the military industry. Hence, the paper making industryis highly sensitive to macroeconomic changes. Characterised as being technology-intensive, capital-intensive andresource-intensive, it is the macroeconomic“barometer”, as well as one of the important indicators of the modernisationand civilisation level of a country. Driven by a moderate economic recovery, there were signs of bottoming out in PPI ofthe paper making industry. From July 2023 to May 2024, PPI of the paper making industry maintained positive growth.It is expecting to gradually turn positive. The profitability of enterprises within the industry is expected to rebound. It isexpected that the industry will continue its recovery trend in the second half of the year.As a typical pro-cyclical industry, the paper making industry has a positive correlation with the macroeconomic trend,and is more sensitive to macroeconomic changes. According to the data of the National Bureau of Statistics, the growthof value-added industrial output of China’s paper making industry exceeded 10% during the first five months of the year.Total profit of paper making and paper-made products amounted to RMB18,670 million, up by 147.3% year on year.From the perspective of industry layout, the market concentration of China’s paper making industry is relatively low. Theproportion of CR10 in China’s paper making industry of approximately 45% in 2022, compared with 90% for the CR10in the United States, means much scope for improvement. From the perspective of China’s new production capacity, itis primarily contributed by leading enterprises. Relevant products tend to develop towards customised, green and light-weighted products, and industry upgrade is still in progress.
2. Business overview of the Company
The machine-made paper business is the major source of revenue and profit of the Company. There was no significantchange in the principal activity and the business models such as procurement, production, marketing, and research anddevelopment.During the reporting period, the Company actively optimised its product mix, adopted flexible sales strategies andenhanced asset management efficiency. As the sentiment in the industry bottomed out, the results of the Companyentered a recovery phase, and its profitability improved quarter by quarter. Based on its accounting records, theCompany realised revenue of RMB13,885 million and net profit of RMB26 million from January to June, reflecting abetter development trend. At present, the Company has production bases in Shandong, Guangdong, Hubei, Jiangxi,Jilin and other places, with annual pulp and paper production capacity of 11 million tonnes. It is the first domesticpaper making enterprise that achieves a balance between pulp production and paper making capacity in general.Looking forward, the Company will further implement its“pulp and paper integration strategy”, enhance asset allocationefficiency, strengthen cost management, optimise its product mix, and consolidate and expand sales markets, strivingto improve corporate management levels and operation quality.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
III Management Discussion and Analysis
I. Principal activities of the Company during the reporting period (Cont’d)
3. Major products and their application
The Company attaches great importance to technology research and development and brand benefits. The Companyhas research institutions such as a national enterprise technology centre, a post-doctoral working station, a collaborativeinnovation centre for cleaner production and refinery of light industry bio-based products, the Shandong Pulp andPaper Making Engineering Lab. It has introduced internationally advanced pulp and paper production technologies andequipment for the production of machine-made paper products covering more than 200 types in seven series, includingculture paper, coated paper, white cardboard, copy paper, industrial paper, special paper, and household paper. It is theenterprise with the largest variety of products and the most complete products in the domestic paper making industry.During the reporting period, the Company successfully passed the audit of China Environmental United CertificationCenter, and was awarded the certificate of“China Environmental Labeling (Type I) Product Certification”.Major brands of machine-made paper products of the Company and their applications are set out below:
CategoryMajor brands and types
MajormanufacturingcompaniesRange of applicationCulture paper series1.“BIYUNTIAN”,“CLOUDY MIRROR”,“CLOUDYLEOPARD”and“YUNJIN”all-wood pulp offset
paper 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 offset paper
5. Beige and high white book paper
6. Light weight coated paper
ShouguangHeadquartersShouguang MeilunZhanjiang ChenmingJiangxi 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 coated
paper2.“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 2024
III Management Discussion and Analysis
I. Principal activities of the Company during the reporting period (Cont’d)
3. Major products and their application (Cont
’d)CategoryMajor brands and types
MajormanufacturingcompaniesRange of applicationWhite cardboard
series
1. White cardboard of
“LIYA”series, white cardboardand ivory cardboard of“LIPIN”and“POPLAR”
series, high bulk cardboard and ivory cardboard of“LIZZY”and“BAIYU”series, and super high bulkcardboard 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
ShouguangHeadquartersShouguang 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
ShouguangHeadquartersJiangxi 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 PaperHigh-grade adhesive backing paper for
electronics, medicine, food, washing supplies,supermarket labels, double-sided tapes, etc.Household paper
series
Toilet paper, facial tissue, pocket tissue, napkin, papertowels and“XINGZHILIAN”
Shouguang MeilunDaily toilet supplies; used in restaurants and
other catering industries, and used in publictoilets in hotels, guesthouses, and officebuildings, and also suitable for home andother environment.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
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 2024, the Group’s current ratio was 56.88%. The quick ratio was 48.07%. The gearing ratio (i.e. total liabilitiesdivided by total assets) was 73.30%.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, and borrowings fromfinancial institutions.As at 30 June 2024, the total bank borrowings of the Group were RMB36,305 million (as at the end of the prior year: the totalbank borrowings of the Group was RMB39,430 million). As at 30 June 2024, the Group had monetary funds of RMB11,386million (as at the end of the prior year: RMB12,125 million) in total (For the breakdown of monetary funds, please refer to X. VII.1 Note on Monetary Funds in this report).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 2024, the Grouphad 9,963 employees. The total staff remuneration for the first half of 2024 amounted to RMB561.2925 million (The Group had10,604 employees in 2023. The total staff remuneration for 2023 amounted to RMB1,108.0430 million).There was no major investment project of the Company during the second half of 2024.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 2024, please refer to X. VII. 24. Details of assetswith restricted ownership or right to use in this report.III. Analysis of Core CompetitivenessAfter innovation and development for more than 60 years, the Company has created a strong brand influence and cultivateda solid comprehensive competitiveness. It promotes product upgrades, enhances R&D strength and improves corecompetitiveness by creating competitive advantages in an industry chain featured with pulp and paper integration. Thecore competitiveness of the Company did not underwent major changes during the reporting period. The details of the corecompetitiveness of the Company 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 2024
III Management Discussion and Analysis
III. Analysis of Core Competitiveness (Cont’d)
2. Scale advantages
The paper making industry is a typical capital-intensive and technology-intensive industry that follows the laws ofeconomies of scale. The Company is a leading player in the paper making industry in China. Its large-scale productionbases can be found in the major markets in Southern, Central, Northern, and Northeast China, with annual pulp andpaper production capacity reaching 11 million tonnes, where reasonable production scale creates the marginal costadvantage. Meanwhile, by leveraging the scale advantages, the Company has built an international logistics centreand railway dedicated lines and docks, and constructed a comprehensive logistics service platform covering containershipping, bonded warehousing, transfer and storage at stations and terminals, realising the improvement of logisticsefficiency and the stability of logistics costs.
3. Product advantages
The Company is an enterprise that offers the widest and the most complete product range in the paper makingindustry in China. The product series include culture paper, white cardboard, coated paper, copy paper, householdpaper, thermal paper, etc., with each major product ranking among the best in terms of market share. The Companyhas attached great importance to technology research and development. By introducing the most advanced pulpingand paper making technology and equipment in the world, it persists in technological innovation and work processoptimisation, so as to help improve product quality and structure upgrade, continuously improve the brand value ofChenming, and enhance brand 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 production bases in Shandong, Guangdong, Hubei, Jiangxi,Jilin and other places. With all products sold at close distances, 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, actively push equipment andtechnology upgrade forward and boasts the largest and most advanced pulping and paper making production line in theworld. The Company’s major production equipment has been imported from internationally renowned manufacturers,including Metso and Valmet of Finland, Voith of Germany, Andritz of Austria, etc. and reached the advanced internationallevel, thus ensuring production efficiency and product quality.
6. Advantages in research and innovation
The Company has scientific research institutions including a national enterprise technology centre, a post-doctoralworking station, and a collaborative innovation centre for cleaner production and refinery of light industry bio-basedproducts. At the same time, the Company actively carries out in-depth industry-university-research cooperation withprestigious domestic universities and research institutes, continuously improves technical innovation capabilities andscientific research and development levels, and develops a series of new products with high technology contentsand high added value as well as proprietary technologies. The Company and its subsidiaries Zhanjiang Chenming,Shouguang Meilun, Jiangxi Chenming, Jilin Chenming and Huanggang Chenming are high and new technologyenterprises. As at the end of the reporting period, the Company had obtained 460 national patents, including 42invention patent authorisation, 7 national new products, 16 scientific and technological progress awards above theprovincial level, 5 national scientific and technological projects and 73 Shandong provincial technological innovationprojects. The Company took the lead in obtaining the ISO9001 quality system certification, the ISO14001 environmentalprotection system certification and the FSC-COC international forest system certification among domestic peers.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
III Management Discussion and Analysis
III. Analysis of Core Competitiveness (Cont’d)
7. Team management advantages
The Company possesses a complete and reasonable talent structure consisting of experienced personnel, includinghigh-end talents specialising in production, technology, sales, finance, laws, etc. In the course of business operations,the stable core team has developed a corporate culture that ties in with the Company’s development, summarisedmanagement experience with industry characteristics, and formed a team advantage integrating management andculture, allowing it to accurately grasp the industry development trend. At the same time, the Company has paidattention to the construction of a talent reserve and cultivation mechanism. With advanced business concepts andenormous development space, the Company has attracted an array of high-calibre professionals and improved the levelof human capital construction, providing solid guarantee for the Company’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 for 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, reclaimed water treatment system,reclaimed water reuse system, white water recovery system and black liquor comprehensive utilisation system. Theenvironmental protection indicators rank high in China and in the world. At present, the Company adopts the world’smost advanced“ultrafiltration membrane + reverse osmosis membrane”technology to complete the reclaimed waterrecycling membrane treatment project, which is the largest reclaimed water reuse project in the domestic paper industry.The reclaimed water recycle rate attains the industry-leading level. The reclaimed water quality meets drinking waterstandards, which can save hundreds of thousands cubic metres of fresh water every day. Meanwhile, in response to the“dual carbon”policy, the Company actively introduces photovoltaic power generation and biomass power generation,continuously optimises the energy structure and improves the level of low-carbon production.
INTERIM REPORT 2024
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 changeOther income159,945,128.64108,155,697.1947.88%Mainly due to the additional valued-added tax
credit policy enjoyed by the Company as anadvanced manufacturing enterprise during thereporting period.Investment income181,332,096.11-42,756,726.88524.10%Mainly due to a year-on-year increase of gains
on subsidiary disposal during the reportingperiod.Gains on changes in fair value-2,221,596.44-19,815,797.8388.79%Mainly due to the fluctuation in shares of China
Bohai Bank during the reporting period.Credit impairment loss-124,386,619.66-43,081,750.88188.72%Mainly due to a year-on-year increase of
provision for bad debts of accounts receivable
during the reporting period.Loss on impairment of assets-3,041,427.75-43,314,485.76-92.98%Mainly due to a year-on-year decrease of
provision for impairment of finished products
during the reporting period.Gains on asset disposal19,222,812.6011,759,266.9163.47%Mainly due to a year-on-year increase of gains
on fixed asset disposal during the reporting
period.Income tax expenses-96,400,954.34-211,491,182.1454.42%Mainly due to a year-on-year increase of the
total profit realised by the Company during the
reporting period.Net cash flows from operating activities
1,992,499,393.071,783,087,747.5911.74%Mainly due to a year-on-year increase of sales
volume during the reporting period.Net cash flows from investing activities
571,305,188.1446,500,863.351,128.59%Mainly due to the receipt of consideration for
disposal of equity interest in subsidiaries during
the reporting period.Net cash flows from financing activities
-2,547,689,483.86-2,088,182,807.81-22.01%Mainly due to the reduction in debt size as
a result of repayment of debt due during the
reporting 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 2024
III Management Discussion and Analysis
IV. Analysis of principal operations (Cont’d)
Components of revenue
Unit: RMBThe reporting period
The correspondingperiod of the
prior year
Increase/
decreaseyear on yearItemAmount% of revenueAmount% of revenueTotal revenue13,884,731,519.04100%12,564,962,781.31100%10.50%By industryMachine-made paper12,429,565,296.1089.52%11,300,765,054.8689.94%9.99%Chemical pulp676,203,401.454.87%240,438,232.651.91%181.24%Electricity and steam123,938,936.520.89%120,561,393.770.96%2.80%Property rentals93,524,660.280.67%109,744,705.550.87%-14.78%Construction materials87,284,048.720.63%106,371,211.950.85%-17.94%Chemicals54,442,131.870.39%60,607,594.980.48%-10.17%Others419,773,044.103.03%626,474,587.554.99%-32.99%By productDuplex press paper3,710,036,202.6126.72%3,668,277,002.0729.19%1.14%White cardboard2,926,439,060.8221.08%2,540,842,151.6620.22%15.18%Coated paper2,407,591,953.9617.34%1,808,743,574.2314.40%33.11%Electrostatic paper2,038,760,449.8514.68%1,910,330,360.8915.20%6.72%Anti-sticking raw paper569,577,140.374.10%572,047,556.984.55%-0.43%Thermal paper259,624,961.631.87%262,227,271.152.09%-0.99%Other machine-made paper517,535,526.863.73%538,297,137.884.28%-3.86%Chemical pulp676,203,401.454.87%240,438,232.651.91%181.24%Electricity and steam123,938,936.520.89%120,561,393.770.96%2.80%Property rentals93,524,660.280.67%109,744,705.550.87%-14.78%Construction materials87,284,048.720.63%106,371,211.950.85%-17.94%Chemicals54,442,131.870.39%60,607,594.980.48%-10.17%Others419,773,044.103.03%626,474,587.554.99%-32.99%By geographical segmentMainland China11,052,530,679.1279.60%9,191,090,980.5273.15%20.25%Other countries and regions2,832,200,839.9220.40%3,373,871,800.7926.85%-16.05%Industries, products or regions accounting for over 10% of revenue or operating profit of the Company
√ Applicable Not applicable
INTERIM REPORT 2024
III Management Discussion and Analysis
IV. Analysis of principal operations (Cont’d)Components of revenue (Cont’d)
Unit: RMB
ItemRevenueOperating costs
Gross profitmargin
Increase/decrease ofrevenue ascompared to the
correspondingperiod of the
prior year
Increase/decrease ofoperatingcosts ascompared to thecorrespondingperiod of the prior year
Increase/decrease ofgross profitmargin ascompared to thecorrespondingperiod ofthe prior yearBy industryMachine-made paper12,429,565,296.1011,003,034,856.8611.48%9.99%5.92%3.41%By productDuplex press paper3,710,036,202.613,228,388,604.2712.98%1.14%-0.39%1.34%White cardboard2,926,439,060.823,059,791,466.52-4.56%15.18%16.91%-1.56%Coated paper2,407,591,953.961,898,246,495.8021.16%33.11%16.96%10.89%Electrostatic paper2,038,760,449.851,609,617,857.8921.05%6.72%-1.18%6.32%By geographical segmentMainland China11,052,530,679.129,497,486,181.3414.07%20.25%13.29%5.28%Other countries and regions2,832,200,839.922,688,019,527.665.09%-16.05%-13.67%-2.63%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 applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
III Management Discussion and Analysis
V. Analysis of non-principal operations
√ Applicable Not applicable
Unit: RMBAmount
As a percentage
of total profitReasonIs it sustainable?Other income159,945,128.64-228.36%Receipt of government grants
related to daily business activities
Including RMB53 million which wasthe annual amortisation amount ofgovernment grants received in priorperiods, which was sustainable.Investment income181,332,096.11-258.89%Recognition of external investment
income and dividends, as well asincome from equity disposal andderecognition of financial assetsduring the reporting period
NoGain or loss arising from the change in fair value
-2,221,596.443.17%Fluctuations of fair values of the
shares of China Bohai Bank as wellas forestry assets
NoCredit impairment loss-124,386,619.66177.59%Bad debt provisions for receivablesNoGain on asset disposal19,222,812.60-27.44%Gain arising from disposal of non-
current assets
No
VI. 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
Percentage
changeDescriptionAmountAs apercentage of
total assetsAmount
As apercentage of
total assetsMonetary funds11,386,010,001.5514.69%12,124,832,831.3015.25%-0.56%Mainly due to a decrease in guarantee
deposits maintained by the Companyas at the end of the reporting period.Inventories4,261,634,676.935.50%4,958,178,000.366.24%-0.74%Mainly due to a decrease in inventories
of the Company as at the end of thereporting period.Fixed assets32,030,248,108.2441.33%33,186,248,169.5641.75%-0.42%Mainly due to the effect of the disposal
of equity interest in Yujing Hotel andTuoan Plastic, the subsidiaries, by theCompany during the reporting period,as well as ordinary amortisation.Construction in progress
1,099,279,935.621.42%859,617,965.161.08%0.34%Mainly due to an increase in investment
in technology upgrade projects duringthe reporting period.Short-term borrowings
30,264,463,843.1439.05%33,475,479,021.6242.11%-3.06%Mainly due to a decrease in short-term
debt size as at the end of the reportingperiod.Bills payable5,562,384,579.397.18%4,618,986,463.955.81%1.37%Mainly due to an increase of payment
for goods with bills by the Companyduring the reporting period.Other receivables3,257,911,098.58 4.20%2,414,752,127.193.04%1.16%Mainly due to an increase in external
open credit as at the end of thereporting period.Long-term payables2,279,402,749.152.94%2,541,095,217.663.20%-0.26%Mainly due to the repayment of part of
the equipment financing lease paymentby the Company during the reportingperiod.
INTERIM REPORT 2024
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 changechargedto equity
Impairmentprovidedduringthe period
Amountacquiredduringthe period
Amountdisposedof duringthe period
Otherchanges
ClosingbalanceFinancial assets
1. Held-for-trading financial assets
(excluding derivative financial assets)46,294,291.71-7,405,789.55-157,122,291.08308,917.7239,197,419.88
2. Other non-current financial assets781,561,040.5759,269,016.381,483,295.37780,077,745.20
3. Consumable biological assets
measured at fair value1,483,978,089.615,184,193.1141,944,998.1410,975,007.4516,961,127.991,483,176,162.18Total2,311,833,421.89-2,221,596.44-55,908,276.5610,975,007.4518,444,423.36308,917.722,302,451,327.26Whether 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: RMBAs at the end of the periodAs at the beginning of the periodItemBook balanceBook value
Type ofrestrictionRestrictionBook balanceBook value
Type ofrestrictionRestrictionMonetary funds10,583,179,917.0010,583,179,917.00PledgedAs deposits for bank
acceptance bills, letter ofcredit, letter of guarantee,loans, deposit reserves andinterest receivable
11,360,599,088.6911,360,599,088.69PledgedAs deposits for bank
acceptance bills, letter ofcredit, letter of guarantee,loans, deposit reserves andinterest receivableFixed assets9,383,901,424.596,097,926,811.05ChargedAs collateral for bank
borrowings and long-termpayables
9,411,111,670.626,303,095,864.20ChargedAs collateral for bank
borrowings and long-termpayablesInvestment properties6,114,818,654.815,075,202,994.63ChargedAs collateral for bank
borrowings
5,941,741,699.605,004,776,921.76ChargedAs collateral for bank
borrowingsIntangible assets849,460,775.99645,269,711.95ChargedAs collateral for bank
borrowings and long-termpayables
865,105,844.99665,784,045.39ChargedAs collateral for bank
borrowings and long-term
payablesAccounts receivable84,955,640.3184,502,139.21PledgedAs collateral for borrowings403,349,324.55398,710,807.32PledgedAs collateral for borrowingsAccounts receivable financing
20,000.0020,000.00PledgedAs collateral for obtaining
letters of credit
90,551,168.0190,551,168.01PledgedAs collateral for obtaining
letters of creditTotal27,016,336,412.7022,486,101,573.8428,072,458,796.4623,823,517,895.37
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
III Management Discussion and Analysis
VII. Analysis of investments
1. Overview
√ Applicable Not applicable
Investments during the reporting period (RMB)
Investments during thecorresponding period of
prior year (RMB)Change18,000,000.005,400,000.00233.33%
2. Material equity investments acquired during the reporting period
√ Applicable Not applicable
Unit: RMB
Name of investeePrincipal activities
Form ofinvestment
Investment
amountShareholding
Sourceof fundPartner(s)
Period ofinvestment
Product
typeProgressas at thedate ofbalancesheetEstimatedreturn
Profit or loss
frominvestmentfor the period
Involvementin lawsuit
Date ofdisclosure,if any
Disclosureindex, if anyShouguangChenming Importand Export Trade Co., Ltd.
Sale of paperproducts and paperproduction rawmaterials
Capitalincrease
18,000,000.00100%Self-owned
funds
SubsidiaryLong-termTradingCompletedN/A2,968,937.54NoN/AN/ATotal18,000,000.00N/A2,968,937.54
3. Material non-equity investments during the reporting period
Applicable √ Not applicable
INTERIM REPORT 2024
III Management Discussion and Analysis
VII. Analysis of investments (Cont’d)
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 includedin equityAcquisitionamountduringthe period
Disposalamountduring theperiodProfit or lossduring thereporting period
Book valueas at the end ofthe reportingperiod
Classificationin account
Sourceof fundDomesticand foreign shares
09668China Bohai Bank195,684,817.15Measured at fair value46,294,291.71-7,405,789.55-157,122,291.080.000.00-7,096,871.8339,197,419.88Held-for-trading
financial assets
Self-ownedfundsTotal195,684,817.1546,294,291.71-7,405,789.55-157,122,291.080.000.00-7,096,871.8339,197,419.88Disclosure 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 andapproval of securities investments by the shareholders’ general meeting (if any)
N/A
(2) Derivative 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
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 applicable
Counterparty(ies)
Equityinterestdisposed of
Disposaldate
Transactionconsideration (RMB’0,000)
Net profitcontribution tothe Company fromthe beginning ofthe period up tothe disposal date(RMB’0,000)
Effect ofdisposal onthe Company
Net profitcontribution tothe Company onequity disposalas a percentageof total net profit
Pricingbasisof disposalof equityinterest
Relatedpartytransactionor not
Relationshipwithcounterparty(ies)
Relevantequity titlefullytransferredor not
Carried outon scheduleornot, if not,the reasonsand measurestaken by theCompany
DisclosureDate
DisclosureindexShouguang ChenmingGuangyuan Real Property Company Limited
ShandongYujingGrandHotel Co., Ltd.
31 March 2024
16,299.28-517.17The disposal of
equity interest inYujing Hotel andTuoan Plastic,the subsidiaries,did not affectthe normaloperation of theCompany, andthe disposal ofequity interestreplenished theliquidity.
839.04%Assessed
value
YesA subsidiary of
a companyinvestedby Directorsand membersof the SeniorManagement of the Company
YesYes23 March
2024
http://www.cninfo.com.cn
Kunshan Dupen Electronics Technology Co., Ltd.
KunshanTuoanPlasticProducts Co., Ltd.
29 February 2024
14,373.00-265.33120.21%Assessed
valueNoN/AYesYesN/AN/A
IX. 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 activitiesRegistered capitalTotal assetsNet assetsRevenueOperating profitNet profitZhanjiang Chenming Pulp & Paper Co., Ltd.
SubsidiaryProduction and sale
of duplex press paper,electrostatic paper andwhite cardboard etc.
6,913,572,423.0024,372,968,723.198,615,753,892.146,278,830,552.25-21,395,564.1310,510,454.71Shouguang Meilun Paper Co., Ltd.SubsidiaryProduction and sale of
coated paper, culturepaper, household paperand chemical pulp
4,801,045,519.0016,441,594,138.298,338,012,784.204,684,096,701.7529,489,563.0340,515,254.62Huanggang Chenming Pulp & Paper Co., Ltd.
SubsidiaryProduction and sale of
chemical pulp
3,350,000,000.008,035,223,901.083,356,605,015.662,709,134,386.2062,285,942.4957,107,544.38
INTERIM REPORT 2024
III Management Discussion and Analysis
IX. Analysis of major subsidiaries and investees (Cont’d)Acquisition and disposal of subsidiaries during the reporting period
√ Applicable Not applicable
Name of company
Methods to acquire anddispose of subsidiariesduring the reporting period
Impact on overall production andoperation and resultsShandong Yujing Grand Hotel Co., Ltd.DisposalNet profit increased by RMB221 million.Kunshan Tuoan Plastic Products Co., Ltd.DisposalNet profit increased by RMB32 million.Guangzhou Chenming Commercial Factoring Co., Ltd.DeregistrationNet profit decreased by RMB5,300.Particulars of major subsidiaries and investees
1. During the reporting period, the price of white paper board declined significantly due to an increase in supply and
insufficient demand, and profit margins of Zhanjiang Chenming were squeezed.
2. During the reporting period, the production and sales volume of cultural paper and coated paper, the major products of
Meilun Paper, increased year on year. The unit production cost decreased year on year while profit increased year onyear.
3. During the reporting period, the price and sales volume of chemical pulp, the major product of Huanggang Chenming,
increased, and its profitability increased year on year.The Company enjoys the advantages of pulp and paper integration, large scale, comprehensive products, reasonableindustrial layout, and advanced technical equipment. With the gradual rise in the selling prices of machine-made paper andthe continuous optimisation of the cost side, the Company’s profitability will further improve.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
III Management Discussion and Analysis
X. Structured entities controlled by the Company Applicable √ Not applicable
XI. Risk factors of the Company and the measures to be taken
1. Macroeconomic and policy risk
Paper making industry is a basic raw materials industry, thus is being supported by national industry policies. Overthe years, relevant competent departments issued a series of relevant policies and regulations, including the Policyon the Development of Papermaking Industry, aiming to improve industry structure, enhance product technologystandard, energy saving and emission reduction, as well as eliminate outdated production capacity. With the continuouseconomic development, the policies on the papermaking industry may further adjust in the future. In addition, the fiscaland financial policies, bank interest rate, import and export policy and other policies may be adjusted in the future.All the above industrial policies and related policy adjustments will have an impact on the Company’s operation anddevelopment.In response to the above risks, the Company will pay close attention to the national industrial policy, and focus onits principal activities of pulp production and paper making. The Company will strive to its innovation-driven strategy,comprehensively optimise industrial structure and regional layout, and establish coordinated and efficient industrysystem, to respond to the risks arising from industrial policy adjustments. At the same time, the Company willcontinuously improve its lean management, reduce liability size, optimise its capital structure, enhance cost control,put greater efforts in disposal of non-major assets and improve asset quality, so as to cope with the risks arising fromadjustments of other macroeconomic policies such as fiscal and financial policies.
2. Environmental protection risk
Establishing a green paper industry is the strategic direction of industry development. In recent years, environmentalprotection requirements have become increasingly stringent. Relevant authorities have successively issued the WhitePaper on Sustainable Development of Papermaking Industry in China, the Guiding Opinions on Accelerating theEstablishment and Improvement of a Green, Low-Carbon and Cyclical Economic System, the Opinions on Acceleratingthe High-Quality Development of the Manufacturing Services Industry, the“14th Five-Year Plan” and Medium and Long-term High-quality Development Outline of the Papermaking Industry, the Norm of Energy Consumption Per Unit Productof Pulp and Paper (GB31825-2024) and other policies, which advocate cyclical, low-carbon, green economy to achievehigh quality development of the industry. Such higher national environmental protection standards further increase theinvestment in pollution control by enterprises in the industry and increase the operating costs of the Company in theshort term.In response to the aforesaid risks, the Company actively implements the national“double carbon”policy. The Companyadheres to the development idea of“placing green development and environmental protection as its priority”. TheCompany widely adopts new technologies for energy saving and emission reduction, conducts clean production, andstrives to achieve its waste emission target. At present, the Company adopts the world’s most advanced“ultrafiltrationmembrane+reverse osmosis membrane”technology to complete the reclaimed water recycling membrane treatmentproject. The reclaimed water recycle rate reaches more than 75%. The reclaimed water quality meets drinking waterstandards, which can save fresh water of hundreds of thousands of cubic meters of per day. At the same time, theCompany actively explores the comprehensive utilisation of innovative resources and industrial recycling developmentmodels, and built a circular economy ecological chain of“resources-products-renewable resources”.
INTERIM REPORT 2024
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
The major raw materials of the papermaking industry are wood pulp and wood chips. China’s wood resources arerelatively limited, and the dependence on wood pulp and wood chips is high, which makes the development of thepapermaking industry subject to fluctuations in the international price of wood pulp and wood chips. If the price of rawmaterials fluctuates sharply, it will bring uncertainty to the control of production costs of papermaking enterprises, whichwill affect the operating performance of enterprises.In response to the aforesaid risks, the Company adheres to the strategic layout of the whole pulp and paper integratedindustry chain, and has wood pulp production lines in Shouguang, Zhanjiang, Huanggang and other production bases,ensuring the stability of upstream raw materials. At the same time, the Company has established a more comprehensivesupply chain management mechanism, enhanced the strategic cooperation with quality suppliers, practiced sourceprocurement, closely followed the price trends of the raw materials market, and improved its market research andjudgment ability, in order to minimise the impact of fluctuations in raw material prices on the Company.
4. Risk of intensifying market competition
Although the papermaking industry has accelerated the elimination of outdated production capacity after several roundsof environmental protection policies, the industry structure has been optimised with a further improved concentration.However, there remains the phenomena of a large number of enterprises, structural and staged overcapacity of someproducts, a large number of mid – and low-end products, and product homogeneity. During the reporting period,affected by factors such as supply shocks and weak demand, the price of white cardboard remained at a low level withintensifying market competition.In response to the aforesaid risks, the Company continues to promote technological innovation, and continuouslyimproves its production equipment, processing design and process levels, implement lean production, improve productquality, and create brand benefits. At the same time, being market-oriented, the Company produces marketableproducts to meet the diverse needs, and establishes a differentiated and customised product mix so as to increase theadded value of products. The Company further enhances cost control, improves production capacity utilisation rate,reduces unit costs, thereby realising cost reduction and efficiency improvement, and improving its corporate profitability.
5. Risk of the 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.To this end, Chenming Leasing has comprehensive risk prevention and control measures for the financial leasingbusiness, with strong risk resistance and low risk of default. At present, the Company focuses on the development ofits principal activities, i.e. pulp production and paper making, and continues to reduce the size of the financial leasingbusiness. As at the end of the reporting period, the balance of financial leases of Chenming Leasing decreased toRMB4,936 million with the overall risks under control.XII. Implementation of the“Quality and Return Enhancement” action planWhether the Company has disclosed its“Quality and Return Enhancement” action plan? Yes √ No
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
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 meeting2023 annual general meetingAnnual general meeting19.50%14 May 202415 May 2024http://www.cninfo.com.cn
(announcement no.: 2024-033)14 May 2024http://www.hkex.com.hk
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 applicableThere was no change of Directors, Supervisors and Senior Management of the Company during the reporting period. Pleasesee the 2023 annual report for details.III. Profit distribution and conversion of capital reserves into share capital during the reportingperiod Applicable √ Not applicableThe Company does not propose distribution of cash dividends and bonus shares, and increase of share capital from reservesfor the interim period.IV. Implementation of the equity incentive plan, employee shareholding plan or other employeeincentive measure of the Company
√ Applicable Not applicable
1. Equity incentive
1. On 30 March 2020, the Company convened the ninth extraordinary meeting of the ninth session of the Board, at
which the Company considered and approved the Resolution in Relation to the 2020 Restricted Share IncentiveScheme of Shandong Chenming Paper Holdings Limited (Draft) and Its Summary and other resolutions. On thesame date, the fourth extraordinary meeting of the ninth session of the Supervisory Committee of the Companyconsidered and approved the above resolutions and verified the list of proposed participants of the incentivescheme.
INTERIM REPORT 2024
IV Corporate Governance
IV. Implementation of the equity incentive plan, employee shareholding plan or other employee
incentive measure of the Company(Cont’d)
1. Equity incentive (Cont
’d)
2. On 3 April 2020, the Company announced the list of participants through the Company
’s internal website for aperiod from 3 April 2020 to 12 April 2020. During the period, the Supervisory Committee of the Company andrelevant departments did not receive any objection against the proposed participants. The Supervisory Committeeverified the list of participants under the grant of the incentive scheme.
3. On 15 May 2020, the Company convened the 2020 second extraordinary general meeting, the 2020 first class
meeting for holders of domestic-listed shares and the 2020 first class meeting for holders of overseas-listedshares, at which the Company considered and approved the Resolution in Relation to the 2020 Restricted ShareIncentive Scheme of Shandong Chenming Paper Holdings Limited (Draft) and Its Summary and other resolutions.On 16 May 2020, the Company disclosed the Self-Examination Report for the Trading of Shares of the Companyby Insiders and Participants of the 2020 Restricted A Share Incentive Scheme.
4. On 29 May 2020, the Company convened the tenth extraordinary meeting of ninth session of the Board and the
fifth extraordinary meeting of the ninth session of the Supervisory Committee, at which the Company consideredand approved 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,approving the issue of 79,600,000 restricted A shares to 111 participants at the price of RMB2.85 per share on 29May 2020.
5. On 15 July 2020, the 79,600,000 restricted A shares granted to the participants were listed.
6. On 18 July 2022, the Company convened the second extraordinary meeting of the tenth session of the Board
and the first extraordinary meeting of the tenth session of the Supervisory Committee, at which the Companyconsidered and approved the Resolution on the Fulfilment of the Unlocking Conditions of the Restricted SharesGranted under the 2020 Restricted A Share Incentive Scheme during the First Unlocking Period and the Resolutionon the Adjustment to the Repurchase Price of the 2020 Restricted A Share Incentive Scheme and Repurchase andCancellation of Certain Restricted Shares.96 participants fulfilled the unlocking conditions for the first unlocking period under the 2020 Restricted A ShareIncentive Scheme with 29,948,000 restricted shares being eligible for unlocking. 15 participants had resigned,had changed duty, and had removed from office, which failed to comply with the unlocking conditions. Thetotal number of restricted shares that have been granted to and held by the participants and have not yet beenunlocked is 4,466,000, with a repurchase price of RMB2.5184172 per share (excluding the bank loan interest ratefor the same term). On 27 July 2022, 29,948,000 restricted A shares that were unlocked were listed for trading.On 18 October 2022, the Company completed the procedures for the repurchase and cancellation of 4,466,000restricted A shares with the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited.
7. On 17 July 2023, the Company convened the ninth extraordinary meeting of the tenth session of the Board and
the fifth extraordinary meeting of the tenth session of the Supervisory Committee, at which the Resolution on theFailure Fulfilment of the Unlocking Conditions for the Second Unlocking Period under the 2020 Restricted A ShareIncentive Scheme and Repurchase and Cancellation of Certain Restricted Shares was considered and approved.The results for 2022 of the Company failed to pass the performance appraisal targets at company level set forthe second unlocking period. Meanwhile, 5 participants lost their incentive qualification due to their resignation.The Board of the Company repurchased and cancelled 22,929,000 restricted A shares which had been grantedto participants but not yet unlocked for the second unlocking period at a repurchase price of RMB2.5184172 pershare (excluding the bank loan interest rate for the same term). On 20 November 2023, the Company completedthe repurchase and cancellation procedures of the 22,929,000 restricted A shares at the Shenzhen Branch ofChina Securities Depository and Clearing Corporation Limited.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
IV Corporate Governance
IV. Implementation of the equity incentive plan, employee shareholding plan or other employeeincentive measure of the Company(Cont’d)
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 ofHong Kong Limited
(I) Compliance with the Code on Corporate GovernanceThe 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 C1 to the Hong Kong Listing Rules during the reportingperiod.(II) Securities transactions by DirectorsThe 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 C3 to the Hong Kong Listing Rules. Having made adequateenquiries with all Directors and Supervisors of the Company, the Company was not aware of any information thatreasonably suggested that the Directors and Supervisors had not complied with the requirements as stipulated in thiscode during the reporting period.
INTERIM REPORT 2024
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
Environmental protection related policies and industry standards
1. The Company, during its own production and operation process, strictly bides by relevant environmental protection laws
and regulations as follows:
The Environmental Protection Law of the People’s Republic of China, the Law on the Prevention and Control of AirPollution of the People’s Republic of China, the Law on the Prevention and Control of Water Pollution of the People’sRepublic of China, the Law on the Prevention and Control of Environmental Pollution by Solid Waste of the People’sRepublic of China, the Law on Noise Pollution Prevention and Control of the People’s Republic of China, Measures forthe Administration of Pollutant Discharge Permits, Regulations on Groundwater Management, and the Measures for theEmergency Administration of Environmental Contingencies.
2. The Company strictly implements national, industry and local standards for pollutant discharge as follows:
Exhaust gas: Integrated Emission Standard of Air Pollutants (GB 16297-1996), Emission Standard of Air Pollutants forThermal Power Plants (GB 13223-2011), Emission Standard for Odor Pollutants (GB 14554-93), Emission Standard of AirPollutants for Boilers (DB44/765-2019), Emission Standard of Air Pollutants for Thermal Power Plants (DB37/664-2019),Regional and Integrated Emission Standard of Air Pollutants (DB37/2376-2019), Emission Standard of Air Pollutantsfor Building Materials Industry (DB37/2373-2018), Emission standards of pollutants for inorganic chemical industry (GB31573-2015) and GB 18484-2020 (GB 18484-2020).Wastewater: Integrated Wastewater Discharge Standard (GB 8978-1996), Wastewater Quality Standards for Dischargeto Municipal Sewers (GB/T 31962-2015), Discharge Standard of Water Pollutants for the Pulp and Paper Industry (GB3544-2008) and Discharge Limits of Water Pollutants (DB44/26-2001), and the wastewater influent standard of localwastewater treatment plants.Noise: Emission Standard for Industrial Enterprises Noise at Boundary (GB 12348-2008).
Environmental protection administrative licensingThe dates of issue and validity of pollutant discharge permits are as follows:
Shandong Chenming Paper Holdings Limited: Issued on 2 March 2023 and valid up to 1 March 2028.Shouguang Meilun Paper Co., Ltd.: Issued on 2 March 2023 and valid up to 1 March 2028.Zhanjiang Chenming Pulp & Paper Co., Ltd.: Issued on 30 May 2022 and valid up to 29 May 2027.Jiangxi Chenming Paper Co., Ltd.: Issued on 11 June 2020 and valid up to 27 June 2025.Huanggang Chenming Pulp & Paper Co., Ltd.: Issued on 12 June 2024 and valid up to 11 June 2029.Jilin Chenming Paper Co., Ltd.: Issued on 10 December 2021 and valid up to 9 December 2026.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
V Environmental and Social Responsibility
I. Major environmental protection matters (Cont’d)Industry emission standards and the status of pollutant emissions involved in production and operationactivities
Name of companyor subsidiary
Categoryof majorpollutantsand specificpollutants
Name of majorpollutantsand specificpollutantsWay of emission
Number ofemission
outletsDistribution ofemission outlets
Emissionconcentration/intensity
PollutantemissionstandardsimplementedTotal emissions
Approvedtotalemissions
ExcessiveemissionsShandong ChenmingPaper Holdings Limited
Exhaust gasSO
Organised emission
2Chenming Industrial Park
Power plant no. 1:
9.66mg/m
Power plant no. 2:
10.5mg/m
35mg/m
Power plant no. 1:
10.65t
Power plant no. 2:
11.43t
160.32t/yearNo
NO
x
Organised emission
2Chenming Industrial
Park
Power plant no. 1:
40.6mg/m
Power plant no. 2:
38.3mg/m
50mg/m
Power plant no. 1:
43.2t
Power plant no. 2:
40.23t
233.91t/yearNo
ParticulatesOrganised
emission
2Chenming Industrial
Park
Power plant no. 1:
0.658mg/m
Power plant no. 2:
0.544mg/m
5mg/m
Power plant no. 1:
0.703t
Power plant no. 2:
0.561t
23.39t/yearNo
WastewaterCODIndirect
emission
2Chenming Industrial
Park
Sewage outlet no. 1:
147mg/LSewage outlet no. 2:
204mg/L
300mg/LSewage outlet no. 1:
737tSewage outlet no. 2:
1161t
6,510.74t/yearNoAmmonia nitrogen
Indirect emission
2Chenming Industrial
Park
Sewage outlet no. 1:
4.93mg/L
Sewage outlet no. 2:
0.526mg/L
30mg/LSewage outlet no. 1:
25.72t
Sewage outlet no. 2:
2.892t
650.7t/yearNo
Total nitrogenIndirect
emission
2Chenming Industrial
Park
Sewage outlet no. 1:
19.5 mg/L
Sewage outlet no. 2:
15.4 mg/L
70mg/LSewage outlet no. 1:
98.86t
Sewage outlet no. 2:
87.6t
1,519.1t/yearNoShouguang Meilun Paper Co., Ltd.
Exhaust gasSO
Organised emission
4Chenming Industrial
Park
Power plant no. 1:
18.7mg/m
Power plant no. 2:
14.5mg/m
Alkali recovery:
7.91mg/m
Lime kiln:
3.2mg/m
35mg/m
(self-ownedpower plant),
50mg/m
(chemicalpulp mill)
Power plant no. 1:
12.63t
Power plant no. 2:
10.78t
Alkali recovery: 47.68tLime kiln: 2.49t
342.89t/yearNo
NOx
Organised emission
4Chenming Industrial Park
Power plant no. 1:
38.2mg/m
Power plant no. 2:
37.5mg/m
Alkali recovery:
79.6mg/m
Lime kiln:
14.1mg/m
50mg/m
(self-ownedpower plant),100mg/m
(chemicalpulp mill)
Power plant no. 1:
25.11t
Power plant no. 2:
27.78t
Alkali recovery:
402.83t
Lime kiln:
11.8t
1,202.75t/yearNo
ParticulatesOrganised
emission
4Chenming Industrial
Park
Power plant no. 1:
0.281mg/m
Power plant no. 2:
0.435mg/m
Alkali recovery:
2.06mg/m
Lime kiln:
1.09mg/m
5mg/m
(self-ownedpower plant),
10mg/m
(chemicalpulp mill)
Power plant no. 1:
0.182t
Power plant no. 2:
0.321t
Alkali recovery:
11.422t
Lime kiln:
0.756t
121.979t/yearNo
INTERIM REPORT 2024
V Environmental and Social Responsibility
Name of companyor subsidiary
Categoryof majorpollutantsand specificpollutants
Name of majorpollutantsand specificpollutantsWay of emission
Number of
emission
outlets
Distribution ofemission outlets
Emissionconcentration/
intensity
PollutantemissionstandardsimplementedTotal emissions
Approved
totalemissions
ExcessiveemissionsJiangxi Chenming Paper Co., Ltd.
Exhaust gasSO
Organised emission
1Thermal power plant240T/h furnace:
18.56mg/m
200mg/m
21.02t806t/yearNo
NO
x
Organised emission
1Thermal power plant240T/h furnace:
35.36mg/m
200mg/m
38.60t806t/yearNo
ParticulatesOrganised
emission
1Thermal power plant240T/h furnace:
2.99mg/m
30mg/m
3.55t135t/yearNo
WastewaterCODDirect emission1Total wastewater
discharge
31.31mg/L90mg/L72.35t1,260t/yearNoAmmonia nitrogen
Direct emission1Total wastewater
discharge
1.04mg/L8mg/L2.22t112t/yearNoTotal nitrogenDirect emission1Total wastewater
discharge
3.05mg/L12mg/L6.31t/NoJilin Chenming Paper Co., Ltd.
Exhaust gasSO
Organised emission
3 (2 in use,
1 spare)
Within factory area4.06mg/m
100mg/m
1.27t97t/yearNo
NO
x
Organised emission
3 (2 in use,
1 spare)
Within factory area39.41mg/m
100mg/m
11.70t213t/yearNo
ParticulatesOrganised
emission
3 (2 in use,
1 spare)
Within factory area8.70mg/m
30mg/m
2.63t51.66t/yearNo
WastewaterCODIndirect emission1Total wastewater
discharge
132.35mg/L120mg/L346.03t6,000t/yearNoAmmonia nitrogen
Indirect emission1Total wastewater
discharge
1.65mg/L45mg/L4.34t500t/yearNoTotal nitrogenIndirect emission1Total wastewater
discharge
6.02mg/L50mg/L15.65t/NoZhanjiang ChenmingPulp & Paper Co., Ltd.
Exhaust gasSO
Organised emission
6Within factory areaPower plant no. 1:
2.5mg/m
Power plant no. 2:
3.3mg/m
Power plant no. 3:
2.3mg/m
Power plant no. 4:
0.8mg/m
Lime kiln:
20.4mg/m
Alkali furnace:
23.9mg/m
Power plant:
35mg/m
Lime kiln:
200mg/m
Alkali furnace:
200mg/m
87t620t/yearNo
I. Major environmental protection matters (Cont’d)
Industry emission standards and the status of pollutant emissions involved in production and operationactivities(Cont’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
V Environmental and Social Responsibility
Name of companyor subsidiary
Categoryof majorpollutantsand specificpollutants
Name of majorpollutantsand specificpollutantsWay of emission
Number ofemission
outlets
Distribution ofemission outlets
Emissionconcentration/
intensity
PollutantemissionstandardsimplementedTotal emissions
Approvedtotalemissions
ExcessiveemissionsNO
x
Organised emission
6Within factory areaPower plant no. 1:
20.3mg/m
Power plant no. 2:
25.2mg/m
Power plant no. 3:
19.6mg/m
Power plant no. 4:
10.2mg/m
Lime kiln:
126.4mg/m
Alkali furnace:
82.8mg/m
Power plant:
50mg/m
Lime kiln:
200mg/m
Alkali furnace:
200mg/m
208.32t1,800t/yearNo
ParticulatesOrganised
emission
6Within factory areaPower plant no. 1:
2.7mg/m
Power plant no. 2:
3.9mg/m
Power plant no. 3:
2.4mg/m
Power plant no. 4:
0.8mg/m
Lime kiln:
16.5mg/m
Alkali furnace:
8.1mg/m
Power plant:
10mg/m
Lime kiln:
30mg/m
Alkali furnace:
30mg/m
24.58t195.06t/yearNo
WastewaterCODDirect emission1Wastewater discharge35mg/L90mg/L488t1,943t/yearNo
Ammonia nitrogen
Direct emission1Wastewater discharge0.89mg/L8mg/L13t43.9t/yearNoTotal nitrogenDirect emission1Wastewater discharge2.18mg/L12mg/L31.256t320.4t/yearNoHuanggang ChenmingPulp & Paper Co., Ltd.
Exhaust gasSO
Organised
emission
1Lime kiln chimney23.264mg/m
80mg/m
8.747t142.872t/yearNo
SO
Organised
emission
1Alkali furnace chimney29.065mg/m
200mg/m
68.174t328.417t/yearNo
NO
X
Organised
emission
1Lime kiln chimney102.261mg/m
180mg/m
37.022t181.887t/yearNo
NOX
Organised
emission
1Alkali furnace chimney141.435 mg/m
200mg/m
298.203t950.829t/yearNo
ParticulatesOrganised
emission
1Lime kiln chimney14.76 mg/m
200mg/m
5.243t45.311t/yearNo
ParticulatesOrganised
emission
1Alkali furnace chimney15.165mg/m
30mg/m
28.066t83.759t/yearNo
WastewaterCODIndirect emission1Total wastewater
discharge
25.69 mg/L150mg/L121.859t398.911t/yearNoAmmonia nitrogen
Indirect emission1Total wastewater
discharge
1.269 mg/L14mg/L6.014t39.891t/yearNoTotal nitrogenIndirect emission1Total wastewater
discharge
3.917mg/L29mg/L18.318t/No
I. Major environmental protection matters (Cont’d)
Industry emission standards and the status of pollutant emissions involved in production and operationactivities(Cont’d)
INTERIM REPORT 2024
V Environmental and Social Responsibility
I. Major environmental protection matters (Cont’d)
Treatment of pollutants
1. Shandong Chenming Paper Holdings Limited
Its own power plant uses the exhaust gas treatment process of limestone-gypsum desulfurisation+SNCR selective non-catalytic reduction denitration+electric and bag composite dust removal+wet type electric dust removal. In the firsthalf of 2024, the environmental protection exhaust gas treatment facilities operated well, and were overhauled in timeaccording to the overhaul plan. The daily average exhaust gas indicator did not exceed the standard, and the exhaustgas was discharged up to the standard after treatment.Its sewage treatment plant uses the traditional activated sludge wastewater treatment process+membrane treatmentand recycle process, and the wastewater which is treated up to the standard is partially discharged into the sewagetreatment plant of Shouguang Zhongye Water Co., Ltd., and partially reused in production lines. In the first half of 2024,the wastewater treatment facilities operated well, and were overhauled in time according to the overhaul plan. The dailyaverage wastewater indicator did not exceed the standard, and the wastewater was discharged up to the standard aftertreatment.
2. Shouguang Meilun Paper Co., Ltd.
Its own power plant uses the exhaust gas treatment process of limestone-gypsum desulfurisation + SNCR selective non-catalytic reduction denitration + electric and bag composite dust removal + wet type electric dust removal. The chemicalpulp alkali recovery furnace uses the exhaust gas treatment process of PSCR denitration + electrostatic dust removal+ wet electrostatic dust removal, and the chemical pulp lime kiln uses the exhaust gas treatment process of ozonedenitration + electrostatic dust removal + wet type electric dust removal. In the first half of 2024, the environmentalprotection exhaust gas treatment facilities operated well, and were overhauled in time according to the overhaul plan.The daily average exhaust gas indicator did not exceed the standard, and the exhaust gas was discharged up to thestandard after treatment.
3. Jiangxi Chenming Paper Co., Ltd.
Its own power plant uses the exhaust gas treatment process of ammonia desulfurisation + SNCR catalytic reductiondenitrification+ electric and bag composite dust removal + 90-metre desulfurisation and denitrification tower. Theaerobic section of the sewage treatment plant is equipped with a negative pressure exhaust device to recover and treatthe exhaust gas from anaerobic and aerobic sections, and uses the process of alkali spraying + biofiltration + waterwashing. In the first half of 2024, the environmental protection exhaust gas treatment facilities operated well, and wereoverhauled in time according to the overhaul plan. The daily average exhaust gas indicator did not exceed the standard,and the exhaust gas was discharged up to the standard after treatment.Industrial wastewater is collected by a catchment well with large particles removed by grids and fibres in the wastewaterrecovered by inclined mesh, and then flow into the settling tank for preliminary settling and cooling in free-flowing.When the water temperature reaches 38°C, the water is pumped into a high-concentration primary settling tank anda low-concentration primary settling tank. After the pre-acidification treatment, organic matter which can be easilydecomposed from the polymer decomposed through a hydrolysis acidification tank. In the biochemical process, thebiogas produced is recovered for power generation, and the biochemical water enters into the anaerobic section, andgets into aeration and other aerobic systems with cooled low-concentration water. A stable COD value is achievedthrough the aerobic system. In order to better treat the water, the aerobic water enters into the in-depth treatmentsystem, and is treated up to the standard through the processes such as Fenton treatment, settling tank treatment,inclined plate settling, and flocculation settling. In the process of wastewater treatment, the suspended matter in thewater body is removed from the sludge produced which is treated by the processes such as plate and frame filteringand belt machine desliming, which meets the requirements of Table II of GB3544. A reclaimed water recycling device isin place to recycle some water which meets the requirements.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
V Environmental and Social Responsibility
I. Major environmental protection matters (Cont’d)
Treatment of pollutants (Cont’d)
4. Jilin Chenming Paper Co., Ltd.
Its own power plant uses low-temperature combustion, staged combustion and SCR denitrification outside the furnace,and uses bag filter for flue gas dust removal, and uses wet desulfurisation process of limestone inside the furnace +limestone-gypsum outside the furnace, and the discharge is up to the standard.The sewage station uses the treatment process of anaerobic (IC reactor)+aerobic (jet aeration)+in-depth treatment (Fentonadvanced oxidation), and the discharge is up to the standard.
5. Zhanjiang Chenming Pulp and Paper Co., Ltd.
The thermal power plant of Zhangjiang Chenming Pulp and Paper Co., Ltd. has three circulating fluidised bed boilersof 280t/h and one circulating fluidised bed boiler of 400t/h. In particular, the three boilers of 280t/h are equipped withSNGR denitrification and external wet (cement-plaster) desulphurisation system. The boiler of 400t/h is equipped withSNCR+SCR in combination denitrification, external wet desulphurisation and wet electrostatic dust removal system.The company has constructed wastewater treatment station in two phases. Among which, the capacity of phase Iwastewater treatment station is 86,000 m3/d (applies“primary settling tower + conditioning tower + selective aerationtank + Fenton oxidation tank + clarifier” treatment), while that of phase II wastewater treatment station is 30,000 m3/d (applies“first-class sedimentation pre-treatment + second-class biological treatment + third-class Fenton oxidationdeep treatment”).
6. Huanggang Chenming Pulp & Paper Co., Ltd.
The alkali furnace uses polymer denitration outside the furnace + electrostatic dust removal and alkaline melt from theprocess able to absorb sulphur dioxide. The discharge is up to the standard. The lime kiln uses limestone to fix sulphurand five electrostatic precipitators to remove dust. The discharge is up to the standard.The sewage treatment uses physical settling + aerobic biochemical treatment + Fenton in-depth treatment process. Thedischarge is up to the standard.
INTERIM REPORT 2024
V Environmental and Social Responsibility
I. Major environmental protection matters (Cont’d)
Emergency plan for emergency environmental incidents
The Company has strictly implemented emergency regulations for emergency environmental incidents, and formulated variousemergency plans for emergency environmental incidents according to the technical requirements in the“Technical 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.Investment in environmental governance and protection and payment of environmental protection tax
The Company has always adhered to the concept of“green development, ecological Chenming”, and clung to thedevelopment model of“clean production”and resource recycling. A green ecology is incorporated in the whole process ofproduction and operation. The Company has invested more than RMB8 billion in total to construct the pollution treatmentfacilities including the alkali recovery system, reclaimed water treatment system, reclaimed water reuse system, white waterrecovery system and black liquor comprehensive utilisation system. The environmental protection indicators rank high in China.During the reporting period, the Company paid environmental protection tax according to law. The Company’s environmentalprotection tax mainly results from atmospheric pollutants. According to the Environmental Protection Tax Law of People’sRepublic of China and its implementation rules, the pollutants shall be calculated according to the automatic monitoring dataof pollutants if automatic pollutant monitoring equipment which complies with national provisions and monitoring standardsis installed and used. Taxable atmospheric pollutants are determined according to the pollution equivalent quantity convertedfrom the amount of pollutant discharge. The taxable atmospheric pollutants discharged from each outlet, or where there is nooutlet, are to be ranked in decreasing order of pollution equivalent quantity, and environmental taxes are to be levied on thetop three pollutants. In the first half of 2024, the Company paid environmental protection tax amounting to RMB7.2513 million.
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 lime kilnexhaust emissions (sulphur dioxide, nitrogen oxide and particulates). 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
V Environmental and Social Responsibility
I. Major environmental protection matters (Cont’d)
Administrative penalties for environmental problems during the reporting periodName of company orsubsidiaryReasons for penaltyViolationsPenalty results
Impact on the productionand operation of thelisted company
Correctivemeasures of thecompanyJiangxi ChenmingViolation of the requirement
of paragraph 1 of Article37 of the Law on thePrevention and Control ofEnvironmental Pollution bySolid Waste of the People’sRepublic of China“Wherean entity that producesindustrial solid wastescommissions anotherperson to transport, utilise,or treat the industrialsolid wastes, it shallverify the eligibility andtechnical capabilities of thecommissioned party, signa written contract as legallyrequired, and stipulate therequirements for pollutionprevention and control inthe contract”.
The general industrialsolid waste andsludge treating entitycommissioned by JiangxiChenming did not havethe eligibility and technicalcapabilities for treatment.It was alleged that JiangxiChenming failed to fulfil itsverification obligation inbreach of the requirementto commission anotherperson to transport,utilise, or treat theindustrial solid wastes.
An administrative penaltyof RMB800,000 wasimposed on JiangxiChenming by NanchangEcological EnvironmentBureau.
Jiangxi Chenminghad completed therectification and paid thepenalty on time. Therewas no material adverseimpact on the listedcompany.
The generalindustrial solidwaste and sludgetreating entity waspromptly replaced.An entity withqualifications andtechnical strengthsfor treating generalindustrial solidwaste and sludgewas selectedfor cooperation.Specialisedpersonnel wereregularly assigned toverify the treatmenton site.
Other environmental information to be disclosed
The 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.
INTERIM REPORT 2024
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
√ Applicable Not applicable
1. The Group strengthened energy management, and compared and analysed the consumption of coal, electricity, on a
daily basis with strict control.
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. According to the zero position of the air cover of the paper machine dryer, the Group reduced the frequency of the fan
appropriately to improve the drying efficiency by raising the zero position and save electricity consumption.
4. 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 line pressureand other measures.
5. 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.
6. The Group vigorously developed clean energy and energy recycling projects to reduce carbon emissions.
7. 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
V Environmental and Social Responsibility
II. Social responsibilityChenming Paper takes“Creating Value, Contributing to Society”as its corporate mission. During the reporting period, theCompany focused on the development of its principal activities, i.e. pulp production and paper making. It continuouslystrengthened its supply chain management, improved its product quality, and enhanced its customer service levels, strivingto create economic value. At the same time, the Company placed equal importance on social value and economic value. Itcontinued to regulate its corporate governance practices, valued the investor relations management, protected the rights ofits employees, and strengthened its responsibilities for safety and environmental protection. The Company effectively fulfilledits social responsibilities to stakeholders such as shareholders, employees, customers and suppliers, aiming to becomea company that created effective value for society and realised its corporate vision of“Building a Superior and StrongerEnterprise, and Crafting a Century-Long Chenming”.
1. Compliance operation to build strong foundation for governance
During the reporting period, the Company consistently implemented the reform of the independent director systemof listed companies. Eight corporate governance systems including The Measures for Administration of IndependentDirectors, the Articles of Association, the Procedural Rules of the Board Meeting and the Procedural Rules of theGeneral Meeting were amended to further improve independent Directors’ability to perform their duties and fullyutilising the role of independent Directors. The Company valued the investor relations management. The communicationand exchange with investors were strengthened through various channels. On 7 April 2024, the Company held the 2023annual results briefing and replied more than 40 questions from investors on the Shenzhen Stock Exchange InteractiveYi platform. The Company ensured that its investor hotline was accessible. The announcements published in Shenzhenand Hong Kong were available under the investor relations column of the Company’s official website to enableconvenient access for investors. During the reporting period, the Company held 3 Board meetings and 2 meetings of theSupervisory Committee. All Directors and Supervisors of the Company were present at each meeting where resolutionswere passed with the procedure for consideration and approval of resolutions being legal and compliant. The 2023annual general meeting of the Company was held on-site and online to ensure shareholders’rights to know, participatein, and vote on the material matters of the Company. Some Directors attended the general meeting in person, andvisited the Company’s factories before the meeting to understand the operations of the Company, thus safeguarding theinterests of the Company’s shareholders, especially the small and medium-sized shareholders, in a practical manner.
2. Care for employees to empower talent development
The Company adheres to the employment philosophy of“Cultivating Talents, Retaining Talents, and Making Good Useof Talents”. Being people-oriented, it protects employees’occupational health and safety while attaches importanceto employees’ career development planning, in order to gather up employees’love and dedication for work to help thehigh quality development of the Company. During the reporting period, the Company took the 23rd“safety productionmonth”as an opportunity to launch a series of safety education activities to thoroughly implement the safety productionpolicy of“safety first, prevention-oriented and comprehensive management”, and enhance the safety awarenessof all employees, thus safeguarding the health and safety of employees. The Company attached great importanceto employee training. It set up a diversified and customised training platform. Categorised specialized training waslaunched according to the training needs of each department and the requirements of the positions to strengthenthe specificity and efficiency of training, and to cultivate high quality talents. A sound performance appraisal andcompensation management system was established to provide competitive compensation and benefits, and create aclear path for promotion, so that employees can share the fruits of the development of the Company. The trade unioncommittee fully played a role as a bridge in an effort to build a harmonious labour relationship and realise growingtogether with employees by giving out birthday cakes to employees, organising cultural and sports activities such astable tennis, basketball and badminton, and organising quarterly employee seminars addressing employees’ difficulties.
INTERIM REPORT 2024
V Environmental and Social Responsibility
II. Social responsibility (Cont’d)
3. Sincerity towards customers to promote win-win cooperation
During the reporting period, the Company adhered to the core values of“Integrity, Win-Win and Sharing”to proactivelyestablish win-win strategic partnerships with customers and suppliers. For the protection of customers’rights, theCompany adhered to the marketing philosophy of“Integrity, Mutual Benefit and Better Future for All”. It was customer-centred and market demand-oriented, and constantly strengthened technological innovation and improved productquality to meet customer demand and create benefits of branding. Meanwhile, it regulated the after-sales managementof products, formulated the“Customer Complaint Handling Regulations”, optimised the customer complaint handlingprocess, and continuously improved customer service satisfaction. For the protection of suppliers’rights, the Companyconstantly optimised the supply chain management, and had systems of the Company such as the Subsidiary RegionalProcurement Management Measures and the Tender Management System in place. It strived to create a fair and justcompetition environment for suppliers, and strengthen strategic cooperation with high quality suppliers to ensure thequality of raw materials and their stable supply, thus realising cost reduction and efficiency increase, mutual benefit andwin-win cooperation.
4. Green development to protect the ecological environment
The Company adheres to the concepts of“lucid waters and lush mountains are invaluable assets”, and“greendevelopment, eco-friendly Chenming”. It steadfastly follows the high quality development path of giving priority to theecology and adopting a green and low-carbon policy, and strives to promote economic and ecological developmenttogether to realise a“win-win”situation in terms of economic benefits and environmental benefits. During the reportingperiod, the Company actively promoted clean production, vigorously promoted the treatment of“three wastes”,and vigorously implemented energy saving and emission reduction. It had advanced pollution treatment facilitiesincluding the alkali recovery system, reclaimed water treatment system, reclaimed water reuse system, and blackliquor comprehensive utilisation system to ensure that all indicators met the requirements of the national environmentalprotection standards. Meanwhile, the Company attached importance to technology research and development, andactively developed green products. It successfully passed the audit of China Environmental United Certification Centerand was awarded the certificate of“China Environmental Labeling (Type I) Product Certification”. The Type I certifiedproducts covered the offset printing paper series and the coated paper series. The Company practically took the mainsocial responsibility of protecting the ecological environment.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
VI Material Matters
I. Undertakings made by parties involved in undertakings including the Company’s beneficialcontrollers, shareholders, related parties, bidders and the Company fulfilled during thereporting period and not yet fulfilled within the prescribed time period as at the end of thereporting period Applicable √ Not applicableDuring the reporting period, there were no such undertakings in respect of the Company as those made by parties involved inundertakings including the Company’s beneficial controllers, shareholders, related parties, bidders and the Company fulfilledduring the reporting period and not yet fulfilled within the prescribed time period as at the end of the reporting period.II. Appropriation of funds of the Company by the controlling shareholder and other relatedparties 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 report of the Company is unaudited.
V. Opinions of the Board and the Supervisory Committee regarding the“modified auditor’sreport” for the reporting period issued by the accountants
Applicable √ Not applicable
VI. Opinions of the Board regarding the“modified auditor’s report” for the prior year
Applicable √ Not applicable
VII. Matters related to bankruptcy and reorganisation
Applicable √ Not applicableThere was no matter related to bankruptcy and reorganisation during the reporting period.
INTERIM REPORT 2024
VI Material Matters
VIII. LitigationMaterial litigation and arbitration
√ Applicable Not applicable
General informationon the litigation(arbitration)Amount involved
Whetherprovisionsare madeProgressTrial results and impact
Enforcementof judgment
Date ofdisclosureDisclosure indexStatutory demand and winding-up petition
HK$389,112,432.44NoOn 10 August 2023, the Court of First Instance
handed down its judgment on the applicationmade by the Company for the dismissal oradjournment of the winding-up petition andruled that the winding-up petition was stayed.On 31 October 2023, Arjowiggins HKK2 Limited(“HKK2”) appealed against the judgment of theHong Kong Court of First Instance on stayingthe winding-up petition. On 21 March 2024, TheHong Kong Court of Appeal heard the appealmade by HKK2.
On 23 April 2024, the Companyreceived the judgment madeby the Hong Kong Court ofAppeal ruling to dismiss theappeal made by HKK2.
N/A26 April 2024
25 April 2024
http://www.cninfo.com.cn(Announcement no. 2024-031)http://www.hkex.com.hk
Other litigations
√ Applicable Not applicable
General information on thelitigation (arbitration)
Amountinvolved(RMB’0,000)
Whetherprovisionsare madeProgressTrial results and impactEnforcement of judgment
Date ofdisclosure
DisclosureindexSummary of matters notsubject to disclosure asmaterial litigation (arbitration)in which Chenming Leasing is the plaintiff
68,306.47NoJudgment was made.For resolved litigations, the
court ordered relevant defendantand guarantor to settle outstandingloans to the Company, in line withthe request of the Company andwould not have any significantimpact on the operations andfinancial position of the Company.
Enforcement of the judgment wasin progress.
N/AN/A
Summary of matters notsubject to disclosure asmaterial litigation (arbitration)in which Chenming Leasing is the defendant
130.00NoJudgment was made.The case was closed, having
no significant impact on theoperations and financial positionof the Company.
Enforcement of the judgment wasexecuted.
N/AN/A
Summary of matters notsubject to disclosure asmaterial litigation (arbitration)in which the Company andother subsidiaries of the Company are the plaintiff
44,863.62NoThe amount involved in ongoing
cases was RMB48.7686 million; theamount involved in resolved caseswas RMB399.8676 million.
The cases had no significantimpact on the operations andfinancial position of the Company.
The amount involved in theresolved and executed cases wasRMB121,300, and other casesare in the progress of execution.
N/AN/A
Summary of matters notsubject to disclosure asmaterial litigation (arbitration)in which the Company andother subsidiaries of the Company are the defendant
27,717.65NoThe amount involved in ongoing
cases was RMB257.6573 million; theamount involved in resolved caseswas RMB19.5192 million.
The cases had no significantimpact on the operations andfinancial position of the Company.
All the resolved cases wereexecuted.
N/AN/A
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
VI Material Matters
IX. Punishment and rectification
Applicable √ Not applicableDuring the reporting period, there was no punishment and rectification against the CompanyX. Credibility of the Company, its controlling shareholders and beneficial controllers
Applicable √ Not applicableXI. Significant related party transactions
1. Related party transactions associated with day-to-day operation
√ Applicable Not applicable
Relatedparty
Relationshipwith theCompany
Types ofthe relatedpartytransactions
Subjectmatter of therelated partytransactions
Pricingbasis ofthe relatedpartytransaction
Relatedpartytransactionprice
Amount ofrelatedpartytransactions(RMB’0,000)Percentageas theamountof similartransactions
Amount oftransactionsapproved(RMB’0,000)
Whetherexceedingapprovedcap
Settlementof relatedpartytransactions
Market priceof availablesimilartransaction
DisclosuredateDisclosure indexWeifang PortWood Chip Wharf Co., Ltd.
Joint ventureLabour
services
Portmiscellaneousfees
Market priceMarket price5,619.1112.40%11,000.00NoBank
acceptanceand telegraphictransfer
N/A29 March
2024
http://www.cninfo.com.cnTotal5,619.1111,000.00Particulars 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)N/A
2. Related party transaction in connection with purchase or sale of assets or equity interest
√ Applicable Not applicable
In order to further focus on the development of its principal business of pulp production and paper making, divest thenon-principal business, continuously optimise its asset structure, improve its asset quality, increase its cash inflow andenhance its profitability, the Company transferred its 90.05% equity interest in Yujing Hotel and the debts of YujingHotel payable to the Company amounting to RMB193.5072 million to Shouguang Chenming Guangyuan Real PropertyCompany Limited, a related party, for a consideration of RMB356.50 million. The consideration was determined basedon the Asset Valuation Report (Tian Hao Zi Ping Bao Zi [2024] J No. 0004), with 31 December 2023 as its benchmarkdate, prepared by Tinho International Real Estate Land Assets Appraisal Group Co. Ltd.. Upon completion of thetransaction, the Company ceased to have any equity interest in Yujing Hotel.
INTERIM REPORT 2024
VI Material Matters
XI. Significant related party transactions (Cont’d)
2. Related party transaction in connection with purchase or sale of assets or equity interest (Cont
’d)
Related party
Relationship with theCompany
Types ofthe relatedpartytransactions
Subject matter ofthe related partytransactions
Pricing basis ofthe related partytransaction
Book value
of thetransferredasset(RMB’0,000)
Assessvalue of thetransferredasset(RMB’0,000)
Transferprice(RMB0’000)Settlementof relatedpartytransaction
Gains orlosses ontransaction(RMB0,000)
DisclosuredateDisclosure indexShouguang
ChenmingGuangyuanReal PropertyCompanyLimited
Subsidiary of a companyinvested by Directorsand Senior Management of the Company
Equity transfer
Transfer of 90.05%equity interest inYujing Hotel toGuangyuan RealProperty fromShandong Chenming
Assess value-4,054.2318,071.7616,299.28Cash and
notes
20,353.5123 March
2024
http://www.cninfo.com.cn
Reason for a greater difference between the transfer price and the book value or the assessed value (if any)
The main reason was the property and land appraisal appreciation of Yujing Hotel.Effect on the operating results and financial position of the CompanyThe disposal of Yujing Hotel, a subsidiary, did not affect the normal operations of the Company and the proceeds from the equity
disposal replenished the liquidity.The performance of the performance targets during the reporting period if any performance targets were involved in the relevant transaction
Nil
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
Creditor’s rights receivable from any related party
Related party
Relationshipwith theCompanyReason
Was thereany non-operatingcapitaloccupation
Openingbalance(RMB’0,000)
Amountincreasedduring thecurrent period
(RMB’0,000)
Amountrecoveredduring thecurrent period
(RMB’0,000)Interest rate
Interest forthe current
period(RMB’0,000)
Closingbalance(RMB’0,000)Shouguang Meite Environmental Technology Co., Ltd.
Joint ventureFinancial supportNo1,042.726.00%31.631,074.35Weifang Port Wood Chip Wharf Co., Ltd.
Joint ventureFinancial supportNo7,555.473,500.003,500.006.00%191.107,746.57Wuhan Chenming Hanyang Paper Holdings Co., Ltd.
AssociateFinancial supportNo22,725.274.75%539.0723,264.34Effect of related creditors’rightson 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 ofexisting businesses of the above entities.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
VI Material Matters
XI. Significant related party transactions (Cont’d)
4. Related creditors
’ rights and debts transactions (Cont’d)Debts payable to any related party
Related party
Relationshipwith theCompanyReason
Openingbalance(RMB’0,000)
Amountincreasedduring thecurrent period(RMB’0,000)Amount repaidduring thecurrent period(RMB’0,000)Interest rate
Interest for thecurrent period(RMB’0,000)
Closingbalance(RMB’0,000)Chenming Holdings Company LimitedControlling
shareholder
Financial support13,561.2915,475.0017,410.00Market interest rate174.9811,801.27Guangdong Nanyue Bank Co., Ltd.AssociateBorrowing206,906.00218,598.00206,906.00Market interest rate2,460.56218,598.00Effect of related debts on the operatingresults and financial position of the Company
Financial support was provided by Chenming Holdings without requiring any pledge or guarantee, which was a testament to its support
and confidence in the future development of the Company, and helped the Company promote project construction and 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 2024
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 applicable
In April 2023, Jiangxi Chenming, a subsidiary, acquired equity interest in Jiangxi Port, which was included in thescope of consolidation. The principal activities of Jiangxi Chenming Port is goods loading and transportation atwharf. In order to revitalise Jiangxi Port and enhance economic benefits to the Company, Jiangxi Chenming hascontracted the businesses of Jiangxi Port to Jiangxi Yirong Investment Co., Ltd. for 5 years, and receives fixedcontracting fees of RMB4.00 million per year on quarterly basis.A project which generates profit or loss for the Company representing more than 10% of the Company’s totalprofit during the reporting period Applicable √ Not applicableThe Company do not have any contracting project during the reporting period that generated profit or loss for theCompany representing more than 10% of the Company’s total profit during the reporting period.
(3) Leasing
√ Applicable Not applicable
Leasing description:
As a lesseeThe Company has simplified the treatment of short-term leases and leases of low-value assets by not recognisingright-of-use assets and lease liabilities. The charges to expense for short-term leases, low-value assets andvariable lease payments not included in the measurement of lease liabilities during the current period are asfollows:
Unit: RMBItemFirst half of 2024Low-value leases3,235,879.40Total3,235,879.40
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
VI Material Matters
XII. Material contracts and implementation (Cont’d)
1. Custody, contracting and leasing (Cont
’d)
(3) Leasing (Cont
’d)
As a lessorWhere an operating lease is formed:
According to paragraph 58 of the new lease standard, the lessor shall disclose in the notes the followinginformation related to operating leases:
Lease income, and make separate disclosure of income related to variable lease payments not included inlease receipts;
Unit: RMBItemFirst half of 2024Lease income88,182,141.14
The amount of undiscounted lease receipts to be received in each of the five consecutive fiscal years afterthe balance sheet date and the total amount of undiscounted lease receipts to be received in the remainingyears.
Unit: RMBYear30 June 2024Within 1 year after the balance sheet date174,536,416.381 to 2 years after the balance sheet date165,465,795.092 to 3 years after the balance sheet date167,667,038.243 to 4 years after the balance sheet date161,101,058.014 to 5 years after the balance sheet date162,012,344.71More than 5 years after the balance sheet date163,111,818.84Total993,894,471.27
Items that bring profit or loss of more than 10% of the total profit of the Company during the reportingperiod Applicable √ Not applicableThe Company did not have any leasing project that brought profit or loss to the Company amounting tomore than 10% of the total profit of the Company during the reporting period.
INTERIM REPORT 2024
VI Material Matters
XII. Material contracts and implementation (Cont’d)
2. Significant guarantees
√ Applicable Not applicable
(1) Guarantees
During the reporting period, the Company provided guarantee to subsidiaries and the guarantee amount incurredwas RMB7,426.6000 million. As at 30 June 2024, the balance of the external guarantee provided by the Company(including the guarantee to its subsidiaries by the Company and the guarantee provided to subsidiaries bysubsidiaries) amounted to RMB12,752.4198 million, representing 76.69% of the equity attributable to shareholdersof the Company as at the end of June 2024.
Unit: RMB’0,000External guarantees of the Company and its subsidiaries (excluding guarantees to subsidiaries)
Name of obligee
Date of therelatedannouncementdisclosingthe guaranteeamount
Amount ofguarantee
Guaranteedate
Guarantee
provided
Type ofguaranteeCollateral
Counter-guaranteeTerm
Fulfilledor notGuaranteeto relatedpartiesor notWeifang Port Wood Chip Wharf Co., Ltd.
24 July 201717,500.0020 December
2017
8,500.00General
guarantee
Creditguarantee
Nil10 yearsNoYesZhanjiang Runbao Trading Co., Ltd.
28 March 202416,000.0025 April 202416,000.00Pledge34.64%
equityinterestin Wuhan Chenming
Equity transfer
payment of
RMB160
million
2 yearsNoNo
Zhanjiang Dingjin Trading Co., Ltd.
7 December
2022
13,558.197 December
2022
13,558.19MortgagePropertiesRemaining
equity transfer
payment of
RMB136
million
3 yearsNoNo
Shanghai Shuilan TradingCo., Ltd.
7 December
2022
45,700.007 December
2022
45,000.00Pledge100% equity
interest inShanghai Chongmin
80% equity
interest in
Taixing Port
held by
Shanghai
Huahao
3 yearsNoNo
Total 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)92,758.19Balance of total actual guarantees at the end of the reporting period (A4)83,058.19
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
VI Material Matters
Guarantees to subsidiaries from the Company
Name of obligee
Date of the
relatedannouncementdisclosingthe guarantee
amount
Amount ofguarantee
Guaranteedate
Guarantee
provided
Type ofguaranteeCollateral
Counter-guaranteeTerm
Fulfilledor notGuaranteeto relatedpartiesor notZhanjiang Chenming Pulp & Paper Co., Ltd.
30 March 202231,384.0317 June 202231,384.03General
guarantee
NilNil3 yearsNoNoZhanjiang Chenming Pulp & Paper Co., Ltd.
30 March 2023349,840.932 June 2023349,840.93General
guarantee
NilNil3 yearsNoNoZhanjiang Chenming Pulp & Paper Co., Ltd.
28 March 20241,070,000.0015 May 2024117,464.60General
guarantee
NilNil1 yearNoNoShouguang Meilun Paper Co., Ltd.
30 March 202369,130.2712 July 202369,130.27General
guarantee
NilNil1 yearNoNoShouguang Meilun Paper Co., Ltd.
28 March 2024500,000.0027 May 2024101,919.51General
guarantee
NilNil1 yearNoNoJiangxi Chenming Paper Co., Ltd.
30 March 20225,760.0031 March 20235,760.00General
guarantee
NilNil1.5 yearsNoNoJiangxi Chenming Paper Co., Ltd.
30 March 202359,336.2127 June 202359,336.21General
guarantee
NilNil1.25 yearsNoNoJiangxi Chenming Paper Co., Ltd.
28 March 2024430,000.0031 May 202474,000.00General
guarantee
NilNil1 yearNoNoHuanggang Chenming Pulp & Paper Co., Ltd.
30 March 202333,500.0012 July 202333,500.00General
guarantee
NilNil1 yearNoNoHuanggang Chenming Pulp & Paper Co., Ltd.
28 March 2024350,000.0020 May 20249,000.00General
guarantee
NilNil1 yearNoNoHuanggang ChenmingPaper Technology Co., Ltd.
28 March 2024470,000.00General
guarantee
NilNil1 yearNoNoChenming (HK) Limited30 March 20233,441.734 January
2024
3,441.73General
guarantee
NilNil1 yearNoNoChenming (HK) Limited28 March 2024200,000.0017 June
2024
1,415.00General
guarantee
NilNil1 yearNoNoZhanjiang ChenmingArboriculture Development Co., Ltd.
28 March 202430,000.00General
guarantee
NilNil1 yearNoNoJilin Chenming Paper Co., Ltd.
30 March 202330,000.0015 December
2023
20,000.00General
guarantee
NilNil1 yearNoNoJilin Chenming Paper Co., Ltd.
24 December
2023
50,000.0029 December
2023
31,114.55General
guarantee
NilNil1 yearNoNoJilin Chenming Paper Co., Ltd.
28 March 2024130,000.0019 June 20241,600.00General
guarantee
NilNil1 yearNoNoShouguang Chenming Art Paper Co., Ltd.
28 March 202420,000.00General
guarantee
NilNil1 yearNoNoChenming (Singapore) Co., Ltd.
28 March 202450,000.00General
guarantee
NilNil1 yearNoNo
XII. Material contracts and implementation (Cont’d)
2. Significant guarantees (Cont
’d)
(1) Guarantees (Cont
’d)
INTERIM REPORT 2024
VI Material Matters
Guarantees to subsidiaries from the Company
Name of obligee
Date of the
relatedannouncement
disclosingthe guarantee
amount
Amount ofguarantee
Guaranteedate
Guaranteeprovided
Type ofguaranteeCollateral
Counter-guaranteeTerm
Fulfilledor notGuaranteeto relatedpartiesor notShandong Chenming Paper Sales Co., Ltd.
30 March 2023159,277.0114 August
2023
159,277.01General
guarantee
NilNil1 yearNoNoShandong Chenming Paper Sales Co., Ltd.
28 March 2024350,000.0023 May 202442,000.00General
guarantee
NilNil1 yearNoNoShanghai ChenmingPulp & Paper Sales Co., Ltd.
30 March 2022950.0013 February
2023
950.00General
guarantee
NilNil3 yearsNoNoShanghai ChenmingPulp & Paper Sales Co., Ltd.
30 March 2023450.0021 November
2023
450.00General
guarantee
NilNil1 yearNoNoShanghai ChenmingPulp & Paper Sales Co., Ltd.
28 March 2024100,000.004 June 20245,400.00General
guarantee
NilNil1 yearNoNoShanghai ChenmingPulp & Paper Sales Co., Ltd.
19 June 2024-10,000.00General
guarantee
NilNil1 yearNoNoShanghai HeruimingProperty Management Co., Ltd.
19 June 202410,000.00General
guarantee
NilNil1 yearNoNoHuanggang ChenmingPulp & Fiber Trading Co., Ltd.
30 March 20234,000.0031 August
2023
4,000.00General
guarantee
NilNil1 yearNoNoHuanggang ChenmingPulp & Fiber Trading Co., Ltd.
28 March 202430,000.00General
guarantee
NilNil1 yearNoNoShouguang ChenmingImport and Export Trade Co., Ltd.
30 March 202314,999.9621 December
2023
14,999.96General
guarantee
NilNil1 yearNoNoShouguang ChenmingImport and Export Trade Co., Ltd.
28 March 2024100,000.00General
guarantee
NilNil1 yearNoNoHainan Chenming Technology Co., Ltd.
30 March 202347,240.0029 November
2023
47,240.00General
guarantee
NilNil1 yearNoNoHainan Chenming Technology Co., Ltd.
28 March 2024120,000.0021 May 20248,960.00General
guarantee
NilNil1 yearNoNo
XII. Material contracts and implementation (Cont’d)
2. Significant guarantees (Cont
’d)
(1) Guarantees (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
VI Material Matters
Guarantees to subsidiaries from the Company
Name of obligee
Date of therelatedannouncementdisclosingthe guarantee
amount
Amount ofguarantee
Guaranteedate
Guaranteeprovided
Type ofguaranteeCollateral
Counter-guaranteeTerm
Fulfilledor notGuaranteeto relatedpartiesor notChenming (Overseas) Co., Ltd.
28 March 202430,000.00General
guarantee
NilNil1 yearNoNoNanchang ChenmingArboricultureDevelopment Co., Ltd.
28 March 202410,000.00General
guarantee
NilNil1 yearNoNoShouguang ChenmingPapermaking Machine Co., Ltd.
28 March 20245,000.00General
guarantee
NilNil1 yearNoNoShouguang HongxiangPrinting and Packaging Co., Ltd.
28 March 20245,000.00General
guarantee
NilNil1 yearNoNoShouguang HongyiDecorative Packaging Co., Ltd.
28 March 20245,000.00General
guarantee
NilNil1 yearNoNoShouguang ChenmingModern Logistic Co., Ltd.
28 March 20245,000.00General
guarantee
NilNil1 yearNoNoFoshan ChenmingImport and Export Trade Co., Ltd.
28 March 202450,000.00General
guarantee
NilNil1 yearNoNoShanghai HongtaiProperty Management Co., Ltd.
28 March 202410,000.00General
guarantee
NilNil1 yearNoNoTotal amount of guarantee provided for subsidiaries approved during the reporting period (B1)
4,070,000.00Total amount of guarantee provided for subsidiaries
during the reporting period (B2)
742,660.00Total amount of guarantee provided for subsidiaries approved as at the end of the reporting period (B3)
4,929,310.13Total balance of guarantee provided for subsidiaries
as at the end of the reporting period (B4)
1,192,183.79
XII. Material contracts and implementation (Cont’d)
2. Significant guarantees (Cont
’d)
(1) Guarantees (Cont
’d)
INTERIM REPORT 2024
VI Material Matters
Guarantees between subsidiaries
Name of obligee
Date ofthe relatedannouncementdisclosingthe guarantee
amount
Amount ofguarantee
Guaranteedate
Guaranteeprovided
Type ofguaranteeCollateral
Counter-guaranteeTerm
Fulfilled
or notGuaranteeto relatedpartiesor notShouguang Meilun Paper Co., Ltd.
28 March 202460,000.00General
guarantee
NilNil1 yearNoNoHuanggang Chenming Pulp & Paper Co., Ltd.
28 March 202420,000.00General
guarantee
NilNil1 yearNoNoShouguang Meilun PaperCo., Ltd.
28 March 202420,000.00General
guarantee
NilNil1 yearNoNoZhanjiang Chenming Pulp& Paper Co., Ltd.
28 March 202430,000.00General
guarantee
NilNil1 yearNoNoTotal amount of guarantee provided for subsidiaries approved during the reporting period (C1)
130,000.00Total amount of guarantee provided for subsidiaries during
the reporting period (C2)
0.00
Total amount of guarantee provided for subsidiaries approved as at the end of the reporting period (C3)
130,000.00Total balance of guarantee provided for subsidiaries as at
the end of the reporting period (C4)
0.00
Total 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)
4,216,000.00Total amount of guarantee during the reporting period
(A2+B2+C2)
758,660.00Total amount of guarantee approved as at the end of the reporting period (A3+B3+C3)
5,152,068.32Total balance of guarantee as at the end of the reporting
period (A4+B4+C4)
1,275,241.98The percentage of total amount of guarantee provided (i.e. A4+B4+C4) to the net assets of the Company76.69%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)461,613.17Total amount of guarantee provided in excess of 50% of net assets (F)443,795.53Sum of the above three amount of guarantee (D+E+F)905,408.71For 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)
NilProviding external guarantees in violation of prescribed procedures (if any)Nil
3. Entrusted wealth management
Applicable √ Not applicable
4. Other material contracts
Applicable √ Not applicableThe Company did not have any other material contracts during the reporting period.
XII. Material contracts and implementation (Cont’d)
2. Significant guarantees (Cont
’d)
(1) Guarantees (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
VI Material Matters
XIII. Other matters of significance
√ Applicable Not applicable
1. Information disclosure index for 2024 Interim Report
Announcementno.Subject matterDate of publication
Publication website andindex2024-001Announcement on Pledge and Continued Pledge of
Shares of Shareholder
19 January 2024http://www.cninfo.com.cn2024-002Announcement on Pledge of Shares of Shareholder26 January 2024http://www.cninfo.com.cn2024-0032023 Annual Results Forecast31 January 2024http://www.cninfo.com.cn2024-004Announcement on Pledge of Shares of Shareholder8 February 2024http://www.cninfo.com.cn2024-005Announcement on Adjustment to Amount of
Guarantee Between Subsidiaries
22 February 2024http://www.cninfo.com.cn2024-006Announcement on Release of Pledge of Shares of
Shareholder
13 March 2024http://www.cninfo.com.cn2024-007Announcement on Resolution of the Fourteenth
Extraordinary Meeting of the Tenth Session of theBoard of Directors
23 March 2024http://www.cninfo.com.cn2024-008Announcement on Equity Transfer of Subsidiary
and Related Party Transaction
23 March 2024http://www.cninfo.com.cn2024-009Announcement on Resolutions of the Eighth
Meeting of the Ten Session of the Board ofDirectors
29 March 2024http://www.cninfo.com.cn2024-010Announcement on Resolutions of the Eighth
Meeting of the Ten Session of the SupervisoryCommittee
29 March 2024http://www.cninfo.com.cn2024-011Notice of 2023 Annual General Meeting29 March 2024http://www.cninfo.com.cn2024-012Special Statement on Securities Investment in 202329 March 2024http://www.cninfo.com.cn2024-013Announcement on Re-appointment of Auditor for
2024
29 March 2024http://www.cninfo.com.cn2024-014Announcement on Development of Equipment
Financing Business
29 March 2024http://www.cninfo.com.cn2024-015Announcement on Carrying out Factoring Business
of Accounts Receivable
29 March 2024http://www.cninfo.com.cn2024-016Announcement on Expected Provision of
Guarantees to Subsidiaries for 2024
29 March 2024http://www.cninfo.com.cn2024-017Announcement on Proposed Non-distribution of
Profit for 2023
29 March 2024http://www.cninfo.com.cn2024-018Announcement on Amendment to Related
Governance Systems of the Company
29 March 2024http://www.cninfo.com.cn2024-019Announcement on Receipt of Financial Support
and Related Party Transaction
29 March 2024http://www.cninfo.com.cn2024-020Announcement on Estimated Day-to-day Related
Party Transactions for 2024
29 March 2024http://www.cninfo.com.cn
INTERIM REPORT 2024
VI Material Matters
Announcementno.Subject matterDate of publication
Publication website andindex2024-021Announcement on Appointment of Securities
Affairs Representatives
29 March 2024http://www.cninfo.com.cn2024-022Announcement on Provision of External Guarantee29 March 2024http://www.cninfo.com.cn2024-023Announcement on Proposed Issue of Corporate
Bonds Overseas and Provision of Guarantee
29 March 2024http://www.cninfo.com.cn2024-0242023 Annual Report Summary29 March 2024http://www.cninfo.com.cn2024-025Announcement on Reduction of Registered Capital
of Wholly-owned Subsidiary
29 March 2024http://www.cninfo.com.cn2024-026Announcement on the 2023 Annual Online
Performance Briefing
29 March 2024http://www.cninfo.com.cn2024-0272024 First Quarterly Results Forecast9 April 2024http://www.cninfo.com.cn2024-028Announcement on Pledge of Shares of Shareholder13 April 2024http://www.cninfo.com.cn2024-0292024 First Quarterly Report16 April 2024http://www.cninfo.com.cn2024-030Announcement on Release of Pledge of Shares of
Shareholder
20 April 2024http://www.cninfo.com.cn2024-031Announcement on Progress of Litigation26 April 2024http://www.cninfo.com.cn2024-032Announcement on Pledge of Shares of Shareholder15 May 2024http://www.cninfo.com.cn2024-033Results of the 2023 Annual General Meeting15 May 2024http://www.cninfo.com.cn2024-034Announcement on Adjustment to Amount of
Guarantee Between Subsidiaries
20 June 2024http://www.cninfo.com.cnXIV. Matters of significant of subsidiaries of the Company Applicable √ Not applicable
XIII. Other matters of significance (Cont’d)
1. Information disclosure index for 2024 Interim Report (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
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
Sharesconverted from
reservesOthersSubtotalAmountPercentage
I. Restricted shares36,578,5871.24%2,709,2252,709,22539,287,8121.33%
1. Shares held by other domestic
investors36,578,5871.24%2,709,2252,709,22539,287,8121.33%Including: Shares held by domestic
natural persons36,578,5871.24%2,709,2252,709,22539,287,8121.33%II. Non-restricted shares2,920,234,61398.76%-2,709,225-2,709,2252,917,525,38898.67%
1. RMB ordinary shares1,685,544,09757.00%-2,709,225-2,709,2251,682,834,87256.91%
2. Domestic listed foreign shares706,385,26623.89%706,385,26623.89%
3. Overseas listed foreign shares528,305,25017.87%528,305,25017.87%III. Total number of shares2,956,813,200100.00%2,956,813,200100.00%The reasons for such changes
√ Applicable Not applicable
The Shenzhen Branch of China Securities Depository and Clearing Corporation Limited recalculated the statutoryquota of transferable shares for the Directors, Supervisors and Senior Management of the Company this year at 25%on the first trading day of this year based on the shares of the Company registered under the names of its Directors,Supervisors and Senior Management on the last trading day of the previous year, resulting in an increase of 2,709,225RMB ordinary shares altogether in the locked-up shares of the Senior Management.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 2024
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 ofshareholder
Restrictedshares at thebeginning ofthe period
Restricted
sharesreleasedduring theperiod
Restrictedsharesincreasedduring theperiod
Restrictedshares at theend of the
periodReason for restriction
Date of releasefrom restrictionChen Hongguo17,310,0331,500,00018,810,033Restricted shares of the
participants of the ShareIncentive Scheme; locked-up shares of Directors,Supervisors and SeniorManagement
In accordance with the ShareIncentive Scheme (Draft)and relevant requirementsfor shares held by Directors,Supervisors and SeniorManagementHu Changqing1,532,143187,5001,719,643Restricted shares of the
participants of the ShareIncentive Scheme; locked-up shares of Directors,Supervisors and SeniorManagement
In accordance with the ShareIncentive Scheme (Draft)and relevant requirementsfor shares held by Directors,Supervisors and SeniorManagementLi Xingchun2,250,000375,0002,625,000Restricted shares of the
participants of the ShareIncentive Scheme; locked-up shares of Directors,Supervisors and SeniorManagement
In accordance with the ShareIncentive Scheme (Draft)and relevant requirementsfor shares held by Directors,Supervisors and SeniorManagementLi Feng1,579,520112,5001,692,020Restricted shares of the
participants of the ShareIncentive Scheme; locked-up shares of Directors,Supervisors and SeniorManagement
In accordance with the ShareIncentive Scheme (Draft)and relevant requirementsfor shares held by Directors,Supervisors and SeniorManagementLi Weixian603,600117,975721,575Restricted shares of the
participants of the ShareIncentive Scheme; locked-up shares of Directors,Supervisors and SeniorManagement
In accordance with the ShareIncentive Scheme (Draft)and relevant requirementsfor shares held by Directors,Supervisors and SeniorManagement
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
VII Changes in Share Capital and Shareholders
Name ofshareholder
Restrictedshares at thebeginning ofthe period
Restricted
sharesreleasedduring theperiod
Restricted
sharesincreasedduring the
period
Restrictedshares at theend of theperiodReason for restriction
Date of releasefrom restrictionLi Xueqin1,995,991225,0002,220,991Restricted shares of the
participants of the ShareIncentive Scheme; locked-up shares of Directors,Supervisors and SeniorManagement
In accordance with the ShareIncentive Scheme (Draft)and relevant requirementsfor shares held by Directors,Supervisors and SeniorManagementLi Zhenzhong859,800150,0001,009,800Restricted shares of the
participants of the ShareIncentive Scheme; locked-up shares of Directors,Supervisors and SeniorManagement
In accordance with the ShareIncentive Scheme (Draft)and relevant requirementsfor shares held by Directors,Supervisors and SeniorManagementLi Mingtang300,00037,500337,500Restricted shares of the
participants of the ShareIncentive Scheme; locked-up shares of Directors,Supervisors and SeniorManagement
In accordance with the ShareIncentive Scheme (Draft)and relevant requirementsfor shares held by Directors,Supervisors and SeniorManagementDong Lianming300,00037,500337,500Restricted shares of the
participants of the ShareIncentive Scheme; locked-up shares of Directors,Supervisors and SeniorManagement
In accordance with the ShareIncentive Scheme (Draft)and relevant requirementsfor shares held by Directors,Supervisors and SeniorManagementYuan Xikun168,52533,750134,775Restricted shares of the
participants of the ShareIncentive Scheme; locked-up shares of Directors,Supervisors and SeniorManagement
2 January 2024
Total26,899,61233,7502,742,97529,608,837
II. Issuance and listing of securities
Applicable √ Not applicable
I. Changes in shares (Cont’d)
2. Changes in restricted shares (Cont
’d)
INTERIM REPORT 2024
VII Changes in Share Capital and Shareholders
III. Total number of shareholders and shareholdings
Unit: shareTotal number of ordinaryshareholders as at the end of the reporting period
138,850, of which 118,008 wereholders of A shares, 20,519were holders of B shares and 323 were holders of H shares
Total number of holders ofpreference shares withrestored voting right as at the end of the reporting period
Shareholdings of ordinary shareholders interested in more than 5% or top ten ordinary shareholders (excluding the shares lent under refinancing business)
Name of shareholderNature of shareholder
Percentage ofshareholding
Number ofordinaryshares heldat the end ofthe reportingperiod
Changes(increase ordecrease)during thereportingperiod
Number ofrestrictedordinaryshares heldStatus ofshares
Number ofnon-restrictedordinaryshares heldNumber
Share pledged, markedor locked-upStatus ofsharesNumberCHENMING HOLDINGS COMPANY LIMITEDState-owned legal person15.47%457,322,91900457,322,919Pledged288,778,200HKSCC NOMINEES LIMITEDOverseas legal person12.63%373,430,775-30,5000373,430,775CHENMING HOLDINGS (HONG KONG) LIMITED (Note 1)
Overseas legal person12.32%364,131,56300364,131,563Chen HongguoDomestic natural person0.85%25,080,044018,810,0336,270,011SHANDONG SUN HOLDINGS GROUP CO., LTD.Domestic non-state-owned
legal person
0.84%24,827,117-160,000024,827,117CHINA MERCHANTS SECURITIES (HK) CO., LIMITED
Overseas legal person0.72%21,186,095213,837021,186,095VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND
Overseas legal person0.50%14,771,9450014,771,945VANGUARD EMERGING MARKETS STOCK INDEX FUND
Overseas legal person0.49%14,535,446-316,700014,535,446HONG KONG SECURITIES CLEARING COMPANY LIMITED
Overseas legal person0.42%12,305,2221,053,442012,305,222Xu HekunDomestic natural person0.23%6,789,900550,10006,789,900Strategic investors or general legal persons who become the top ten shareholders due to the placement of new shares
NilRelated party relationship or acting in concert among the above shareholdersA 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 and chairman of
Chenming Holdings Company Limited. Save for the above, it is not aware that any other shareholders
of tradable shares are persons acting in concert. It is also not aware that any other shareholders of
tradable shares are related to each other.Explanation of the aforementioned shareholders’entrusted/entrusted voting rights and waiver of voting rights
NilSpecial explanation for designated repurchase accounts among the top ten shareholdersNil
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
VII Changes in Share Capital and Shareholders
III. Total number of shareholders and shareholdings (Cont’d)Shareholdings of top ten non-restricted ordinary shareholders (excluding the shares lent under refinancing business and
the locked-up shares of the Senior Management)
Name of shareholder Class of shares
Number of non-restricted sharesheld as at the endof the reportingperiod Number
Class of sharesClass of sharesNumberCHENMING HOLDINGS COMPANY LIMITED457,322,919RMB ordinary shares457,322,919HKSCC NOMINEES LIMITED373,430,775Overseas listed foreign shares373,430,775CHENMING HOLDINGS (HONG KONG) LIMITED (Note 1)
364,131,563Domestic listed foreign shares210,717,563
Overseas listed foreign shares153,414,000SHANDONG SUN HOLDINGS GROUP CO., LTD.24,827,117RMB ordinary shares24,827,117CHINA MERCHANTS SECURITIES (HK) CO., LIMITED
21,186,095Domestic listed foreign shares21,186,095VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND
14,771,945Domestic listed foreign shares14,771,945VANGUARD EMERGING MARKETS STOCK INDEX FUND
14,535,446Domestic listed foreign shares14,535,446HONG KONG SECURITIES CLEARING COMPANY LIMITED
12,305,222RMB ordinary shares12,305,222Xu Hekun6,789,900Domestic listed foreign shares6,789,900Chen Hongguo6,270,011RMB ordinary shares6,270,011Related 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 legal person.A shareholder, Chen Hongguo, is the legal representative and chairmanof Chenming Holdings Company Limited. Save for the above, it is notaware that any other shareholders of tradable shares are persons acting inconcert. It is also not aware that any other shareholders of tradable sharesare related to each other.Securities margin trading of top 10 ordinaryshareholders
Chenming Holdings Company Limited held 457,322,919 RMB ordinaryshares, of which 326,322,919 shares were held through ordinary accountand 131,000,000 shares were held through credit guarantee securityaccount;Shandong Sun Holdings Group Co., Ltd. held 24,827,117 RMB ordinaryshares, of which no share was held through ordinary account and24,827,117 shares were held through credit guarantee security account.
Note 1: In order to meet its own capital needs, Chenming Holdings (Hong Kong) Limited conducted share financing business with overseas
institutions, entrusting 210,717,563 B shares and 153,414,000 H shares of the Company held by it to the custody brokerage designated byoverseas institutions. The aforesaid shares were subject to the risk of not to be recovered, which may lead to a reduction in the Company’sshareholding, but does not affect Chenming Holdings’ position as the largest shareholder, and does not affect the Company’s control. Fordetails, please refer to the announcement disclosed by the Company on CNINFO on 18 July 2023 (announcement no.: 2023-058) and theinsider information disclosed by the Company on the website of Hong Kong Stock Exchange on 18 July 2023.
INTERIM REPORT 2024
VII Changes in Share Capital and Shareholders
III. Total number of shareholders and shareholdings (Cont’d)Share lending by shareholders interested in more than 5%, top 10 shareholders and top 10 shareholders ofnon-restricted shares under refinancing business Applicable √ Not applicable
Changes of top 10 shareholders and top 10 shareholders of non-restricted shares due to lending/returning ofshares under refinancing business as compared to prior period Applicable √ Not applicableWhether 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 applicableThere was no change in the shareholding of the Directors, Supervisors and Senior Management of the Company during thereporting period. Please see the 2023 annual report for details.V. Change of controlling shareholders or beneficial controllersChange 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
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 ExchangeAs at 30 June 2024, 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 (Ashares) held as at the
end of the reportingperiod (shares)
As a percentage of thetotal share capital ofthe CompanyDirectorsChen Hongguo (Note 2)Chairman25,080,0440.85%Hu ChangqingExecutive Director and vice chairman2,292,8570.08%Li XingchunExecutive Director and vice chairman3,500,0000.12%Li FengExecutive Director and deputy
general manager
2,256,0270.08%Li WeixianExecutive Director and general
manager
962,1000.03%Han TingdeNon-executive Director––Li ChuanxuanNon-executive Director––Li ZhihuiIndependent non-executive Director––Sun JianfeiIndependent non-executive Director––Yin MeiqunIndependent non-executive Director––Yang BiaoIndependent non-executive Director––SupervisorsLi KangChairman of the Supervisory
Committee
149,3000.01%Pan AilingSupervisor––Zhang HongSupervisor––Sang AilingSupervisor––Qiu LanjuSupervisor––
Associated corporation(s)
NamePositionName of associated corporation(s)
Numberof sharesheld at thebeginning ofthe reporting
period
(shares)
Changeduring theperiod (+/-)
Number ofshares heldat the end ofthe reporting
period(shares)ChenHongguoDirector
Shouguang Henglian EnterpriseInvestment Co. Ltd. (Note 3)231,000,000–231,000,000
Note 2: Save for the 25,080,044 A shares held personally, Chen Hongguo is deemed to be interested in the 2,961,322 A shares held by his spouse, Li
Xueqin.Note 3: 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”). As a result, Shouguang Henglian is deemed to be controlled by Chen Hongguo.
Accordingly, the 231,000,000 shares in Chenming Holdings (approximately 18.65% of the total share capital of Chenming Holdings) held by
Shouguang Henglian are also deemed to be held by Chen Hongguo.
INTERIM REPORT 2024
VII Changes in Share Capital and Shareholders
VI. Securities interests held by Directors, Supervisors and chief executives disclosed in
accordance with the Listing Rules of Hong Kong Stock Exchange(Cont’d)
Save as disclosed above, as at 30 June 2024, none of the Directors, Supervisors or chief executives of the Company hadany 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 section 352of the SFO or which were required to be notified to the Company and the Hong Kong Stock Exchange pursuant to the ModelCode for Securities Transactions by Directors of Listed Issuers as contained in Appendix C3 to the Listing Rules of Hong KongStock Exchange.As at 30 June 2024, 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 sharesdisclosed in accordance with the Listing Rules of Hong Kong Stock ExchangeAs at 30 June 2024, 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 sharesheld (shares)
Approximate shareholdingas a percentage ofTotal sharecapital (%)Class of shares (%)Chenming Holdings Company Limited457,322,919 A shares (L)15.4726.56Chenming Holdings (Hong Kong) Limited210,717,563 B shares (L)7.1329.83Chenming Holdings (Hong Kong) Limited153,414,000 H shares (L)5.1929.04
(L) – Long position (S) – Short position (P) – Lending pool
Save as disclosed above, as at 30 June 2024, 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 2024
VIII Preference Shares
Applicable √ Not applicableThe Company had no preference shares during the reporting period.
INTERIM REPORT 2024
IX Bonds
Applicable √ Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
I. Auditors’ ReportIs the interim report audited Yes ? NoThe interim financial report is unaudited.
II. Financial StatementsThe unit in the notes to the financial statements is: RMB
1. Consolidated Balance Sheet
Prepared by: Shandong Chenming Paper Holdings Limited
30 June 2024
Unit: RMBItemClosing balanceOpening balanceCURRENT ASSETS:
Monetary funds11,386,010,001.5512,124,832,831.30 Financial assets held for trading39,197,419.8846,294,291.71 Bills receivable674,962,254.15411,600,000.00 Accounts receivable2,967,220,987.042,528,507,059.83 Accounts receivable financing22,065,605.03215,884,249.97 Prepayments947,491,125.52825,135,156.21 Other receivables2,076,983,663.172,224,904,557.88 Including: Interest receivable––
Dividend receivable22,659,149.81– Inventories4,261,634,676.934,958,178,000.36 Including: Data resources–– Non-current assets due within one year3,990,527,056.674,161,725,935.75 Other current assets1,148,814,363.921,068,826,944.78Total current assets27,514,907,153.8628,565,889,027.79NON-CURRENT ASSETS:
Long-term receivables557,470,810.47339,293,533.35 Long-term equity investments4,649,654,565.494,685,199,385.73 Other non-current financial assets780,077,745.20781,561,040.57 Investment property5,945,948,712.416,049,242,696.36 Fixed assets32,030,248,108.2433,186,248,169.56 Construction in progress1,099,279,935.62859,617,965.16 Bearer biological assets17,962,753.6017,684,687.36 Right-of-use assets162,392,245.57167,815,311.50 Intangible assets1,954,534,646.072,002,360,891.85 Including: Data resources–– Goodwill8,273,638.4235,220,543.80 Long-term prepaid expenses38,127,162.7339,979,161.49 Deferred income tax assets1,814,848,473.901,689,857,881.49 Other non-current assets927,555,268.151,067,082,657.57Total non-current assets49,986,374,065.8750,921,163,925.79Total assets77,501,281,219.7379,487,052,953.58
INTERIM REPORT 2024
X Financial Report
II. Financial Statements (Cont’d)
1. Consolidated Balance Sheet (Cont
’d)
ItemClosing balanceOpening balanceCURRENT LIABILITIES:
Short-term borrowings30,264,463,843.1433,475,479,021.62 Bills payable5,562,384,579.394,618,986,463.95 Accounts payable4,077,198,162.783,902,620,870.20 Receipts in advance14,398,554.7016,242,921.65 Contract liabilities1,517,098,339.471,443,680,155.62 Employee benefits payable45,123,764.4374,337,158.44 Taxes payable117,268,252.1299,709,707.56 Other payables3,257,911,098.582,414,752,127.19 Including: Interest payable––
Dividend payable123,000,000.00– Non-current liabilities due within one year3,446,557,991.713,631,937,677.82 Other current liabilities70,000,000.00100,000,000.00Total current liabilities48,372,404,586.3249,777,746,104.05NON-CURRENT LIABILITIES:
Long-term borrowings4,824,800,796.904,681,014,489.64 Lease liabilities40,363,786.0941,987,022.85 Long-term payables2,279,402,749.152,541,095,217.66 Deferred income1,287,765,254.491,337,864,114.70 Deferred income tax liabilities5,309,034.509,490,159.05 Total non-current liabilities8,437,641,621.138,611,451,003.90Total liabilities56,810,046,207.4558,389,197,107.95OWNERS’ EQUITY:
Share capital2,956,813,200.002,956,813,200.00 Capital reserves5,250,308,143.665,328,790,899.61 Less: Treasury shares63,432,450.0063,432,450.00 Other comprehensive income-880,417,248.35-864,881,489.08 Special reserves25,448,968.9223,322,829.57 Surplus reserves1,212,009,109.971,212,009,109.97 General risk provisions79,383,656.7579,370,294.91 Retained profit8,048,815,645.138,020,182,801.55Total equity attributable to owners of the Company16,628,929,026.0816,692,175,196.53 Minority interest4,062,305,986.204,405,680,649.10Total owners’ equity20,691,235,012.2821,097,855,845.63Total liabilities and owners’ equity77,501,281,219.7379,487,052,953.58Legal Representative: Financial controller: Head of the financial department:
Chen HongguoDong LianmingZhang Bo
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company
Unit: RMBItemClosing balanceOpening balanceCURRENT ASSETS:
Monetary funds3,742,119,283.914,421,608,897.40 Bills receivable1,321,153,335.773,024,868,267.23 Accounts receivable596,472,975.9228,216,771.01 Prepayments796,610,369.65476,746,114.74 Other receivables8,434,729,619.199,237,241,240.86 Including: Interest receivable––
Dividend receivable–– Inventories458,644,458.00554,028,121.69 Including: Data resources–– Non-current assets due within one year11,999,841.813,428,684.19 Other current assets60,160,557.1262,834,527.02Total current assets15,421,890,441.3717,808,972,624.14NON-CURRENT ASSETS:–– Long-term receivables–12,485,720.05 Long-term equity investments18,350,419,572.9918,298,999,830.51 Other non-current financial assets120,978,728.82122,462,024.19 Fixed assets3,309,104,120.553,415,454,701.17 Construction in progress68,141,078.9438,707,761.30 Intangible assets469,179,017.08476,297,197.96 Including: Data resources–– Deferred income tax assets595,834,951.98571,194,789.79 Other non-current assets12,692,260.7012,692,260.70Total non-current assets22,926,349,731.0622,948,294,285.67Total assets38,348,240,172.4340,757,266,909.81CURRENT LIABILITIES:–– Short-term borrowings10,214,591,919.0913,172,491,176.11 Bills payable7,054,959,474.136,699,118,643.16 Accounts payable1,767,901,706.211,817,323,321.03 Contract liabilities447,913,981.071,454,807,158.83 Employee benefits payable24,946,017.6638,778,024.93 Taxes payable11,430,805.789,022,105.28Other payables698,141,854.701,412,965,873.90 Including: Interest payable––
Dividend payable–– Non-current liabilities due within one year1,619,986,231.69734,311,029.42Total current liabilities21,839,871,990.3325,338,817,332.66
INTERIM REPORT 2024
X Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company (Cont
’d)
ItemClosing balanceOpening balanceNON-CURRENT LIABILITIES:–– Long-term borrowings879,554,888.891,795,000,000.00 Long-term payables3,274,187,773.931,281,983,636.99 Deferred income30,670,590.2831,530,836.20Total non-current liabilities4,184,413,253.103,108,514,473.19Total liabilities26,024,285,243.4328,447,331,805.85OWNERS’ EQUITY:–– Share capital2,956,813,200.002,956,813,200.00 Capital reserves5,073,338,869.195,073,338,869.19 Less: Treasury shares63,432,450.0063,432,450.00 Special reserves6,008,954.434,612,641.99 Surplus reserves1,199,819,528.061,199,819,528.06 Retained profit3,151,406,827.323,138,783,314.72Total owners’ equity12,323,954,929.0012,309,935,103.96Total liabilities and owners’ equity38,348,240,172.4340,757,266,909.81
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
II. Financial Statements (Cont’d)
3. Consolidated Income Statement
Unit: RMBItemFirst half of 2024First half of 2023I. Total revenue13,884,731,519.0412,564,962,781.31Including: Revenue13,884,731,519.0412,564,962,781.31II. Total operating costs14,187,361,954.5913,439,844,164.10Including: Operating costs12,185,505,709.0011,496,731,662.58
Taxes and surcharges116,747,402.65105,817,810.49Sales and distribution expenses99,303,831.21106,666,717.54General and administrative expenses317,435,416.15328,296,224.86Research and development expense611,914,096.41552,804,828.58Finance expenses856,455,499.17849,526,920.05 Including: Interest expenses854,610,967.90856,872,614.18
Interest income104,024,655.2294,532,686.92Add: Other income159,945,128.64108,155,697.19
Investment income (“-” denotes loss)181,332,096.11-42,756,726.88Including: In vestment income from associates and joint
ventures-38,682,172.1923,934,269.81Ga ins on derecognition of financial assets
measured at amortised cost-23,412,008.23-67,175,214.10Gain on change in fair value (“-” denotes loss)-2,221,596.44-19,815,797.83Credit impairment loss (“-” denotes loss)-124,386,619.66-43,081,750.88Lo ss on impairment of assets
(“-” denotes loss)-3,041,427.75-43,314,485.76Gain on disposal of assets (“-” denotes loss)19,222,812.6011,759,266.91III. Operating profit (“-” denotes loss)-71,780,042.05-903,935,180.04Add: Non-operating income2,751,486.93940,805.30Less: Non-operating expenses1,013,551.003,138,190.06IV. Total profit (“-” denotes total loss)-70,042,106.12-906,132,564.80Less: Income tax expenses-96,400,954.34-211,491,182.14V. Net profit (“-” denotes net loss)26,358,848.22-694,641,382.66(i) Classification according to the continuity of operation
1. Net profit from continuing operations (
“-”denotesnet loss)26,358,848.22-694,641,382.66
2. Net profit from discontinued operations (
“-”
denotes net loss)––(ii) Classification according to ownership
1. Net profit attributable to shareholders of the
Company (“-” denotes net loss)28,646,205.42-688,080,164.10
2. Profit or loss of minority interest (
“-”denotes net
loss)-2,287,357.20-6,561,218.56VI. Net other comprehensive income after tax-15,535,759.27-85,733,908.54Net other comprehensive income after tax attributable to owners of the Company-15,535,759.27-85,733,908.54(i) Other comprehensive income that cannot be reclassifiedto profit and loss––(ii) Other comprehensive income that will be reclassified toprofit and loss-15,535,759.27-85,733,908.54
1. Exchange differences arising from translation
of financial statements denominated in foreign
currencies-19,208,272.66-88,339,013.66
2. Other comprehensive income that may be
reclassified to profit and loss under the equity
method3,672,513.392,605,105.12Other comprehensive income, net of tax attributable to minority interest––
INTERIM REPORT 2024
X Financial Report
II. Financial Statements (Cont’d)
3. Consolidated Income Statement (Cont
’d)ItemFirst half of 2024First half of 2023VII. Total comprehensive income10,823,088.95-780,375,291.20
To tal comprehensive income attributable to owners of theCompany13,110,446.15-773,814,072.64Total comprehensive income attributable to minority interest-2,287,357.20-6,561,218.56VIII. Earnings per share:
(i) Basic earnings per share0.01-0.25(ii) Diluted earnings per share0.01-0.25Legal Representative: Financial controller: Head of the financial department:
Chen HongguoDong LianmingZhang Bo
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
II. Financial Statements (Cont’d)
4. Income statement of the Company
Unit: RMBItemFirst half of 2024First half of 2023I. Revenue4,405,643,431.813,904,584,964.10
Less: Operating costs4,045,995,379.913,746,877,337.08
Taxes and surcharges24,633,366.9219,988,361.19Sales and distribution expenses4,006,101.044,148,207.41General and administrative expenses87,291,113.2951,547,136.68Research and development expense125,852,983.90117,941,892.00Finance expenses122,304,383.31125,869,235.74 Including: Interest expenses215,154,909.24245,995,158.97
Interest income151,576,285.23212,850,374.32Add: Other income29,945,854.4013,833,015.46Investment income (“-” denotes loss)-54,484,706.4855,178,952.64Including: Investment income from associates and joint
ventures-36,830,257.52-2,829,947.39Ga ins on derecognition of financial assets measured at
amortised cost (“-” denotes loss)-10,845,725.80-22,621,312.74Gain on change in fair value (“-” denotes loss)Credit impairment loss (“-” denotes loss)-1,228,938.13-6,264,582.46Loss on impairment of assets (“-” denotes loss)-673,567.00Gain on disposal of assets (“-” denotes loss)18,393,499.789,745,045.43II. Operating profit (“-” denotes loss)-12,487,753.99-89,294,774.93Add: Non-operating income1,065,964.61451,184.77Less: Non-operating expenses594,860.211,912,008.53III. Total profit (“-” denotes total loss)-12,016,649.59-90,755,598.69Less: Income tax expenses-24,640,162.19-41,697,391.77IV. Net profit (“-” denotes net loss)12,623,512.60-49,058,206.92(i) Net profit from continuing operations
(“-” denotes net loss)12,623,512.60-49,058,206.92(ii) Net profit from discontinued operations
(“-” denotes net loss)––V. Total comprehensive income12,623,512.60-49,058,206.92
INTERIM REPORT 2024
X Financial Report
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement
Unit: RMBItemFirst half of 2024First half of 2023I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services14,231,647,331.4512,654,981,362.62Tax rebates received8,107,525.70109,519,774.17Cash received relating to other operating activities150,658,134.92880,312,282.56Subtotal of cash inflows from operating activities14,390,412,992.0713,644,813,419.35
Cash paid for goods and services10,553,832,290.819,962,778,364.17Cash paid to and for employees657,515,276.65667,506,780.80Payments of taxes and surcharges242,371,386.74428,775,626.59Cash paid relating to other operating activities944,194,644.80802,664,900.20Subtotal of cash outflows from operating activities12,397,913,599.0011,861,725,671.76Net cash flows from operating activities1,992,499,393.071,783,087,747.59II. Cash flows from investing activities:
Cash received from investments1,483,295.376,376,301.89Cash received from investment income1,298,463.591,730,212.77Ne t cash received from disposal of fixed assets, intangibleassets and other long-term assets14,657,469.09147,784,119.60Ne t cash received from disposal of subsidiaries and otherbusiness units610,107,490.67–Subtotal of cash inflows from investing activities627,546,718.72155,890,634.26
Ca sh paid for purchase of fixed assets, intangible assets andother long-term assets56,241,530.58104,455,019.88Ne t cash paid for acquisition of subsidiaries and other
business units–4,934,751.03Subtotal of cash outflows from investing activities56,241,530.58109,389,770.91Net cash flows from investing activities571,305,188.1446,500,863.35
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement (Cont
’d)ItemFirst half of 2024First half of 2023III. Cash flows from financing activities:
Cash received from borrowings15,651,271,993.4717,765,551,073.77Cash received relating to other financing activities1,852,785,703.001,128,264,589.15Subtotal of cash inflows from financing activities17,504,057,696.4718,893,815,662.92
Cash repayments of amounts borrowed17,359,068,511.5518,186,471,433.20Ca sh paid for dividend and profit distribution or interestpayment905,617,475.65853,357,265.46Including: Di vidend and profit paid by subsidiaries to minority
shareholders–9,419,178.08Cash paid relating to other financing activities1,787,061,193.131,942,169,772.07Subtotal of cash outflows from financing activities20,051,747,180.3320,981,998,470.73Net cash flows from financing activities-2,547,689,483.86-2,088,182,807.81IV. Effect of foreign exchange rate changes on cash and cash
equivalents22,481,244.59-58,096,458.38V. Net increase in cash and cash equivalents38,596,341.94-316,690,655.25
Add: Ba lance of cash and cash equivalents as at the
beginning of the period764,233,742.612,159,460,149.51VI. Balance of cash and cash equivalents as at the end of the
period802,830,084.551,842,769,494.26
INTERIM REPORT 2024
X Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company
Unit: RMBItemFirst half of 2024First half of 2023I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services4,389,348,030.243,929,585,126.95Tax rebates received–10,186,261.55Cash received relating to other operating activities159,626,585.94244,461,863.48Subtotal of cash inflows from operating activities4,548,974,616.184,184,233,251.98Cash paid for goods and services3,833,931,092.643,646,421,670.77Cash paid to and for employees152,875,362.26159,974,284.62Payments of taxes and surcharges23,260,283.1823,767,270.65Cash paid relating to other operating activities185,450,974.46222,463,991.65Subtotal of cash outflows from operating activities4,195,517,712.544,052,627,217.69Net cash flows from operating activities353,456,903.64131,606,034.29II. Cash flows from investing activities:
Cash received from investments488,776,095.376,376,301.89Cash received from investment income110,698,463.5981,730,212.77Ne t cash received from disposal of fixed assets, intangibleassets and other long-term assets14,521,469.0940,443,619.60Subtotal of cash inflows from investing activities613,996,028.05128,550,134.26
Ca sh paid for purchase of fixed assets, intangible assets
and other long-term assets5,342,093.9219,406,565.34Subtotal of cash outflows from investing activities5,342,093.9219,406,565.34Net cash flows from investing activities608,653,934.13109,143,568.92
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company (Cont
’d)
ItemFirst half of 2024First half of 2023III. Cash flows from financing activities:
Cash received from borrowings10,107,406,194.2510,014,688,564.21Cash received relating to other financing activities757,331,971.661,362,715,891.06Subtotal of cash inflows from financing activities10,864,738,165.9111,377,404,455.27Cash repayments of amounts borrowed11,078,908,500.0810,389,789,485.97Ca sh paid for dividend and profit distribution or interestpayment207,045,676.09242,860,355.63Cash paid relating to other financing activities464,307,395.90438,804,497.05Subtotal of cash outflows from financing activities11,750,261,572.0711,071,454,338.65Net cash flows from financing activities-885,523,406.16305,950,116.62IV. Effect of foreign exchange rate changes on cash and cash
equivalents1,254,926.56-3,138,503.82V. Net increase in cash and cash equivalents77,842,358.17543,561,216.01Add: Ba lance of cash and cash equivalents as at the
beginning of the period350,786,839.40233,971,948.99VI. Balance of cash and cash equivalents as at the end of the
period428,629,197.57777,533,165.00
INTERIM REPORT 2024
X Financial Report
II. Financial Statements (Cont
’d)
7. Consolidated statement of changes in owners
’ equity
Amount for the period
Unit: RMB
Item
First half of 2024
Equity attributable to owners of the Company
MinorityinterestTotalowners’ equityShare capital
Other equity instruments
CapitalreservesLess:
Treasury shares
OthercomprehensiveincomeSpecialreservesSurplusreservesGeneral riskprovisionsRetained profitOthersSubtotal
PreferencesharesPerpetualbondsOthers
I. Balance as at the end of the prior year2,956,813,200.00–––5,328,790,899.6163,432,450.00-864,881,489.0823,322,829.571,212,009,109.9779,370,294.918,020,182,801.55–16,692,175,196.534,405,680,649.1021,097,855,845.63II. Balance as at the beginning of the year2,956,813,200.00–––5,328,790,899.6163,432,450.00-864,881,489.0823,322,829.571,212,009,109.9779,370,294.918,020,182,801.55–16,692,175,196.534,405,680,649.1021,097,855,845.63III. Changes in the period (“-” denotes decrease)––––-78,482,755.95–-15,535,759.272,126,139.35–13,361.8428,632,843.58–-63,246,170.45-343,374,662.90-406,620,833.35
(i) Total comprehensive income––––––-15,535,759.27–––28,646,205.42–13,110,446.15-2,287,357.2010,823,088.95(ii) Capital paid in and reduced by owners––––-78,482,755.95–––––––-78,482,755.95-290,042,380.45-368,525,136.40
1. Ordinary shares paid by owners–––––––––––––-290,042,380.45-290,042,380.45
2. Others––––-78,482,755.95–––––––-78,482,755.95–-78,482,755.95(III) Profit distribution–––––––––13,361.84-13,361.84––-123,000,000.00-123,000,000.00
1. Transfer to general risk provisions–––––––––13,361.84-13,361.84––––
2. Distribution to owners (or shareholders)–––––––––––––-123,000,000.00-123,000,000.00
(IV) Transfer within owners’ equity–––––––––––––71,955,074.7571,955,074.75
1. Others–––––––––––––71,955,074.7571,955,074.75
(V) Special reserves–––––––2,126,139.35––––2,126,139.35–2,126,139.35
1. Withdrawn in the period–––––––5,053,378.02––––5,053,378.02–5,053,378.02
2. Used in the period–––––––-2,927,238.67––––-2,927,238.67–-2,927,238.67
IV. Balance as at the end of the period2,956,813,200.00–––5,250,308,143.6663,432,450.00-880,417,248.3525,448,968.921,212,009,109.9779,383,656.758,048,815,645.13–16,628,929,026.084,062,305,986.2020,691,235,012.28
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
II. Financial Statements (Cont
’d)
7. Consolidated statement of changes in owners
’ equity (Cont
’d)
Amounts for the prior year
Unit: RMB
Item
First half of 2023
Equity attributable to owners of the Company
MinorityinterestTotalowners’ equityShare capital
Other equity instruments
CapitalreservesLess:
Treasury shares
OthercomprehensiveincomeSpecial
reservesSurplusreservesGeneral riskprovisionsRetainedprofitOthersSubtotal
Preference
sharesPerpetual
bondsOthers
I. Balance as at the end of the prior year2,979,742,200.00–996,000,000.00–5,361,200,522.29128,780,100.00-821,940,694.5715,791,710.951,212,009,109.9779,900,268.719,390,642,477.57–19,084,565,494.924,643,688,325.6923,728,253,820.61II. Balance as at the beginning of the year2,979,742,200.00–996,000,000.00–5,361,200,522.29128,780,100.00-821,940,694.5715,791,710.951,212,009,109.9779,900,268.719,390,642,477.57–19,084,565,494.924,643,688,325.6923,728,253,820.61III. Changes in the period (“-” denotes decrease)––––-27,467,521.92–-85,733,908.544,123,023.54––-688,080,164.10–-797,158,571.02-15,980,396.64-813,138,967.66
(i) Total comprehensive income––––––-85,733,908.54–––-688,080,164.10–-773,814,072.64-6,561,218.56-780,375,291.20(ii) Capital paid in and reduced by owners––––-27,467,521.92–––––––-27,467,521.92–-27,467,521.92
1. Amount of share-based payments
recognised in owners’ equity––––-27,467,521.92–––––––-27,467,521.92–-27,467,521.92
(iii) Profit distribution–––––––––––––-9,419,178.08-9,419,178.08
1. Distribution to shareholders (or owners)–––––––––––––-9,419,178.08-9,419,178.08
(iv) Special reserves–––––––4,123,023.54––––4,123,023.54–4,123,023.54
1. Withdrawn in the period–––––––13,373,517.00––––13,373,517.00–13,373,517.00
2. Used in the period (denotes in
“-”)–––––––-9,250,493.46––––-9,250,493.46–-9,250,493.46
IV. Balance as at the end of the period2,979,742,200.00–996,000,000.00–5,333,733,000.37128,780,100.00-907,674,603.1119,914,734.491,212,009,109.9779,900,268.718,702,562,313.47–18,287,406,923.904,627,707,929.0522,915,114,852.95
INTERIM REPORT 2024
X Financial Report
II. Financial Statements (Cont
’d)
8. Statement of changes in owners
’ equity of the Company
Amount for the period
Unit: RMB
Item
First half of 2024
Share capital
Other equity instruments
Capital reserves
Less:
Treasury shares
OthercomprehensiveincomeSpecial
reservesSurplusreservesRetainedprofitOthers
Total
owners
’ equity
Preference
sharesPerpetual
bondsOthers
I. Balance as at the end of the prior year2,956,813,200.00–––5,073,338,869.1963,432,450.00–4,612,641.991,199,819,528.063,138,783,314.72–12,309,935,103.96II. Balance as at the beginning of the year2,956,813,200.00–––5,073,338,869.1963,432,450.00–4,612,641.991,199,819,528.063,138,783,314.72–12,309,935,103.96III. Changes in the period (
“-” denotes decrease)–––––––1,396,312.44–12,623,512.60–14,019,825.04
(i) Total comprehensive income–––––––––12,623,512.60–12,623,512.60(ii) Special reserves–––––––1,396,312.44–––1,396,312.44
1. Withdrawn in the period–––––––1,396,312.44–––1,396,312.44
IV. Balance as at the end of the period2,956,813,200.00–––5,073,338,869.1963,432,450.00–6,008,954.431,199,819,528.063,151,406,827.32–12,323,954,929.00
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
II. Financial Statements (Cont
’d)
8. Statement of changes in owners
’ equity of the Company (Cont
’d)
Amounts for the prior year
Unit: RMB
Item
First half of 2023
Share capital
Other equity instruments
Capital reserves
Less:
Treasury shares
OthercomprehensiveincomeSpecialreservesSurplusreservesRetainedprofitOthers
Totalowners’ equity
PreferencesharesPerpetualbondsOthers
I. Balance as at the end of the prior year2,979,742,200.00–996,000,000.00–5,147,225,041.11128,780,100.00–2,066,138.151,199,819,528.063,121,934,271.16–13,318,007,078.48II. Balance as at the beginning of the year2,979,742,200.00–996,000,000.00–5,147,225,041.11128,780,100.00–2,066,138.151,199,819,528.063,121,934,271.16–13,318,007,078.48III. Changes in the period (
“-” denotes decrease)––––-27,467,521.92––1,261,601.44–-65,980,906.92–-92,186,827.40
(i) Total comprehensive income–––––––––-65,980,906.92–-65,980,906.92(ii) Capital paid in and reduced by owners––––-27,467,521.92––––––-27,467,521.92
1. Amount of share-based payments
recognised in owners’ equity––––-27,467,521.92––––––-27,467,521.92
(iv) Special reserves–––––––1,261,601.44–––1,261,601.44
1. Withdrawn in the period–––––––1,284,902.41–––1,284,902.41
2. Used in the period–––––––-23,300.97–––-23,300.97
IV. Balance as at the end of the period2,979,742,200.00–996,000,000.00–5,119,757,519.19128,780,100.00–3,327,739.591,199,819,528.063,055,953,364.24–13,225,820,251.08
INTERIM REPORT 2024
X Financial Report
III. Company overviewThe predecessor of Shandong Chenming Paper Holdings Limited (hereinafter referred to as the“Company”, a joint-stockcompany incorporated in Shouguang City, Shandong Province) was Shandong Shouguang Paper Mill Corporation, which waschanged as a joint stock company with limited liability through offering to specific investors in May 1993. In December 1996,with approval by Lu Gai Zi [1996] No. 270 issued by the People’s Government of Shandong Province and Zheng Wei [1996]No. 59 of the Securities Committee of the State Council, the Company was changed as a joint stock company with limitedliability established by share offer. The Company’s headquarters is located at No. 2199 Nongsheng East Road, ShouguangCity, Shandong Province.In May 1997, with approval by Zheng Wei Fa [1997] No. 26 issued by the Securities Committee of the State Council, theCompany issued 115,000,000 domestic listed foreign shares (B shares) under public offering, which were listed and traded onShenzhen Stock Exchange from 26 May 1997.In September 2000, with approval by Zheng Jian Gong Si Zi [2000] No. 151 issued by the China Securities RegulatoryCommission, the Company issued additional 70,000,000 RMB ordinary shares (A shares), which were listed and traded onShenzhen Stock Exchange from 20 November 2000.In June 2008, with approval by the Stock Exchange of Hong Kong Limited, the Company issued 355,700,000 H shares.At 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 the numberof state-owned shares. The additionally issued H shares were listed and traded on Hong Kong Stock Exchange on 18 June2008.As at 30 June 2024, the total share capital of the Company was 2,956,813,200 shares. For details, please refer to Note VII. 39.Principal business activities: the Company is principally engaged in, among other things, processing and sale of paperproducts (including machine-made paper and paper board), paper making raw materials, machinery and chemicals; generationand sale of electric power and thermal power; forestry, saplings growing, processing and sale of timber and constructionmaterials; manufacturing, processing and sale of wood products; and hotel service, and equipment financial and operatingleasing, investment properties and property service etc.The financial statements and notes thereto were approved at the tenth meeting of the tenth session of the board of directorsof the Company (the“Board”) on 14 August 2024.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
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 (collectively referred to as“ASBEs”) promulgatedby the Ministry of Finance. In addition, the Company also discloses relevant financial information in accordance withthe“Preparation Rules for Information Disclosure by Companies Offering Securities to the Public No. 15 – GeneralProvisions on Financial Reports” (revised in 2023) of the CSRC.The financial statements are presented on a going concern.The Company’s financial statements have been prepared on an accrual basis. Except for certain financial instruments,the financial statements are prepared under the historical cost convention. In the event that impairment of assetsoccurs, a provision for impairment is made accordingly in accordance with the relevant regulations.
2. Going concern
No facts or circumstances comprise a material uncertainty about the Company’s going concern basis within 12 monthssince the end of the reporting period.V. Significant Accounting Policies and Accounting EstimatesSpecific accounting policies and accounting estimates are indicated as follows:
The Company and its subsidiaries are principally engaged in machine-made paper, electricity and steam, constructionmaterials, paper making chemical products, processing of moulds, hotel management and other operations. The Companyand its subsidiaries formulated certain specific accounting policies and accounting estimates for the transactions and matterssuch as revenue recognition, determination of performance progress and R&D expenses based on their actual production andoperation characteristics pursuant to the requirements under the relevant ASBEs. For details, please refer to this Note V. 30“Revenue”. For the critical accounting judgments and estimates made by the management, please refer to Note V. 40“Changesin significant accounting policies and accounting estimates”.
1. Statement of compliance with the Accounting Standards for Business Enterprises
These financial statements have been prepared in conformity with the ASBEs, which truly and fully reflect the financialposition of the consolidated entity and the Company as at 30 June 2024 and relevant information such as the operatingresults and cash flows of the consolidated entity and the Company for the first half of 2024.
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.
INTERIM REPORT 2024
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. Determination method and selection basis of importance standards
ItemImportance standardsSignificant accounts receivable with single provision for baddebt reserves
Overdue accounts receivable and the amount of a single
receivable exceeds 0.5% of total assetsWrite-off of significant accounts receivable during the
period
The amount of a single write-off exceeds 0.5% of net
assetsSignificant prepayments aged more than one yearAged more than one year and the single amount exceeds
0.5% of total assets
Significant receipts in advance aged more than one yearAged more than one year and the single amount exceeds
0.5% of total assets
Significant other payables aged more than one yearAged more than one year and the single amount exceeds
0.5% of total assets
Significant accounts payable aged more than one yearAged more than one year and the single amount exceeds
0.5% of total assets
Bad debt provisions with significant amounts reversed or
recovered during the current period
Individually identified or classified into the third stage, the
amount transferred or recovered exceeds 0.5% of total
assetsSignificant construction in progressProjects with budgets exceeding 0.5% of total assetsSignificant non-wholly owned subsidiariesThe total assets of the subsidiary exceed 10% of the
Company on a consolidated basis and the revenue or
pre-tax profit exceeds 10%Significant investment activitiesInvestment amount exceeds 0.5% of total assetsSignificant joint ventures and associatesThe joint venture or associate operates normally with an
accounting amount exceeding 0.5% of total assetsSignificant debt restructuringThe restructuring amount exceeds 0.5% of total assets
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
6. Accounting treatment of business combinations under common control and not under common control
(1) Business combination under common control
For the business combination involving entities under common control, the assets and liabilities of the party beingmerged that are obtained in the business combination by the absorbing party shall be measured at the carryingamounts as recorded by the ultimate controlling party in the consolidated financial statements at the combinationdate. The difference between the carrying amount of the consideration paid for the combination and the carryingamount of the net assets obtained in the combination is charged to the capital reserve. If the capital reserve is notsufficient to absorb the difference, any excess shall be adjusted against retained earnings.Business combinations involving entities under common control and achieved in stagesThe assets and liabilities of the party being merged that are obtained at the combination by the absorbing partyshall be measured at the carrying value as recorded by the ultimate controlling party in the consolidated financialstatements at combination date. The difference between the sum of the carrying value from original shareholdingportion and the new investment cost incurred at combination date and the carrying value of net assets obtainedat combination date shall be adjusted to capital reserve, if the balance of capital reserve is not sufficient to absorbthe differences, any excess is adjusted to retained earnings. The long-term investment prior to the absorbing partyobtaining the control of the party being merged, the recognised profit or loss, comprehensive income and otherchange of owners’equity at the closer date of the acquisition date and combination date under common controlshall separately offset the opening balance of retained earnings and profit or loss during comparative statements.
(2) Business combination not under common control
For business combinations involving entities not under common control, the cost for each combination ismeasured at the aggregate fair value at acquisition date, of assets given, liabilities incurred or assumed, andequity securities issued by the acquirer in exchange for control of the acquiree. At acquisition date, the acquiredassets, liabilities or contingent liabilities of acquiree are measured at their fair value.
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
6. 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 stagesThe combination cost is the sum of consideration paid at acquisition date and fair value of the acquiree’s equityinvestment held prior to acquisition date. The cost of equity of the acquiree held prior to acquisition date shall beremeasured at the fair value at acquisition date, and the difference between the fair value and carrying amountshall be recognised as investment income or loss for the current period. Other comprehensive income andchanges of other owners’ equity related with acquiree’s equity held prior to acquisition date shall be transferredto investment profit or loss for current period at acquisition date, except for the other comprehensive incomeincurred by the changes of net assets or net liabilities due to the remeasurement of defined benefit plans andthe other comprehensive income related to investments in non-trading equity instruments that were previouslydesignated as at fair value through other comprehensive income.
(3) Transaction fees attribution during business combination
The audit, legal, valuation advisory and other intermediary fees and other relevant administrative expenses arisingfrom business combinations are recognised in profit or loss when incurred. Transaction costs of equity or debtsecurities issued as the considerations of business combination are included in the initial recognition amounts.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
7. Judgment criteria for control and preparation of consolidated financial statements
(1) Judgment criteria for control
The scope of consolidation of the consolidated financial statements is determined on the basis of control. Theterm“control”refers to the fact that the Company has power over the investee and is entitled to variable returnsfrom its involvement with the investee and the ability to use its power over the investee to affect the amount ofthose returns. The Company will reassess when changes in relevant facts and circumstances result in changes inthe relevant elements involved in the definition of control.When judging whether to include a structured entity into the scope of consolidation, the Companycomprehensively considers all facts and circumstances, including assessing the purpose and design of thestructured entity, identifying the types of variable returns, and assessing whether to control the structured entityon the basis of whether it bears part or all of the return variability by participating in its related activities.
(2) Basis for preparation of the consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial statements of theCompany and its subsidiaries and other relevant information. In preparing the consolidated financial statements,the accounting policies and accounting periods of the Company and its subsidiaries shall be consistent, andintra-company significant transactions and balances are eliminated.A subsidiary and its business acquired through a business combination involving entities under common controlduring the reporting period shall be included in the scope of the consolidation of the Company from the dateof being controlled by the ultimate controlling party, and its operating results and cash flows from the date ofbeing controlled by the ultimate controlling party are included in the consolidated income statement and theconsolidated cash flow statement, respectively.For a subsidiary and its business acquired through a business combination involving entities not under commoncontrol during the reporting period, its income, expenses and profits are included in the consolidated incomestatement, and cash flows are included in the consolidated cash flow statement from the acquisition date to theend of the reporting period.The shareholders’equity of the subsidiaries that is not attributable to the Company is presented undershareholders’equity in the consolidated balance sheet as minority interest. The portion of net profit or loss ofsubsidiaries for the period attributable to minority interest is presented in the consolidated income statementunder the“profit or loss of minority interest”. When the amount of loss attributable to the minority shareholders ofa subsidiary exceeds the minority shareholders’ portion of the opening balance of owners’equity of the subsidiary,the excess amount shall be allocated against minority interest.
(3) Acquisition of non-controlling interests in subsidiaries
The difference between the long-term equity investments costs acquired by the acquisition of non-controllinginterests and the share of the net assets from subsidiaries from the date of acquisition or the date of combinationbased on the new shareholding ratio, as well as the difference between the proceeds from the partial disposalof the equity investment without losing control over its subsidiary and the disposal of the long-term equityinvestment corresponding to the share of the net assets of the subsidiaries from the date of acquisition or the dateof combination, is adjusted to the capital reserve. If the capital reserve is not sufficient, any excess is adjusted toretained earnings.
(4) Accounting treatment for loss of control over subsidiaries
For the loss of control over a subsidiary due to disposal of a portion of the equity investment or other reasons,the remaining equity is measured at fair value on the date when the control is lost. The difference arising fromthe sum of consideration received for disposal of equity interest and the fair value of remaining equity interestover the sum of the share of the carrying amount of net assets of the former subsidiary calculated continuouslyfrom the purchase date based on the shareholding percentage before disposal and the goodwill is recognised asinvestment income in the period when the control is lost.Other comprehensive income related to equity investment in the former subsidiary shall be accounted for on thesame basis as the former subsidiary’s direct disposal of relevant assets or liabilities when the control is lost. Otherchanges in owners’equity related to the former subsidiary that are accounted for using the equity method shall betransferred to current profit or loss at the time when the control is lost
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
8. Classification of joint arrangements and accounting treatment for joint operations
A joint arrangement refers to an arrangement of two or more parties have joint control. The joint arrangements of theCompany comprise joint operations and joint ventures.
(1) Joint operations
Joint operations refer to a joint arrangement during which the Company is entitled to relevant assets andobligations of this arrangement.The Company recognises the following items in relation to its interest in a joint operation and accounts for them inaccordance with the relevant ASBEs:
A. the assets held solely by it and assets held jointly according to its share;B. the liabilities assumed solely by it and liabilities assumed jointly according to its share;C. the revenue from sale of output from joint operations;D. the revenue from sale of output from joint operations according to its share;E. the fees solely incurred by it and fees incurred from joint operations according to its share.
(2) Joint ventures
Joint ventures refer to a joint arrangement during which the Company only is entitled to net assets of thisarrangement.The Company accounts for its investments in joint ventures in accordance with the requirements relating toaccounting treatment using equity method for long-term equity investments.
9. Standards for recognising cash and cash equivalents
Cash refers to cash on hand and deposits readily available for payment purpose. Cash equivalents refer to short – termand highly liquid investments held by the Company which are readily convertible into known amount of cash and whichare subject to insignificant risk of value change.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Foreign currency operations and translation of statements denominated in foreign currency
(1) Foreign currency operations
The foreign currency operations of the Company are translated into the functional currency at the prevailing spotexchange rate on the date of exchange.On the balance sheet date, foreign currency monetary items shall be translated at the spot exchange rate onthe balance sheet date. The exchange difference arising from the difference between the spot exchange rateon the balance sheet date and the spot exchange rate upon initial recognition or the last balance sheet date willbe recognised in profit or loss for the period. The foreign currency non-monetary items measured at historicalcost shall still be measured by the functional currency translated at the spot exchange rate on the date of thetransaction. Foreign currency non-monetary items measured at fair value are translated at the spot exchangerate on the date of determination of the fair value. The difference between the amounts of the functional currencybefore and after the translation will be recognised in profit or loss or other comprehensive income for the periodbased on the nature of the non-monetary items.
(2) Translation of financial statements denominated in foreign currency
When translating the financial statements denominated in foreign currency of overseas subsidiaries, assets andliabilities on the balance sheet are translated at the spot exchange rate prevailing at the balance sheet date;owner’s equity items except for“retained profit”are translated at the spot exchange rates at the dates on whichsuch items arose.Income and expenses items in the income statement are translated at the prevailing spot exchange rate on thetransaction date.All items in the cash flow statements shall be translated at the prevailing spot exchange rate on the date thatthe cash flow transaction occurred. Effects arising from changes of exchange rate on cash shall be presentedseparately as the“effect of foreign exchange rate changes on cash and cash equivalents”item in the cash flowstatements.The differences arising from translation of financial statements shall be included in the“other comprehensiveincome” item in owners’ equity in the balance sheet.On disposal of foreign operations and loss of control, exchange differences arising from the translation of financialstatements denominated in foreign currencies related to the disposed foreign operations which has been includedin shareholders’equity in the balance sheet, shall be transferred to profit or loss in whole or in proportionate sharein the period in which the disposal took place.
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. Financial instruments
A financial instrument is a contract that gives rise to a financial asset of one party and a financial liability or equityinstrument of another party.
(1) Recognition and derecognition of financial instruments
Financial asset or financial liability will be recognised when the Company became one of the parties under afinancial instrument contract.Financial asset that satisfied any of the following criteria shall be derecognised:
the contract right to receive the cash flows of the financial asset has terminated;the financial asset has been transferred and meets the derecognition criteria for the transfer of financialasset as described below.A financial liability (or a part thereof) is derecognised only when the present obligation is discharged in full or inpart. If an agreement is entered between the Company (debtor) and a creditor to replace the existing financialliabilities with new financial liabilities, and the contractual terms of the new financial liabilities are substantiallydifferent from those of the existing financial liabilities, the existing financial liabilities shall be derecognised and thenew financial liabilities shall be recognised.Conventionally traded financial assets shall be recognised and derecognised at the trading date.
(2) Classification and measurement of financial assets
The Company classifies the financial assets according to the business model for managing the financial assetsand characteristics of the contractual cash flows as follows: financial assets measured at amortised cost, financialassets measured at fair value through other comprehensive income, and financial assets measured at fair valuethrough profit or loss.Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair valuethrough profit or loss, relevant transaction costs are directly recognised in profit or loss for the current period.For other categories of financial assets, relevant transaction costs are included in the amount initially recognised.Accounts receivable arising from sales of goods or rendering services, without significant financing component,are initially recognised based on the transaction price expected to be entitled by the Company.
Financial assets measured at amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designatedat fair value through profit or loss:
The Company’s business model for managing such financial assets is to collect contractual cash flows;The contractual terms of the financial asset stipulate that cash flows generated on specific dates are solelypayments of principal and interest on the principal amount outstanding.Subsequent to initial recognition, such financial assets are measured at amortised cost using the effective interestmethod. A gain or loss on a financial asset that is measured at amortised cost and is not part of a hedgingrelationship shall be recognised in profit or loss for the current period when the financial asset is derecognised,amortised using the effective interest method or with impairment recognised.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. Financial instruments (Cont
’d)
(2) Classification and measurement of financial assets (Cont
’d)Financial assets measured at fair value through other comprehensive income
A financial asset is classified as measured at fair value through other comprehensive income if it meets both of thefollowing conditions and is not designated at fair value through profit or loss:
The Company’s business model for managing such financial assets is achieved both by collecting collectcontractual cash flows and selling such financial assets;The contractual terms of the financial asset stipulate that cash flows generated on specific dates are solelypayments of principal and interest on the principal amount outstanding.Subsequent to initial recognition, such financial assets are subsequently measured at fair value. Interest calculatedusing the effective interest method, impairment losses or gains and foreign exchange gains and losses arerecognised in profit or loss for the current period, and other gains or losses are recognised in other comprehensiveincome. On derecognition, the cumulative gain or loss previously recognised in other comprehensive income isreclassified from other comprehensive income to profit or loss.Financial assets measured at fair value through profit or lossThe Company classifies the financial assets other than those measured at amortised cost and measured at fairvalue through other comprehensive income as financial assets measured at fair value through profit or loss. Uponinitial recognition, the Company irrevocably designates certain financial assets that are required to be measuredat amortised cost or at fair value through other comprehensive income as financial assets measured at fair valuethrough profit or loss in order to eliminate or significantly reduce accounting mismatch.Upon initial recognition, such financial assets are measured at fair value. Except for those held for hedgingpurposes, gains or losses (including interests and dividend income) arising from such financial assets arerecognised in the profit or loss for the current period.The business model for managing financial assets refers to how the Company manages its financial assets inorder to generate cash flows. That is, the Company’s business model determines whether cash flows will resultfrom collecting contractual cash flows, selling financial assets or both. The Company determines the businessmodel for managing financial assets on the basis of objective facts and specific business objectives for managingfinancial assets determined by key management personnel.The Company assesses the characteristics of the contractual cash flows of financial assets to determine whetherthe contractual cash flows generated by the relevant financial assets on a specific date are solely payments ofprincipal and interest on the principal amount outstanding. The principal refers to the fair value of the financialassets at the initial recognition. Interest includes consideration for the time value of money, for the credit riskassociated with the principal amount outstanding during a particular period of time and for other basic lendingrisks, costs and profits. In addition, the Company evaluates the contractual terms that may result in a change inthe time distribution or amount of contractual cash flows from a financial asset to determine whether it meets therequirements of the above contractual cash flow characteristics.
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. Financial instruments (Cont
’d)
(2) Classification and measurement of financial assets (Cont
’d)Financial assets measured at fair value through profit or loss (Cont’d)All affected financial assets are reclassified on the first day of the first reporting period following the change inthe business model where the Company changes its business model for managing financial assets; otherwise,financial assets shall not be reclassified after initial recognition.Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair valuethrough profit or loss, relevant transaction costs are directly recognised in profit or loss for the current period.For other categories of financial assets, relevant transaction costs are included in the amount initially recognised.Accounts receivable arising from sales of goods or rendering services, without significant financing component,are initially recognised based on the transaction price expected to be entitled by the Company.
(3) Classification and measurement of financial liabilities
At initial recognition, financial liabilities of the Company are classified as financial liabilities measured at fair valuethrough profit or loss and financial liabilities measured at amortised cost. For financial liabilities not classifiedas measured at fair value through profit or loss, relevant transaction costs are included in the amount initiallyrecognised.
Financial liabilities measured at fair value through profit or loss
Financial liabilities measured at fair value through profit or loss comprise held-for-trading financial liabilities andfinancial liabilities designated at fair value through profit or loss upon initial recognition. Such financial liabilitiesare subsequently measured at fair value, and the gains or losses from the change in fair value and the dividend orinterest expenses related to the financial liabilities are included in the profit or loss of the current period.Financial liabilities measured at amortised costOther financial liabilities are subsequently measured at amortised cost using the effective interest rate method,and the gains or losses arising from derecognition or amortisation are recognised in profit or loss for the currentperiod.Classification between financial liabilities and equity instruments
A financial liability is a liability if:
it has a contractual obligation to pay in cash or other financial assets to other parties.it has a contractual obligation to exchange financial assets or financial liabilities under potential adverse
condition with other parties. it is a non-derivative instrument contract which will or may be settled with the entity’s own equityinstruments, and the entity will deliver a variable number of its own equity instruments according to suchcontract. it is a derivative instrument contract which will or may be settled with the entity’s own equity instruments,except for a derivative instrument contract that exchanges a fixed amount of cash or other financial assetwith a fixed number of its own equity instruments.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. 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. 12.
(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 investment in debt instruments measured at fair value through other comprehensive income;Contract assets as defined in the Accounting Standards for Business Enterprises No. 14 – Revenue;Lease receivables;Financial guarantee contracts (except those measured at fair value through profit or loss or formed by continuinginvolvement of transferred financial assets or the transfer does not qualify for derecognition).
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. 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.For receivables such as bills receivable, accounts receivable, accounts receivable financing, other receivablesand contract assets, if the credit risk characteristics of a customer are significantly different from other customersin the portfolio, or the credit risk characteristics of such customer change significantly, the Company will make aseparate provision for bad debts for such receivables. In addition to the receivables for which bad debt provisionsare made individually, the Company divides the receivables into portfolios based on credit risk characteristics andcalculates bad debt provisions on a combined basis.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. 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: Due from non-related party customersAccounts receivable portfolio 3: Factoring receivablesFor bills receivable classified as a portfolio, the Company refers to the historical credit loss experience, combinedwith the current situation and the forecast of future economic conditions, to calculate the ECLs based on defaultrisk exposure and lifetime ECL rate.For accounts receivable classified as a portfolio, the Company refers to the historical credit loss experience,combined with the current situation and the forecast of future economic conditions, to prepare a comparison tableof the ageing/overdue days of accounts receivable and the lifetime ECL rate to calculate the ECLs. The aging ofaccounts receivable is calculated from the date of recognition.Other receivables
The Company classifies other receivables into portfolios based on credit risk characteristics, and calculates theECLs on a portfolio basis. The basis for determining the portfolios is as follows:
Other receivables portfolio 1: Amount due from government authoritiesOther receivables portfolio 1: 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. For other receivables grouped by aging, the agingis calculated from the date of recognition.
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. Financial instruments (Cont
’d)
(5) Impairment of financial assets (Cont
’d)
Long-term receivablesThe Company’s long-term receivables include finance lease receivables and deposits receivable.The Company classifies the finance lease receivables and deposits receivable into portfolios based on the creditrisk characteristics, and calculates the ECLs on a portfolio basis. The basis for determining the portfolios is asfollows:
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 accounts receivable financing and deposits receivable, the Company refers to the historical credit lossexperience, combined with the current situation and the forecast of future economic conditions, and calculatesthe ECLs based on default risk exposure and lifetime ECL rate.Except for those of finance lease receivables and deposits receivable, the ECLs of other receivables and long –term receivables classified as a portfolio are measured based on default risk exposure and ECL rate over the next12 months or the entire lifetime.
Debt investments and other debt investmentsFor debt investments and other debt investments, the Company measures the ECLs based on the nature of theinvestment, the types of counterparty and risk exposure, and default risk exposure and ECL rate within the next12 months or the entire lifetime.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. 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.
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. Financial instruments (Cont
’d)
(5) Impairment of financial assets (Cont
’d)Presentation of provisions for ECLsECLs are remeasured at each balance sheet date to reflect changes in the financial instrument’s credit risk uponinitial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit or loss forthe current period. For financial assets measured at amortised cost, the provisions of impairment is deductedfrom the carrying amount of the financial assets presented in the balance sheet; for debt investments at fair valuethrough other comprehensive income, the Company makes provisions of impairment in other comprehensiveincome without reducing the carrying amount of the financial asset.Write-offsThe book balance of a financial asset is directly written off to the extent that there is no realistic prospect ofrecovery of the contractual cash flows of the financial asset (either partially or in full). Such write-off constitutesderecognition of such financial asset. This is generally the case when the Company determines that the debtordoes not have assets or sources of income that could generate sufficient cash flows to repay the amounts subjectto the write-off. However, financial assets that are written off could still be subject to enforcement activities inorder to comply with the Company’s procedures for recovery of amounts due.If a write-off of financial assets is subsequently recovered, the recovery is credited to profit or loss in the period inwhich the recovery occurs.
(6) Transfer of financial assets
Transfer of financial assets refers to the transfer or delivery of financial assets to another party other than theissuer of such financial assets (the transferee).If the Company transfers substantially all the risks and rewards of ownership of the financial asset to thetransferee, the financial asset shall be derecognised. If the Company retains substantially all the risks and rewardsof ownership of a financial asset, the financial asset shall not be derecognised.If the Company neither transfers nor retains substantially all the risks and rewards of ownership of the financialasset, it accounts for the transaction as follows: if the Company does not retain control, it derecognises thefinancial asset and recognises any resulting assets or liabilities; if the control over the financial asset is not waived,the relevant financial asset is recognised according to the extent of its continuing involvement in the transferredfinancial asset and the relevant liability is recognised accordingly.
(7) Offset of financial assets and financial liabilities
If the Company owns the legitimate rights of offsetting the recognised financial assets and financial liabilities,which are enforceable currently, and the Company plans to realise the financial assets or to clear off the financialliabilities on a net amount basis or simultaneously, the net amount of financial assets and financial liabilities shallbe presented in the balance sheet upon offsetting. Otherwise, financial assets and financial liabilities are presentedseparately in the balance sheet without offsetting.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
12. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transactionbetween market participants at the measurement date.The Company measures the relevant asset and liability at fair value, based on the presumption that the orderlytransaction to sell the asset or transfer the liability takes place either in the principal market for the relevant asset orliability, or in the absence of a principal market, in the most advantageous market for relevant the asset or liability. Theprincipal or the most advantageous market must be a trading market accessible by the Company at the measurementdate. The Company adopts the presumption that market participants would use when pricing the asset or liability in theirbest economic interest.If there exists an active market for a financial asset or financial liability, the Company uses the quotation on the activemarket as its fair value. If the market for a financial instrument is inactive, the Company uses valuation technique torecognise its fair value.Fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economicbenefits by using the asset in its best use or by selling it to another market participant that would use the asset in itsbest use.The Company adopts valuation techniques that are appropriate in the current circumstance and for which sufficient dataand other information are available, prioritises the use of relevant observable inputs and uses unobservable inputs onlyunder the circumstances where such relevant observable inputs cannot be obtained or practicably obtained.Assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within thefair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole. Level 1:
based on quoted prices (unadjusted) in active markets for identical assets or liabilities obtainable at the measurementdate. Level 2: observable inputs for the relevant asset or liability, either directly or indirectly, except for Level 1 input.Level 3: unobservable inputs for the relevant assets or liability.At each balance sheet date, the Company reassesses assets and liabilities measured at fair value that are recognisedin the financial statements on a recurring basis to determine whether transfers have occurred between fair valuemeasurement hierarchy levels.
13. Inventories
(1) Classification of inventories
Inventories of the Company mainly include raw materials, work in progress, goods in stock, development productsand consumable biological assets, etc.
(2) Pricing of inventories dispatched
Inventories of the Company are measured at their actual cost when obtained. Cost of raw materials, goods instock and others will be calculated with weighted average method when being dispatched.Consumable biological assets refer to biological assets held-for-sale which include growing timber. Consumablebiological assets without a stock are stated at historical cost at initial recognition, and subsequently measuredat fair value when there is a stock. Changes in fair values shall be recognised as profit or loss in the currentperiod. The cost of self-planting, self-cultivating consumable biological assets is the necessary expensesdirectly attributable to such assets prior to canopy closure, including borrowing costs eligible for capitalisation.Subsequent expenses such as maintenance cost incurred after canopy closure shall be included in profit or lossfor the current period.The cost of consumable biological assets shall, at the time of harvest or disposal, be carried forward at carryingamount using the stock volume proportion method.
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
13. Inventories (Cont
’d)
(3) Recognition of and provision for inventory impairment
At the balance sheet date, inventories are measured at the lower of cost and net realisable value. If the netrealisable value is below the cost of inventories, a provision for inventory impairment is made.Net realisable value refers to the amount of the estimated price of inventories less the estimated cost incurredupon completion, estimated sales expenses and taxes and levies. The realisable value of inventories shall bedetermined on the basis of definite evidence, purpose of holding the inventories and effect of after-balance –sheet-date events.The Company usually makes provisions for inventory impairment on the basis of individual inventory items;however, for inventories with large quantities and lower unit prices, these inventories are accrued impairmentaccording to inventory categories.At the balance sheet date, in case the factors causing inventory impairment no longer exists, the original provisionfor inventory impairment shall be reversed.
(4) Inventory stock taking system
The Company implements permanent inventory system as its inventory stock taking system.
(5) Amortisation of low-value consumables and packaging materials
The low-value consumables of the Company are amortised when issued for use.Packaging materials for turnover are amortised when issued for use.
14. Long-term equity investments
Long-term equity investments include the equity investments in subsidiaries, joint ventures and associates. Associatesof the Company are those investees that the Company imposes significant influence over.
(1) Determination of initial investment cost
Long-term equity investments acquired through business combinations: for a long-term equity investmentacquired through a business combination involving enterprises under common control, the investment cost shallbe the absorbing party’s share of the carrying amount of the owners’equity under the consolidated financialstatements of the ultimate controlling party on the date of combination. For a long-term equity investmentacquired through a business combination involving enterprises not under common control, the investment cost ofthe long-term equity investment shall be the cost of combination.Long-term equity investments acquired through other means: for a long-term equity investment acquired by cashpayment, the initial investment cost shall be the purchase cost actually paid; for a long-term equity investmentacquired by issuing equity securities, the initial investment cost shall be the fair value of equity securities issued.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
14. Long-term equity investments (Cont
’d)
(2) Subsequent measurement and method for profit or loss recognition
Investments in subsidiaries shall be accounted for using the cost method. Except for the investments which meetthe conditions of holding for sale, investments in associates and joint ventures shall be accounted for using theequity method.For a long-term equity investment accounted for using the cost method, the cash dividends or profits declared bythe investees for distribution shall be recognised as investment gains and included in profit or loss for the currentperiod, except the case of receiving the actual consideration paid for the investment or the declared but not yetdistributed cash dividends or profits which is included in the consideration.For a long-term equity investment accounted for using the equity method, where the initial investment costexceeds the investor’s interest in the fair value of the investee’s identifiable net assets at the acquisition date, noadjustment shall be made to the investment cost of the long-term equity investment. Where the initial investmentcost is less than the investor’s interest in the fair value of the investee’s identifiable net assets at the acquisitiondate, adjustment shall be made to the carrying amount of the long-term equity investment, and the difference shallbe charged to profit or loss for the current period.Under the equity method, investment gain and other comprehensive income shall be recognised based on theCompany’s share of the net profits or losses and other comprehensive income made by the investee, respectively.Meanwhile, the carrying amount of long-term equity investment shall be adjusted. The carrying amount oflong-term equity investment shall be reduced based on the Group’s share of profit or cash dividend distributedby the investee. In respect of the other movement of net profit or loss, other comprehensive income and profitdistribution of investee, the carrying amount of long-term equity investment shall be adjusted and included inthe capital reserves (other capital reserves). The Group shall recognise its share of the investee’s net profits orlosses based on the fair values of the investee’s individual separately identifiable assets at the time of acquisition,after making appropriate adjustments thereto according to the accounting policies and accounting periods of theCompany.For additional equity investment made in order to obtain significant influence or common control over investeewithout resulted in control, the initial investment cost under the equity method shall be the aggregate of fair valueof previously held equity investment and additional investment cost on the date of transfer. For 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 – Recognition and measurement of Financial Instruments. The differencebetween its fair value and carrying amount shall be included in profit or loss for the current period. In respectof other comprehensive income recognised under previous equity investment using equity method, it shall beaccounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability byinvestee at the time when equity method was ceased to be used. Movement of other owners’equity related to theprevious equity investment shall be transferred to profit or loss for the current period.In the event of loss of control over investee due to partial disposal of equity investment, the remaining equityinterest which can apply common control or impose significant influence over the investee after disposal shall beaccounted for using equity method. Such remaining equity interest shall be treated as accounting for using equitymethod since it is obtained and adjustment was made accordingly. For the remaining equity interest which cannotapply common control or impose significant influence over the investee after disposal, it shall be accounted forusing the Accounting Standard for Business Enterprises No. 22 – Recognition and measurement of FinancialInstruments. The difference between its fair value and carrying amount as at the date of losing control shall beincluded in profit or loss for the current period.
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
14. Long-term equity investments (Cont
’d)
(2) Subsequent measurement and method for profit or loss recognition (Cont
’d)
If the shareholding ratio of the Company is reduced due to the capital increase of other investors, and as a result,the Company loses the control of but still can apply common control or impose significant influence over theinvestee, the net asset increase due to the capital increase of the investee attributable to the Company shall berecognised according to the new shareholding ratio, and the difference with the original carrying amount of thelong-term equity investment corresponding to the shareholding ratio reduction part that should be carried forwardshall be recorded in the profit or loss for the current period; and then it shall be adjusted according to the newshareholding ratio as if equity method is used for accounting when acquiring the investment.In respect of the transactions between the Company and its associates and joint ventures, the share of unrealisedgain or loss arising from internal transactions shall be eliminated by the portion attributable to the Company.Investment gain or loss shall be recognised accordingly. However, any unrealised loss arising from internaltransactions between the Company and an investee is not eliminated to the extent that the loss is impairment lossof the transferred assets.
(3) Basis for determining the common control and significant influence on the investee
Common control is the contractually agreed sharing of control over an arrangement, which relevant activities ofsuch arrangement must be decided by unanimously agreement from parties who share control. When determiningif there is any common control, it should first be identified if the arrangement is controlled by all the participantsor the group consisting of the participants, and then determined if the decision on the arranged activity can bemade only with the unanimous consent of the participants sharing the control. If all the participants or a groupof participants can only decide the relevant activities of certain arrangement through concerted action, it canbe considered that all the participants or a group of participants share common control on the arrangement. Ifthere are two or more participant groups that can collectively control certain arrangement, it does not constitutecommon control. When determining if there is any common control, the relevant protection rights will not be takeninto account.Significant influence is the power of the investor to participate in the financial and operating policy decisions ofan investee, but to fail to control or joint control the formulation of such policies together with other parties. Whendetermining if there is any significant influence on the investee, the influence of the voting shares of the investeeheld by the investor directly and indirectly and the potential voting rights held by the investor and other partieswhich are exercisable in the current period and converted to the equity of the investee, including the warrants,stock options and convertible bonds that are issued by the investee and can be converted in the current period,shall be taken into account.When the Company holds directly or indirectly through the subsidiary 20% (inclusive) to 50% of the voting sharesof the investee, it is generally considered to have significant influence on the investee, unless there is concreteevidence to prove that it cannot participate in the production and operation decision-making of the investee andcannot pose significant influence in this situation. When the Company owns less than 20% of the voting sharesof the investee, it is generally considered that it has not significantly influenced on the investee, unless thereis concrete evidence to prove that it can participate in the production and operation decision – making of theinvestee and can impose significant influence in this situation.
(4) Impairment test method and impairment provision
For the method for making impairment provision for the investment in subsidiaries, associates and joint ventures,please refer to Note V. 23.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
15. 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. 23.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.
16. 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
Year ofdepreciation
Estimated residual
value
Annual depreciation
rateHousing and building structure20-405-102.25-4.75Machinery and equipment8-205-104.50-11.88Transportation equipment5-85-1011.25-19.00Electronic equipment and others55-1018.00-19.00Where, for the fixed assets for which impairment provision is made, to determine the depreciation rate, theaccumulated amount of the fixed asset impairment provision that has been made shall be deducted.
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
16. Fixed assets (Cont
’d)
(3) The impairment test method and impairment provision method of the fixed assets are set out in Note V. 23.
(4) The Company will review the useful lives, estimated net residual value and depreciation method of the fixed assets
at the end of each year.When there is any difference between the useful lives estimate and the originally estimated value, the usefullives of the fixed asset shall be adjusted. When there is any difference between the estimated net residual valueestimate and the originally estimated value, the estimated net residual value shall be adjusted.
(5) Disposal of fixed assets
A fixed asset is derecognised on disposal or when it is expected that there shall be no economic benefit arisingfrom using or after disposal. Where the fixed assets are sold, transferred, retired or damaged, the income receivedafter disposal after deducting the carrying amount and related taxes are recognised in profit or loss for the currentperiod.The Company regards the fixed assets that have been replaced due to technological transformation or eliminationof outdated production capacity and have no subsequent plan for use, but have not reached the retirementstandard, as idle fixed assets. The depreciation method for idle fixed assets remains unchanged from before itwas idle.
17. 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.For technological transformation or new machine-made paper projects, the projects will be put into trial operation for aperiod of time (usually three months) upon completion of construction. After the internal acceptance is completed duringthe trial operation period, the construction in progress will be transferred to fixed assets.The method for impairment provision of construction in progress is set out in Note V. 23.
18. Materials for project
The materials for project of the Group refer to various materials prepared for construction in progress, includingconstruction materials, equipment not yet installed and tools for production.The purchased materials for project are measured at cost, and the planning materials for project are transferred toconstruction in progress. After the completion of the project, the remaining materials for project are transferred toinventory.The method for impairment provision of materials for project is set out in Note V. 23.The closing balance of materials for project is presented as“construction in progress” item in the balance sheet.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
19. 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; andthe acquisition, construction or production activity necessary for the asset to be ready for its intended useor sale has been started.
(2) Capitalisation period of borrowing costs
When a qualifying asset acquired, constructed or produced by the Company is ready for its intended use or sale,the capitalisation of the borrowing costs shall discontinue. The borrowing costs incurred after a qualifying assetis ready for its intended use or sale shall be recognised as expenses when incurred according to the incurredamount, and included in the profit or loss for the current period.Capitalisation of borrowing costs shall be suspended during periods in which the acquisition, construction orproduction of a qualifying asset is interrupted abnormally, when the interruption is for a continuous period of morethan 3 months. The capitalisation of the borrowing costs shall be continued in the normal interruption period.
(3) Calculation methods for capitalisation rate and capitalised amount of the borrowing costs
Where funds are borrowed for a specific purpose, the amount of interest to be capitalised shall be the actualinterest expense incurred on that borrowing for the period less any bank interest earned from depositing theborrowed funds before being used into banks or any investment income on the temporary investment of thosefunds. Where funds are borrowed for general purpose, the Company shall determine the amount of interestto be capitalised on such borrowings by applying a capitalisation rate to the weighted average of the excessamounts of cumulative expenditures on the asset over and above the amounts of specific-purpose borrowings.The capitalisation rate shall be the weighted average of the interest rates applicable to the general-purposeborrowings.During the capitalisation period, exchange differences on a specific purpose borrowing denominated in foreigncurrency shall be capitalised. Exchange differences related to general-purpose borrowings denominated in foreigncurrency shall be included in profit or loss for the current period.
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
20. Biological assets
(1) Standards for recognising biological assets
Bearer biological assets refer to biological assets held for the purpose of producing agricultural products,providing labour services or renting. The Company’s bearer biological assets are mainly tea trees. Bearerbiological 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 itsintended production 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 theasset is ready for its intended production and operation are expensed and recognised in profit or loss as incurred.According to experience, the tea trees grown by the Company generally take 7 years to reach the crown closurestage.Depreciation of bearer biological assets is calculated using the straight-line method over the estimated useful lifeof each biological asset less its residual value as follows:
Type of bearer biological assetsUseful life (year)
Estimated residual
value
Annual depreciation
rateTea tree205%The Company reviews the useful life and estimated net residual value of a bearer biological asset and thedepreciation method applied at least at each financial year-end. A change in the useful life or estimated netresidual value of a fixed asset or the depreciation method used shall be accounted for as a change in accountingestimate.The difference between the disposal income of the sale, loss, death or damage of a bearer biological asset, net ofits carrying amount and related taxes, is recognised in profit or loss for the current period.The method for impairment provision of bearer biological assets is set out in Note V. 23.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
21. Intangible assets
The intangible assets of the Company include land use rights, software, patents and certificates of third party right.The intangible asset is initially measured at cost, and its useful life is determined upon acquisition. If the useful life isfinite, the intangible asset will be amortised over the estimated useful life using the amortisation method that can reflectthe estimated realisation of the economic benefits related to the asset, starting from the time when it is available for use.If it is unable to reliably determine the estimated realisation, straight-line method shall be adopted for amortisation. Theintangible assets with uncertain useful life will not be amortised.The amortisation methods for the intangible assets with finite useful life are as follows:
TypeUseful life
The basis for determininguseful life
Method ofamortisationRemarkLand use rights50-70Years of certificateStraight-line methodSoftware5-10Estimated years for
software replacement
Straight-line methodPatents5-20Useful life of purchaseStraight-line methodCertificates of third party right3Useful life of purchaseStraight-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. 23.
22. R&D expenses
The R&D expenses of the Company are expenses directly related to the R&D activities of the Company, including thewages R&D staff, direct investment costs, depreciation expenses and long-term prepaid expenses, design expenses,equipment testing expenses, amortisation expenses of intangible assets, and outsourced R&D expenses, and otherexpenses. Among them, the wages of R&D staff are included in R&D expenses based on working hours of relatedprojects. Equipment, production lines, and sites shared between R&D activities and other production and operationactivities are included in R&D expenses according to the proportion of working hours and the proportion of area.The Company divides the expenses on internal R&D projects into expenses in the research phase and expenses in thedevelopment phase. All R&D expenses of the Company are included in the current profits and losses when incurred.
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
23. Asset impairment
Impairment of long-term equity investments in subsidiaries, associates and joint ventures, asset impairment oninvestment property, fixed assets, construction in progress, bearer biological assets measured at cost, right-of –use assets, intangible assets, goodwill and others (excluding inventories, deferred tax assets and financial assets)subsequently measured at cost is determined as follows:
The Company determines if there is any indication of asset impairment as at the balance sheet date. If there is anyevidence indicating that an asset may be impaired, recoverable amount shall be estimated for impairment test. Goodwillarising from business combinations, intangible assets with an indefinite useful life and intangible assets not ready foruse will be tested for impairment annually, regardless of whether there is any indication of impairment.The recoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of thefuture cash flows expected to be derived from the asset. The Company estimates the recoverable amount of anindividual asset. If it is not possible to estimate the recoverable amount of the individual asset, the Company shalldetermine the recoverable amount of the asset group to which the asset belongs. The determination of an asset groupis based on whether major cash inflows generated by the asset group are independent of the cash inflows from otherassets or asset groups.When the recoverable amount of an asset or an asset group is less than its carrying amount, the carrying amount isreduced to its recoverable amount. The reduction amount is charged to profit or loss and an impairment provision ismade accordingly.For the purpose of impairment test of goodwill, the carrying amount of goodwill acquired in a business combination isallocated to the relevant asset groups on a reasonable basis from the acquisition date; where it is difficult to allocateto the related asset groups, it is allocated to the combination of related asset groups. The related asset groups orcombination of asset groups are those which can benefit from the synergies of the business combination and are notlarger than the reportable segments identified by the Company.In the impairment test, if there is any indication that an asset group or a combination of asset groups related to goodwillmay be impaired, the Company first tests the asset group or set of asset groups excluding goodwill for impairment,calculates the recoverable amount and recognises the corresponding impairment loss. An impairment test is then carriedout on the asset group or combination of asset groups containing goodwill by comparing its carrying amount with itsrecoverable amount. If the recoverable amount is lower than the carrying amount, an impairment loss is recognised forgoodwill.An impairment loss recognised shall not be reversed in a subsequent period.
24. 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.
25. 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
26. 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 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 as a liability as the employees provide services, with a corresponding charge to profit orloss or included in the cost of assets where appropriate.
(3) Post-employment benefits
Post-employment benefit plans include defined contribution plans and defined benefit plans. A definedcontribution plan is a post-employment benefit plan under which the Company pays fixed contributionsinto a separate fund and the Company has no further obligations for payment. A defined benefit plan is apost-employment benefit plan other than a defined contribution plan.
Defined contribution plansDefined contribution plans include basic pension insurance, unemployment insurance and enterprise annuity plan (ifany).During the accounting period in which an employee provides service, the amount payable calculated according tothe defined contribution plan is recognised as a liability and included in the profit or loss for the current period orthe cost of relevant assets.Defined benefit plans
For defined benefit plans, the actuarial valuation is carried out by an independent actuary on the annual balancesheet date, and the cost of providing benefits is determined by the expected cumulative benefit unit method. Thecost of staff remuneration arising from the Company’s defined benefit plans includes the following components:
Service cost, including current service cost, past service cost, and settlement gain or loss. In particular,
the current service cost refers to the increase in the present value of obligations of defined benefit plansarising from the service provided by staff in the current period; the past service cost refers to the increase ordecrease in the present value of obligations of defined benefit plans related to the service of the staff in theprevious period arising from the revision of defined benefit plans.Net interest on net liabilities or net assets of defined benefit plans, including interest income from the assetsunder the plans, interest expense arising from the obligations of defined benefit plans, and interest affectedby asset caps. Changes arising from the remeasurement of net liabilities or net assets of defined benefit plans.Unless other accounting standards require or allow costs of staff welfare to be included in costs of assets,the Company will include the above items and in the current profit and loss; and include item in othercomprehensive income which will not be transferred back to profit or loss in subsequent accounting periods.When the original defined benefit plan is terminated, all the part originally included in other comprehensive incomeshall be transferred to retained profit within the scope of equity.
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
26. Employee benefits (Cont
’d)
(4) Termination benefits
When the Company provides termination benefits to employees, employee benefits liabilities arising fromtermination benefits are recognised in profit or loss for the current period at the earlier of the following dates: whenthe Company cannot revoke unilaterally compensation for dismissal due to the cancellation of labour relationshipplans and employee redundant proposals; the Company recognises cost and expenses related to payment ofcompensation for dismissal and restructuring.For the early retirement plans, economic compensations before the actual retirement date were classified astermination benefits. During the period from the date of cease of render of services to the actual retirementdate, relevant wages and contribution to social insurance for the employees proposed to be paid are recognisedin profit or loss on a one-off basis. Economic compensation after the official retirement date, such as normalpension, is accounted for as post-employment benefits.
(5) Other long-term benefits
Other long-term employee benefits provided by the Group to employees that meet the conditions for definedcontribution plans are accounted for in accordance with the relevant provisions relating to defined contributionplans as stated above. If the conditions for defined benefit plans are met, the benefits shall accounted for inaccordance with the relevant provisions relating to defined benefit plans, but the“changes arising from theremeasurement of net liabilities or net assets of defined benefit plans”in the relevant employee benefits shall beincluded in the current profit and loss or the relevant costs of assets.
27. 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
28. Share-based payments and equity instruments
(1) Category of share-based payment
The Company’s share-based payment is either equity-settled or cash-settled.
(2) Determination of fair value of equity instruments
For the existence of an active market for options and other equity instruments granted by the Company, the fairvalue is determined at the quoted price in the active market. For options and other equity instruments with noactive market, option pricing model shall be used to estimate the fair value of the equity instruments. The followingfactors shall be taken into account using option pricing models: A. the exercise price of the option; B. the validityperiod of the option; C. the current market price of the share; D. the expected volatility of the share price; E.predicted dividend of the share; and F. risk-free rate of the option within the validity period.
(3) Recognition of vesting of equity instruments based on the best estimate
On each balance sheet date within the vesting period, the estimated number of equity instruments expected tovest is revised based on the best estimate made by the Company according to the latest available subsequentinformation as to changes in the number of employees with exercisable rights. On the vesting date, the finalestimated number of equity instruments expected to vest should equal the actual number of equity instrumentsexpected to vest.
(4) Accounting treatment of implementation, modification and termination of share-based payment
Equity-settled share-based payment shall be measured at the fair value of the equity instruments granted toemployees. For those may immediately vest after the grant, the fair value of equity instrument at the grant dateshall be included in the relevant costs or expenses, and the capital reserve shall be increased accordingly.If the right may not be exercised until the vesting period comes to an end or until the specified performanceconditions are met, on each balance sheet date within the vesting period, the services obtained in the currentperiod shall, based on the best estimate of the number of vested equity instruments, be included in the relevantcosts or expenses and the capital reserve at the fair value of the equity instrument at the grant date. After thevesting period, relevant costs or expenses and total shareholders’equity which have been recognised will not beadjusted.Cash-settled share-based payment shall be measured in accordance with the fair value of liability calculatedand recognised based on the shares or other equity instruments undertaken by the Company. For those mayimmediately vest after the grant, the fair value of the liability undertaken by the Company shall, on the date of thegrant, be included in the relevant costs or expenses, and the liabilities shall be increased accordingly. If the rightmay not be exercised until the vesting period comes to an end or until the specified performance conditions aremet, on each balance sheet date within the vesting period, the services obtained in the current period shall, basedon the best estimate of the information about the exercisable right, be included in the relevant costs or expensesand the corresponding liabilities at the fair value of the liability undertaken by the Company. For each of thebalance sheet date and settlement date before the settlement of the relevant liabilities, fair value of the liabilitiesshall be remeasured and the changes will be included in the profit or loss for the current period.
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
28. Share-based payments and equity instruments (Cont
’d)
(4) Accounting treatment of implementation, modification and termination of share-based payment (Cont
’d)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.An increase in the fair value of equity instruments refers to the difference between the fair values of the modifieddate. If the modification reduces the total fair value of shares paid or not conductive to the use of other employeesshare-based payment plans to modify the terms and conditions of service, it will continue to be accounted for inthe accounting treatment, as if the change had not occurred, unless the Company cancelled some or all of theequity instruments granted.During the vesting period, if the cancelled equity instruments (except for failure to meet the conditions of 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.
(5) Restricted shares
If the Company grants the restricted shares to incentive participants under an equity incentive plan, the incentiveparticipants shall subscribe for the shares first. If the unlocking conditions stipulated in the equity incentive plancannot be fulfilled subsequently, the Company repurchase the shares at the predetermined price. If the registrationand other capital increase procedures for the restricted shares issued to employees are completed in accordancewith relevant regulations, the Company recognises share capital and capital reserve (or capital premium) based onthe subscription money received from the employees on the grant date; and recognises treasury shares and otherpayables for repurchase obligation.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
29. Other financial instruments such as preference shares and perpetual bonds
(1) Classification of financial liabilities and equity instruments
Financial instruments issued by the Company are classified into financial assets, financial liabilities or equityinstruments on the basis of the substance of the contractual arrangements and the economic nature not onlyits legal form, together with the definition of financial asset, financial liability and equity instruments on initialrecognition.
(2) Accounting treatment of other financial instruments such as preference shares and perpetual bonds
Financial instruments issued by the Company are initially recognised and measured in accordance with thefinancial instrument standards; thereafter, interest or dividends are accrued on each balance sheet date andaccounted for in accordance with relevant specific ASBEs, i.e. to determine the accounting treatment for interestexpenditure or dividend distribution of the instrument based on the classification of the financial instrument issued.For financial instruments classified as equity instruments, their interest expenses or dividend distributions aretreated as profit distribution of the Company, and their repurchases and cancellations are treated as changes inequity; for financial instruments classified as financial liabilities, their interest expenses or dividend distribution arein principle accounted for with reference to borrowing costs, and the gains or losses arising from their repurchasesor redemption are included in the profit or loss for the current period.For the transaction costs such as fees and commissions incurred by the Company for issuing financialinstruments, if such financial instruments are classified as debt instruments and measured at amortised cost, theyare included in the initial measured amount of the instruments issued; if such financial instruments are classifiedas equity instruments, they are deducted from equity.
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
30. 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 theCompany performs its obligations under the contract;when the customer is able to control the goods in progress in the course of performance by the Companyunder the contract;when the goods produced by the Company under the contract are irreplaceable and the Company has theright 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.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 the
current payment obligations for the goods.The Company has transferred the legal title of the goods to the customer, which is when the client
possesses the legal title of the goods.The Company has transferred the physical possession of goods to the customer, which is when the
customer obtains physical possession of the goods.The Company has transferred all of the substantial risks and rewards of ownership of the goods to the
customer, which is when the customer obtain all of the substantial risks and rewards of ownership of the
goods to the customer. The customer has accepted the goods or services. Other information indicates that the customer has obtained control of the goods.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
30. Revenue (Cont
’d)
(2) Specific methods
The Company’s revenue mainly comes from the following types of business: sales of goods, provision of hotel andproperty services, and provision of financial leasing and factoring services.
Sales of goodsThe Company produces and sells machine-made paper and raw materials, electricity and steam, constructionmaterials, papermaking chemicals, plastic automobile accessories, moulds and other products.In terms of domestic sales, revenue is recognised at a point in time when the control over the goods is transferredafter the Company has delivered the goods (other than electricity and steam) sold to the location as specified inthe contract and the customer has accepted the goods.In terms of overseas sales, revenue is recognised on the day when the goods (other than electricity and steam)sold are loaded on board and declared.The sales of electricity and steam by the Company are performance obligations performed within a certainperiod. For sales of electricity, the Company recognises revenue from sales of electricity based on the quantity ofelectricity delivered to customers every month at a price agreed in the contract. For sales of steam, the Companyrecognises revenue from sales of steam based on the amount of steam delivered to customers every month at aprice agreed in the contract.The credit periods granted by the Company to customers in various industries are consistent with the practices ofvarious industries, therefore, there is no significant financing component.The Company provides product quality assurance for the sales of products and recognises correspondingprovisions. The Company does not provide any additional services or additional quality assurance, so the productquality assurance does not constitute a separate fulfilment obligation.The Company’s cooperation model with distributors is outright sales, and the recognition of sales revenue underthe distribution model is consistent with the direct sales model.Certain contracts between the Company and its customers contain arrangements on sales rebates which will giverise to variable consideration. Where a contract contains variable consideration, the Company determines the bestestimates on the variable consideration based on expected values or the most probable amount, provided thattransaction prices including variable consideration shall not exceed the cumulative amount of recognised revenueupon the removal of relevant uncertainties in connection with which a significant reversal is highly unlikely.For sales of machine-made paper with sales return clauses, the revenue recognised is subject to the cumulativeamount of recognised revenue in connection with which a significant reversal is highly unlikely. The Companyrecognises the liabilities according to the expected amount of refund, and recognises the carrying amount of thegoods returned at the time of transfer deducting the estimated cost of recovering the goods as an asset (includingthe loss of the value of the returned goods).
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
30. Revenue (Cont
’d)
(2) Specific methods (Cont
’d)Provision of hotel and property servicesThe Company provides hotel and property services to external parties. Since the customers obtain and consumethe economic benefits brought by the Company’s performance of the contract while the Company performs thecontract, the Company recognises revenue according to the progress of the contract performance. Since theperformance progress occurs evenly, the Company recognises revenue by amortising on a straight – line basisover the service period.Provision of financial leasing and factoring services
The Company recognises revenue from external financial leasing and factoring services according to the effectiveinterest rate.For assets that have not experienced credit impairment, the Company determines its interest income based onthe amount of the book balance of the financial asset (i.e. without considering the impact of impairment) multipliedby the effective interest rate.There are two cases for financial assets with credit impairment:
For financial assets that are not credit-impaired when purchased or originated, but are credit-impaired insubsequent periods, the Company shall, in the subsequent periods when impairment occurs, determine itsincome based on the amount of the amortised cost of the financial asset (i.e. the book balance minus the accruedimpairment) multiplied by the effective interest rate (the effective interest rate determined at the time of initialrecognition, which does not change due to the occurrence of impairment).For financial assets that are credit-impaired when purchased or originated, the Company shall, upon initialrecognition, determines its income based on the amount of the amortised cost of the financial asset multipliedby the credit-adjusted effective interest rate (i.e. the interest rate at which the projected future cash flows afterimpairment are discounted to the amortised cost at the time of purchase or origination).
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
31. Contract costs
Contract costs are either the incremental costs of obtaining a contract with a customer or the costs to fulfil a contractwith a customer.Incremental costs of obtaining a contract are those costs that the Company incurs to obtain a contract with a customerthat it would not have incurred if the contract had not been obtained e.g. sales commission. The Company recognisesthe incremental costs of obtaining a contract with a customer as an asset if it expects to recover those costs. Othercosts of obtaining a contract, other than incremental costs that are expected to be recovered, are recognised in profit orloss in the period in which they are incurred.If the costs to fulfil a contract with a customer are not within the scope of inventories or other ASBEs, the Companyrecognises an asset from the costs incurred to fulfil a contract only if those costs meet all of the following criteria:
the costs relate directly to an existing contract or to a specifically identifiable anticipated contract, including directlabour, direct materials, allocations of overheads (or similar costs), costs that are explicitly chargeable to thecustomer and other costs that are incurred only because the Company entered into the contract;the costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy)performance obligations in the future; the costs are expected to be recovered.Assets recognised for the incremental costs of obtaining a contract and assets recognised for the costs to fulfil acontract (the“assets related to contract costs”) are amortised on a systematic basis that is consistent with the transferto the customer of the goods or services to which the assets relate and recognised in profit or loss for the currentperiod. If the amortisation period does not exceed one year, it shall be recognised in profit or loss for the current period.The Company recognises an impairment loss in profit or loss to the extent that the carrying amount of an asset relatedto contract costs exceeds:
remaining amount of consideration that the Company expects to receive in exchange for the goods or services to
which the asset relates; the cost estimated to be happened for the transfer of related goods or services.
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
32. Government grants
A government grant is recognised when the grant will be received and that the Company will comply with the conditionsattaching to the grant.If a government grant is in the form of a monetary asset, it is measured at the amount received or receivable. If agovernment grant is in the form of non-monetary asset, it is measured at fair value; if the fair value cannot be obtained ina reliable way, it is measured at the nominal amount of RMB1.Government grants obtained for acquisition or construction of long-term assets or other forms of long-term assetformation are classified as government grants related to assets, while the remaining government grants are classified asgovernment grants related to revenue.Regarding the government grant not clearly defined in the official documents and can form long-term assets, the partof government grant which can be referred to the value of the assets is classified as government grant related to assetsand the remaining part is government grant related to revenue. For the government grant that is difficult to distinguish,the entire government grant is classified as government grant related to revenue.A government grant related to an asset shall be recognised as deferred income, and evenly amortised to profit or lossover the useful life of the asset in a reasonable and systematic manner. For a government grant related to revenue, ifthe grant is a compensation for related costs, expenses or losses incurred, the grant shall be recognised in profit orloss for the current period or used to offset related costs; if the grant is a compensation for related costs, expenses orlosses to be incurred in subsequent periods, the grant shall be recognised as deferred income, and recognised in profitor loss over the periods in which the related costs, expenses or losses are recognised, or used to offset related costs. Agovernment grant measured at nominal amount is directly included in profit or loss for the current period. The Companyadopts a consistent approach to the same or similar government grants.A government grant related to daily activities is recognised in other gains or used to offset related costs relying onthe essence of economic business; otherwise, recognised in non-operating income or used to offset non-operatingexpenses.For the repayment of a government grant already recognised, if the carrying amount of relevant assets was written offat initial recognition, the carrying amount of the assets shall be adjusted; if there is any related deferred income, therepayment shall be offset against the carrying amount of the deferred income, and any excess shall be recognised inprofit or loss for the current period; otherwise, the repayment shall be recognised immediately in profit or loss for thecurrent period.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
33. 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 (other than a single transaction that the initially recognised assets and liabilities result in an equal amountof taxable temporary differences and deductible temporary differences);
(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 (other than a single transaction that the initially recognised assets and liabilities resultin an equal amount of taxable temporary differences and deductible temporary differences);
(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.
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
33. Deferred income tax assets/deferred income tax liabilities (Cont
’d)At the balance sheet date, deferred income tax assets and deferred income tax liabilities are presented as the netamount after offsetting when the following conditions are met at the same time:
(1) The tax payer within the Company has the legal right to settle current income tax assets and current income tax
liabilities on a net basis;
(2) Deferred income tax assets and deferred income tax liabilities are related to income taxes levied by the same tax
collection and administration authority on the same taxpayer within the Company.
34. 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. 35.The lease liability is initially measured at the present value of the lease payments that are not paid at the beginningdate of the lease using the interest rate implicit in the lease. Where the interest rate implicit in the lease cannot bedetermined, the incremental borrowing rate is used as the discount rate. Lease payments include fixed paymentsand in-substance fixed payments, less any lease incentives receivable; variable lease payments that are basedon an index or a rate; the exercise price of a purchase option if the lessee is reasonably certain to exercisethat option; payments for terminating the lease, if the lease term reflects the lessee exercising that option ofterminating; and amounts expected to be payable by the lessee under residual value guarantees. Subsequently,the interest expense on the lease liability for each period during the lease term is calculated using a constantperiodic rate of interest and is recognised in profit or loss for the current period. Variable lease payments notincluded in the measurement of lease liabilities are recognised in profit or loss for the period in which they actuallyarise.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
34. Lease (Cont
’d)
(2) The Company as lessee (Cont
’d)Short-term leaseShort-term leases refer to leases with a lease term of less than 12 months from the commencement date, exceptfor those with a purchase option.Lease payments on short-term leases are recognised in the cost of related assets or current profit or loss on astraight-line basis over the lease term.For short-term leases, the Company chooses to adopt the above simplified approach for the following types ofassets that meet the conditions of short-term lease according to the classification of leased assets.Low-value equipmentTransportation vehiclesLow-value asset leaseA low-value asset lease is a lease that the value of a single leased asset is below RMB40,000 when it is a newasset.Lease payments on low-value asset leases are recognised on a straight-line basis over the lease term, and eitherincluded in the cost of the related asset or charged to profit or loss for the current period.For a low-value asset lease, the Company chooses the above simplified approach based on the specificcircumstances of each lease.Lease modification
The 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, redetermines 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.
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
34. 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 leasesUnder finance leases, the Company accounts for finance lease receivables at the beginning of the lease term atthe net lease investment, which is the sum of the unsecured residual value and the present value of the leasereceipts outstanding at the commencement date of the lease, discounted at the interest rate implicit in the lease.The Company as lessor calculates and recognises interest income for each period of the lease term based ona fixed periodic interest rate. Variable lease payments acquired by the Company as lessor that are not includedin the net measurement of lease investments are included in profit or loss for the period when they are actuallyincurred.Derecognition and impairment of finance lease receivables are accounted for in accordance with the requirementsunder the Accounting Standard for Business Enterprises No. 22 – Recognition and Measurement of FinancialInstruments and the Accounting Standards for Business Enterprises No. 23 – Transfer of Financial Assets.Operating lease
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. Lease payments under operating leases are recognised in profit or loss ona straight-line basis over the lease term. Initial direct costs incurred in relation to operating leases are capitalisedand amortised over the lease term on the same basis as rental income and recognised in profit or loss for thecurrent period. The variable lease payments obtained in relation to operating leases that are not included in thelease payments are recognised in profit or loss in the period in which they actually incurred.
Lease modification
The Company accounts for a modification in an operating lease as a new lease from the effective date of themodification and the amount of lease receipts received in advance or receivable in respect of the lease prior to themodification is treated as a receipt under the new lease.The Company accounts for a modification in a finance lease as a separate lease when the change occurs andthe following conditions are met: the modification expands the scope of lease by adding the right to use oneor more of the leased assets; and the increase in consideration is equivalent to the separate price for theexpanded scope of lease adjusted for that contractual situation.Where a finance lease is modified and not accounted for as a separate lease, the Company accounts for themodified lease in the following circumstances: If the modification takes effect on the lease commencementdate, the lease will be classified as an operating lease, the Company will account for it as a new lease from theeffective date of the lease modification, and use the net lease investment before the effective date of the leasemodification; If the modification takes effect on the lease commencement date, the lease will be classified as afinance lease, and the Company will conduct accounting treatment in accordance with the Accounting Standardsfor Business Enterprises No. 22 – Recognition and Measurement of Financial Instruments on modifying orrenegotiating contracts.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
34. 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 – Revenue.Where asset transfer under the sale and leaseback transactions is a sale, the lessee shall measure the right –of-use assets created by the sale and leaseback based on the portion of carrying amount of the original assetsrelated to right of use obtained upon leaseback, and only recognise relevant profit or loss for the right transferredto the lessor. The lessor shall account for the purchase of assets in accordance with other applicable ASBEs andaccount for the lease of assets in accordance with this standard.Where asset transfer under the sale and leaseback transactions is not a sale, the lessee shall continue torecognise the transferred assets while recognising a financial liability equal to the transfer income and accountfor such liability according to the Accounting Standard for Business Enterprises No. 22 – Recognition andMeasurement of Financial Instruments; or not to recognise the transferred assets but recognise a financial assetequal to the transfer income and account for such asset according to the Accounting Standard for BusinessEnterprises No. 22 – Recognition and Measurement of Financial Instruments.
35. Right-of-use assets
(1) Conditions for recognition of right-of-use assets
Right-of-use assets are defined as the right of underlying assets in the lease term for the Company as a lessee.Right-of-use assets are initially measured at cost at the commencement date of the lease. The cost includes theamount of the initial measurement of lease liability; lease payments made at or before the inception of the leaseless any lease incentives enjoyed; initial direct costs incurred by the Company as lessee; costs to be incurred indismantling and removing the underlying assets, restoring the site on which it is located or restoring the underlyingasset to the condition required by the terms and conditions of the lease incurred by the Company as lessee. Asa lessee, the Company recognises and measures the costs of dismantling and restoration in accordance with theAccounting Standard for Business Enterprises No. 13 – Contingencies. Subsequently, the lease liability is adjustedfor any remeasurement of the lease liability.
(2) Depreciation method of right-of-use assets
The Company uses the straight-line method for depreciation. Where the Company, as a lessee, is reasonablycertain to obtain ownership of the leased asset at the end of the lease term, such asset is depreciated over theremaining useful life of the leased asset. Where ownership of the lease assets during the lease term cannot bereasonably determined, right-of-use assets are depreciated over the lease term or the remainder of useful lives ofthe lease assets, whichever is shorter.
(3) For the methods of impairment test and impairment provision of right-of-use assets, please refer to Note V. 23.
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
36. Production safety expenses and maintenance costs
According to relevant provisions, the Company makes provisions for production safety expenses based on the revenueof the power plant in the previous year and the prescribed percentages. The specific provisions are as follows: ifthe revenue of the previous year did not exceed RMB10 million, provisions would be made at 3%; if the revenue ofthe previous year exceeded RMB10 million but did not exceed RMB100 million, provisions would be made at 1.5%;if the revenue of the previous year exceeded RMB100 million but did not exceed RMB1,000 million, provisions wouldbe made at 1%; if the revenue of the previous year exceeded RMB1,000 million but did not exceed RMB5,000million, provisions would be made at 0.8%; if the revenue of the previous year exceeded RMB5,000 million but didnot exceed RMB10,000 million, provisions would be made at 0.6%; if the revenue of the previous year exceededRMB10,000 million, provisions would be made at 0.2%.Provisions for production safety expenses are included in the cost of related products or profit or loss of the currentperiod and included in“special reserves” correspondingly.When the provisions for production safety expenses and maintenance costs are utilised within the prescribed scope,if such production safety expenses are applied and related to revenue expenditures, specific reserve is directly offset.When fixed assets are incurred, they are included in the“construction in progress”item and transferred to fixed assetswhen the status of the assets is ready for intended use. They are then offset against specific reserve based on theamount included in fixed assets while corresponding amount is recognised in accumulated depreciation. Such fixedassets are no longer depreciated in subsequent periods.
37. Repurchase of shares
Prior to cancellation or transfer of shares repurchased, the Company recognises all expenditures arising from sharerepurchase as cost of treasury shares in the treasury share account. Considerations and transaction fee incurred fromthe repurchase of shares shall lead to the elimination of owners’equity and does not recognise profit or loss whenshares of the Company are repurchased, transferred or cancelled.The difference between the actual amount received and the carrying amount of the treasury shares are recognised ascapital reserve when the treasury shares are transferred, if the capital reserve is not sufficient to be offset, the excessamount shall be recognised to offset surplus reserve and retained profit. When the treasury shares are cancelled,the capital shall be eliminated according to the number of shares and par value of cancelled shares, the differencebetween the actual amount received and the carrying amount of the treasury shares are recognised as capital reserve,if the capital reserve is not sufficient to be offset, the excess amount shall be recognised to offset surplus reserve andretained profit.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
38. Debt restructuring
(1) The Company as the debtor
The debt is derecognised when the current obligation of the debt is discharged. Specifically, when the uncertaintyabout the execution process and results of the debt restructuring agreement is eliminated, the gains and lossesrelated to the debt restructuring are recognised.If debt restructuring is carried out by repaying debts with assets, the Company shall derecognise the relevantassets and the debts paid off when they meet the conditions for derecognition, and the difference between thebook value of the debts paid off and the book value of the transferred assets shall be included in the current profitand loss.If the debt is converted into equity instruments for debt restructuring, the Company shall derecognise the debtspaid off when they meet the conditions for derecognition. When the Company initially recognises an equityinstrument, it is measured based on the fair value of the equity instrument. If the fair value of the equity instrumentcannot be measured reliably, it is measured based on the fair value of the debt paid off. The difference betweenthe book value of the debts paid off and the recognised amount of the equity instrument shall be included in thecurrent profit and loss.When a debt restructuring involves the modification of other terms of a debt, the Company shall recognise andmeasure the restructured debts in accordance with the Accounting Standards for Business Enterprises No. 22 –Recognition and Measurement of Financial Instruments and the Accounting Standards for Business EnterprisesNo. 37 – Presentation of Financial Instruments.When a debt is settled by multiple assets or combination of various methods in a debt restructuring, the Companyshall recognise and measure the equity instruments and restructured debts in accordance with the aforementionedmethods, and the difference between the book value of the debts paid off and the sum of the book value of thetransferred assets and the recognised amount of the equity instruments and restructured debts shall be includedin the current profit and loss.
INTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
38. Debt restructuring (Cont
’d)
(2) The Company as the creditor
The debt receivable are derecognised when the contractual rights to receive the cash flows under the debtreceivable expire. Specifically, when the uncertainty about the execution process and results of the debtrestructuring agreement is eliminated, the gains and losses related to the debt restructuring are recognised.If debt restructuring is carried out by repaying debts with assets, the Company shall initially recognise assetsother than the transferred financial assets at cost. In particular, the cost of inventories includes the fair value of thedebt receivable and any directly attributable expenditure, including taxes, transportation costs, handling costs,insurance and other costs, for bringing the assets to the current position and condition; the cost of investment inassociates or joint ventures includes the fair value of the debt receivable and any directly attributable expenditure,including taxes; the cost of investment property includes the fair value of the debt receivable and any directlyattributable expenditure, including taxes; the cost of fixed assets includes the fair value of the debt receivableand any directly attributable expenditure, including taxes, transportation costs, handling costs, installation costs,professional service fees and other costs, for bringing the assets to the status for intended use; the cost ofintangible assets includes the fair value of the debt receivable and any directly attributable expenditure, includingtaxes, for bringing the assets to the status for intended use. The difference between the fair value and the bookvalue of the debt receivable is included in the current profit and loss.When the debt restructuring causes the Company to convert the debt receivable to an equity investment of jointventures or associates, the Company shall measure the equity investment based on the sum of the fair value ofdebt receivable, and any directly attributable taxes and other costs of the investment. The difference between thefair value and the book value of the debt receivable is included in the current profit and loss.When a debt restructuring involves the modification of other terms of a debt, the Company recognises andmeasures the restructured debt receivable in accordance with the Accounting Standards for Business EnterprisesNo. 22 – Recognition and Measurement of Financial Instruments.When a debt is settled by multiple assets or combination of various methods in a debt restructuring, the Companyfirst recognises and measures the financial assets received and restructured debt receivable in accordancewith the Accounting Standards for Business Enterprises No. 22 – Recognition and Measurement of FinancialInstruments, and then allocates the net value, which is the fair value of the debt receivable deducted by therecognised amount of financial assets received and restructured debt receivable, to the costs of non – financialassets received based on their relative fair value. The difference between the fair value and the book value of thedebt receivable is included in the current profit and loss.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
39. Critical accounting judgments and estimates
The Company gives continuous assessment on, among other things, the reasonable expectations of future events andthe critical accounting estimates and key assumptions adopted according to its historical experience and other factors.The critical accounting estimates and key assumptions that are likely to lead to significant adjustment risks of thecarrying amount of assets and liabilities for the next financial year are listed as follows:
Classification of financial assetsSignificant judgements involved in determining the classification of financial assets include the analysis of businessmodels and contractual cash flow characteristics.Factors considered by the Company in determining the business model for a group of financial assets include how theasset’s performance is evaluated and reported to key management personnel, how risks are assessed and managedand how the relevant management personnel are compensated.When the Company assesses whether the contractual cash flows of the financial assets are consistent with basiclending arrangements, the main judgements are described as below: whether the principal amount may change overthe life of the financial asset (for example, if there are repayments of principal); whether the interest includes onlyconsideration for the time value of money, credit risk, other basic lending risks and a profit margin and cost. Forexample, whether the amount repaid in advance reflects only the outstanding principal and interest thereon, as well asreasonable compensation paid for early termination of the contract.Measurement of the ECLs of accounts receivableThe Company calculates the ECLs of accounts receivable using the exposure to default risk and ECL rate of accountsreceivable, and determines the ECL rate based on default probability and default loss rate. When determining the ECLrate, the Company adjusts its historical data by referring to information such as historical credit loss experience as wellas current situation and forward-looking information. When considering the forward-looking information, indicators usedby the Company include the risk of economic downturn, external market environment, technology environment andchanges in customers. The assumptions relating to the ECL calculation are monitored and reviewed by the Company ona regularly basis.Measurement of past due credit losses on finance lease receivablesThe Company calculates the ECLs of accounts receivable using the exposure to default risk and ECL rate of accountsreceivable, and determines the ECL rate based on default probability and default loss rate. When determining the ECLrate, the Company takes into account the current status and repayment ability of the counterparty while considering thevalue of collateral, guarantees and other credit enhancement measures related to the lease receivables.Deferred income tax assetsDeferred income tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profitwill be available against which the losses can be utilised. Significant management judgement is required to determinethe amount of deferred income tax assets that can be recognised, based upon the likely timing and level of futuretaxable profits together with future tax planning strategies.
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
39. Critical accounting judgments and estimates (Cont
’d)Impairment of goodwillThe Company assesses the impairment of goodwill at least annually, which requires estimates of the use value of assetgroups allocated with goodwill. When estimating the use value, the Company is required to estimate the future cashflows from such asset groups while selecting the appropriate discount rate to calculate the present value of future cashflows.Impairment of inventoriesOn the balance sheet date, the Company determines the net realisable value of its inventories based on the estimatedselling prices of the inventories, less costs estimated to be incurred upon completion, estimated selling expenses andrelated taxes. The realisable value of inventories shall be determined on the basis of definite evidence, purpose ofholding the inventories and effect of after-balance – sheet-date events. If the net realisable value is below the cost ofinventories, a provision for inventory impairment is made.Impairment of fixed assets and long-term equity investmentsThe Company assesses the impairment of fixed assets and long-term equity investments at least annually. When anyevent or change in circumstances indicates that the carrying amount may not be recoverable, the carrying amount ofsuch project is reviewed for impairment. If the carrying amount of an asset exceeds its recoverable amount, impairmentloss is recognised for the difference. The recoverable amount is determined as the higher of the asset’s fair value lesscosts of disposal and the present value of the asset’s estimated future cash flows. A number of assumptions are madein estimating the recoverable amount of assets, including future cash flows and discount rates relating to non-currentassets. If future events differ from these assumptions, the recoverable amount shall be revised, which may have animpact on the operations or financial position of the Company.
40. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
There were no changes in the significant accounting policies of the Company during the year.
(2) Changes in significant accounting estimates
The Company did not have any change in significant accounting estimates during the year.
(3) Adjustments to relevant items at the beginning of the year in the financial statements arising from the first-time
adoption of new accounting standards in 2024 Applicable ? Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VI. Taxation
1. Main tax types and tax rates
Tax typeTax baseTax rateValue added tax (VAT)VAT payable (VAT payable is calculated
by multiplying taxable sales amountby the applicable tax rate less current deductible input VAT)
13/9/6Property taxRental income and property price1.2/12Urban maintenance and construction taxActual turnover tax paid7Enterprise income tax (EIT)Taxable income25Disclosure of taxable entities subject to different EIT tax ratesName of taxable entityEIT tax rateShandong Chenming Paper Holdings Limited15Shouguang Meilun Paper Co., Ltd.15Jilin Chenming Paper Co., Ltd.15Jiangxi Chenming Paper Co., Ltd.15Zhanjiang Chenming Pulp & Paper Co., Ltd.15Huanggang Chenming Pulp & Paper Co., Ltd.15Shouguang Xinyuan Coal Co., Ltd.20Shouguang Chenming Papermaking Machine Co., Ltd.20Shouguang Wei Yuan Logistics Company Limited20Shouguang Shun Da Customs Declaration Co., Ltd.20Zhanjiang Chenming Arboriculture Development Co., Ltd.Exempt from EITNanchang Chenming Arboriculture Development Co., LtdExempt 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.
INTERIM REPORT 2024
X Financial Report
VI. Taxation (Cont’d)
2. Tax incentives (Cont
’d)
(1) Enterprise income tax (Cont
’d)Jilin Chenming Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprisecertificate with a certification number of GR202222000414 on 29 November 2022. Pursuant to the requirementsunder the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies, JilinChenming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to the preferentialtreatment from 2022 to 2024.Jiangxi Chenming Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprisecertificate with a certification number of GR202236000018 on 4 November 2022. Pursuant to the requirementsunder the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies, JiangxiChenming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to the preferentialtreatment from 2022 to 2024.Zhanjiang Chenming Pulp & Paper Co., Ltd., a subsidiary of the Company, received a high and new technologyenterprise certificate with a certification number of GR202144001212 on 20 December 2021. Pursuant to therequirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies,Zhanjiang Chenming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to thepreferential treatment from 2021 to 2023.Huanggang Chenming Pulp & Paper Co., Ltd., a subsidiary of the Company, received a high and new technologyenterprise certificate with a certification number of GR202342003128 on 5 December 2023. 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 2023 to 2025.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 Xinyuan Coal Co., Ltd., Shouguang Chenming Papermaking Machine Co., Ltd., Shouguang WeiYuan Logistics Company Limited and Shouguang Shun Da Customs Declaration Co, Ltd., which are subsidiariesof the Company, are small and micro enterprises. Pursuant to the Announcement of the Ministry of Financeand the State Administration of Taxation on Further Implementation of Preferential Income Tax Policies forSmall and Micro Enterprises (Cai Shui [2022] No. 13) and the Announcement of the Ministry of Finance and theState Administration of Taxation on the Implementation of Preferential Income Tax Policies for Small and MicroEnterprises and Individual Industrial and Commercial Business (Cai Shui [2023] No. 6), the annual taxable incomeof a small low-profit enterprise that is less than RMB3 million shall be included in its taxable income at a reducedrate of 25%, with the applicable enterprise income tax rate of 20%.
(2) Value-added Tax (
“VAT”)Pursuant to Rule 10 of the Interim Regulation of the People’s Republic of China on Value Added Tax, ZhanjiangChenming Arboriculture Development Co., Ltd., Yangjiang Chenming Arboriculture Development Co., Ltd.,Nanchang Chenming Arboriculture Development Co., Ltd. and Chenming Arboriculture Co., Ltd., which aresubsidiaries of the Company, are exempt from VAT, and have completed the filings for VAT reduction forexemption from VAT.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements
1. Monetary funds
Unit: RMBItemClosing balanceOpening balanceTreasury cash4,129,836.093,674,805.36Bank deposit798,700,248.46760,558,937.25Other monetary funds10,543,555,422.0511,321,241,125.05Interest accrued on deposits39,624,494.9539,357,963.64Total11,386,010,001.5512,124,832,831.30 Of which: Total deposits in overseas banks214,470,161.75261,470,228.68
Other explanations:
Other monetary funds of RMB7,492,911,199.09 were the guarantee deposit for the application for acceptance billsby the Company;Other monetary funds of RMB2,598,772,139.21 were the guarantee deposit for the application for letter of creditwith the banks by the Company;Other monetary funds of RMB408,529,872.18 were the guarantee deposit for the application for loans with thebanks by the Company; Other monetary funds of RMB33,260,000.00 were the Company’s statutory reserve deposits with the People’sBank of China;Other monetary funds of RMB10,082,211.57 were locked-up due to reasons such as litigations or being unusedfor a long time, resulting in restriction on the use of that account’s balance.
2. Financial assets held for trading
Unit: RMBItemClosing balanceOpening balanceFinancial assets measured at fair value through profit or loss39,197,419.8846,294,291.71Of which: Investment in equity instruments39,197,419.8846,294,291.71Total39,197,419.8846,294,291.71Explanation: Financial assets held for trading were shares of China Bohai Bank subscribed by the Company.
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
3. Bills receivable
(1) Bills receivable by category
Unit: RMBItemClosing balanceOpening balanceCommercial acceptance bills674,962,254.15411,600,000.00Total674,962,254.15411,600,000.00
(2) Disclosure by bad debt provision method
Unit: RMB
Category
Closing balanceOpening balanceBook balanceBad debts provision
Carrying amount
Book balanceBad debts provision
Carrying amountAmountPercentageAmountProvisionpercentageAmountPercentageAmount
ProvisionpercentageBills receivable assessed collectively for bad debt provision674,962,254.15100.00%674,962,254.15411,600,000.00100.00%411,600,000.00Including:
Commercial acceptance bills674,962,254.15100.00%674,962,254.15411,600,000.00100.00%411,600,000.00Total674,962,254.15100.00%674,962,254.15411,600,000.00100.00%411,600,000.00
Name of category being assessed collectively for bad debt provision: Commercial acceptance bills
Unit: RMBName
Closing balanceBook balance
Bad debtsprovision
ProvisionpercentageCommercial acceptance bills674,962,254.15Total674,962,254.15
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
3. Bills receivable (Cont
’d)
(3) Bills receivable endorsed or discounted by the Company but not yet due as at the balance sheet date
Unit: RMB
Item
Amountderecognised as
at the endof the period
Amount not yetderecognised asat the endof the periodCommercial acceptance bills77,408,961.64Total77,408,961.64
4. Accounts receivable
(1) Disclosure by ageing
Unit: RMBAgeing
Closing bookbalance
Opening book
balanceWithin 1 year (including 1 year)2,018,934,956.91 1,561,046,809.051 to 2 years 231,466,242.34 385,112,389.042 to 3 years907,544,853.12722,669,952.03Over 3 years407,392,203.57408,747,914.19Subtotal3,565,338,255.943,077,577,064.31Bad debts provision598,117,268.90549,070,004.48Total2,967,220,987.042,528,507,059.83The 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 and over 3 years.
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
4. Accounts receivable (Cont
’d)
(2) Disclosure by bad debt provision method
Unit: RMB
Category
Closing balanceOpening balanceBook balanceBad debts provision
Carrying amount
Book balanceBad debts provision
Carrying amountAmountPercentage(%)Amount
Provisionpercentage(%)Amount
Percentage(%)Amount
Provisionpercentage(%)Accounts receivable assessed individually for bad debt provision200,147,048.865.61192,205,340.8696.037,941,708.00201,074,254.686.53193,132,546.6896.057,941,708.00Accounts receivable assessed collectively for bad debt provision3,365,191,207.0894.39405,911,928.0412.062,959,279,279.042,876,502,809.6393.47355,937,457.8012.372,520,565,351.83Including:
Due from related party customers4,454,075.91 0.12982,547.4222.063,471,528.492,359.030.0023.180.982,335.85Due from non-related party customers2,028,298,177.3956.8984,942,867.564.191,943,355,309.831,545,540,409.9450.2281,008,019.205.241,464,532,390.74 Factoring receivables1,332,438,953.7837.37319,986,513.0624.021,012,452,440.721,330,960,040.6643.25274,929,415.4220.661,056,030,625.24Total3,565,338,255.94100.00598,117,268.9016.782,967,220,987.043,077,577,064.31100.00549,070,004.4817.842,528,507,059.83
Items assessed individually for bad debt provision
Unit: RMB
Name
Opening balanceClosing balanceBook balance
Bad debts
provisionBook balance
Bad debts
provision
Provisionpercentage
(%)Provision reasonHengfeng Hongyuan Real Estate Holdings Co., Ltd.45,493,811.4045,493,811.4045,493,811.4045,493,811.40100.00Long outstandingFoshan Shunde Xingchen Paper Co., Ltd.26,697,528.7026,697,528.7026,697,528.7026,697,528.70100.00Long outstandingWuhan Tianrui Paper Co., Ltd.17,600,000.009,658,292.0017,600,000.009,658,292.0054.88Long outstandingShandong Bisheng Printing Materials Co., Ltd.14,813,369.2714,813,369.2714,813,369.2714,813,369.27100.00Long outstandingZhengzhou Hongyang Paper Products Co., Ltd.14,753,432.9314,753,432.9314,573,432.9314,573,432.93100.00Long outstandingHenan Yibang Technology Trading Co., Ltd.13,396,601.2213,396,601.2213,396,601.2213,396,601.22100.00Long outstanding49 companies including Shandong Yiming New Material Technology Corp Co., Ltd.68,319,511.1668,319,511.1667,572,305.3467,572,305.34100.00Long outstandingTotal201,074,254.68193,132,546.68200,147,048.86192,205,340.8696.03
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
4. Accounts receivable (Cont
’d)
(2) Disclosure by bad debt provision method (Cont
’d)Items assessed collectively for bad debt provision: Due from related party customersName
Closing balanceBook balance
Bad debts provision
Provisionpercentage (%)
Within 1 year4,451,716.88982,382.2922.071 to 2 years2,359.03165.137.00
Total4,454,075.91982,547.4222.06
Items assessed collectively for bad debt provision: Receivables from non-related party customer
Unit: RMBName
Closing balanceBook balance
Bad debts
provision
Provisionpercentage (%)
Within 1 year1,909,978,867.4130,445,041.381.591 to 2 years55,550,505.525,708,109.0510.282 to 3 years5,475,630.971,815,779.2833.16Over 3 years57,293,173.4946,973,937.8581.99Total2,028,298,177.3984,942,867.564.19
Items assessed collectively for bad debt provision: Factoring receivables
Unit: RMBName
Closing balanceBook balance
Bad debts
provision
Provisionpercentage (%)
Within 1 year104,504,372.625,514,174.585.281 to 2 years175,913,377.7932,121,647.9018.262 to 3 years902,069,222.15212,199,833.5923.52Over 3 years149,951,981.2270,150,856.9946.78Total1,332,438,953.78319,986,513.0624.02
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X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
4. Accounts receivable (Cont
’d)
(3) Provision, recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMBCategoryOpening balance
Changes in the period
Closing balanceProvisionRecoveryor reversalWritten-offOthers
Bad debts provision549,070,004.4852,619,258.382,605,396.98-966,596.98598,117,268.90Total549,070,004.4852,619,258.382,605,396.98-966,596.98598,117,268.90
Explanation:
“Others” was due to disposal of subsidiaries.
(4) Top five accounts receivable and contract assets based on closing balance of debtors
The total amount of top five accounts receivable and contract assets based on closing balance of debtors forthe period amounted to RMB1,126,885,955.42 in total, accounting for 31.61% of the total closing balance ofaccounts receivable and contract assets. The closing balance of the corresponding bad debt provision amountedto RMB270,139,608.82 in total.
Unit: RMB
Name of entity
Closing balance
of accounts
receivable
As a percentage
of the closingbalance of thetotal accountsreceivable (%)
Closing balance
of bad debt
provisionCustomer 1481,810,233.3313.51108,757,408.67Customer 2222,656,666.646.2553,542,297.56Customer 3198,948,388.795.5836,107,859.62Customer 4121,908,333.333.4231,619,632.99Customer 5101,562,333.332.8540,112,409.98Total1,126,885,955.4231.61270,139,608.82
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
5. Accounts receivable financing
(1) Accounts receivable financing by category
Unit: RMBItemClosing balanceOpening balanceBank acceptance bills22,065,605.03215,884,249.97Total22,065,605.03215,884,249.97
Explanation:
All the accounts receivable financing of the Company were bank acceptance bills. Since the terms of the bankacceptance bills did not exceed one year, and both parties to the endorsement of the bills agreed to offset equalamounts of accounts receivable and payable based on the face value of the bills, fair value equalled amortisedcost.Certain subsidiaries of the Company discount and endorse part of the bank acceptance bills based on their dailycapital management needs. Therefore, the bank acceptance bills of the subsidiaries are classified as financialassets measured at fair value through other comprehensive income.The Company has no bank acceptance bill assessed individually for impairment provision. At the end of theperiod, the Company believed that there is no significant credit risk in the bank acceptance bills held and no majorlosses will be incurred due to default of banks.
(2) Disclosure by bad debt provision method
Unit: RMB
Category
Closing balanceOpening balanceBook balanceBad debts provision
Carrying amount
Book balanceBad debts provision
Carrying amountAmountPercentageAmountProvisionpercentageAmountPercentageAmount
Provisionpercentage
Items assessed collectively for
bad debt provision22,065,605.0322,065,605.03215,884,249.97215,884,249.97Including:
Bank acceptance bills22,065,605.0322,065,605.03215,884,249.97215,884,249.97Total22,065,605.0322,065,605.03215,884,249.97215,884,249.97
Name of category being assessed collectively for bad debt provision: Bank acceptance bills
Unit: RMBName
Closing balanceBook balance
Bad debts
provision
Provisionpercentage
Bank acceptance bills22,065,605.03Total22,065,605.03
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
5. Accounts receivable financing (Cont
’d)
(3) Accounts receivable financing pledged by the Company as at the end of the period
Unit: RMBItem
Amount pledgedas at the endof the periodBank acceptance bills20,000.00Total20,000.00
(4) Accounts receivable financing endorsed or discounted but not yet due as at the balance sheet date
Unit: RMB
Item
Amountderecognised asat the endof the period
Amount not yetderecognised asat the endof the periodBank acceptance bills7,834,710,831.76Total7,834,710,831.76
6. Other receivables
Unit: RMBItemClosing balanceOpening balanceDividend receivable22,659,149.81Other receivables2,054,324,513.362,224,904,557.88Total2,076,983,663.172,224,904,557.88
(1) Dividends receivable
1) Classification of dividends receivable
Unit: RMBItem (or investee)Closing balanceOpening balanceWeifang Chenchuang Equity Investment Fund Partnership (Limited Partnership)22,659,149.81Total22,659,149.81
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
6. Other receivables (Cont
’d)
(2) Other receivables
1) Classification of other receivables by nature
Unit: RMBNature
Closing book
balance
Opening book
balanceOpen credit2,528,395,095.812,691,372,170.61Reserve and borrowings23,191,956.6727,444,170.92Guarantee deposit and deposit15,279,813.4912,578,821.54Others9,674,231.253,445,072.68subtotal2,576,541,097.222,734,840,235.75Bad debt provision522,216,583.86509,935,677.87Total2,054,324,513.362,224,904,557.88
2) Disclosure by ageing
Unit: RMBAgeing
Closing bookbalance
Opening book
balanceWithin 1 year (including 1 year)825,043,943.261,052,737,595.001 to 2 years361,343,970.53291,207,253.532 to 3 years233,310,980.82204,348,508.24Over 3 years1,156,842,202.611,186,546,878.98subtotal2,576,541,097.222,734,840,235.75Bad debt provision522,216,583.86509,935,677.87Total2,054,324,513.362,224,904,557.88The basis used by the ageing analysis: the ageing of other receivables is the length of time of the Company’soutstanding other receivables based on invoice date. The closing balance is recognised one by one from theend of the period onwards until the amounts add up to the balance. It is also broken up by intervals of within1 year, 1-2 years, 2-3 years and over 3 years.
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
6. Other receivables (Cont
’d)
(2) Other receivables (Cont
’d)
3) Disclosure by bad debt provision method
Bad debt provision based on the general model of ECLs:
Unit: RMB
Bad debts provision
Stage 1Stage 2Stage 3
TotalECLs for thenext 12 months
Lifetime ECLs
(not credit-impaired)
Lifetime ECLs(credit-impaired)
Balance as at 1 January 202487,540,266.28422,395,411.59509,935,677.87Balance as at 1 January 2024 forthe period– Transferred to stage 2– Transferred to stage 3– Reversed to stage 2– Reversed to stage 1Provision for the period2,888,840.7125,844,198.7328,733,039.44Reversal for the period1,016,204.9774,074.591,090,279.56Transfer for the periodWrite-off for the periodOther changes-1,635,900.55-13,725,953.34-15,361,853.89Balance as at 30 June 202487,777,001.47434,439,582.39522,216,583.86
4) Provision, recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMBCategory
Openingbalance
Changes in the period
Closing balanceProvisionRecoveryor reversal
Transfer or
write-offOthers
Other receivables509,935,677.8728,733,039.441,090,279.56-15,361,853.89522,216,583.86Total509,935,677.8728,733,039.441,090,279.56-15,361,853.89522,216,583.86
Explanation of others: Others was the external transfer of subsidiary and transfer of debts.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
6. Other receivables (Cont
’d)
(2) Other receivables (Cont
’d)
5) 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 debtors for theyear was RMB1,720,808,887.00, which accounted for 66.79% of the closing balance of the total otherreceivables. The closing balance of corresponding bad debt provision amounted to RMB250,907,576.27.
Unit: RMB
Name of entityNatureClosing balanceAgeing
As a percentageof the closingbalance of totalother receivables
Closing balance
of bad debt
provisionCustomer 1Consideration for debt transfer 472,854,783.563 to 4 years18.35%84,556,765.37Customer 2Consideration for debt transfer453,002,316.854 to 5 years17.58%158,550,810.90Customer 3Consideration for debt transfer 390,000,000.00Within 1 year15.14%7,800,000.00Customer 4Financial support232,643,410.74Within 1 year9.03%Customer 5Consideration for debt transfer 172,308,375.85Within 1 year6.69%Total1,720,808,887.0066.79%250,907,576.27
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
7. Prepayments
(1) Prepayments by ageing
Unit: RMBAgeing
Closing balanceOpening balanceAmountPercentage (%)AmountPercentage (%)
Within 1 year901,296,304.1495.12790,687,918.6195.831 to 2 years46,194,821.384.8834,447,237.604.17Total947,491,125.52100.00825,135,156.21100.00
(2) Top five prepayments based on closing balance of prepaid parties
The total amount of top five prepayments based on closing balance of prepaid parties for the period amounted toRMB295,215,506.98, accounting for 31.16% of the closing balance of the total prepayments.
Unit: RMB
Name of entity
Closing balanceof prepayments
As a percentageof the closingbalance of thetotal prepayments
(%)Customer 1112,414,309.2411.86Customer 264,772,536.706.84Customer 345,579,894.134.81Customer 436,419,766.913.84Customer 536,029,000.003.80Total295,215,506.9831.16
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
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: RMB
Item
Closing balanceOpening balance
Book balance
Impairmentprovision forinventories orperformance
costsCarrying amountBook balance
Impairmentprovision forinventories orperformancecostsCarrying amount
Raw materials1,684,074,471.6418,015,768.761,666,058,702.881,977,478,797.8518,030,837.141,959,447,960.71Work-in-process products83,546,759.6183,546,759.61102,415,558.33102,415,558.33Goods in stock1,031,894,480.013,041,427.751,028,853,052.261,413,366,440.571,030,048.861,412,336,391.71Consumable biological assets1,483,176,162.181,483,176,162.181,483,978,089.611,483,978,089.61Total4,282,691,873.4421,057,196.514,261,634,676.934,977,238,886.3619,060,886.004,958,178,000.36
Note: Consumable biological assets are forestry assets.
(2) Impairment provision for inventories and performance costs
Unit: RMBItem
Openingbalance
Increase during the periodDecrease during the period
Closing balanceProvisionOthersReversal orwritten-offOthers
Raw materials18,030,837.1415,068.3818,015,768.76Goods in stock1,030,048.863,041,427.751,030,048.863,041,427.75Total19,060,886.003,041,427.751,045,117.2421,057,196.51
Item
Basis for recognition of net realisablevalue/residual considerationwith future cost
Reason for reversal or written-off ofimpairment provision for inventories/performance costs during the periodRaw materialsThe cost of raw materials is higher than
their net realisable value
Written-off of impairment provision forinventories due to sales of impaired spareparts during the periodGoods in stockThe cost of goods in stock is higher than
their net realisable value
Written-off of impairment provision forinventories due to sales of impaired goodsin stock during the period
INTERIM REPORT 2024
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 year3,990,527,056.674,161,725,935.75Total3,990,527,056.674,161,725,935.75Explanations: Long-term receivables due within one year amounting to RMB3,892,561,045.68 (amount for
the prior year: RMB4,054,545,080.32) were financial lease receivables;Long-term receivables due within one year amounting to RMB97,966,010.99 (amount for the
prior year: RMB107,180,855.43) were deposits receivable.
1) Particulars of impairment provision
Unit: RMB
Bad debts provision
Stage 1Stage 2Stage 3
TotalECLs for thenext 12 months
Lifetime ECLs(not credit-
impaired)
Lifetime ECLs(credit-impaired)
Balance as at 1 January 20241,067,619,552.901,067,619,552.90Balance as at 1 January 2024 for the period– Transferred to stage 2– Transferred to stage 3– Reversed to stage 2– Reversed to stage 1Provision for the period55,740,138.5255,740,138.52Reversal for the period25,674,797.1825,674,797.18Transfer for the periodWrite-off for the period41,314,296.7441,314,296.74Other changes-18,883,742.54-18,883,742.54Balance as at 30 June 20241,037,486,854.961,037,486,854.96Explanation of other changes: Other changes are the decrease in the amount of bad debt provision for the transferof debt for the Shandong Leasing Xuchang Chenming Project.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
10. Other current assets
Unit: RMBItemClosing balanceOpening balanceReceivables under financial lease due within one year494,989,361.76400,411,532.31Prepaid expenses290,816,055.05201,963,827.62Factoring receivables due within one year254,389,157.48261,871,191.52Input tax amount to be deducted52,532,417.19119,271,427.68Prepaid tax18,423,599.1647,645,192.37Other payments37,663,773.2837,663,773.28Total1,148,814,363.921,068,826,944.78
11. Long-term receivables
(1) Particulars of long-term receivables
Unit: RMBItem
Closing balanceOpening balanceDiscount
rate rangeBook balanceBad debts provisionCarrying amountBook balanceBad debts provisionCarrying amount
Finance lease payments5,443,874,214.181,038,902,375.274,404,971,838.915,329,611,463.141,070,429,664.014,259,181,799.134%-12%Less: Unrealised financing income144,584,049.03144,584,049.0366,941,274.3666,941,274.36Deposit for finance lease304,882,741.47304,882,741.47329,246,696.64329,246,696.64Less: Unrealised financing income17,272,664.2117,272,664.2120,467,752.3120,467,752.31Subtotal5,586,900,242.411,038,902,375.274,547,997,867.145,571,449,133.111,070,429,664.014,501,019,469.10Less: Long-term receivables due within
one year5,028,013,911.631,037,486,854.963,990,527,056.675,229,345,488.651,067,619,552.904,161,725,935.75Total558,886,330.781,415,520.31557,470,810.47342,103,644.462,810,111.11339,293,533.35
(2) Disclosure by bad debt provision method
Unit: RMB
Category
Closing balanceOpening balanceBook balanceBad debts provision
Carrying amount
Book balanceBad debts provision
Carrying amountAmountPercentage
(%)Amount
Provisionpercentage
(%)Amount
Percentage
(%)Amount
Provisionpercentage
(%)
Items assessed collectively for bad
debt provision558,886,330.78100.001,415,520.310.25557,470,810.47342,103,644.46100.002,810,111.110.82339,293,533.35Including:
Receivables not past due369,242,264.5166.071,415,520.310.38367,826,744.20140,505,555.5641.072,810,111.112.00137,695,444.45 Deposits receivable189,644,066.2733.93189,644,066.27201,598,088.9058.93201,598,088.90Total558,886,330.78100.001,415,520.310.25557,470,810.47342,103,644.46100.002,810,111.110.82339,293,533.35
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
11. Long-term receivables (Cont
’d)
(2) Disclosure by bad debt provision method (Cont
’d)
Name of category being assessed collectively for bad debt provision: Receivables not past due
Unit: RMBName
Closing balanceBook balance
Bad debts
provision
Provisionpercentage (%)
Maturity date within 1 yearMaturity date 1 to 2 years149,595,206.831,415,520.310.95Maturity date 2 to 3 years79,361,873.50Maturity date over 3 year140,285,184.18Total369,242,264.511,415,520.310.38
Name of category being assessed collectively for bad debt provision: Deposits receivable
Unit: RMBName
Closing balanceBook balance
Bad debts
provision
Provisionpercentage
Maturity date within 1 yearMaturity date 1 to 2 years144,907,006.65Maturity date 2 to 3 years38,737,059.62Maturity date over 3 year6,000,000.00Total189,644,066.27
Provision for bad debts made on a general model of ECL:
Unit: RMB
Bad debts provision
Stage 1Stage 2Stage 3
TotalECLs for thenext 12 months
Lifetime ECLs
(not credit-
impaired)
Lifetime ECLs
(credit-impaired)
Balance as at 1 January 20242,810,111.112,810,111.11Balance as at 1 January 2024 for theperiod– Transferred to stage 2– Transferred to stage 3– Reversed to stage 2– Reversed to stage 1Provision for the periodReversal for the periodTransfer for the periodWrite-off for the periodOther changes-1,394,590.80-1,394,590.80Balance as at 30 June 20241,415,520.311,415,520.31Other explanations: Other changes in the period was the amount of bad debt provision reclassified to non-currentassets due within one year.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
11. Long-term receivables (Cont
’d)
(3) Provision, recovery or reversal of bad debt provision for the period
Unit: RMBCategory
Openingbalance
Changes in the period
Closing
balanceProvisionRecovery orreversal
Transfer orwrite-offOthersBad debts provision2,810,111.11-1,394,590.801,415,520.31Total2,810,111.11-1,394,590.801,415,520.31Other explanations: Others in the period was the amount of bad debt provision reclassified to non-current assetsdue within one year.
12. Long-term equity investments
Unit: RMB
Investee
Openingbalance(carryingamount)
Openingbalance ofimpairment
provision
Change for the period
Closing balance(carrying amount)
Closing balance
of impairment
provisionAdditionalcontribution
Withdrawncontribution
Investmentgain or lossrecognisedunder equity
method
Adjustment
of othercomprehensive
income
Otherchangein equityinterest
Distribution
of cashdividendor profitdeclared
ImpairmentprovisionOthersI. Joint venturesShouguang ChenmingHuisen New-styleConstruction Materials Co., Ltd.7,400,283.59466,616.497,866,900.08Weifang Port Wood Chip Wharf Co., Ltd.79,142,080.568,850,767.2987,992,847.85Shouguang MeiteEnvironmental Technology Co., Ltd.19,066,523.791,141,859.5620,208,383.35Shouguang JintouIndustrial InvestmentPartnership (Limited Partnership)2,344,570,247.55-19,202,925.232,325,367,322.32Weifang Xingxing United Chemical Co., Ltd.91,874,385.1291,874,385.12Subtotal2,542,053,520.61-8,743,681.892,533,309,838.72
INTERIM REPORT 2024
X Financial Report
Investee
Openingbalance(carryingamount)
Openingbalance ofimpairmentprovision
Change for the period
Closing balance(carrying amount)
Closing balanceof impairmentprovisionAdditionalcontribution
Withdrawncontribution
Investmentgain or lossrecognisedunder equitymethod
Adjustmentof othercomprehensiveincome
Otherchangein equityinterestDistributionof cashdividendor profitdeclared
ImpairmentprovisionOthersII. AssociatesZhuhai Dechen NewThird Board EquityInvestmentFund Company (Limited Partnership)27,263,804.36-4,094.5127,259,709.85Ningbo Kaichen HuameiEquity Investment FundPartnership (Limited Partnership)278,128,830.13-45,877,685.10232,251,145.03Nanchang Tianchen Port Co., Ltd.58,147,506.393,213,081.5761,360,587.96Goldtrust Futures Co., Ltd.187,786,626.285,646,638.65193,433,264.93Xuchang Chenming Paper Co., Ltd.5,994,545.965,994,545.96Chenming (Qingdao)Asset Management Co., Ltd.8,377,144.65-265,861.698,111,282.96Wuhan ChenmingHanyang Paper Holdings Co., Ltd.251,918,902.31-3,070,493.34248,848,408.97Guangdong Nanyue Bank Co., Ltd.1,331,523,051.0010,419,924.123,672,513.39-535,161.441,345,080,327.07Subtotal2,143,145,865.125,994,545.96-29,938,490.303,672,513.39-535,161.442,116,344,726.775,994,545.96Total4,685,199,385.735,994,545.96-38,682,172.193,672,513.39-535,161.444,649,654,565.495,994,545.96
Explanation: Weifang Xingxing United Chemical Co., Ltd. was completely shut down due to demolition and relocation,and each of the shareholders planned to withdraw their investments. The Company ceased to account for WeifangXingxing United Chemical Co., Ltd. using the equity method, and the carrying amount as at the end of the period wasbasically in line with the expected recoverable amount.Determination of net amount of recoverable amount measured at fair value after deducting disposal expenses Applicable ? Not applicableDetermination of present value of recoverable amount based on expected cash flows Applicable ? Not applicable
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
12. Long-term equity investments (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
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 instruments659,099,016.38659,099,016.38Investment in equity instruments120,978,728.82122,462,024.19Total780,077,745.20781,561,040.57
14. Investment property
(1) Investment property under the cost method
? Applicable Not applicable
Unit: RMBItem
Housing andbuilding structureTotalI. Original carrying amount
1. Opening balance7,142,921,213.877,142,921,213.87
2. Increase during the period
3. Decrease during the period6,005,490.936,005,490.93
(1) Disposal6,005,490.936,005,490.93
4. Closing balance7,136,915,722.947,136,915,722.94II. Accumulated depreciation and accumulated amortisation
1. Opening balance1,093,678,517.511,093,678,517.51
2. Increase during the period98,230,727.3798,230,727.37
(1) Provision or amortisation98,230,727.3798,230,727.37
3. Decrease during the period942,234.35942,234.35
(1) Disposal942,234.35942,234.35
4. Closing balance1,190,967,010.531,190,967,010.53III. Impairment provisionIV. Carrying amount
1. Closing carrying amount5,945,948,712.415,945,948,712.41
2. Opening carrying amount6,049,242,696.366,049,242,696.36
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
14. Investment property (Cont
’d)
(1) Investment property under the cost method (Cont
’d)Note: Investment properties under the Company primarily include:
Pujiang International Finance Plaza, located at No. 1098, Dongdaming Road, Hongkou District, Shanghai, is a long-term held officeproperty of Shanghai Hongtai Real Estate Co., Ltd., a subsidiary of the Company, and leasehold land mainly used for external rentalor office purposes;Jinan Chenming Finance Building (), located in No. 7 Zone, Hanyu Financial Business Center, No. 7000, JingshiRoad, Jinan Innovation Zone, is a long-term held office property of Shandong Chenming Investment Limited, a subsidiary of theCompany, and leasehold land 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 along-term held apartment property of Shanghai Heruiming Property Management Co., Ltd., a subsidiary of the Company, andleasehold land 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 Property Management Co., Ltd., a subsidiary of the Company, andleasehold land mainly used for external rental purposes;Shenzhen Zhuoyue Baozhong Times Square (), located at Room 3201-3210, Building C, Zhuoyue BaozhongTimes Square (Phase 2), Xin’an Sub-district, Bao’an District, Shenzhen, is a long-term held office property of Guangzhou ChenmingProperty Management Co., Ltd., a subsidiary of the Company, and leasehold land mainly used for external rental purposes.Shanghai Xizang South Road shop, located at No. 518-528 Xizang South Road, Shanghai, is a long-term store held by WuhanJunheng Property Management Co. Ltd., a subsidiary, and leasehold land mainly for external rental purposes.Determination of net amount of recoverable amount measured at fair value after deducting disposal expenses Applicable ? Not applicableDetermination of present value of recoverable amount based on expected cash flows Applicable ? Not applicable
(2) Investment property under the fair value method
Applicable ? Not applicable
15. Fixed assets
Unit: RMBItemClosing balanceOpening balanceFixed assets32,030,248,108.2433,186,248,169.56Total 32,030,248,108.2433,186,248,169.56
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
15. Fixed assets (Cont
’d)
(1) Particulars of fixed assets
Unit: RMBItem
Housing andbuilding structure
Machinery andequipment
Transportationequipment
Electronicequipmentand othersTotalI. Original carrying amount:
1. Opening balance11,722,953,106.4143,133,736,594.15294,812,326.00398,874,518.6155,550,376,545.17
2. Increase during the period14,898,024.1063,006,764.7715,391.423,650,702.6481,570,882.93
(1) Acquisition5,822,121.6263,006,764.7715,391.423,650,702.6472,494,980.45
(2) Debt restructuring9,075,902.489,075,902.48
3. Decrease during the period232,951,355.7680,766,052.436,155,991.15133,382,484.79453,255,884.13
(1) Disposal or retirement232,951,355.7680,766,052.436,155,991.15133,382,484.79453,255,884.13
4. Closing balance11,504,899,774.7543,115,977,306.49288,671,726.27269,142,736.4655,178,691,543.97II. Accumulated depreciation
1. Opening balance2,624,265,582.2119,050,501,794.09222,005,103.33263,312,432.6722,160,084,912.30
2. Increase during the period146,873,482.40886,740,254.949,309,022.493,901,562.141,046,824,321.97
(1) Provision146,873,482.40886,740,254.949,309,022.493,901,562.141,046,824,321.97
3. Decrease during the period73,439,297.4867,585,194.445,478,653.88116,006,116.05262,509,261.85
(1) Disposal or retirement73,439,297.4867,585,194.445,478,653.88116,006,116.05262,509,261.85
4. Closing balance2,697,699,767.1319,869,656,854.59225,835,471.94151,207,878.7622,944,399,972.42III. Impairment provision
1. Opening balance27,808,852.79168,785,487.4713,889.137,435,233.92204,043,463.31
2. Increase during the period
3. Decrease during the period
4. Closing balance27,808,852.79168,785,487.4713,889.137,435,233.92204,043,463.31IV. Carrying amount
1. Closing carrying amount8,779,391,154.8323,077,534,964.4362,822,365.20110,499,623.7832,030,248,108.24
2. Opening carrying amount9,070,878,671.4123,914,449,312.5972,793,333.54128,126,852.0233,186,248,169.56
INTERIM REPORT 2024
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
Originalcarryingamount
Accumulateddepreciation
Impairmentprovision
CarryingamountRemarkHousing and building structure72,585,434.3726,237,134.483,093,008.6443,255,291.25Machinery and equipment915,384,576.13605,131,651.56147,820,099.87162,432,824.70Electronic equipment and others478,399.18430,559.267,187.2740,652.65Total988,448,409.68631,799,345.30150,920,295.78205,728,768.60
(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.)964,116,878.13Under applicationHousing and building structure (Huanggang Chenming Pulp & Paper Co., Ltd.)537,475,350.83Under applicationHousing and building structure (Shouguang Meilun Paper Co., Ltd.)474,762,523.91Under applicationHousing and building structure (Jilin Chenming Paper Co., Ltd.)357,832,450.57Under applicationHousing and building structure (Jiangxi Chenming Paper Co., Ltd.)192,089,591.58Under applicationHousing and building structure (Shandong Chenming Paper Holdings Limited)133,131,559.85Under applicationTotal2,659,408,354.87
(4) Impairment test on fixed assets
Applicable ? Not applicable
16. Construction in progress
Unit: RMBItemClosing balanceOpening balanceConstruction in progress1,092,039,980.28852,139,418.48Materials for project7,239,955.347,478,546.68Total1,099,279,935.62859,617,965.16
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
16. Construction in progress (Cont
’d)
(1) Particulars of construction in progress
Unit: RMBItem
Closing balanceOpening balanceBookbalance
Impairment
provision
Carryingamount
Bookbalance
Impairmentprovision
CarryingamountRelocation of Wuhan 4800papermaking machineproject (Zhanjiang Chenming)569,740,174.02569,740,174.02533,417,722.83533,417,722.83Chemical pulp flue gasdenitrification technologicaltransformation project (Huanggang Pulp & Paper)290,050,326.03290,050,326.03156,604,031.76156,604,031.76Technological transformation project182,762,744.92662,764.60182,099,980.32130,674,807.30662,764.60130,012,042.70300,000 tonnes softwoodpulp project (Shandong Chenming)11,564,392.4311,564,392.438,941,631.088,941,631.08Others59,723,779.2421,138,671.7638,585,107.4844,302,661.8721,138,671.7623,163,990.11Total1,113,841,416.6421,801,436.361,092,039,980.28873,940,854.8421,801,436.36852,139,418.48
(2) Changes in material construction in progress projects for the period
Unit: RMB
Project nameBudget
Openingbalance
Increase duringthe period
Transfer tofixed assetduring the
period
Otherdeductions
duringthe period
Closingbalance
Accumulated
investmentto budget
Construction
progress
Accumulated
capitalised
interest
Including:
Capitalised
interestamountduringthe period
Capitalisation
rate of the
interestamount during
the periodSource of fundRelocation of Wuhan4800 papermakingmachine project(Zhanjiang Chenming)800,000,000.00533,417,722.8336,322,451.19569,740,174.0271.22%71.00%
Self-owned fundsand borrowings300,000 tonnessoftwoodpulp project(Shandong Chenming)1,488,980,000.008,941,631.082,622,761.3511,564,392.430.78%0.70%
Self-owned fundsand borrowingsTotal2,288,980,000.00542,359,353.9138,945,212.54581,304,566.45
(3) Impairment provision for construction in progress
Applicable ? Not applicable
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
16. Construction in progress (Cont
’d)
(4) Materials for project
Unit: RMBItem
Closing balanceOpening balanceBookbalance
Impairmentprovision
Carryingamount
Bookbalance
Impairment
provision
Carrying
amountSpecial materials7,239,955.347,239,955.347,478,546.687,478,546.68Total7,239,955.347,239,955.347,478,546.687,478,546.68
17. Bearer biological assets
(1) Bearer biological assets under the cost method
? Applicable Not applicable
Unit: RMBItemTea treeTotalI. Original carrying amount
1. Opening balance17,684,687.3617,684,687.36
2. Increase during the period278,066.24278,066.24
(1) Cultivation278,066.24278,066.24
3. Decrease during the period
4. Closing balance17,962,753.6017,962,753.60II. Accumulated depreciation
1. Opening balance
2. Increase during the period
3. Decrease during the period
4. Closing balance
III. Impairment provision
1. Opening balance
2. Increase during the period
3. Decrease during the period
4. Closing balance
IV. Carrying amount
1. Closing carrying amount17,962,753.6017,962,753.60
2. Opening carrying amount17,684,687.3617,684,687.36
(2) Impairment test on bearer biological assets under the cost method
Applicable ? Not applicable
(3) Bearer biological assets measured at fair value
Applicable ? Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
18. Right-of-use assets
(1) Particulars of right-of-use assets
Unit: RMBItemLand use rights
Housingand buildingstructureTotalI. Original carrying amount
1. Opening balance198,089,207.015,521,837.26203,611,044.27
2. Increase during the period
3. Decrease during the period2,250,074.7412,385.322,262,460.06
(1) Transfer2,126,221.542,126,221.54
(2) Other decreases123,853.2012,385.32136,238.52
4. Closing balance195,839,132.275,509,451.94201,348,584.21II. Accumulated depreciation
1. Opening balance34,470,758.271,324,974.5035,795,732.77
2. Increase during the period3,725,504.84135,477.643,860,982.48
(1) Provision3,725,504.84135,477.643,860,982.48
3. Decrease during the period700,376.61700,376.61
(1) Disposal700,376.61700,376.61
4. Closing balance37,495,886.501,460,452.1438,956,338.64III. Impairment provision
1. Opening balance
2. Increase during the period
3. Decrease during the period
4. Closing balance
IV. Carrying amount
1. Closing carrying amount158,343,245.774,048,999.80162,392,245.57
2. Opening carrying amount163,618,448.744,196,862.76167,815,311.50Explanation: The reason for other decreases is that the original recognised amount of right-of-use assets wastax included, and as the invoices for leasing have been received, the input tax amount offset the original carryingamount of the right-of-use assets.
(2) Impairment test on right-of-use assets
Applicable ? Not applicable
INTERIM REPORT 2024
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 amount
1. Opening balance2,525,157,831.8223,309,148.7127,493,613.0515,908,674.872,591,869,268.45
2. Increase during the period20,708,694.0020,708,694.00
(1) Increase due to debt
restructuring20,708,694.0020,708,694.00
3. Decrease during the period63,881,675.771,020,714.0864,902,389.85
(1) Disposal63,881,675.771,020,714.0864,902,389.85
4. Closing balance2,481,984,850.0522,288,434.6327,493,613.0515,908,674.872,547,675,572.60II. Accumulated amortisation
1. Opening balance549,448,621.9522,999,984.341,151,095.4415,908,674.87589,508,376.60
2. Increase during the period26,669,309.8847,475.0026,716,784.88
(1) Provision26,669,309.8847,475.0026,716,784.88
3. Decrease during the period22,072,347.461,011,887.4923,084,234.95
(1) Disposal22,072,347.461,011,887.4923,084,234.95
4. Closing balance554,045,584.3721,988,096.851,198,570.4415,908,674.87593,140,926.53III. Impairment provision
1. Opening balance
2. Increase during the period
3. Decrease during the period
4. Closing balance
IV. Carrying amount
1. Closing carrying amount1,927,939,265.68300,337.7826,295,042.611,954,534,646.07
2. Opening carrying amount1,975,709,209.87309,164.3726,342,517.612,002,360,891.85Explanation: (1) For details of restricted ownership, please refer to note VII. 24.
(2) Impairment test on intangible assets
Applicable ? Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
20. Goodwill
(1) Original carrying amount of goodwill
Unit: RMB
Name of investee or event generating goodwillOpening balance
Increase during
the period
Decrease duringthe period
Closing balanceArising from
businesscombinationsDisposal
Kunshan Tuoan Plastic Products Co., Ltd.26,946,905.3826,946,905.38Jilin Chenming Paper Co., Ltd.14,314,160.6014,314,160.60Jiangxi Chenming Port Co., Ltd.8,273,638.428,273,638.42
Total49,534,704.4026,946,905.3822,587,799.02
(2) Provision for impairment of goodwill
Unit: RMBName of investee or event generating goodwillOpening balance
Increase during
the period
Decrease during
the period
Closing balanceProvisionDisposal
Jilin Chenming Paper Co., Ltd.14,314,160.6014,314,160.60
Total14,314,160.6014,314,160.60
(3) Relevant information on goodwill for asset group or combination of asset groups
Name
Composition and basis of asset group orcombination of asset groups
Operating segmentand basis
Whether it isconsistent withprior yearJilin Chenming Paper Co., Ltd.The company as a whole is regarded as an asset group or
combination of asset groups
Machine-made paper segmentYesJiangxi Chenming Port Co., Ltd.The company as a whole is regarded as an asset group or
combination of asset groups
Other segmentYesOther explanation: With the category of the principal activities as the basis for determining its reportingsegments, the Company regarded Jilin Chenming Paper Co., Ltd. and Jiangxi Chenming Port Co., Ltd. as anasset group as a whole, respectively.
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
20. Goodwill (Cont
’d)
(4) Specific determination of recoverable amount
Determination of net amount of recoverable amount measured at fair value after deducting disposal expenses Applicable ? Not applicableDetermination of present value of recoverable amount based on expected cash flows? Applicable Not applicable
Unit: RMB
Item
CarryingamountRecoverableamountImpairment
Term offorecastperiodKey parameterfor forecast period
Key parameterfor stabilisation period
Basis ofdetermination ofkey parameterfor stabilisationperiodJiangxi Chenming Port Co., Ltd.-2,458,522.7113,494,715.710.005Discount rate of 6.23%Value added of zeroEstimationTotal-2,458,522.7113,494,715.710.00
21. Long-term prepaid expenses
Unit: RMBItem
Openingbalance
Increase during
the period
Amortisationduring the period
OtherdeductionsClosing balanceWoodland expenses5,952,099.77306,730.585,645,369.19Others34,027,061.721,357,483.45187,784.7332,481,793.54Total39,979,161.491,664,214.03187,784.7338,127,162.73
Other Explanation: Other deduction was due to the disposal of subsidiary.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
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: RMB
Item
Closing balanceOpening balanceDeductibletemporarydifference
Deferredincometax assets
Deductibletemporarydifference
Deferredincometax assets
Deductible loss7,733,097,173.051,257,426,863.677,008,265,437.961,138,659,379.33Provision for impairment of assets2,197,977,157.68515,876,810.642,170,702,373.93509,035,457.40Deferred income142,842,333.4221,426,350.01144,721,508.4321,708,225.98Outstanding payables107,821,937.8316,497,569.18121,528,026.2018,553,482.43Unrealised profit arising from intra-grouptransactions14,483,521.603,620,880.407,605,345.401,901,336.35Total10,196,222,123.581,814,848,473.909,452,822,691.921,689,857,881.49
(2) Deferred income tax liabilities before offsetting
Unit: RMBItem
Closing balanceOpening balanceTaxable temporary
differences
Deferred income
tax liabilities
Taxable temporary
differences
Deferred income
tax liabilities
Asset valuation increment from businesscombinations involving entities not under common control21,236,138.005,309,034.5037,960,636.209,490,159.05
Total21,236,138.005,309,034.5037,960,636.209,490,159.05
(3) The breakdown of unrecognised deferred income tax assets
Unit: RMBItemClosing balanceOpening balanceDeductible loss600,327,728.14721,381,744.55Deductible temporary difference51,626,100.2453,265,395.05Total651,953,828.38774,647,139.60
INTERIM REPORT 2024
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)
(4) Expiry of deductible loss of unrecognised deferred income tax assets falls in the years as follows
Unit: RMBYearClosing balanceOpening balanceRemark2024158,265,081.512025208,380,555.63226,672,646.51202673,280,337.3861,481,717.71202724,609,377.9477,967,748.732028140,072,946.12196,994,550.092029153,984,511.07Total600,327,728.14721,381,744.55
23. Other non-current assets
Unit: RMBItem
Closing balanceOpening balanceBookbalance
Impairment
provisionCarrying amount
Bookbalance
Impairment
provisionCarrying amount
Payments for engineering and equipment915,667,751.58915,667,751.581,055,195,141.001,055,195,141.00Others11,887,516.5711,887,516.5711,887,516.5711,887,516.57
Total927,555,268.15927,555,268.151,067,082,657.571,067,082,657.57
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
24. Assets with restricted ownerships or right to use
Unit: RMBItem
Closing balanceOpening balanceBook balanceCarrying amount
Type ofrestrictionRestrictionBook balanceCarrying amount
Type ofrestrictionRestrictionMonetary funds10,583,179,917.0010,583,179,917.00PledgedAs deposits for acceptance
bills and letters of credit,deposits for letter ofguarantee, securitydeposits for loans,deposit reserves, interestreceivable, etc. (Note VII. 1)
11,360,599,088.6911,360,599,088.69PledgedAs deposits for acceptance bills and
letters of credit, deposits for letterof guarantee, security deposits forloans, deposit reserves, interestreceivable, etc. (Note VII. 1)Fixed assets9,383,901,424.596,097,926,811.05ChargedAs collateral for bank
borrowings and long-termpayables (Note VII. 15)
9,411,111,670.626,303,095,864.20ChargedAs collateral for bank borrowings and
long-term payables (Note VII. 15)Investment properties
6,114,818,654.815,075,202,994.63ChargedAs collateral for bank
borrowings (Note VII. 14)
5,941,741,699.605,004,776,921.76ChargedAs collateral for bank borrowings
(Note VII. 14)Intangible assets849,460,775.99645,269,711.95ChargedAs collateral for bank
borrowings and long-termpayables (Note VII. 19)
865,105,844.99665,784,045.39ChargedAs collateral for bank borrowings and
long-term payables (Note VII. 19)Accounts receivable84,955,640.3184,502,139.21PledgedAs pledge for borrowings
(Note VII. 4)
403,349,324.55398,710,807.32PledgedAs pledge for borrowings (Note VII. 4)Accounts receivable financing
20,000.0020,000.00PledgedAs pledge for obtaining letters
of credit (Note VII. 5)
90,551,168.0190,551,168.01PledgedAs pledge for obtaining letters of credit
(Note VII. 5)Total27,016,336,412.7022,486,101,573.8428,072,458,796.4623,823,517,895.37
Other explanation:
As at 30 June 2024, housing, building structure and equipment with the carrying amount of RMB6,097,926,811.05(31 December 2023: carrying amount of RMB6,303,095,864.20), investment properties with the carrying amount ofRMB5,075,202,994.63 (31 December 2023: carrying amount of RMB5,004,776,921.76) and intangible assets with thecarrying amount of RMB645,269,711.95 (31 December 2023: carrying amount of RMB665,784,045.39) were pledged ascollateral for long-term borrowings of RMB4,140,020,848.22 (31 December 2023: RMB4,262,800,469.08) and short-termborrowings of RMB20,000,000.00 (31 December 2023: RMB85,000,000.00).
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
25. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMBItemClosing balanceOpening balanceDiscounted borrowings11,608,999,222.3612,270,872,000.00Credit borrowings9,359,698,029.189,908,287,425.27Guaranteed borrowings8,882,107,193.629,785,629,371.41Pledged borrowings393,659,397.981,425,690,224.94Mortgage borrowings20,000,000.0085,000,000.00Total30,264,463,843.1433,475,479,021.62Explanation of the classification of short-term borrowings:
For classification and amount of mortgage borrowings and mortgage assets, please see 1. Monetary fundsand 24. Assets with restricted ownerships or right to use in Note VII.For classification and amount of pledged borrowings and mortgage assets, please see 1. Monetary fundsand 24. 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 endof the year amounted to RMB0.00. Short-term borrowings included accrued interest of RMB25,209,675.76.
26. Bills payable
Unit: RMBCategoryClosing balanceOpening balanceCommercial acceptance bills4,267,192,499.153,604,737,193.92Bank acceptance bills1,295,192,080.241,014,249,270.03Total5,562,384,579.394,618,986,463.95
Total outstanding bills payable due as at the end of the period amounted to RMB0.00.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
27. Accounts payable
(1) Particulars of accounts payable
Unit: RMBItemClosing balanceOpening balancePayment for goods3,398,430,307.193,329,807,929.61Payment for engineering193,203,879.71222,541,200.98Payment for equipment170,057,669.66107,663,951.56Others315,506,306.22242,607,788.05Total4,077,198,162.783,902,620,870.20
(2) Disclosure by ageing
Unit: RMBAgeingClosing balanceOpening balanceWithin 1 year (including 1 year)3,625,253,454.213,361,203,746.721 to 2 years187,319,359.25267,905,274.762 to 3 years26,049,232.7330,677,976.15Over 3 years238,576,116.59242,833,872.57Total4,077,198,162.783,902,620,870.20The 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 and over 3 years.
28. Other payables
Unit: RMBItemClosing balanceOpening balanceOther payables3,134,911,098.582,414,752,127.19Dividend payable123,000,000.00Total3,257,911,098.582,414,752,127.19
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
28. Other payables (Cont
’d)
(1) Dividend payable
Unit: RMBItemClosing balanceOpening balanceDividend declared but not yet distributed to minority shareholders by subsidiary123,000,000.00Total123,000,000.00
(2) Other payables
1) Other payables by nature
Unit: RMBItemClosing balanceOpening balanceOpen credit1,800,239,769.121,090,141,993.83Deposit825,462,360.02785,572,067.82Accrued expenses387,260,893.04381,781,932.14The obligation to repurchase shares under the share incentive scheme63,764,745.7463,764,745.74Others58,183,330.6693,491,387.66Total3,134,911,098.582,414,752,127.19
2) Significant other payables aged over 1 year
Unit: RMBItemClosing balance
Reason foroutstanding or
not transferMCC Fujian Investment Construction Co., Ltd.570,000,000.00Project deposits
29. Receipts in advance
(1) Particulars of receipts in advance
Unit: RMBItemClosing balanceOpening balancePrepaid rents and property fees14,398,554.7016,242,921.65Total14,398,554.7016,242,921.65
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
30. Contract liabilities
Unit: RMBItemClosing balanceOpening balancePayment for goods in advance1,517,098,339.471,443,680,155.62Total1,517,098,339.471,443,680,155.62
31. Staff remuneration payables
(1) Particulars of staff remuneration payables
Unit: RMBItem
Openingbalance
Increase
duringthe period
Decreaseduringthe period
ClosingbalanceI. Short-term remuneration73,907,233.82 529,423,606.94561,292,469.8842,038,370.88II. Retirement benefit plan-definedcontribution scheme429,924.62 99,262,593.2896,607,124.353,085,393.55III. Termination benefits125,413.81125,413.81Total74,337,158.44628,811,614.03658,025,008.0445,123,764.43
(2) Particulars of short-term remuneration
Unit: RMBItemOpening balance
Increase during the period
Decreaseduringthe periodClosing balance
1. Salaries, bonuses, allowance and subsidies54,425,637.71425,802,119.58458,852,591.6521,375,165.64
2. Staff welfare15,273,065.8315,273,065.83
3. Social insurance premium1,399,223.3246,066,674.1645,310,915.752,154,981.73Including: Medical insurance premium494,472.6841,159,193.0840,339,349.291,314,316.47
Maternity insurance premium15,635.744,275,281.744,157,106.70133,810.78Work-related injury insurance premium889,114.90632,199.34814,459.76706,854.48
4. Housing provident funds6,932,114.3033,425,836.0434,912,499.035,445,451.31
5. Union funds and workers
’ education7,813,758.788,010,810.963,540,075.5812,284,494.16
6. Other short-term remuneration3,336,499.71845,100.373,403,322.04778,278.04Total73,907,233.82529,423,606.94561,292,469.8842,038,370.88
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
31. Staff remuneration payables (Cont
’d)
(3) Defined contribution plan
Unit: RMBItem
Openingbalance
Increaseduringthe period
Decreaseduringthe period
Closingbalance
1. Basic pension insurance premiums415,282.2795,010,017.5192,753,288.642,672,011.14
2. Unemployment insurance premiums14,642.354,252,575.773,853,835.71413,382.41Total429,924.6299,262,593.2896,607,124.353,085,393.55
32. Tax payables
Unit: RMBItemClosing balanceOpening balanceValue added tax45,997,159.9140,076,417.59Property tax24,506,123.5315,486,094.67Stamp duty13,952,948.0410,875,401.17Land use tax11,754,662.0611,149,858.80Enterprise income tax7,007,345.926,720,397.49Environmental protection tax3,199,355.753,698,248.00Resource tax3,000,000.003,000,000.00Urban maintenance and construction tax2,251,418.402,396,420.76Land appreciation tax2,024,028.202,059,693.25Educational surcharges and others1,889,242.092,062,463.52Individual income tax1,685,968.222,184,712.31Total117,268,252.1299,709,707.56
33. Non-current liabilities due within one year
Unit: RMBItemClosing balanceOpening balanceLong-term payables due within one year2,226,743,234.922,354,342,454.51Long-term borrowings due within one year1,216,122,189.541,273,902,656.06Lease liabilities due within one year3,692,567.253,692,567.25Total3,446,557,991.713,631,937,677.82
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
34. Other non-current liabilities
Unit: RMBItemClosing balanceOpening balanceShort-term financial leasing borrowings70,000,000.00100,000,000.00Total70,000,000.00100,000,000.00
35. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMBItemClosing balanceOpening balanceMortgage borrowings4,140,020,848.224,262,800,469.08Guaranteed borrowings1,074,338,325.07857,571,273.74Credit borrowings826,563,813.15834,545,402.88Less: Long-term borrowings due within one year1,216,122,189.541,273,902,656.06Total4,824,800,796.904,681,014,489.64Explanation of the types of long-term borrowings:
For classification and amount of mortgage borrowings and mortgage assets, please see 1. Monetary fundsand 24. Assets with restricted ownerships or right to use in Note VII. Long-term borrowings included accrued interest of RMB554,888.89.
36. Lease liabilities
Unit: RMBItemClosing balanceOpening balanceLease payments payable61,566,153.1464,264,374.68Less: Unrecognised financing expenses17,509,799.8018,584,784.58Less: Lease liabilities due within one year3,692,567.253,692,567.25Total40,363,786.0941,987,022.85
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
37. Long-term payables
Unit: RMBItemClosing balanceOpening balanceLong-term payables2,279,402,749.152,541,095,217.66Total2,279,402,749.152,541,095,217.66
(1) Long-term payables by nature
Unit: RMBItemClosing balanceOpening balanceFinancial leasing borrowings4,031,251,825.854,345,793,513.95China Development Bank Special Fund275,000,000.00343,750,000.00Contributions by other partners199,894,158.22199,894,158.22Retention for the financial leasing operations6,000,000.00Less: Long-term payables due within one year2,226,743,234.922,354,342,454.51Total2,279,402,749.152,541,095,217.66Other explanations:
Contributions by other partners refer to the contributions made by other partners to Weifang Chenming GrowthDriver Replacement Equity Investment Fund Partnership (Limited Partnership) and Weifang Chendu EquityInvestment Partnership (Limited Partnership), the special structured entities of the Company, and such contributionsare reclassified as financial liabilities on a consolidation basis.
38. Deferred income
Unit: RMBItemOpening balance
Increase during
the period
Decrease during
the periodClosing balanceReasonGovernment grants1,337,864,114.703,270,000.0053,368,860.211,287,765,254.49Financial provisionTotal1,337,864,114.703,270,000.0053,368,860.211,287,765,254.49
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
38. Deferred income (Cont
’d)Items in respect of government grants:
Liability item
Openingbalance
New grantsduring theperiod
Include inother incomefor the period
Otherchanges
Closingbalance
Asset-related/income-relatedFunding for environmental protection524,694,035.2425,239,041.36499,454,993.88Asset-relatedHuanggang forestry-pulp-paper project445,968,305.2512,513,108.90433,455,196.35Asset-relatedInfrastructure and environmental protection engineering196,803,377.255,758,794.72191,044,582.53Asset-relatedFinancial subsidies for technological transformation project95,106,015.683,270,000.004,416,552.4893,959,463.20Asset-relatedZhanjiang forestry-pulp-paper project42,617,331.352,047,316.4640,570,014.89Asset-relatedProject fund for National Key Technology Research and Development Program793,725.0082,350.00711,375.00Asset-relatedOthers31,881,324.933,311,696.2928,569,628.64Asset-relatedTotal1,337,864,114.703,270,000.0053,368,860.211,287,765,254.49
39. Share capital
Unit: RMB
Opening balance
Increase/decrease during the year (+/-)
Closing balanceNew issueBonus issueSharesconverted fromreservesOthersSubtotal
Total number of shares2,956,813,200.002,956,813,200.00
40. Capital reserves
Unit: RMBItemOpening balance
Increase during
the period
Decrease during
the periodClosing balanceCapital premium (share premium)4,599,770,312.401,240,406.7479,723,162.694,521,287,556.45Other capital reserves729,020,587.21729,020,587.21Total5,328,790,899.611,240,406.7479,723,162.695,250,308,143.66
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
40. Capital reserves (Cont
’d)Other explanations, including changes (increase or decrease) during the period and reasons for such changes:
The Company acquired partial equity interest in Shouguang Meilun Paper Co., Ltd., a subsidiary, from minorityshareholders, resulting in a decrease in capital reserves of RMB9,957,619.55; the Company contributed capitalto Shandong Yujing Grand Hotel Co., Ltd., resulting in a decrease in capital reserves of RMB67,989,974.96;Guangdong Nanyue Bank Co., Ltd., an associate of the Company, purchased certain interests from minorityshareholders, resulting in decrease in capital reserves of RMB535,161.44.
41. Treasury shares
Unit: RMBItemOpening balance
Increase duringthe period
Decrease duringthe periodClosing balanceShare incentive63,432,450.0063,432,450.00Total63,432,450.0063,432,450.00
42. Other comprehensive income
Other comprehensive income attributable to the Company in the balance sheet is as follows:
Unit: RMB
ItemOpening balance
Amount for the period
Closing balanceAttributable tothe parentcompanyafter tax
Less:
Transferred
from othercomprehensiveincome in priorperiods toretainedearnings duringthe periodI. Other comprehensive income that cannot be reclassified to profit and lossII. Other comprehensive income that will be reclassified to profit and loss-864,881,489.08-15,535,759.27-880,417,248.35
1. Other comprehensive income that may be reclassified to profit and loss
under the equity method-11,140,109.713,672,513.39-7,467,596.32
2. Exchange differences arising from translation of financial statements
denominated in foreign currencies-853,741,379.37-19,208,272.66-872,949,652.03Total other comprehensive income-864,881,489.08-15,535,759.27-880,417,248.35
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
42. Other comprehensive income (Cont
’d)
Other comprehensive income attributable to the parent company in the income statement:
Unit: RMB
Item
Amount for the period
Incurredbefore income
tax forthe period
Less:
Transferredfrom othercomprehensiveincome in priorperiods toprofit or lossduringthe period
Less: Incometax expenses
Less:
Attributable tominorityshareholdersafter tax
Attributable tothe parentcompanyafter taxI. Other comprehensive income that cannot be reclassified to profit and lossII. Other comprehensive income that will be reclassified to profit and loss-15,535,759.27-15,535,759.27
1. Other comprehensive income that may be reclassified to profit and loss
under the equity method3,672,513.393,672,513.39
2. Exchange differences arising from translation of financial statements
denominated in foreign currencies-19,208,272.66-19,208,272.66Total other comprehensive income-15,535,759.27-15,535,759.27
43. General risk provisions
Unit: RMBItemOpening balance
Increase during
the period
Decrease during
the periodClosing balanceGeneral risk provisions79,370,294.9113,361.8479,383,656.75Total79,370,294.9113,361.8479,383,656.75
Explanation: The general risk provisions are accrued by the Company’s subsidiaries Shandong Chenming GroupFinance Co., Ltd. and Shandong Chenming Commercial Factoring Co., Ltd. based on 1% of the receivables.Accordingly, the balance of the general risk provisions was adjusted based on the balance of the receivables.
44. Special reserves
Unit: RMBItemOpening balance
Increase during
the period
Decrease during
the periodClosing balanceProduction safety expenses23,322,829.575,053,378.022,927,238.6725,448,968.92Total23,322,829.575,053,378.022,927,238.6725,448,968.92
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
45. Surplus reserves
Unit: RMBItemOpening balance
Increase duringthe period
Decrease duringthe periodClosing balanceStatutory surplus reserves1,212,009,109.971,212,009,109.97Total1,212,009,109.971,212,009,109.97
46. Retained profit
Unit: RMBItemThe periodThe prior periodRetained profit as at the end of the prior period before adjustment8,020,182,801.559,390,642,477.57Adjustment to opening balance of retained earnings (increase +, decrease -)Opening balance of retained profit after adjustment8,020,182,801.559,390,642,477.57Add: N et profit for the period attributable to shareholders of the parentcompany28,646,205.42-1,281,289,649.82Less: Transfer of statutory surplus reserves Transfer of discretionary surplus reserves Transfer of general risk reserves13,361.84-529,973.80 Perpetual bonds interest payable89,700,000.00Retained profit as at the end of the period8,048,815,645.138,020,182,801.55
47. Revenue and operating costs
Unit: RMBItem
Amount for the periodAmount for the prior periodRevenueCostsRevenueCostsPrincipal activities13,762,711,500.1612,089,871,177.8712,420,935,712.7811,377,205,194.89Other activities122,020,018.8895,634,531.13144,027,068.53119,526,467.69Total13,884,731,519.0412,185,505,709.0012,564,962,781.3111,496,731,662.58
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
47. Revenue and operating costs (Cont
’d)
Breakdown of revenue and operating costs:
Unit: RMB
Category of contract
Machine-made paperFinancial servicesProperties and rentalsOthersTotalRevenueOperating costsRevenueOperating costsRevenueOperating costsRevenueOperating costsRevenueOperating costsType of business13,481,661,035.7111,924,438,705.06146,357,054.10731,119.2896,646,679.91105,057,448.14160,066,749.32155,278,436.5213,884,731,519.0412,185,505,709.00Including:
Machine-made paper12,429,565,296.1011,003,034,856.8612,429,565,296.1011,003,034,856.86Chemical pulp676,203,401.45559,225,217.42676,203,401.45559,225,217.42Electricity and steam123,938,936.52150,426,816.88123,938,936.52150,426,816.88Construction materials––87,284,048.7288,181,069.9387,284,048.7288,181,069.93Properties and rentals93,524,660.2894,794,899.59––93,524,660.2894,794,899.59Paper chemicals54,442,131.8747,128,441.1154,442,131.8747,128,441.11Others197,511,269.77164,623,372.79146,357,054.10731,119.283,122,019.6310,262,548.5572,782,700.6067,097,366.59419,773,044.10242,714,407.21By geographical area13,481,661,035.7111,924,438,705.06146,357,054.10731,119.2896,646,679.91105,057,448.14160,066,749.32155,278,436.5213,884,731,519.0412,185,505,709.00Including:
Mainland China10,649,460,195.799,236,419,177.40146,357,054.10731,119.2896,646,679.91105,057,448.14160,066,749.32155,278,436.5211,052,530,679.129,497,486,181.34Other countries and regions2,832,200,839.922,688,019,527.662,832,200,839.922,688,019,527.66By the timing of delivery13,481,661,035.7111,924,438,705.06146,357,054.10731,119.2896,646,679.91105,057,448.14160,066,749.32155,278,436.5213,884,731,519.0412,185,505,709.00Including:
Goods (at a point in time)13,355,608,712.9611,768,812,209.08159,251,216.13155,278,436.5213,514,859,929.0911,924,090,645.60Services (within a certain period)126,052,322.75155,626,495.98146,357,054.10731,119.2896,646,679.91105,057,448.14815,533.19–369,871,589.95261,415,063.40By sales channel13,481,661,035.7111,924,438,705.06146,357,054.10731,119.2896,646,679.91105,057,448.14160,066,749.32155,278,436.5213,884,731,519.0412,185,505,709.00Including:
Distribution9,515,928,871.048,395,207,255.259,515,928,871.048,395,207,255.25Direct sales3,965,732,164.673,529,231,449.81146,357,054.10731,119.2896,646,679.91105,057,448.14160,066,749.32155,278,436.524,368,802,648.003,790,298,453.75Total13,481,661,035.7111,924,438,705.06146,357,054.10731,119.2896,646,679.91105,057,448.14160,066,749.32155,278,436.5213,884,731,519.0412,185,505,709.00
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
47. Revenue and operating costs (Cont
’d)Information related to performance obligations:
Item
Time for fulfilment ofperformanceobligations
Significant terms ofpayment
Nature of goods thatthe Companyundertakesto transfer
Whether theperson is theprimary personin charge
Company’scommitmentsexpected to berefunded to customers
Types ofquality assuranceoffered by theCompany andrelated obligationsMachine-made paperDo mestic sales on the
day of delivery to thecustomer; foreignsales on the day ofcustoms clearance
Do mestic sales tend tobe provided on aninvoice basis; foreignsales tend to beprepaid
Produces easilydistinguishable
YesNoneGu aranteed quality
assurance, shouldthere be objectionsto product qualitywithin 7 days ofarrival, the productscan be returned andexchanged.Other explanations: The Company’s performance obligations for sales of machine-made paper are generally less thanone year, and the Company takes advance payments or provides credit terms depending on the customer. When theCompany is the primary responsible party for a sale, it generally obtains the unconditional right to receive paymentwhen control of the merchandise is transferred to the customer either at the time of shipment or upon delivery to thedestination specified by the customer.Information related to the transaction price allocated to residual performance obligations:
As at the end of the reporting period, the amount of revenue with signed contracts but unfulfilled or uncompletedperformance obligation was RMB1,517,098,339.47, in which RMB1,517,098,339.47 was expected to be recognised in2024.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
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 tax41,691,189.1943,867,342.48Stamp duty27,045,444.3920,624,364.19Land use tax23,596,390.5017,689,934.66Water resource tax7,474,477.007,866,553.80Environmental protection tax6,753,382.646,474,664.23Urban maintenance and construction tax5,628,724.655,065,031.72Educational surcharges and local education surcharge4,107,340.963,832,275.95Local water conservation funds424,555.73375,223.40Vehicle and vessel tax25,897.5922,420.06Total116,747,402.65105,817,810.49
49. General and administrative expenses
Unit: RMBItem
Amount for
the period
Amount forthe prior periodWages and surcharges107,661,916.80118,217,373.00Depreciation expenses59,471,794.5244,973,785.82Hospitality expenses47,703,471.6744,140,876.01Amortisation of intangible assets25,046,414.1823,286,773.73Welfare expenses23,910,644.6531,454,087.17Legal costs10,840,988.906,650,909.23Insurance premium6,695,006.669,440,871.93Repair fees6,462,342.019,337,357.64Intermediary service expenses4,654,917.808,597,192.82Others24,987,918.9632,196,997.51Total317,435,416.15328,296,224.86
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
50. Sales and distribution expenses
Unit: RMBItem
Amount forthe period
Amount forthe prior periodWages and surcharges48,843,122.2350,366,970.26Hospitality expenses21,071,398.7023,235,804.11Travel expenses13,823,032.5312,003,217.19Rental expenses3,428,387.223,238,179.10Selling commissions2,472,705.103,387,483.92Depreciation expenses1,480,291.622,820,127.76Office expenses1,175,994.991,137,272.19Warehouse expenses301,394.66429,220.85Others6,707,504.1610,048,442.16Total99,303,831.21106,666,717.54
51. Research and development expense
Unit: RMBItem
Amount forthe period
Amount forthe prior periodConsumption of materials414,455,113.32366,319,485.67Utilities76,607,858.2775,235,547.39Wages and surcharges63,586,172.6666,209,728.31Depreciation expenses36,311,580.2223,682,873.40Insurance premium13,601,674.1713,868,772.48Welfare expenses3,372,176.583,443,387.62Housing provident funds2,265,763.362,384,161.81Other expenses1,713,757.831,660,871.90Total611,914,096.41552,804,828.58
52. Finance expenses
Unit: RMBItem
Amount for
the period
Amount forthe prior periodInterest expenses854,610,967.90856,872,614.18Interest income104,024,655.2294,532,686.92Foreign exchange gains and losses-40,639,311.96-34,863,785.35Bank charges and others146,508,498.45122,050,778.14Total856,455,499.17849,526,920.05
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
53. Other income
Unit: RMBSource of other income
Amount forthe period
Amount forthe prior periodAdditional deduction of VAT94,956,915.41Government grants – amortised deferred income included in profit or loss53,368,860.2182,410,962.30Government grants – directly included in profit or loss10,932,524.8325,744,734.89Refund of handling fees for withholding and payment of individual incometax498,630.65Gain on debt restructuring188,197.54Total159,945,128.64108,155,697.19
54. Gain on change in fair value
Unit: RMBSource of gain on change in fair value
Amount for
the period
Amount forthe prior periodGain on change in fair value of consumable biological assets measured at fair value5,184,193.115,749,779.42Financial assets held for trading-7,405,789.55-25,565,577.25Total-2,221,596.44-19,815,797.83
55. Investment income
Unit: RMBItem
Amount for
the period
Amount forthe prior periodInvestment gain on disposal of long-term equity investments216,154,711.23Investment income on holding other non-current financial assets23,957,613.40630,212.77Gain on debt restructuring3,313,951.90-145,995.36Income from long-term equity investments accounted for using the equity method-38,682,172.1923,934,269.81Investment gain on derecognition of financial assets-23,412,008.23-67,175,214.10Total181,332,096.11-42,756,726.88
56. Credit impairment loss
Unit: RMBItem
Amount for
the period
Amount forthe prior periodBad debt loss of accounts receivable-124,386,619.66-43,081,750.88Total-124,386,619.66-43,081,750.88
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
57. Loss on impairment of assets
Unit: RMBItem
Amount for
the period
Amount forthe prior periodLoss on inventory impairment-3,041,427.75-43,314,485.76Total-3,041,427.75-43,314,485.76
58. Non-operating income
Unit: RMBItem
Amount forthe period
Amount forthe prior period
Included in non-recurring profit orloss in the periodFine income1,900,470.03323,305.001,900,470.03Gain on damage and retirement of non-current assets395,610.51433,184.77395,610.51Exempted debts366,717.7412,888.00366,717.74Others88,688.65171,427.5388,688.65Total2,751,486.93940,805.302,751,486.93
59. Non-operating expenses
Unit: RMBItem
Amount for
the period
Amount forthe prior period
Included in non-recurring profit orloss in the periodLoss on damage and retirement of non-current
assets639,215.793,074,424.63639,215.79Donation300,000.00300,000.00Others74,335.2163,765.4374,335.21Total1,013,551.003,138,190.061,013,551.00
60. Asset disposal income
Unit: RMBSource of asset disposal income
Amount for
the period
Amount forthe prior periodGain on disposal of fixed assets (“-” denotes loss)19,222,812.6011,759,266.91Total19,222,812.6011,759,266.91
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
61. Income tax expenses
(1) Particulars of income tax expenses
Unit: RMBItem
Amount forthe period
Amount forthe prior periodIncome tax expenses for the period30,685,170.6822,508,021.82Deferred income tax expenses-127,086,125.02-233,999,203.96Total-96,400,954.34-211,491,182.14
(2) Reconciliation between accounting profit and income tax expenses
Unit: RMBItem
Amount forthe periodTotal profit-70,042,106.12Income tax expenses calculated at statutory/applicable tax rates-10,506,315.92Effect of different tax rates applicable to subsidiaries-46,483,903.78Effect of adjustments for income tax for prior periods11,537,775.39Profit and loss of joint ventures and associates accounted for using the equity method-10,700,688.45Effect of income not subject to tax-3,690,697.97Effect of non-deductible costs, expenses and losses10,819,433.00Effect of utilisation of previously unrecognised deductible loss on deferred income tax assets-27,072,452.40Effect of current unrecognised deductible temporary difference or deductible loss arising from deferred tax income assets37,402,548.77Tax effect of R&D fee deduction (listed with“-”)-57,706,652.98Income tax expense-96,400,954.34
62. Other comprehensive income
Please refer to note VII. 42.
63. Items on statements of cash flow
(1) Cash relating to operating activities
Cash received relating to other operating activities
Unit: RMBItem
Amount for
the period
Amount forthe prior periodInterest income98,034,655.2296,517,182.23Open credit and other income37,948,513.99128,779,296.53Government grants14,674,965.7116,978,364.27Net proceedings from the financial leasing business638,037,439.53Total150,658,134.92880,312,282.56
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
63. Items on statements of cash flow (Cont
’d)
(1) Cash relating to operating activities (Cont
’d)Cash paid relating to other operating activities
Unit: RMBItem
Amount forthe period
Amount forthe prior periodExpenses and open credit944,194,644.80802,664,900.20Total944,194,644.80802,664,900.20
(2) Cash relating to financing activities
Cash received relating to other financing activities
Unit: RMBItem
Amount for
the period
Amount forthe prior periodEquipment finance lease received1,075,100,000.001,122,264,589.15Deposit for finance lease6,000,000.00Net recovery of guarantee deposit777,685,703.00Total1,852,785,703.001,128,264,589.15
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
63. Items on statements of cash flow (Cont
’d)
(2) Cash relating to financing activities (Cont
’d)
Cash paid relating to other financing activities
Unit: RMBItem
Amount forthe period
Amount forthe prior periodRepayment of equipment finance lease1,379,961,193.131,376,861,062.23Acquisition of non-controlling interests300,000,000.00Repayment of borrowings from China Development Bank funds68,750,000.0068,750,000.00Current accounts19,350,000.00Payment of deposit for equipment finance lease19,000,000.0049,250,000.00Repayment of bonds350,000,000.00Net expense of guarantee deposit97,308,709.84Total1,787,061,193.131,942,169,772.07
Changes in liabilities arising from financing activities? Applicable Not applicable
Unit: RMB
ItemOpening balance
Increase during the periodDecrease during the period
Closing balanceCash changesNon-cash changesCash changesNon-cash changesShort-term borrowings33,475,479,021.6214,019,854,718.40101,648,246.5316,828,518,143.41504,000,000.0030,264,463,843.14Long-term borrowings5,954,917,145.70612,417,275.0727,366,519.99524,387,954.3229,390,000.006,040,922,986.44Long-term payables4,895,437,672.171,075,100,000.00167,914,684.431,483,163,328.15149,143,044.384,506,145,984.07Lease liabilities45,679,590.10881,727.481,272,376.611,232,587.6344,056,353.34Other payables (financing)282,524,750.001,019,000,000.00156,030,000.001,145,494,750.00Long-term receivables (deposit for financial leasing)308,778,944.3351,600,826.6819,000,000.0011,431,959.61287,610,077.26Other monetary funds (net change of guarantee deposit)11,321,241,125.05777,685,703.0010,543,555,422.05Total56,284,058,248.9717,504,057,696.47349,412,005.1119,012,371,802.49695,197,591.6252,832,249,416.30
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
64. 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 profit26,358,848.22-694,641,382.66Add: Provision for impairment of assets127,428,047.4186,396,236.64Depreciation of fixed assets and investment property1,145,055,049.341,128,930,791.82Depreciation of right-of-use assets3,860,982.483,572,130.01Amortisation of intangible assets26,716,784.8826,601,501.33Amortisation of long-term prepaid expenses1,664,214.032,970,626.13Loss on disposal of fixed assets, intangible assets and otherlong-term assets (“-” denotes gain)
-19,222,812.60-11,759,266.91Loss on retirement of fixed assets (“-” denotes gain)243,605.282,641,239.86Loss on changes in fair value (“-” denotes gain)2,221,596.4419,815,797.83Finance expenses (“-” denotes gain)854,610,967.90856,872,614.18Investment loss (“-” denotes gain)-181,332,096.1142,756,726.88Decrease in deferred income tax assets (“-”denotesincrease)
-124,990,592.41-226,570,060.35Increase in deferred income tax liabilities (“-”denotesdecrease)
-4,181,124.555,466,650.50Decrease in inventories (“-” denotes increase)694,547,012.9235,683,655.24Decrease in operating receivables (“-” denotes increase)-544,020,781.43643,109,345.71Increase in operating payables (“-” denotes decrease)-16,460,308.73-138,758,858.62OthersNet cash flows from operating activities1,992,499,393.071,783,087,747.59
2.Major investing and financing activities not involving cash
settlements:
Capital converted from debtsConvertible corporate bonds due within one yearFixed assets under finance leases
3.Net change in cash and cash equivalents:
Closing balance of cash802,830,084.551,842,769,494.26Less: Opening balance of cash764,233,742.612,159,460,149.51Add: Closing balance of cash equivalentsLess: Opening balance of cash equivalentsNet increase in cash and cash equivalents38,596,341.94-316,690,655.25
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
64. Supplementary information on cash flow statement (Cont
’d)
(2) Net cash from disposal of subsidiaries received in current period
Unit: RMBAmountCash or cash equivalents received in the current period from disposal of subsidiaries during
the period251,022,800.00Including: Kunshan Tuoan Plastic Products Co., Ltd.143,730,000.00 Shandong Yujing Grand Hotel Co., Ltd.107,292,800.00Less: Cash and cash equivalents held by the subsidiary on the date of loss of control20,915,309.33Including: Kunshan Tuoan Plastic Products Co., Ltd.20,091,053.42 Shandong Yujing Grand Hotel Co., Ltd.824,255.91Add: Cash or cash equivalents received in the current period from disposal of subsidiaries during previous periods380,000,000.00Including: Wuhan Chenming Hanyang Paper Holdings Co., Ltd.380,000,000.00 Net cash received from disposal of subsidiaries610,107,490.67
(3) Cash and cash equivalents composition
Unit: RMBItemClosing balanceOpening balanceI. Cash802,830,084.55764,233,742.61 Including: Treasury cash4,129,836.093,674,805.36
Bank deposit that can be used for payment at any time798,700,248.46760,558,937.25II. Cash equivalentsIII. Balance of cash and cash equivalent at end of period802,830,084.55764,233,742.61
(4) Monetary funds other than cash and cash equivalents
Unit: RMBItem
Amount for
the period
Amount forthe prior period
Reasons why it is not cash andcash equivalentsOther monetary funds10,543,555,422.0511,321,241,125.05See Note VII.1 for detailsInterest accrued on deposits39,624,494.9539,357,963.64See Note VII.1 for detailsTotal10,583,179,917.0011,360,599,088.69
65. Notes to items of statements of changes in owners
’ equity
Explanation of the item name of“others”and the adjustment amount to the balance as at the end of the previous year:
Nil
INTERIM REPORT 2024
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 foreign currency balanceExchange rate
Closing balance
in RMBMonetary fundsIncluding: USD39,951,997.817.1268284,729,897.99
EUR1,570,740.117.661712,034,539.50HKD394,815.280.9127360,340.01GBP1,777.909.043016,077.55JPY1,197.000.044753.55Accounts receivableIncluding: USD8,726,610.897.126862,192,810.49
EUR17,223.107.6617131,958.23JPY146,734,998.000.04476,559,054.41Other receivablesIncluding: USD1,084,115.807.12687,726,276.48
EUR80,841.817.6617619,385.70Accounts payableIncluding: USD18,990,945.767.1268135,344,672.24
EUR766,383.127.66175,871,797.55Long-term borrowingsIncluding: EUR4,492,120.007.661734,417,275.80
(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 applicableNo.Name of subsidiary
Principal place ofbusiness
Place ofincorporation
Functionalcurrency1Chenming GmbHHamburg, GermanyHamburg, GermanyEUR2Chenming Paper Korea Co., Ltd.Seoul, KoreaSeoul, KoreaKRW3Chenming International Co., Ltd.Los Angeles, USALos Angeles, USAUSD4Chenming Paper Japan Co., Ltd.Tokyo, JapanTokyo, JapanJPY5Chenming Paper United States Co., Ltd.Los Angeles, USALos Angeles, USAUSD6Chenming (Overseas) LimitedHong Kong, ChinaHong Kong, ChinaUSD7Chenming (Singapore) LimitedSingaporeSingaporeUSD8Chenming (HK) LimitedHong Kong, ChinaHong Kong, ChinaUSD
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
67. Leases
(1) The Company as a lessee
Simplified treatment of lease expenses for short-term leases or leases of low-value assets? Applicable Not applicable
Unit: RMBItem
Amount forthe periodShort-term lease3,235,879.40Total3,235,879.40
(2) The Company as a lessor
Operating lease as a lessor? Applicable Not applicable
Unit: RMBItemLease income
Including: income related tovariable lease payments not included in lease receiptsLease income88,182,141.14Total88,182,141.14Financial lease as a lessor Applicable ? Not applicable
INTERIM REPORT 2024
X Financial Report
VII. Notes to Items of The Consolidated Financial Statements (Cont’d)
67. Leases (Cont
’d)
(2) The Company as a lessor (Cont
’d)
Undiscounted lease payments for each of the next five years
Unit: RMBItem
Annual undiscounted lease payments
Closing balanceOpening balanceThe first year174,536,416.38179,905,002.33The second year165,465,795.09168,651,189.37The third year167,667,038.24167,585,064.63The fourth year161,101,058.01162,996,827.55The fifth year162,012,344.71159,887,562.91Five years later163,111,818.84165,396,559.34Total undiscounted lease payments after five years993,894,471.271,004,422,206.13VIII. R&D Expenses
Unit: RMBItem
Amount for
the period
Amount forthe prior periodConsumption of materials414,455,113.32366,319,485.67Utilities76,607,858.2775,235,547.39Wages and surcharges63,586,172.6666,209,728.31Depreciation expenses36,311,580.2223,682,873.40Insurance premium13,601,674.1713,868,772.48Welfare expenses3,372,176.583,443,387.62Housing provident funds2,265,763.362,384,161.81Other expenses1,713,757.831,660,871.90Total611,914,096.41552,804,828.58Including: R&D expenses included in profit or loss611,914,096.41552,804,828.58
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
IX. Change in Scope of Consolidation
1. Disposal of a subsidiary
Any transaction or event that results in the loss of control of any subsidiary during the period? Yes No
Unit: RMB
Name of subsidiary
Disposalconsiderationat the date ofloss of control
Disposal
percentageat the date of
loss of control
Disposal
methodat the date ofloss of control
Date ofloss of controlThe basis fordetermining the
date of loss of
controlDifference
between
consideration and
share of net assets of
relevant subsidiary
as per consolidatedfinancial statements
Remaining
shareholding as
of the date ofloss of control
Carrying
amount ofremaining
shareholding
as of the date
of loss of
control as per
consolidated
financial statements
Fair value of
remaining
shareholding
as of the date of
loss of control
as per consolidatedfinancial statements
Gain or loss
in fair value of
remaining
shareholdingDetermination
and key
assumption
of fair value of
remaining
shareholding
as of the date of
loss of control asper consolidated
financial statements
Relevant othercomprehensive
income of former
subsidiarytransferred
to profit or loss
or retained profit
Shandong Yujing Grand Hotel Co., Ltd.162,992,813.2590.05%Transfer2024-3-31Loss of control203,535,106.51Kunshan Tuoan Plastic Products Co., Ltd.143,730,000.00100.00%Transfer2024-2-29Loss of control12,619,604.72Any situation where investments in subsidiaries are disposed of step by step through multiple transactions and control is lost during the period Yes ? No
2. Change in scope of consolidation due to other reasons
During the period, 1 subsidiary was deregistered, namely Guangzhou Chenming Commercial Factoring Co., Ltd.
INTERIM REPORT 2024
X Financial Report
X. Interest in Other Entities
1. Interest in subsidiaries
(1) Constitution of the Group
Unit: RMB’0,000Name of subsidiaryRegister capital
Principleplace ofbusiness
Place ofincorporation
Nature ofbusiness
Type oflegal person
Shareholding
Acquisition
Issued debtsecurities
Issued sharecapitalDirectIndirectShouguang Meilun Paper Co., Ltd.
480,104.55ShouguangShouguangPaper makingFor-profit corporation68.28%Establishment00Shouguang Meichen Energy Technology Co., Ltd.
100.00ShouguangShouguangElectricityFor-profit corporation100%Establishment00Shouguang Chenming Art Paper Co., Ltd.
2,000.00(USD)ShouguangShouguangPaper makingFor-profit corporation75%Establishment00Shandong Chenming Paper Sales Co., Ltd.
10,000.00ShouguangShouguangSales of paper
product
For-profit corporation100%Establishment00Shanghai Chenming Pulp & Paper Sales Co., Ltd.
10,000.00ShanghaiShanghaiPaper product
trading
For-profit corporation100%Establishment00Shouguang Chenming Import and Export Trade Co., Ltd.
70,000.00ShouguangShouguangTradingFor-profit corporation35.71%64.29%Establishment00Jiangxi Chenming Supply Chain Management Co., Ltd.
200.00JiangxiJiangxiTradingFor-profit corporation70%Establishment00Zhanjiang Chenming Pulp & Paper Co., Ltd.
691,357.24ZhanjiangZhanjiangPaper makingFor-profit corporation80.28%Establishment00Zhanjiang ChenmingArboriculture Development Co., Ltd.
130,000.00ZhanjiangZhanjiangArboricultureFor-profit corporation100%Establishment00Yangjiang ChenmingArboriculture Development Co., Ltd.
22,000.00YangjiangYangjiangArboricultureFor-profit corporation100%Establishment00Guangdong Huirui Investment Co., Ltd.
25,800.00ZhanjiangZhanjiangInvestmentFor-profit corporation100%Establishment00Hubei Changjiang ChenmingHuanggang Equity InvestmentFund Partnership (Limited Partnership)
200,100.00HuanggangHuanggangFundFor-profit corporation59.97%Establishment00Hainan Chenming Technology Co., Ltd.
20,000.00HaikouHaikouWholesale and
retail
For-profit corporation100%Establishment00Foshan Chenming Import and Export Trade Co., Ltd.
20,000.00FoshanFoshanTradingFor-profit corporation100%Establishment00Shanghai Heruiming Property Management Co., Ltd.
30,150.00ShanghaiShanghaiBusiness
services
For-profit corporation100%Merger and
acquisition
Zhanjiang Chenming Port Co., Ltd.10,000.00ZhanjiangZhanjiangPort servicesFor-profit corporation100%Establishment00Zhanjiang Meilun Pulp & Paper Co., Ltd.
10,000.00ZhanjiangZhanjiangPaper makingFor-profit corporation100%Establishment00Guangdong Chenming Panels Co., Ltd.
1,000.00GuangdongGuangdongPanelsFor-profit corporation100%Establishment00Jiangxi Chenming Tea Co., Ltd.1,000.00JiangxiJiangxiTea businessFor-profit corporation100%Establishment00Jiangxi Chenming Paper Co., Ltd.32,673.32(USD)NanchangNanchangPaper makingFor-profit corporation100%Establishment00Jiangxi Chenming Logistics Co., Ltd500.00NanchangNanchangLogisticsFor-profit corporation100%Establishment00Nanchang Shengheng Trading Co.,Ltd.
1,000.00NanchangNanchangTradingFor-profit corporation100%Establishment00Nanchang Kunheng Trading Co.,Ltd.
1,000.00NanchangNanchangTradingFor-profit corporation100%Establishment00
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
Name of subsidiaryRegister capital
Principleplace ofbusiness
Place ofincorporation
Nature ofbusiness
Type oflegal person
Shareholding
Acquisition
Issued debtsecurities
Issued sharecapitalDirectIndirectNanchang Chenming ArboricultureDevelopment Co., Ltd.
1,000.00NanchangNanchangArboricultureFor-profit corporation100%Establishment00Jiangxi Chenming Port Co., Ltd.1,507.00JiangxiJiangxiCargo
transportation
For-profit corporation100%Merger and
acquisition
Shandong Dingkun AssetManagement Partnership (Limited Partnership)
100,100.00ShouguangShouguangBusiness servicesFor-profit corporation100%Establishment00Shouguang Kunhe Trading Co., Ltd.1,000.00ShouguangShouguangTradingFor-profit corporation100%EstablishmentJilin Chenming Paper Co., Ltd.150,000.00JilinJilinPaper makingFor-profit corporation100%Acquisition00Fuyu Chenming Paper Co., Ltd.30,800.00FuyuFuyuPaper makingFor-profit corporation100%Establishment00Jilin Chenming New-style WallMaterials Co., Ltd
1,000.00JilinJilinWall materialsFor-profit corporation100%Establishment00Jilin Chenming Logistics Co., Ltd.500.00JilinJilinLogisticsFor-profit corporation100%Establishment00Huanggang Chenming Pulp & PaperCo., Ltd.
335,000.00HuanggangHuanggangPulp productionFor-profit corporation70.15%29.85%Establishment00Huanggang Chenming PaperTechnology Co., Ltd.
100,000.00HuanggangHuanggangPaper makingFor-profit corporation100%Establishment00Huanggang Chenming Port ServiceCo., Ltd.
5,000.00HuanggangHuanggangPort servicesFor-profit corporation100%Establishment00Huanggang Chenming Pulp & FiberTrading Co., Ltd.
5,000.00HuanggangHuanggangTradingFor-profit corporation100%Establishment00Hubei Huanggang Chenming EquityInvestment Fund Management Co., Ltd.
300.00HuanggangHuanggangCapital market
services
For-profit corporation60%Establishment00Shandong Chenming GroupFinance Co., Ltd.
500,000.00JinanJinanFinanceFor-profit corporation80%20%Establishment00Shandong Chenming FinancialLeasing Co., Ltd.
587,200.00JinanJinanFinance leasesFor-profit corporation100%Establishment00Chenming (HK) Limited9,990.00 (USD)Hong KongHong KongPaper product
trading
For-profit corporation100%Establishment00Qingdao Chenming NonghaiFinancial Leasing Co., Ltd
500,000.00QingdaoQingdaoFinance leasesFor-profit corporation100%Establishment00Shanghai Chenming FinancialLeasing Co., Ltd.
100,000.00ShanghaiShanghaiFinance leasesFor-profit corporation100%Establishment00Wuhan Junheng PropertyManagement Co. Ltd.
39,600.00WuhanWuhanPropertyFor-profit corporation100%Merger and
acquisition
Guangzhou Chenming PropertyManagement Co., Ltd.
100,000.00GuangzhouGuangzhouPropertyFor-profit corporation100%Establishment00Shandong Chenming InvestmentLimited
20,000.00JinanJinanInvestmentFor-profit corporation100%Establishment00Shanxi Fuyin Industrial Trading Co.,Ltd.
36,000.00TaiyuanTaiyuanWholesale and
retail
For-profit corporation100%Acquisition00
X. Interest in Other Entities (Cont’d)
1. Interest in subsidiaries (Cont
’d)
(1) Constitution of the Group (Cont
’d)
INTERIM REPORT 2024
X Financial Report
Name of subsidiaryRegister capital
Principleplace ofbusiness
Place ofincorporation
Nature ofbusiness
Type oflegal person
Shareholding
Acquisition
Issued debtsecurities
Issued sharecapitalDirectIndirectChongmin Culture Development(Shanghai) Co., Ltd.
20,000.00ShanghaiShanghaiLeasing and
business services
For-profit corporation100%Acquisition00Jinan Chenming Paper Sales Co.,Ltd.
10,000.00JinanJinanInvestment
management/ Paper product trading
For-profit corporation100%Establishment00Shandong Chenming CommercialFactoring Co., Ltd.
20,000.00JinanJinanBusiness
factoring
For-profit corporation100%Establishment00Chenming GmbH65.00 (USD)GermanyGermanyPaper product
trading
For-profit corporation100%Establishment00Chenming Paper Japan Co., Ltd.150.00 (USD)JapanJapanPaper product
trading
For-profit corporation100%Establishment00Chenming International Co., Ltd.100.00 (USD)The United
States
The United States
Paper product trading
For-profit corporation100%Establishment00Chenming Paper United States Co.,Ltd.
100.00 (USD)The United
States
The United States
Paper product trading
For-profit corporation100%Establishment00Chenming Paper Korea Co., Ltd.100.00 (USD)KoreaKoreaPaper product
trading
For-profit corporation100%Establishment00Chenming (Overseas) Limited2,000.00 (USD)Hong KongHong KongPaper product
trading
For-profit corporation100%Establishment00Chenming (Singapore) Limited2,000.00 (USD)SingaporeSingaporePaper product
trading
For-profit corporation100%Establishment00Meilun (BVI) Limited5.00 (USD)CaymanCaymanCommerceFor-profit corporation100%Establishment00Shanghai Chenming Industry Co.,Ltd.
370,000.00ShanghaiShanghaiProperty
investmentand management
For-profit corporation100%Establishment00Shanghai Chenyin Trading Co., Ltd.41,000.00ShanghaiShanghaiTradingFor-profit corporation51%Establishment00Shanghai Hongtai Real Estate Co.,Ltd.
60,391.77ShanghaiShanghaiReal estateFor-profit corporation100%Merger and
acquisition
Shanghai Hongtai PropertyManagement Co., Ltd.
200.00ShanghaiShanghaiPropertyFor-profit corporation100%Merger and
acquisition
Shouguang Chenming PapermakingMachine Co., Ltd.
200.00ShouguangShouguangMachinery
manufacturing
For-profit corporation100%Establishment00Shouguang Hongxiang Printing andPackaging Co., Ltd.
80.00ShouguangShouguangPrinting and
packaging
For-profit corporation100%Acquisition00Shouguang Chenming ModernLogistic Co., Ltd.
1,000.00ShouguangShouguangTransportationFor-profit corporation100%Establishment00Shouguang Hongyi DecorativePackaging Co., Ltd.
200.00ShouguangShouguangPackagingFor-profit corporation100%Merger and
acquisition
X. 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 2024
X Financial Report
Name of subsidiaryRegister capital
Principleplace ofbusiness
Place ofincorporation
Nature ofbusiness
Type oflegal person
Shareholding
Acquisition
Issued debt
securities
Issued share
capitalDirectIndirectShouguang Xinyuan Coal Co., Ltd.300.00ShouguangShouguangCoalFor-profit corporation100%Merger and
acquisition
Shouguang Wei Yuan LogisticsCompany Limited
393.00ShouguangShouguangLogisticsFor-profit corporation100%Merger and
acquisition
Shouguang City Run Sheng WastedPaper Recycle Co., Ltd.
2,380.00ShouguangShouguangPurchase and
sale of waste
For-profit corporation100%Merger and
acquisition
Shouguang Shun Da CustomsDeclaration Co, Ltd.
150.00ShouguangShouguangCustoms
declaration
For-profit corporation100%Establishment00Huanggang Chenming ArboricultureDevelopment Co., Ltd.
7,000.00HuanggangHuanggangArboricultureFor-profit corporation100%Establishment00Chenming Arboriculture Co., Ltd.10,000.00WuhanWuhanArboricultureFor-profit corporation100%Establishment00Hailaer Chenming Paper Co., Ltd.1,600.00HailaerHailaerPaper makingFor-profit corporation75%Establishment00Weifang Chenming Growth DriverReplacementEquity Investment FundPartnership (Limited Partnership)
100,000.00WeifangWeifangFundFor-profit corporation79%Establishment00Weifang Chendu Equity InvestmentPartnership (Limited Partnership
32,000.00ShouguangShouguangCapital market
services
For-profit corporation79.69%Establishment00Nanjing Chenming CultureCommunication Co., Ltd.
500.00NanjingNanjingMarketingFor-profit corporation100%Establishment00
(2) Major non-wholly owned subsidiaries
Unit: RMBName of subsidiaryMinority interest
Gain or lossattributable to minorityinterest during the period
Dividend tominority interestdeclared during the period
Closing balanceof minority interestShouguang Meilun Paper Co., Ltd.31.72%14,034,956.42123,000,000.001,803,983,499.88Zhanjiang Chenming Pulp & Paper Co., Ltd.19.72%-1,288,359.901,579,422,644.51
X. Interest in Other Entities (Cont’d)
1. Interest in subsidiaries (Cont
’d)
(1) Constitution of the Group (Cont
’d)
INTERIM REPORT 2024
X Financial Report
X. Interest in Other Entities (Cont
’d)
1. Interest in subsidiaries (Cont
’d)
(3) Key financial information of major non-wholly owned subsidiaries
Unit: RMB
Name of subsidiary
Closing balanceOpening balance
Current assets
Non-current
assetsTotal assetsCurrent liabilities
Non-currentliabilitiesTotal liabilitiesCurrent assets
Non-currentassetsTotal assetsCurrent liabilities
Non-currentliabilitiesTotal liabilities
Shouguang Meilun Paper Co., Ltd.6,586,281,476.079,855,312,662.2216,441,594,138.296,998,813,648.601,104,767,705.498,103,581,354.095,534,633,307.0810,096,140,872.0415,630,774,179.126,282,312,497.46888,031,988.487,170,344,485.94Zhanjiang ChenmingPulp & Paper Co., Ltd.12,089,985,789.7612,282,982,933.4324,372,968,723.1913,847,904,342.711,574,758,664.4215,422,663,007.1312,562,782,806.6913,116,686,959.2525,679,469,765.9414,866,141,937.071,876,669,919.4716,742,811,856.54
Unit: RMB
Name of subsidiary
Amount for the periodAmount for the prior period
RevenueNet profit
Total
comprehensive
incomeCash flows from
operating activitiesRevenueNet profit
Total
comprehensive
incomeCash flows
from operating
activities
Shouguang Meilun Paper Co., Ltd.4,684,096,701.7540,515,254.6240,515,254.62759,366,495.739,084,559,413.98153,008,366.72153,008,366.721,528,677,090.76Zhanjiang Chenming Pulp & Paper Co., Ltd.6,278,830,552.253,686,976.507,359,489.89671,266,132.5811,000,808,231.98-541,888,245.61-543,112,252.631,332,553,432.65
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
X. 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 64.87% equity interest in Shouguang Meilun Paper Co., Ltd. In 2024, the Companyand Dongxing Securities Investment Co., Ltd. and SWSC Innovation Investment Co., Ltd. entered into an equitytransfer agreement in relation to the transfer of an aggregate of 3.41% equity interest in Shouguang Meilun PaperCo., Ltd to the Company. The equity transfer transaction did not result in the loss of control over ShouguangMeilun Paper Co., Ltd. by the Company. As at 30 June 2024, the equity transfer agreement was completed, andthe total transaction consideration paid was RMB300 million. The transaction resulted in a decrease in minorityinterest by RMB290.0424 million, and a decrease in capital reserves by RMB9,957,600.
(2) Effect of the transactions on minority interest and equity attributable to the owners of the parent company
Unit: RMBItem
Shouguang MeilunPaper Co., Ltd.Cost of acquisition/disposal consideration300,000,000.00– Cash300,000,000.00Total cost of acquisition/disposal consideration300,000,000.00Less: Share of net assets of the subsidiary calculated based on the proportion of equity interest acquired/disposed of290,042,380.45Difference9,957,619.55Of which: Capital reserve adjustment9,957,619.55
3 Interest in joint arrangements or associates
(1) Major joint ventures and associates
Name of joint venture and associate
Principle place
of business
Place ofincorporationNature of business
Shareholding
Accountingmethod forinvestment injoint venturesor associatesDirectIndirectShouguang Jintou Industrial Investment Partnership (Limited Partnership)ShouguangShouguangInvestment49.57%Equity methodGuangdong Nanyue Bank Co., Ltd.GuangdongGuangdongBank4.46%Equity methodThe basis for holding less than 20% of the voting power of the investee but having significant influence, and thebasis for holding 20% or more of the voting power of the investee but not having significant influence:
The Company holds 4.46% equity interest in Guangdong Nanyue Bank Co., Ltd. but is the second largestshareholder and is able to exercise significant influence over Guangdong Nanyue Bank Co., Ltd. by appointingone director to the board of directors (out of a total of nine directors on the board of directors).
INTERIM REPORT 2024
X Financial Report
X. Interest in Other Entities (Cont’d)
3 Interest in joint arrangements or associates (Cont’d)
(2) Key financial information of major joint ventures
Unit: RMBShouguang Jintou Industrial Investment Partnership(Limited Partnership)
Closing balance/
amount forthe period
Opening balance/amount for theprior periodCurrent assets2,364,434,510.351,775,433,885.35Of which: Cash and cash equivalents1,897,392.081,047,090.41Non-current assets393,384,007.57408,884,578.74Total assets2,757,818,517.922,184,318,464.09Current liabilities696,815,230.96104,387,199.50Non-current liabilities6,080,489.655,805,542.05Total liabilities702,895,720.61110,192,741.55Minority interestEquity interest attributable to shareholders of theparent company2,054,922,797.312,074,125,722.54Share of net assets based on shareholding1,018,612,901.091,028,131,675.91Adjustments– Others1,306,754,421.231,316,438,571.64Carrying amount of equity investment in joint ventures2,325,367,322.322,344,570,247.55Fair value of equity investment in joint ventures where publicly quoted prices existRevenue305,986,438.14Finance expenses1,809,456.021,620,207.86Income tax expenses-616,895.19Net profit-19,202,925.23-1,620,207.86Net profit from discontinued operationsOther comprehensive incomeTotal comprehensive income-19,202,925.23-1,620,207.86Dividends received from joint ventures during the year
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
X. Interest in Other Entities (Cont’d)
3 Interest in joint arrangements or associates (Cont’d)
(3) Key financial information of major associates
Unit: RMBGuangdong Nanyue Bank Co., Ltd.
Closing balance/
amount forthe period
Opening balance/amount for theprior periodCurrent assets204,880,976,101.06194,828,415,917.54Non-current assets115,126,420,036.44111,581,185,310.11Total assets320,007,396,137.50306,409,601,227.65Current liabilities262,494,142,140.38250,233,916,389.30Non-current liabilities27,354,502,269.1126,252,549,634.28Total liabilities289,848,644,409.49276,486,466,023.58Minority interest68,358,275.97Equity interest attributable to shareholders of the parent company30,158,751,728.0129,854,776,928.10Share of net assets based on shareholding1,345,080,327.071,331,523,051.00AdjustmentsGoodwillUnrealised profit arising from intra-group transactionsOthersCarrying amount of equity investment in associates1,345,080,327.071,331,523,051.00Fair value of equity investment in associates where publicly quotedprices existRevenue1,263,828,453.622,739,283,882.64Net profit233,504,987.79416,331,873.52Net profit from discontinued operationsOther comprehensive income82,343,349.45-9,346,709.52Total comprehensive income315,848,337.24406,985,164.00Dividends received from associates during the year
INTERIM REPORT 2024
X Financial Report
X. Interest in Other Entities (Cont’d)3 Interest in joint arrangements or associates (Cont’d)
(4) Summary financial information of non-major joint ventures and associates
Unit: RMBClosing balance/
amount forthe period
Opening balance/amount for theprior periodJoint ventures:
Total carrying amount of investment207,942,516.40197,483,273.06Total amount of the following items based on shareholding– Net profit10,459,243.345,160,237– Other comprehensive income– Total comprehensive income10,459,243.345,160,237Associates:
Total carrying amount of investment771,264,399.70811,622,814.12Total amount of the following items based on shareholding– Net profit-40,358,414.423,643,661.92– Other comprehensive income– Total comprehensive income-40,358,414.423,643,661.92XI. Government Grants
1. Government grants recognised at the end of the reporting period at the amount receivable
Applicable ? Not applicableReasons for not receiving the estimated amount of government grants at the estimated time Applicable ? Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
XI. Government Grants (Cont’d)
2. Liabilities in respect of government grants
? Applicable Not applicable
Unit: RMB
Subsidy itemAccounting itemOpening balance
New grantsduring theperiod
Include innon-operatingincome for theperiod
Include in otherincome forthe period
Other changesfor the periodClosing balance
Asset-related/income-relatedFunding for environmental protectionDeferred income524,694,035.2425,239,041.36499,454,993.88Asset-relatedHuanggang pulp-forestry-paper projectDeferred income445,968,305.2512,513,108.90433,455,196.35Asset-relatedInfrastructure and environmental protection engineering transformation projectDeferred income196,803,377.255,758,794.72191,044,582.53Asset-relatedFinancial subsidies for technical transformation projectDeferred income95,106,015.683,270,000.004,416,552.4893,959,463.20Asset-relatedZhanjiang forestry-pulp-paper projectDeferred income42,617,331.352,047,316.4640,570,014.89Asset-relatedProject fund for National KeyTechnology Research and Development ProgramDeferred income793,725.0082,350.00711,375.00Asset-relatedOthersDeferred income31,881,324.933,311,696.2928,569,628.64Asset-relatedTotal1,337,864,114.703,270,000.0053,368,860.211,287,765,254.49
INTERIM REPORT 2024
X Financial Report
XI. Government Grants (Cont’d)
3. Government grants included in profit or loss for the period
? Applicable Not applicable
Unit: RMBSubsidy itemAccounting item
Amount forthe period
Amount forthe prior periodFunding for environmental protectionOther income25,239,041.3626,594,207.20Huanggang forestry-pulp-paper projectOther income12,513,108.9012,513,108.90Financial subsidies for technological transformation projectOther income11,626,552.4835,191,957.48Sewage treatment and water conservation transformation projectOther income5,758,794.72Zhanjiang forestry-pulp-paper projectOther income2,047,316.462,047,316.46Government rewardsOther income1,510,920.007,220,880.00Subsidy for job expansionOther income938,615.1652,000.00Afforestation subsidyOther income491,960.00459,000.12Incentive fund for smart manufacturing regulatory EnterprisesOther income400,000.00612,000.00Job stabilisation subsidyOther income288,435.219,500.00Project fund for National Key Technology Research and Development ProgramOther income82,350.0082,350.00Unemployment InsuranceOther income46,500.00Refund of taxOther income30,124.002,877,613.59Refund of tax service handling feesOther income15,170.46Railway subsidyOther income800.00Special subsidy for foreign tradeOther income10,833,800.00Infrastructure and environmental protectionengineeringOther income5,758,794.72Immediate VAT refundOther income3,186,241.18OthersOther income3,311,696.29716,927.54Total64,301,385.04108,155,697.19
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
XII. Risk Relating to Financial InstrumentsMain financial instruments of the Group include monetary funds, bills receivable, accounts receivable, accounts receivablefinancing, other receivables, non-current assets due within one year, financial assets held for trading, other current assets,long-term receivables, other non-current financial assets, bills payable, accounts payable, other payables, short-termborrowings, non-current liabilities due within one year, long-term borrowings, bonds payable, lease liabilities and long-termpayables. Details of financial instruments refer to related notes. The risks associated with these financial instruments andthe risk management policies adopted by the Company to mitigate these risks are described below. The management of theCompany manages and monitors these exposures to ensure that the above risks are controlled in a limited extent.
1. Various risks from financial instruments
The Company aims to seek the appropriate balance between the risks and benefits in order to mitigate the adverseeffects on the Company’s financial performance from financial risk. Based on such objectives, the Company’s riskmanagement policies are established to identify and analyse the risks faced by the Company, to set appropriate risklimits and devise corresponding internal control procedures, and to monitor risks faced by the Company. Such riskmanagement policies and internal control systems are reviewed regularly to adapt to changes in market conditions andthe Company’s activities. The internal audit department of the Company undertakes both regular and ad-hoc reviews ofrisk management controls and proceduresRisks associated with the financial instrument of the Company mainly include credit risk, liquidity risk, market risk(including exchange rate risk, interest rate risk and commodity price risk).The board of directors is responsible to plan and establish the Company’s risk management structure, make riskmanagement policies and related guidelines, and supervise the implementation of risk management. The Company hasalready made risk management risks to identify and analyse risks that the Company face. These policies mentionedspecific risks, covering market, credit risk and liquidity risk etc. The Company regularly assesses market environmentand the operation of the Company changes to determine if to make alteration to risk management policy and systems.The Company’s risk management is implemented by Risk Management Committee according to the approval of theboard of directors. The Risk Management Committee works closely with other business department of the Company toidentify, evaluating and avoiding certain risks. The Company’s internal audit department will audit the risk managementcontrol and procedures regularly and report the result to audit committee of the Company.The Company spreads risks through diverse investment and business lines, and through making risk managementpolicy to reduce risks of single industry, specific area and counterpart.
(1) Credit risk
Credit risk refers to risk associated with the default of contract obligation of a transaction counterparty resulting infinancial losses to the Company.The Company manages credit risk based category. Credit risks mainly arose from bank deposit, bills receivable,accounts receivable, other receivables and long-term receivables etc.The Company’s bank deposit mainly deposits in state-owned banks and other large and medium-sized listedbanks. The Company anticipated that the bank deposit does not have significant credit risk.
INTERIM REPORT 2024
X Financial Report
XII. Risk Relating to Financial Instruments (Cont’d)
1. Various risks from financial instruments (Cont
’d)
(1) Credit risk (Cont
’d)
For accounts receivables, other receivables and long-term receivables, the Company set related policies to controlexposure of credit risks. The Company evaluates client’s credit quality and set related credit period based on theclient’s financial status, credit records and other factors such as current market situation etc. The Company keepsmonitor the client’s credit record and for client with deteriorate credit records, the Company will ensure the creditrisk is under control in whole by means of written notice of payment collection, shorten or cancel credit period.The Company’s debtor spread over different industry and area. The Company continued to assess the creditevaluation to receivables and purchase credit guarantee insurance if necessary.The biggest credit risk exposure of the Company is the carrying amount of each financial asset in the balancesheet. The Company did not provide financial guarantee which resulted in credit risks.The amount of top 5 accounts receivable of the Company accounted for 31.61% (2023: 36.65%) of theCompany’s total accounts receivables. The amount of top 5 other receivable of the Company accounted for
66.79% (2023: 70.32%) of the Company
’s total other receivables.
(2) Liquidity risk
Liquidity risk refers to the risks that the Company will not be able to meet its obligations associated with itsfinancial liabilities that are settled by delivering cash or other financial assets.To manage the liquidity risk, the Company monitors and maintains a level of cash and cash equivalents to financethe Company’s operations and mitigate the effects of fluctuations in cash flows. The management of the Companymonitors the usage of bank borrowings and ensures compliance with the borrowing agreements. In the meantime,the Company obtain commitments from major financial institutions to provide sufficient standby funds to meetshort-term and long-term funding needs.Operating cash of the Company was generated from capital and bank and other borrowings. As at 30 June 2024,the Company’s unused bank loan credit was RMB41,846.7437 million (31 December 2023: RMB44,131.5478million). The closing balance of financial assets of the Company due within one year amounted to RMB24,099.4235million, while the closing balance of financial liabilities due within one year amounted to RMB46,718.3898 million.The financial assets due within one year was less than that of financial liabilities. To manage liquidity risk, in 2024,the Company will focus on its major operations, actively divest or dispose non-principal assets, and put greaterefforts in recovery of financial lease payment. In addition to controlling its capital expenditures, the Company willalso strengthen internal control and further lower its costs. The Company will enhance market operations, boostsales volume and enhance corporate efficiency.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
XII. Risk Relating to Financial Instruments (Cont’d)
1. Various risks from financial instruments (Cont
’d)
(2) Liquidity risk (Cont
’d)
As at the end of the period, the financial assets, financial liabilities and off balance sheet guarantee held by theCompany are analysed by their maturity date as below at their remaining undiscounted contractual cash flows (inRMB’0,000):
Item
Closing balanceWithin 1 year1 to 2 years2 to 5 yearsOver 5 yearsTotalFinancial assets:
Monetary funds1,134,638.551,134,638.55Financial assets held for trading3,919.743,919.74Bills receivable67,496.2367,496.23Accounts receivable356,533.83356,533.83Accounts receivable financing2,206.562,206.56Other receivables257,654.11257,654.11Long-term receivables32,591.7529,728.4762,320.22Other non-current financial assets78,007.7778,007.77Other current assets74,937.8574,937.85Non-current assets due within one year512,555.48512,555.48Total financial assets2,409,942.3532,591.7529,728.4778,007.772,550,270.34Financial liabilities:
Short-term borrowings3,023,925.423,023,925.42Bills payable556,238.46556,238.46Accounts payable407,719.82407,719.82Other payables313,491.11313,491.11Non-current liabilities due within one year363,464.18363,464.18Other current liabilities7,000.007,000.00Long-term borrowings148,238.04142,739.05191,502.99482,480.08Lease liabilities183.40354.015,249.955,787.36Long-term payables174,236.6561,580.10235,816.75Total financial liabilities and contingent liabilities4,671,838.99322,658.09204,673.16196,752.945,395,923.18
INTERIM REPORT 2024
X Financial Report
XII. Risk Relating to Financial Instruments (Cont’d)
1. Various risks from financial instruments (Cont
’d)
(2) Liquidity risk (Cont
’d)As at the end of the prior year, the financial assets, financial liabilities and off-balance sheet guarantee held by theCompany are analysed by their maturity date as below at their remaining undiscounted contractual cash flows (inRMB’0,000):
Item
Balance as at the end of the prior yearWithin 1 year1 to 2 years2 to 5 yearsOver 5 yearsTotalFinancial assets:9Monetary funds1,208,547.491,208,547.49Financial assets held for trading4,629.434,629.43Bills receivable41,160.0041,160.00Accounts receivable307,757.71307,757.71Accounts receivable financing21,588.4221,588.42Other receivables273,484.02273,484.02Long-term receivables29,478.616,700.0036,178.61Other non-current financial assets78,156.1078,156.10Other current assets69,994.6569,994.65Non-current assets due within one year529,707.20529,707.20Total financial assets2,456,868.9229,478.616,700.0078,156.102,571,203.63Financial liabilities:
Short-term borrowings3,344,774.243,344,774.24Bills payable461,898.65461,898.65Accounts payable390,262.09390,262.09Other payables241,475.21241,475.21Non-current liabilities due within one year374,650.69374,650.69Other current liabilities10,000.0010,000.00Long-term borrowings84,962.58115,780.76267,358.11468,101.45Lease liabilities453.22354.015,249.956,057.18Long-term payables149,201.63112,355.62261,557.25Total financial liabilities and contingent liabilities4,823,060.88234,617.43228,490.39272,608.065,558,776.76The 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
XII. Risk Relating to Financial Instruments (Cont’d)
1. Various risks from financial instruments (Cont
’d)
(3) Market risk
Market risk includes interest rate risk and currency risk, refers to the risk that the fair value or future cash flow of afinancial instrument will be fluctuated due to the changes in market price.Interest rate riskInterest rate risk refers to the risk that the fair value or future cash flow of a financial instrument will be fluctuateddue to the floating rate. Interest rate risk arises from recognised interest-bearing financial instrument andunrecognised financial instrument (e.g. loan commitments).The Company’s interest rate risk arises from long-term interest-bearing liabilities including long-term borrowingand bonds payable. Financial liabilities issued at floating rate expose the Company to cash flow interest raterisk. Financial liabilities issued at fixed rate expose the Company to fair value interest rate risk. The Companydetermines the relative proportions of its fixed rate and floating rate contracts depending on the prevailing marketconditions and to maintain an appropriate combination of financial instruments at fixed rate and floating ratethrough regular reviews and monitors.The Company continuously monitors the interest rate position of the Company. The Company did not enterinto any interest rate hedging arrangements. But the management is responsible to monitor the risks of interestrate and consider to hedge significant interest risk if necessary. Increase in interest rates will increase thecost of new borrowing and the interest expenses with respect to the Company’s outstanding floating rateinterest-bearing borrowings, and therefore could have a material adverse effect on the Company’s financial result.The management will make adjustments with reference to the latest market conditions. These adjustments mayinclude enter into interest swap agreement to mitigate its exposure to the interest rate risk.Interest bearing financial instrument held by the Company are as follows (in RMB’0,000):
Item
Amount for
the period
Amount forthe prior periodFinancial instrument with fixed interest rateFinancial liabilitiesOf which: Short-term borrowings3,023,925.423,344,774.24
Long-term borrowings482,480.08468,101.45Long-term borrowings due within one year121,612.22127,390.27Total3,628,017.723,940,265.96Financial instrument with float interest rateFinancial assetsOf which: Monetary funds1,134,225.571,208,180.01Total1,134,225.571,208,180.01
INTERIM REPORT 2024
X Financial Report
XII. Risk Relating to Financial Instruments (Cont’d)
1. Various risks from financial instruments (Cont
’d)
(3) Market risk (Cont
’d)Interest rate risk(Cont’d)As at 30 June 2024, if the interest rates of borrowings at floating interest rates increase or decrease by 25 basispoints with all other factors remain unchanged, the Company’s net profit and shareholders’equity will increase ordecrease by RMB3,464,300 (31 December 2023: RMB3,733,100). The bank’s interest settlement date is generallythe 20th of each month, according to the accounting period, so you need to consider the interest rate for the next11 days, the balance of the current loan * the average borrowing rate for the year *25%/360 * 11 * 25%.The financial instruments held by the Company at the reporting date expose the Company to fair value interestrate risk. This sensitivity analysis as above has been determined assuming that the change in interest rates hadoccurred at the reporting date and arisen from the recalculation of the above financial instrument issued at newinterest rates. The non-derivative tools issued at floating interest rate held by the Company at the reporting dateexpose the Company to cash flow interest rate risk. The effect to the net profit and shareholder’s equity illustratedin the sensitivity analysis as above is arisen from the effect to the annual estimate amount of interest expenses orrevenue at the floating interest rate. The analysis is performed on the same basis for prior year.Exchange rate risk
Exchange risk refers to the risk that the fair value or future cash flows of a financial instrument will be fluctuateddue to the changes in foreign currency rates. Foreign currency risk arises on financial instruments that aredenominated in a currency other than the functional currency in which they are measured.The principal business of the Company is situated within the PRC and is denominated in RMB. However, foreignexchange risks still exist for the assets and liabilities in foreign currencies and future foreign currency transactionsas recognised by the Company (assets and liabilities in foreign currencies and foreign currency transactions aremainly denominated in US dollar, Japanese yen, South Korean Won, Euro, Hong Kong dollar and British pound).The following table details the financial assets and liabilities held by the Company which denominated in foreigncurrencies and amounted to RMB as at 30 June 2024 are as follows (in RMB’0,000):
ItemLiabilities denominated in foreign currencyAssets denominated in foreign currency
Closingbalance
Closing balanceof the prior year
Closingbalance
Closing balanceof the prior year
USD13,534.4760,628.2735,464.9045,596.22EUR4,028.911,460.241,278.594,305.63HKD36.03204.24JPY655.91736.80GBP1.611.33Total17,563.3862,088.5137,437.0450,844.22
The Group continuously monitors the size of the Group’s foreign currency transactions and foreign currencyassets and liabilities to minimise the foreign exchange risks it faces, and for this reason the Group may aim toavoid foreign exchange risk by signing forward foreign exchange contracts or currency swap contracts.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
XII. Risk Relating to Financial Instruments (Cont’d)
1. Various risks from financial instruments (Cont
’d)
(3) Market risk (Cont
’d)Exchange rate risk(Cont’d)With other variables unchanged, the after-tax effect of the possible reasonable changes in the exchange rate offoreign currency to RMB on the current profit and loss of the Company is as follows (in RMB’0,000):
Increase (decrease) in after-tax profitsAmount for the periodAmount for the prior period
Increase in exchange rate of USD5%1,096.525%-751.60Decrease in exchange rate of USD-5%-1,096.52-5%751.60Increase in exchange rate of Euro5%-137.525%142.27Decrease in exchange rate of Euro-5%137.52-5%-142.27
Other price risks
Other price risks refer to the risk of fluctuations caused by changes in market prices other than exchange raterisks and interest rate risks, whether arising from factors related to a single financial instrument or its issuer, orfrom factors related to all similar financial instruments traded on the market. Other price risks can stem fromchanges in commodity prices, stock market indexes, equity instrument prices, and other risk variables.Listed equity instrument investments held by the Company classified as financial assets held for trading, othernon-current financial assets and other equity instrument investments are measured at fair value on the balancesheet date. Therefore, the Company is subject to the risk of changes in the securities market.The Company monitors closely the impact of price changes on the price risk of the Company’s investment inequity securities. The Company has not taken any measures to avoid other price risks. However, the managementis responsible for monitoring other price risks, and will consider holding multiple equity securities portfolios toreduce the price risk of equity securities investment when necessary.With other variables unchanged, the after-tax effect of the change of -15.33% (prior year: -32.49%) in equitysecurities investment prices on the Company’s current profit and loss and other comprehensive income is asfollows (unit: RMB’0,000):
Item
Increase (decrease) in after-tax profits
Increase (decrease) in other comprehensive incomeBalance for
the period
Balance forthe prior period
Balance for
the period
Balance forthe prior period
Due to the rise in the price of equity securities
investmentDue to the decline in the price of equity securities
investment-709.69-2,427.46
INTERIM REPORT 2024
X Financial Report
XII. 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 2024, the Company’s gearing ratio is 73.30% (31 December 2023: 73.46%).
3. Financial assets
(1) By transfer method
? Applicable Not applicable
Unit: RMBTransfer Method
Nature of financialassets transferred
Amount of financial
assets transferred
Confirmation ofderecognitionBasis for derecognitionEndorsement or discountingBank acceptance bills7,834,710,831.76DerecognisedBa nk acceptance bills were derecognised as
such bills for endorsement or discountingwere accepted by banks with higher creditrating, their credit risk and deferred paymentrisk were low, the interest rate risk associatedwith the bills was transferred to banks, and itcan be determined that the major risks andrewards of the ownership of the bills weretransferred.External transferDebt receivable31,119,840.10DerecognisedWh ere the Company transferred substantially
all of the risks and rewards related to theownership of the financial asset to thetransfereeTotal7,865,830,671.86
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
XII. Risk Relating to Financial Instruments (Cont’d)
3. Financial assets (Cont
’d)
(2) Financial assets derecognised due to transfer
? Applicable Not applicable
Unit: RMBItem
Method of financialassets transfer
Amount of financialassets derecognised
Gains or losses associatedwith derecognitionBank acceptance billsEndorsement or discounting7,834,710,831.76-57,402,168.13Debt receivableExternal transfer31,119,840.1033,990,159.90Total7,865,830,671.86-23,412,008.23
XIII. Fair Value Disclosure
1. Fair value of assets and liabilities measured at fair value as at the end of the period
Unit: RMBItem
Fair value as at the end of the periodLevel 1 fair valuemeasurement
Level 2 fair valuemeasurement
Level 3 fair value
measurementTotalI.Continuous measurement of fair value
(i) Financial assets held for trading39,197,419.8839,197,419.88
1. Financial assets measured at fair value
through profit or loss
39,197,419.8839,197,419.88
(1) Equity instrument investments39,197,419.8839,197,419.88(ii) Accounts receivable financing22,065,605.0322,065,605.03(iii) Other non-current financial assets780,077,745.20780,077,745.20(iv) Biological assets1,483,176,162.181,483,176,162.18
1. Consumable biological assets1,483,176,162.181,483,176,162.18Total assets continuously measured at fair value39,197,419.882,285,319,512.412,324,516,932.29II.Non-continuous measurement of fair value(i) Assets held for saleTotal assets measured at fair value not on an ongoing
basisTotal liabilities measured at fair value not on an ongoing
basis
INTERIM REPORT 2024
X Financial Report
XIII. Fair Value Disclosure (Cont’d)
2. Basis for determining the market value of continuous and non-continuous level 1 fair value measurement
itemsFor financial assets traded in active markets, the Company determines their fair value using quoted prices in activemarkets.
3. Qualitative and quantitative information on the valuation techniques used and important parameters for
continuous and non-continuous level 3 fair value measurement items
Unit: RMBItem
Fair value as atthe end ofthe period
ValuationtechniquesUnobservable inputsRangeEquity instrument investments:
Shandong Hongqiao Venture
Capital Co., Ltd.
78,170,000.00Cost methodWeifang Chenchuang EquityInvestment Fund Partnership(Limited Partnership)
400,041,731.59See explanation for
detailsJiaohui Chenming Zhuli
(Suzhou) EmergingIndustry DevelopmentFund Partnership (LimitedPartnership)
259,057,284.79See explanation for
detailsConsumable biological assets:
Forestry1,483,176,162.18Roll back method of
market price
Unit price per tonne of Eucalyptus wood
RMB550Unit price per tonne of wet pine
RMB545Unit price per tonne of fir wood
RMB620
Note: For other non-current financial assets not traded in an active market, particularly the investment in Shandong Hongqiao Venture CapitalCo., Ltd., its fair value as at the end of the period was determined through appraisal, and particularly the investment in Weifang ChenchuangEquity Investment Fund Partnership (Limited Partnership) and Jiaohui Chenming Zhuli (Suzhou) Emerging Industry Development Fund Partnership(Limited Partnership), due to the withdrawal or entry of shareholders of the underlying companies during the period, the Company measured theirfair value as at the end of the period with reference to the transaction prices of changes in shareholders.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
XIV. 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 parentcompany inthe Company
Voting rightof the parentcompany inthe CompanyChenming Holdings Co., Ltd.ShouguangInvestment in manufacture of
paper, electricity, steam, andarboriculture
123,878.7727.78%27.78%
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.
3. Joint ventures and associates of the Company
For details of material joint ventures and associates of the Company, please refer to Note IX. 2.Balance of related party transaction between the Company and its joint ventures or associates during the period or priorperiods are as follows:
Name of joint ventures or associatesRelationShouguang Chenming Huisen New-style Construction Materials Co., Ltd.
A joint venture of the CompanyWeifang Port Wood Chip Wharf Co., Ltd.A joint venture of the CompanyShouguang Meite Environmental Technology Co., Ltd.A joint venture of the CompanyWeifang Xingxing United Chemical Co., Ltd.A joint venture of the CompanyChenming (Qingdao) Asset Management Co., Ltd.An associate of the CompanyGuangdong Nanyue Bank Co., Ltd.An associate of the CompanyWuhan Chenming Hanyang Paper Holdings Co., Ltd.An associate of the CompanyOther explanation: The former name of Weifang Port Wood Chip Wharf Co., Ltd. was Weifang Sime Darby West PortCo., Ltd.
INTERIM REPORT 2024
X Financial Report
XIV. Related Parties and Related Party Transactions (Cont’d)
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 CompanyLide Technology Co., Ltd.An investee of the CompanyShouguang Chenming Guangyuan Real Property Company Limited
A subsidiary of a company invested by
the Directors and Senior Management of
the CompanyShandong Yujing Grand Hotel Co., Ltd.A subsidiary of a company invested by
the Directors and Senior Management of
the CompanyChen Hongguo, Hu Changqing, Li Xingchun, Li Weixian, Li Feng, LiKang, Qiu Lanju, Sang Ailing, Li Xueqin, Li Zhenzhong,Li Mingtang, Ge Guangming, Dong Lianming, Yuan Xikun, etc.
Key management personnel of the Company
5. Related party transactions
(1) Purchase and sales of goods and rendering and receiving services
Table on purchase of goods/receiving of services
Unit: RMBRelated party
Details of relatedparty transaction
Amount forthe period
Transactionfacilityapproved
Whether the
transaction
facility isexceeded
Amount for the
prior periodWeifang Port Wood Chip Wharf Co., Ltd.Port miscellaneous expenses56,191,147.39110,000,000.00No20,317,747.45Shandong Yujing Grand Hotel Co., Ltd.
Accommodation and foodexpenses691,058.37N/AN/AShouguang MeiteEnvironmental Technology Co., Ltd.
Purchase of chemicalmaterials15,577,072.00N/AN/A45,798,569.04
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 steam6,547,010.447,876,218.22Shouguang Huixin Construction Materials Co., Ltd.Sales of cement, coal, oil, etc.60,485.7955,815.97Shandong Yujing Grand Hotel Co., Ltd.Sales of electricity and oil26,143.93Shouguang Meite Environmental Technology Co., Ltd.Sales of electricity and water2,153,097.104,292,299.10
(2) Related party leasing
The Company as lessor:
Unit: RMBName of lesseeType of leased asset
Lease incomerecognised forthe current period
Lease incomerecognised forthe previous periodShouguang Meite Environmental Technology Co., Ltd.Housing and building structure733,944.95733,944.95Chenming (Qingdao) Asset Management Co., Ltd.Housing and building structure506,019.39431,707.46Lide Technology Co., Ltd.Housing and building structure949,010.43949,010.43
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
XIV. Related Parties and Related Party Transactions (Cont’d)
5. Related party transactions (Cont
’d)
(3) Related party guarantee
The Company as guarantor
Unit: RMB
Party being guaranteed
Amountunder guarantee
Commencement
date ofguarantee
Expiry dateof guarantee
Whetherperformanceof guaranteeis completedWeifang Port Wood Chip Wharf Co., Ltd.85,000,000.002017-12-202027-12-20NoShouguang Meilun Paper Co., Ltd.91,760,456.122023-7-252024-7-25NoShouguang Meilun Paper Co., Ltd.20,000,000.002023-8-252024-8-24NoShouguang Meilun Paper Co., Ltd.10,000,000.002024-1-32025-1-2NoShouguang Meilun Paper Co., Ltd.101,044,826.082024-5-272025-5-28NoShouguang Meilun Paper Co., Ltd.45,727,471.682024-5-312025-5-31NoShouguang Meilun Paper Co., Ltd.98,114,605.572024-6-42025-6-5NoShouguang Meilun Paper Co., Ltd.178,130,000.002024-6-262025-6-25NoShouguang Meilun Paper Co., Ltd.205,149,907.492024-1-102024-7-9NoShouguang Meilun Paper Co., Ltd.35,479,479.532024-2-62024-8-5NoShouguang Meilun Paper Co., Ltd.44,000,000.002024-2-272025-2-26NoShouguang Meilun Paper Co., Ltd.190,445,746.042024-6-192024-12-16NoShouguang Meilun Paper Co., Ltd.70,732,488.202024-6-242024-12-23NoShouguang Meilun Paper Co., Ltd.20,000,000.002023-8-252024-8-23NoShouguang Meilun Paper Co., Ltd.5,000,000.002024-3-72025-3-7NoShouguang Meilun Paper Co., Ltd.50,000,000.002023-7-122024-7-12NoShouguang Meilun Paper Co., Ltd.15,000,000.002024-1-32024-12-27NoShouguang Meilun Paper Co., Ltd.90,000,000.002023-10-232024-10-23NoShouguang Meilun Paper Co., Ltd.185,000,000.002024-6-132024-12-11NoShouguang Meilun Paper Co., Ltd.100,000,000.002024-6-132024-12-11NoShouguang Meilun Paper Co., Ltd.43,000,000.002023-12-192024-12-18NoShouguang Meilun Paper Co., Ltd.10,000,000.002024-4-122024-12-11NoShouguang Meilun Paper Co., Ltd.10,000,000.002024-4-122024-12-11NoShouguang Meilun Paper Co., Ltd.50,000,000.002024-6-282025-6-27NoShouguang Meilun Paper Co., Ltd.41,912,850.212024-4-122025-4-12NoShandong Chenming Paper Sales Co., Ltd.296,829,334.442023-8-142024-8-14NoShandong Chenming Paper Sales Co., Ltd.111,125,326.612023-9-182024-9-18NoShandong Chenming Paper Sales Co., Ltd.54,723,975.972023-9-262024-9-26NoShandong Chenming Paper Sales Co., Ltd.181,517,502.432023-10-72024-10-7NoShandong Chenming Paper Sales Co., Ltd.198,262,078.032023-10-72024-10-7NoShandong Chenming Paper Sales Co., Ltd.50,000,000.002023-10-182024-10-11NoShandong Chenming Paper Sales Co., Ltd.40,000,000.002023-11-282024-11-28NoShandong Chenming Paper Sales Co., Ltd.50,000,000.002024-1-42024-7-2NoShandong Chenming Paper Sales Co., Ltd.150,000,000.002024-2-82025-2-12NoShandong Chenming Paper Sales Co., Ltd.329,962,137.742024-4-12025-4-2NoShandong Chenming Paper Sales Co., Ltd.130,349,733.692024-4-32025-4-7NoShandong Chenming Paper Sales Co., Ltd.160,000,000.002024-5-232024-11-19NoShandong Chenming Paper Sales Co., Ltd.260,000,000.002024-5-232024-11-19NoShanghai Chenming Pulp & Paper Sales Co., Ltd.4,500,000.002023-11-212024-11-20NoShanghai Chenming Pulp & Paper Sales Co., Ltd.8,000,000.002024-6-42025-5-30NoShanghai Chenming Pulp & Paper Sales Co., Ltd.9,000,000.002024-6-62024-11-20No
INTERIM REPORT 2024
X Financial Report
Party being guaranteed
Amountunder guarantee
Commencement
date ofguarantee
Expiry dateof guarantee
Whetherperformanceof guaranteeis completedShanghai Chenming Pulp & Paper Sales Co., Ltd.9,000,000.002024-6-142025-6-9NoShanghai Chenming Pulp & Paper Sales Co., Ltd.8,000,000.002024-6-202025-5-28NoShanghai Chenming Pulp & Paper Sales Co., Ltd.20,000,000.002024-6-212025-6-18NoChenming (HK) Limited14,150,000.002024-6-172024-8-5NoChenming (HK) Limited34,417,275.072024-1-42030-1-3NoJilin Chenming Paper Co., Ltd.14,000,000.002024-3-112024-9-6NoJilin Chenming Paper Co., Ltd.33,505,524.002024-1-192024-7-23NoJilin Chenming Paper Co., Ltd.16,000,000.002024-6-192025-6-17NoJilin Chenming Paper Co., Ltd.63,640,000.002024-4-162024-10-16NoJilin Chenming Paper Co., Ltd.200,000,000.002024-1-192024-7-18NoJilin Chenming Paper Co., Ltd.200,000,000.002023-12-152025-12-15NoHuanggang Chenming Pulp & Paper Co., Ltd.45,000,000.002023-8-102024-8-9NoHuanggang Chenming Pulp & Paper Co., Ltd.30,000,000.002023-7-182024-7-17NoHuanggang Chenming Pulp & Paper Co., Ltd.90,000,000.002024-5-202025-5-19NoHuanggang Chenming Pulp & Paper Co., Ltd.20,000,000.002024-4-282025-4-27NoHuanggang Chenming Pulp & Paper Co., Ltd.20,000,000.002023-8-182024-8-16NoHuanggang Chenming Pulp & Paper Co., Ltd.120,000,000.002023-7-122024-7-11NoHuanggang Chenming Pulp & Paper Co., Ltd.50,000,000.002023-9-282024-9-28NoHuanggang Chenming Pulp & Paper Co., Ltd.50,000,000.002023-10-132024-10-13NoHuanggang Chenming Pulp & Fiber Trading Co., Ltd.10,000,000.002023-8-312024-8-30NoHuanggang Chenming Pulp & Fiber Trading Co., Ltd.10,000,000.002023-9-262024-9-26NoHuanggang Chenming Pulp & Fiber Trading Co., Ltd.10,000,000.002023-11-132024-11-13NoHuanggang Chenming Pulp & Fiber Trading Co., Ltd.10,000,000.002023-11-242024-11-22NoShouguang Chenming Import and Export Trade Co., Ltd.149,999,600.002023-12-212024-6-19NoZhanjiang Chenming Pulp & Paper Co., Ltd.200,000,000.002023-7-212024-7-20NoZhanjiang Chenming Pulp & Paper Co., Ltd.60,000,000.002023-7-282024-7-27NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002023-8-82024-8-7NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002023-8-112024-8-10NoZhanjiang Chenming Pulp & Paper Co., Ltd.3,900,000.002023-8-112024-8-10NoZhanjiang Chenming Pulp & Paper Co., Ltd.67,000,000.002023-8-142024-8-13NoZhanjiang Chenming Pulp & Paper Co., Ltd.59,000,000.002023-8-142024-8-13NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002023-8-242024-8-23NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002023-9-272024-9-26NoZhanjiang Chenming Pulp & Paper Co., Ltd.78,000,000.002023-10-112024-10-11NoZhanjiang Chenming Pulp & Paper Co., Ltd.113,000,000.002023-10-122024-10-12NoZhanjiang Chenming Pulp & Paper Co., Ltd.85,500,000.002023-11-292024-11-21No
XIV. Related Parties and Related Party Transactions (Cont’d)
5. Related party transactions (Cont
’d)
(3) Related party guarantee (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
Party being guaranteed
Amountunder guarantee
Commencement
date ofguarantee
Expiry dateof guarantee
Whetherperformanceof guaranteeis completedZhanjiang Chenming Pulp & Paper Co., Ltd.6,000,000.002023-12-42024-11-26NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002023-12-92024-12-8NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002024-1-32025-1-2NoZhanjiang Chenming Pulp & Paper Co., Ltd.67,000,000.002024-1-112024-7-10NoZhanjiang Chenming Pulp & Paper Co., Ltd.65,000,000.002024-1-162024-7-15NoZhanjiang Chenming Pulp & Paper Co., Ltd.200,000,000.002024-1-232024-7-22NoZhanjiang Chenming Pulp & Paper Co., Ltd.37,000,000.002024-1-182024-7-16NoZhanjiang Chenming Pulp & Paper Co., Ltd.48,000,000.002024-2-12024-7-26NoZhanjiang Chenming Pulp & Paper Co., Ltd.6,000,000.002024-3-182024-9-11NoZhanjiang Chenming Pulp & Paper Co., Ltd.38,000,000.002024-3-212025-3-20NoZhanjiang Chenming Pulp & Paper Co., Ltd.205,000,000.002024-3-202025-3-20NoZhanjiang Chenming Pulp & Paper Co., Ltd.10,500,000.002024-3-262025-3-26NoZhanjiang Chenming Pulp & Paper Co., Ltd.31,000,000.002024-3-282025-3-27NoZhanjiang Chenming Pulp & Paper Co., Ltd.30,000,000.002024-3-292025-3-27NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002024-4-92024-9-6NoZhanjiang Chenming Pulp & Paper Co., Ltd.50,290,000.002024-4-152024-10-15NoZhanjiang Chenming Pulp & Paper Co., Ltd.75,200,000.002024-5-112024-11-11NoZhanjiang Chenming Pulp & Paper Co., Ltd.23,500,000.002024-5-112024-11-11NoZhanjiang Chenming Pulp & Paper Co., Ltd.50,290,000.002024-5-152024-11-15NoZhanjiang Chenming Pulp & Paper Co., Ltd.209,000,000.002024-5-162024-11-11NoZhanjiang Chenming Pulp & Paper Co., Ltd.25,000,000.002024-5-162025-5-15NoZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002024-5-222024-11-21NoZhanjiang Chenming Pulp & Paper Co., Ltd.81,200,000.002024-5-232024-11-26NoZhanjiang Chenming Pulp & Paper Co., Ltd.60,000,000.002024-5-272025-5-26NoZhanjiang Chenming Pulp & Paper Co., Ltd.45,000,000.002024-5-292025-5-28NoZhanjiang Chenming Pulp & Paper Co., Ltd.63,000,000.002024-5-312025-5-29NoZhanjiang Chenming Pulp & Paper Co., Ltd.40,000,000.002024-6-62025-6-5NoZhanjiang Chenming Pulp & Paper Co., Ltd.38,372,000.002024-6-62025-6-3NoZhanjiang Chenming Pulp & Paper Co., Ltd.47,784,000.002024-6-62025-6-3NoZhanjiang Chenming Pulp & Paper Co., Ltd.40,000,000.002024-6-122024-12-11NoZhanjiang Chenming Pulp & Paper Co., Ltd.48,000,000.002024-6-262025-6-25NoZhanjiang Chenming Pulp & Paper Co., Ltd.62,000,000.002024-6-282025-6-26NoZhanjiang Chenming Pulp & Paper Co., Ltd.70,540,260.412022-6-292025-6-29NoZhanjiang Chenming Pulp & Paper Co., Ltd.61,000,000.002023-3-312026-3-30NoZhanjiang Chenming Pulp & Paper Co., Ltd.120,000,000.002023-6-22026-6-2NoZhanjiang Chenming Pulp & Paper Co., Ltd.68,993,057.402023-6-202026-6-20NoZhanjiang Chenming Pulp & Paper Co., Ltd.250,000,000.002023-7-122026-7-12NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002024-4-292025-10-29NoZhanjiang Chenming Pulp & Paper Co., Ltd.182,326,261.082023-11-82028-11-8NoZhanjiang Chenming Pulp & Paper Co., Ltd.85,000,000.002024-1-122024-7-12No
XIV. Related Parties and Related Party Transactions (Cont’d)
5. Related party transactions (Cont
’d)
(3) Related party guarantee (Cont
’d)
INTERIM REPORT 2024
X Financial Report
Party being guaranteed
Amountunder guarantee
Commencement
date ofguarantee
Expiry dateof guarantee
Whetherperformanceof guaranteeis completedZhanjiang Chenming Pulp & Paper Co., Ltd.70,000,000.002024-2-72024-8-7NoZhanjiang Chenming Pulp & Paper Co., Ltd.65,000,000.002024-3-282024-9-28NoZhanjiang Chenming Pulp & Paper Co., Ltd.56,000,000.002024-4-112024-10-11NoZhanjiang Chenming Pulp & Paper Co., Ltd.42,000,000.002024-4-122024-10-12NoZhanjiang Chenming Pulp & Paper Co., Ltd.40,000,000.002024-5-132024-11-13NoZhanjiang Chenming Pulp & Paper Co., Ltd.20,200,000.002024-5-142024-11-14NoZhanjiang Chenming Pulp & Paper Co., Ltd.40,000,000.002024-5-142024-11-14NoZhanjiang Chenming Pulp & Paper Co., Ltd.65,000,000.002024-6-242024-12-24NoZhanjiang Chenming Pulp & Paper Co., Ltd.58,940,000.002024-6-272024-12-27NoZhanjiang Chenming Pulp & Paper Co., Ltd.70,000,000.002024-6-272024-12-27NoZhanjiang Chenming Pulp & Paper Co., Ltd.26,620,000.002024-6-282024-12-28NoZhanjiang Chenming Pulp & Paper Co., Ltd.25,000,000.002024-6-282024-12-28NoZhanjiang Chenming Pulp & Paper Co., Ltd.69,440,000.002024-6-282024-12-28NoZhanjiang Chenming Pulp & Paper Co., Ltd.70,000,000.002022-6-172025-6-16NoZhanjiang Chenming Pulp & Paper Co., Ltd.70,000,000.002022-6-172025-6-16NoZhanjiang Chenming Pulp & Paper Co., Ltd.42,300,000.002022-10-252024-10-19NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002023-12-262025-1-24NoHainan Chenming Technology Co., Ltd.60,000,000.002024-4-112024-10-11NoHainan Chenming Technology Co., Ltd.50,000,000.002024-5-302024-11-30NoHainan Chenming Technology Co., Ltd.50,050,000.002023-11-292024-11-22NoHainan Chenming Technology Co., Ltd.19,950,000.002023-12-12024-11-25NoHainan Chenming Technology Co., Ltd.56,400,000.002024-1-22027-7-2NoHainan Chenming Technology Co., Ltd.186,000,000.002024-3-272024-9-27NoHainan Chenming Technology Co., Ltd.30,000,000.002024-2-22025-1-29NoHainan Chenming Technology Co., Ltd.20,000,000.002024-2-52025-1-31NoHainan Chenming Technology Co., Ltd.39,600,000.002024-5-212024-11-21NoHainan Chenming Technology Co., Ltd.50,000,000.002024-4-102025-4-7NoJiangxi Chenming Paper Co., Ltd.100,000,000.002023-7-52024-7-4NoJiangxi Chenming Paper Co., Ltd.10,000,000.002023-9-52024-8-30NoJiangxi Chenming Paper Co., Ltd.3,339,000.002023-12-252024-9-30NoJiangxi Chenming Paper Co., Ltd.1,452,000.002024-1-292024-9-30NoJiangxi Chenming Paper Co., Ltd.193,450,000.002024-2-232024-8-20NoJiangxi Chenming Paper Co., Ltd.100,000,000.002024-3-132025-3-8NoJiangxi Chenming Paper Co., Ltd.20,000,000.002024-3-222024-9-18NoJiangxi Chenming Paper Co., Ltd.10,000,000.002024-1-42024-10-30NoJiangxi Chenming Paper Co., Ltd.70,000,000.002024-4-252025-4-24NoJiangxi Chenming Paper Co., Ltd.10,000,000.002024-6-72025-6-3NoJiangxi Chenming Paper Co., Ltd.30,000,000.002024-6-112025-6-9NoJiangxi Chenming Paper Co., Ltd.30,000,000.002024-6-172025-6-13NoJiangxi Chenming Paper Co., Ltd.10,000,000.002024-6-182025-6-16NoJiangxi Chenming Paper Co., Ltd.16,000,000.002024-6-212025-6-17NoJiangxi Chenming Paper Co., Ltd.10,000,000.002024-6-242025-6-20NoJiangxi Chenming Paper Co., Ltd.127,000,000.002024-6-202024-12-19NoJiangxi Chenming Paper Co., Ltd.13,000,000.002024-6-262024-12-25NoJiangxi Chenming Paper Co., Ltd.10,000,000.002024-5-312025-5-26NoJiangxi Chenming Paper Co., Ltd.34,000,000.002024-6-202025-6-15No
XIV. Related Parties and Related Party Transactions (Cont’d)
5. Related party transactions (Cont
’d)
(3) Related party guarantee (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
Party being guaranteed
Amountunder guarantee
Commencement
date ofguarantee
Expiry dateof guarantee
Whetherperformanceof guaranteeis completedJiangxi Chenming Paper Co., Ltd.4,600,000.002024-4-292025-4-29NoJiangxi Chenming Paper Co., Ltd.30,000,000.002023-12-42025-6-3NoJiangxi Chenming Paper Co., Ltd.10,000,000.002023-9-272024-9-20NoShanghai Chenming Pulp & Paper Sales Co., Ltd.9,500,000.002023-2-132026-2-12NoJiangxi Chenming Paper Co., Ltd.200,000,000.002024-5-312025-11-29NoJiangxi Chenming Paper Co., Ltd.250,000,000.002024-6-132025-12-12NoJiangxi Chenming Paper Co., Ltd.30,000,000.002023-9-82026-8-22NoJiangxi Chenming Paper Co., Ltd.27,900,000.002023-3-312024-9-30NoJiangxi Chenming Paper Co., Ltd.29,700,000.002023-5-92024-9-30NoJiangxi Chenming Paper Co., Ltd.2,295,000.002023-6-272024-9-30NoJiangxi Chenming Paper Co., Ltd.5,035,000.002023-8-72024-9-30NoJiangxi Chenming Paper Co., Ltd.3,191,050.002023-9-152024-9-30NoTotal12,006,837,947.79
(4) Related party lending and borrowing
Unit: RMBRelated party
Borrowingamount
Commencement
dateExpiry dateDescriptionBorrowingChenming Holdings Co., Ltd.154,750,000.002024-4-112025-4-10Controlling
shareholder Guangdong Nanyue Bank Co., Ltd.2,185,980,000.002024-1-12024-12-31AssociateBorrowing Weifang Port Wood Chip Wharf Co., Ltd.35,000,000.002024-6-282025-6-27Joint venture
(5) Related party asset transfer and debt restructuring
Unit: RMBRelated partyDetails of related party transaction
Amount forthe period
Amount forthe prior periodShouguang ChenmingGuangyuan Real Property Company Limited
Tr ansfer of 90.05% equity interest in YujingHotel to Guangyuan Real Property fromShandong Chenming
162,992,813.250.00Shouguang ChenmingGuangyuan Real Property Company Limited
Tr ansfer of the debts of Yujing Hotel to
Guangyuan Real Property from ShandongChenming
193,507,186.750.00
XIV. Related Parties and Related Party Transactions (Cont’d)
5. Related party transactions (Cont
’d)
(3) Related party guarantee (Cont
’d)
INTERIM REPORT 2024
X Financial Report
XIV. Related Parties and Related Party Transactions (Cont’d)
6. Related party accounts receivable and accounts payable
(1) Receivables
Unit: RMBItemRelated party
Closing balanceOpening balanceBook balanceBad debts provisionBook balanceBad debts provision
Accounts receivableShouguang Chenming Huisen
New-style Construction Materials Co., Ltd.
1,461,303.2210,116.20Accounts receivableChenming (Qingdao) Asset
Management Co., Ltd.
2,359.03165.132,359.0323.18Accounts receivableShandong Yujing Grand Hotel
Co., Ltd.
2,990,413.66972,266.09Other receivablesWeifang Port Wood Chip Wharf
Co., Ltd.
77,465,749.849,279,154.4475,554,749.848,991,998.46Other receivablesShouguang Meite Environmental
Technology Co., Ltd.
10,801,455.382,151,596.5310,427,200.002,102,653.38Other receivablesWuhan Chenming Hanyang Paper
Holdings Co., Ltd.
232,643,410.74227,252,701.60Other receivablesChenming (Qingdao) Asset
Management Co., Ltd.
81,000.00Other receivablesShouguang Chenming Guangyuan
Real Property Company Limited
172,308,375.85PrepaymentsShandong Yujing Grand Hotel Co.,
Ltd.
106,953.14
(2) Payable
Unit: RMBItemRelated party
Closing book
balance
Opening book
balanceAccounts payableWeifang Port Wood Chip Wharf Co., Ltd.29,897,541.516,932,747.45Accounts payableShouguang Meite Environmental Technology Co., Ltd.13,489,957.4412,973,303.12Accounts payableWeifang Xingxing United Chemical Co., Ltd.26,905,494.3426,905,494.34Accounts payableWuhan Chenming Hanyang Paper Holdings Co., Ltd.14,376,757.6314,334,304.63Accounts payableWuhan Chenming Qianneng Electric Power Co., Ltd.4,859.2272,483.77Accounts payableShandong Yujing Grand Hotel Co., Ltd.3,107,683.37Other payablesWeifang Xingxing United Chemical Co., Ltd.16,860,000.0016,860,000.00Other payablesChenming Holdings Co., Ltd.118,012,703.34135,612,917.24Other payablesLide Technology Co., Ltd.559,897.05559,897.05Other payablesChenming (Qingdao) Asset Management Co., Ltd.115,583.42115,583.42Other payablesWuhan Chenming Hanyang Paper Holdings Co., Ltd.365,200,000.00305,000,000.00
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
XIV. Related Parties and Related Party Transactions (Cont’d)
6. Related party accounts receivable and accounts payable (Cont
’d)
(3) Deposits with related parties
Unit: RMBItemRelated party
Closing bookbalance
Opening bookbalanceBank depositGuangdong Nanyue Bank Co., Ltd.20,415.237,189,314.62Other monetary fundsGuangdong Nanyue Bank Co., Ltd.1,057,450,000.001,311,200,000.00
(4) Loans from related parties
Unit: RMBItemRelated party
Closing book
balance
Opening bookbalanceShort-term borrowingsGuangdong Nanyue Bank Co., Ltd.2,185,980,000.002,069,060,000.00
XV. Undertaking and contingency
1. Significant commitments
Unit: RMBCapital commitments contracted for but not yet necessary to berecognised on the balance sheetClosing balance
Balance as at theend of the prior yearCommitments in relation to acquisition and construction of long-term assets301,225,074.72288,776,312.58
2. Contingency
The Company has no other contingencies that should be disclosed.XVI. Post-balance Sheet Event
There are no significant post-balance sheet events.
INTERIM REPORT 2024
X Financial Report
XVII. Other Material Matters
1. Segment information
(1) Basis for determination and accounting policies
According to the Company’s internal organisational structure, management requirements and internal reportingsystem, the Company’s operating business is divided into 4 reporting segments. These report segments aredetermined based on the financial information required by the company’s daily internal management. Themanagement of the Group regularly evaluates the operating results of these reporting segments to determine theallocation of resources to them and evaluate their performance.
(1) Machine paper segment, which is responsible for production and sales of machine paper;
(2) Financial services segment, which provides financial services;
(3) Hotels and property rentals segment, which is responsible for hotel services and property rental;
(4) Other segments, which is responsible for the above segments otherwise.
The transfer prices of the transfer transactions between the Company’s segments are based on market prices.Segment report information is disclosed in accordance with the accounting policies and measurement standardsadopted by each segment when reporting to management. These accounting policies and measurement basis areconsistent with the accounting policies and measurement basis used in preparing the financial statements.
(2) Financial Information of Reporting Segment
Unit: RMBItemMachine-made paperFinancial servicesProperty and rentalsOthersInter-segment offsetTotalRevenue13,742,039,658.85197,468,294.38105,844,153.54639,029,301.66799,649,889.3913,884,731,519.04Of which: Revenue fromexternal transactions13,481,661,035.71146,357,054.1096,646,679.91160,066,749.3213,884,731,519.04Revenue from inter-segmenttransactions260,378,623.1451,111,240.289,197,473.63478,962,552.34799,649,889.39Of which: Revenue from
principal activities13,555,077,570.55197,468,294.38102,722,133.91299,057,442.10391,613,940.7813,762,711,500.16Operating costs12,191,395,099.2970,513,208.68105,182,654.77629,707,810.33811,293,064.0712,185,505,709.00Of which: Costs of principal
activities11,797,604,920.5970,377,588.6051,405,736.87292,234,927.26121,751,995.4612,089,871,177.86Operating expenses90,578,013.336,328,139.212,397,678.6799,303,831.21Of which: Wages46,380,498.491,631,650.31830,973.4348,843,122.23Depreciation expenses559,024.67919,012.262,254.691,480,291.62Office expenses1,173,132.242,728.93133.821,175,994.99Travel expenses13,603,124.89–219,907.6413,823,032.53Selling commissions2,319,517.67153,187.432,472,705.10Rental expenses3,372,915.52–55,471.703,428,387.22Hospitality expenses20,957,240.7029,770.0084,388.0021,071,398.70Warehouse expenses219,860.17–81,534.49301,394.66Others4,312,216.651,425,460.04969,827.476,707,504.16Operating profit/(loss)38,220,171.9629,331,645.10-133,609,976.9520,842,194.7126,564,076.87-71,780,042.05Total assets83,443,926,086.4721,264,601,133.459,207,711,238.157,376,860,223.7143,791,817,462.0577,501,281,219.73Total liabilities61,722,970,828.653,858,321,675.594,894,655,332.892,157,498,738.0015,823,400,367.6856,810,046,207.45Total cost of construction in
progress incurred for the
current period239,900,561.80239,900,561.80Fixed assets purchased66,028,316.593,115,957.85199,070.003,151,636.0172,494,980.45Intangible assets purchasedBasis of accounting: The transfer prices among the Company’s segments were based on market prices.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
XVII. Other Material Matters (Cont’d)
2. Others
(1) Chenming Holdings (Hong Kong) Limited (hereinafter referred to as
“Hong Kong Chenming Holdings”), a wholly-owned subsidiary of Chenming Holdings Company Limited (hereinafter referred to as“Chenming HoldingsS”), has commenced an equity financing business with three overseas organisations (hereinafter referred to as“Lenders”) in order to meet its own funding needs. In order to satisfy its funding needs, Hong Kong ChenmingHoldings has commenced equity financing business with three overseas organisations (hereinafter referred to asthe“Lenders”). Hong Kong Chenming Holdings deposited 210.72 million B shares (representing 7.07% of the totalshare capital of the Company) and 153.41 million H shares (representing 5.15% of the total share capital of theCompany) held by Hong Kong Chenming Holdings with custodian designated by the Lenders, who provided theloan to Hong Kong Chenming Holdings.After repaying the entire loan from one of the Lenders, Hong Kong Chenming Holdings requested for the return ofthe shares, but the lender refused to co-operate in the return of the 110 million B shares and 95 million H shareson the grounds that there had been a breach of contract of default during the life of the loan. Chenming HongKong Holdings verified the custody of the shares with the other two lenders who have not yet fully repaid theloans, and the lenders have not yet provided the required documentary proof of the safe custody of the shares.After the Lender refused to return the Shares and failure in negotiation, Chenming Holdings is of the view thatthere is a risk of improper infringement on the legitimate rights and interests of Hong Kong Chenming Holdings,and it immediately sought help from the Chinese public security bureau and Hong Kong lawyers to collecteffective evidence. As of the date of this announcement, Chenming Holdings is under normal production andoperation, and is actively safeguarding its legitimate rights and interests through legal channels.There is a risk that the shares involved may not be returned, which may result in a decrease in the percentage ofshareholding of Chenming Holdings in the Company, but will have no impact on the status of Chenming Holdingsas the largest shareholder and will have no impact on the control of the Company.
(2) On 14 June 2022, the Hong Kong Court of Final Appeal handed down its judgment in the case of H-share
liquidation filed by ArjowigginsHKK2Limited (“HKK2 Company”) in relation to the Company’s Joint Venture disputeand the Company has paid the relevant amount of compensation.On 25 October 2022, the Company instructed its legal adviser in Hong Kong to apply to the Court of First Instanceto seek the dismissal or adjournment of the winding-up petition filed by HKK2 against the Company On 25 July2023, the Court of First Instance held a hearing on the said application.On 10 August 2023, the Company received a judgment from the judge of the Court of First Instance, Mr. JusticeHarris, which ruled that the winding-up petition be stayed and the relevant arbitration hearing was held in May2024, given that the Company’s arbitration petition filed in the Hong Kong International Arbitration Centre in June2022 against the Joint Venture Contracts formed the basis of the Company’s cross claim against HKK2 in thewinding-up proceedings.
INTERIM REPORT 2024
X Financial Report
XVIII. Major Item Notes of the Parent Company’s Financial Statements
1. Accounts receivable
(1) Disclosure by ageing
Unit: RMBAgeing
Closing bookbalance
Opening book
balanceWithin 1 year (including 1 year)586,716,474.7618,345,187.321 to 2 years11,500,000.0011,500,000.002 to 3 yearsOver 3 years3,002,821.173,002,821.17Subtotal601,219,295.9332,848,008.49Less: Bad debt provision4,746,320.014,631,237.48Total596,472,975.9228,216,771.01
(2) Disclosure by bad debt provision method
Unit: RMB
Category
Closing balanceOpening balanceBook balanceBad debts provision
Carrying amount
Book balanceBad debts provision
Carrying amountAmountPercentage(%)Amount
Provisionpercentage
(%)Amount
Percentage
(%)Amount
Provisionpercentage(%)
Accounts receivable assessed individually for bad debt provision4,422,600.000.744,422,600.00100.00–Accounts receivable assessed collectively for bad debt provision596,796,695.9399.26323,720.010.05596,472,975.9232,848,008.49100.004,631,237.4814.1028,216,771.01Including:
Due from related party customers544,930,926.2690.64544,930,926.2610,453,076.7531.8210,453,076.75Due from non-related party customers51,865,769.678.63323,720.010.6251,542,049.6622,394,931.7468.184,631,237.4820.6817,763,694.26Total601,219,295.93100.004,746,320.010.79596,472,975.9232,848,008.49100.004,631,237.4814.1028,216,771.01
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
XVIII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
1. Accounts receivable (Cont
’d)
(2) Disclosure by bad debt provision method (Cont
’d)Items assessed collectively for bad debt provision: Due from related party customers
Unit: RMBName
Closing balanceBook balance
Bad debtsprovision
Provisionpercentage (%)
Within 1 year534,930,926.261 to 2 years10,000,000.00
Total544,930,926.26
Items assessed collectively for bad debt provision: Receivables from non-related party customer
Unit: RMBName
Closing balanceBook balance
Bad debts
provision
Provisionpercentage (%)
Within 1 year50,285,548.50 243,498.840.481 to 2 years1,500,000.002 to 3 yearsOver 3 years80,221.1780,221.17100.00Total51,865,769.67323,720.010.62
INTERIM REPORT 2024
X Financial Report
XVIII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
1. Accounts receivable (Cont
’d)
(3) Provision, recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMBCategory
Openingbalance
Changes in the period
Closing
balanceProvisionRecoveryor reversalWrite-offOthers
Bad debt provision4,631,237.48115,082.534,746,320.01
Total4,631,237.48115,082.534,746,320.01
(4) Top five accounts receivable based on closing balance of debtors
The total amount of top five accounts receivable based on closing balance of debtors for the period amountedto RMB576,767,929.02 in total, accounting for 95.93% of the total closing balance of accounts receivable. Theclosing balance of the corresponding bad debt provision amounted to RMB157,570.79 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 I532,786,324.6488.62Customer II15,390,418.862.56107,732.93Customer III12,144,601.622.02Customer IV9,326,889.801.55Customer V7,119,694.101.1849,837.86Total576,767,929.0295.93157,570.79
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
XVIII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
2. Other receivables
Unit: RMBItemClosing balanceOpening balanceOther receivables8,434,729,619.199,237,241,240.86Total8,434,729,619.199,237,241,240.86
(1) Other receivables
1) Other receivables by nature
Unit: RMBNature
Closing bookbalance
Opening book
balanceOpen credit8,511,123,024.649,304,134,372.16Reserve and borrowings13,813,236.2922,523,648.60Guarantee deposit and deposit740,000.00740,000.00Others2,117,542.391,793,548.63Subtotal8,527,793,803.329,329,191,569.39Bad debt provision93,064,184.1391,950,328.53Total8,434,729,619.199,237,241,240.86
2) Disclosure by ageing
Unit: RMBAgeing
Closing bookbalance
Opening bookbalanceWithin 1 year (including 1 year)8,396,377,054.379,165,796,778.411 to 2 years15,192,309.7476,289,024.672 to 3 years35,152,531.617,386,768.102 to 3 years81,071,907.6079,718,998.21Subtotal8,527,793,803.329,329,191,569.39Bad debt provision93,064,184.1391,950,328.53Total8,434,729,619.199,237,241,240.86
INTERIM REPORT 2024
X Financial Report
XVIII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
2. Other receivables (Cont
’d)
(1) Other receivables (Cont
’d)
3) Disclosure by bad debt provision method
Provision for bad debts made on a general model of ECL:
Unit: RMBBad debts provision
Stage 1Stage 2Stage 3
TotalECLs for thenext 12 months
Lifetime ECLs(not credit-impaired)
Lifetime ECLs(credit-impaired)Balance as at 1 January 202441,856,357.8650,093,970.6791,950,328.53Balance as at 1 January 2024 for the period– Transferred to stage 2– Transferred to stage 3– Reversed to stage 2– Reversed to stage 1Provision for the period838,532.49315,323.111,153,855.60Reversal for the period40,000.0040,000.00Transfer for the periodWrite-off for the periodOther changesBalance as at 30 June 202442,694,890.3550,369,293.7893,064,184.13
4) Provision, recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMBCategory
Openingbalance
Changes in the period
Closing balanceProvisionRecoveryor reversalTransfer or Write-offOthersOther receivables91,950,328.531,153,855.6040,000.0093,064,184.13Total91,950,328.531,153,855.6040,000.0093,064,184.13
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
XVIII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
2. Other receivables (Cont
’d)
(1) Other receivables (Cont
’d)
5) Top five accounts receivable based on closing balance of debtors
The total amount of top five other receivables based on closing balance of debtors for the period amountedto RMB5,617,224,908.44 in total, accounting for 65.87% of the total closing balance of other receivables.The closing balance of the corresponding bad debt provision amounted to RMB0.00 in total.
Unit: RMB
Name of entityNatureClosing balanceAgeing
Percentageto total closingbalance of otherreceivables (%)
Closing balance
of bad debt provisionCustomer 1Open credit1,681,156,791.36Within 1 year19.71%Customer 2Open credit1,324,500,000.00Within 1 year15.53%Customer 3Open credit1,110,117,472.36Within 1 year13.02%Customer 4Open credit1,041,000,000.00Within 1 year12.21%Customer 5Open credit460,450,644.72Within 1 year5.40%Total5,617,224,908.4465.87%
3. Long-term equity investments
Unit: RMBItem
Closing balanceOpening balanceBook balance
Impairment
provisionCarrying amountBook balance
Impairment
provisionCarrying amount
Investment in subsidiaries17,986,937,687.2217,986,937,687.2217,898,687,687.2217,898,687,687.22Investment in associates and joint ventures369,476,431.735,994,545.96363,481,885.77406,306,689.255,994,545.96400,312,143.29
Total18,356,414,118.955,994,545.9618,350,419,572.9918,304,994,376.475,994,545.9618,298,999,830.51
INTERIM REPORT 2024
X Financial Report
XVIII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
3. Long-term equity investments (Cont
’d)
(1) Investment in subsidiaries
Unit: RMB
Investee
Openingbalance(carrying amount)
Openingbalanceof impairmentprovision
Change for the period
Closingbalance(carrying amount)
Closingbalance ofimpairmentprovisionAdditionalcontribution
Withdrawncontribution
ImpairmentprovisionOthers
Chenming Paper Korea Co., Ltd.6,143,400.006,143,400.00Chenming GmbH4,083,235.004,083,235.00Hailaer Chenming Paper Co., Ltd.12,000,000.0012,000,000.00Huanggang Chenming Pulp & Paper Co., Ltd.2,350,000,000.002,350,000,000.00Huanggang Chenming Arboriculture Development Co., Ltd.70,000,000.0070,000,000.00Jinan Chenming Investment Management Co., Ltd.100,000,000.00100,000,000.00Shandong Yujing Grand Hotel Co., Ltd.280,500,000.00280,500,000.00Zhanjiang Chenming Pulp & Paper Co., Ltd.5,206,250,000.0068,750,000.005,275,000,000.00Shouguang Chenming Modern Logistic Co., Ltd.10,000,000.0010,000,000.00Shouguang Chenming Art Paper Co., Ltd.113,616,063.80113,616,063.80Shouguang Meilun Paper Co., Ltd4,649,441,979.31300,000,000.004,949,441,979.31Shouguang Shun Da Customs Declaration Co, Ltd.1,500,000.001,500,000.00Shouguang Chenming Import and Export Trade Co., Ltd.250,000,000.00250,000,000.00Shouguang Chenming Papermaking Machine Co., Ltd.2,000,000.002,000,000.00Shouguang Hongxiang Printing and Packaging Co., Ltd.3,730,000.003,730,000.00Shandong Chenming Group Finance Co., Ltd.4,000,000,000.004,000,000,000.00Chenming Arboriculture Co., Ltd.45,000,000.0045,000,000.00Chenming Paper United States Co., Ltd.6,407,800.006,407,800.00Weifang Chenming Growth DriverReplacement Equity Investment Fund Partnership (Limited Partnership)559,722,323.96559,722,323.96Weifang Chendu Equity Investment Partnership (Limited Partnership)228,292,885.15228,292,885.15Total17,898,687,687.22368,750,000.00280,500,000.0017,986,937,687.22
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
XVIII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
3. Long-term equity investments (Cont
’d)
(2) Investment in associates and joint ventures
Unit: RMB
Investee
Openingbalance(carrying amount)
Openingbalanceof impairment
provision
Change for the period
Closingbalance(carryingamount)
Closingbalance ofimpairment
provisionAdditionalcontribution
Withdrawncontribution
Investmentgain or lossrecognised
underequity method
Adjustment
of othercomprehensive
income
Otherchange in
equityinterest
Distribution ofcash dividend or
profit declared
Impairment
provisionOthers
I. Joint venturesShouguang Chenming HuisenNew-style Construction Materials Co., Ltd.7,400,283.59466,616.497,866,900.08Weifang Port Wood Chip Wharf Co., Ltd.79,142,080.568,850,767.2987,992,847.85Subtotal86,542,364.159,317,383.7895,859,747.93II. AssociatesZhuhai Dechen New Third BoardEquity Investment Fund Company (Limited Partnership)27,263,804.36-4,094.5127,259,709.85Ningbo Kaichen Huamei EquityInvestment Fund Partnership (Limited Partnership)278,128,830.13-45,877,685.10232,251,145.03Chenming (Qingdao) Asset Management Co., Ltd.8,377,144.65-265,861.698,111,282.96Xuchang Chenming Paper Co., Ltd.5,994,545.965,994,545.96Subtotal313,769,779.145,994,545.96-46,147,641.30267,622,137.845,994,545.96Total400,312,143.295,994,545.96-36,830,257.52363,481,885.775,994,545.96
Determination of net amount of recoverable amount measured at fair value after deducting disposal expenses Applicable ? Not applicableDetermination of present value of recoverable amount based on expected cash flows Applicable ? Not applicable
INTERIM REPORT 2024
X Financial Report
XVIII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
4. Revenue and operating costs
Unit: RMBItem
Amount for the periodAmount for the prior periodRevenueCostsRevenueCosts
Principal activities2,708,082,195.912,557,283,330.602,588,800,023.672,692,576,337.91Other activities1,697,561,235.901,488,712,049.311,315,784,940.431,054,300,999.17
Total4,405,643,431.814,045,995,379.913,904,584,964.103,746,877,337.08
Breakdown information of operating revenues and operating costs:
Unit: RMBCategory of contract
Machine-made paperOthersTotalOperating RevenueOperating CostsOperating RevenueOperating CostsOperating RevenueOperating CostsType of goods2,708,082,195.912,557,283,330.601,697,561,235.901,488,712,049.314,405,643,431.814,045,995,379.91Including:
Machine-made paper2,368,279,496.792,232,200,488.112,368,279,496.792,232,200,488.11 Others339,802,699.12325,082,842.491,697,561,235.901,488,712,049.312,037,363,935.021,813,794,891.80 By geographical area2,708,082,195.912,557,283,330.601,697,561,235.901,488,712,049.314,405,643,431.814,045,995,379.91Including:
Mainland China2,240,577,709.612,045,306,440.761,697,561,235.901,488,712,049.313,938,138,945.513,534,018,490.07Other countries and regions467,504,486.30511,976,889.84467,504,486.30511,976,889.84 By the timing of delivery2,708,082,195.912,557,283,330.601,697,561,235.901,488,712,049.314,405,643,431.814,045,995,379.91Including:
Goods (at a point in time)2,708,082,195.912,557,283,330.601,596,441,200.611,407,025,247.634,304,523,396.523,964,308,578.23Services (within a certainperiod)101,120,035.2981,686,801.68101,120,035.2981,686,801.68By sales channels2,708,082,195.912,557,283,330.601,697,561,235.901,488,712,049.314,405,643,431.814,045,995,379.91Including:
Distribution2,708,082,195.912,557,283,330.602,708,082,195.912,557,283,330.60Direct sales1,697,561,235.901,488,712,049.311,697,561,235.901,488,712,049.31Total2,708,082,195.912,557,283,330.601,697,561,235.901,488,712,049.314,405,643,431.814,045,995,379.91
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
XVIII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
4. Revenue and operating costs (Cont
’d)Information related to performance obligations:
Item
Time forfulfilment ofperformanceobligations
Significanttermsof payment
Nature of goodsthat theCompanyundertakesto transfer
Whether the personis the primaryperson in charge
Company’scommitmentsexpected to berefunded to customers
Types of qualityassuranceoffered by theCompany andrelated obligationsMachine-made paperDo mestic sales on the
day of delivery to thecustomer; foreignsales on the day ofcustoms clearance
Do mestic sales tend to
be provided on aninvoice basis; foreignsales tend to beprepaid.
Pr oduces easilydistinguishable
YesNoneGu aranteed quality assurance, should there
be objections to product quality within7 days of arrival, the products can bereturned and exchanged.Other explanations: The Company’s performance obligations for sales of machine-made paper are generally less thanone year, and the Company takes advance payments or provides credit terms depending on the customer. When theCompany is the primary responsible party for a sale, it generally obtains the unconditional right to receive paymentwhen control of the merchandise is transferred to the customer either at the time of shipment or upon delivery to thedestination specified by the customer.Information related to the transaction price allocated to residual performance obligations:
At the end of the reporting period, the amount of revenue with signed contracts but unfulfilled or uncompletedperformance obligation was RMB447,913,981.07, in which RMB447,913,981.07 was expected to be recognised in 2024.
5. Investment income
Unit: RMBItem
Amount for
the period
Amount forthe prior periodIncome from long-term equity investments accounted for using the cost method109,400,000.0080,000,000.00Income from long-term equity investments accounted for using the equity method-36,830,257.52-2,829,947.39Investment gain on disposal of long-term equity investments-117,507,186.75Investment gain on holding other non-current financial assets1,298,463.59630,212.77Investment gain on derecognition of financial assets-10,845,725.80-22,621,312.74Total-54,484,706.4855,178,952.64
INTERIM REPORT 2024
X Financial Report
XIX. Supplementary information
1. Breakdown of extraordinary gains or losses for the current period
? Applicable Not applicable
Unit: RMBItemAmountDescriptionProfit or loss from disposal of non-current assets235,133,918.55Government grants (except for the government grants closely related tothe normal operation of the Company, granted in accordance with anestablished standard and having an ongoing effect on the Company’sprofit or loss in compliance with national policies and regulations)accounted for in profit or loss for the current period35,234,521.15Except 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 and financial liabilities held by a non-financialcompany, as well as gain or loss arising from disposal of its financialassets and financial liabilities-19,293,314.75Reversal of provision for impairment of receivables individually tested for
impairment26,150,527.36Profit or loss from debt restructuring3,502,149.44Profit or loss from changes in the fair value of consumable biological assetssubsequently measured at fair value5,184,193.11Other non-operating income and expenses other than the above items1,981,541.21Net extraordinary gains or losses287,893,536.07Less: Effect of income tax-13,171,226.69Less: Effect of minority interest (after tax)1,553,513.83Total299,511,248.93
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2024
X Financial Report
XIX. Supplementary information (Cont’d)
1. Breakdown of extraordinary gains or losses for the current period (Cont
’d)Details of other gain or loss items that fall within the definition of extraordinary gain or loss:
Applicable ? Not applicableThe Company did not have details of other gain or loss items that fall 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 – Extraordinary Gains or Losses defined as itsrecurring gain or loss items? Applicable Not applicableItem
Amount involved
(RMB)ReasonOther income29,066,863.89Go vernment grants related to assets and closely related to the normal
operation of the Company as extraordinary gain or loss due to theinclusion of their subsequent amortisation in other income and theirongoing effect on the Company’s profit or loss.
2. Return on net assets and earnings per share
Profit for the reporting period
Rate of returnon net assets
on weightedaverage basis (%)
Earnings per share
Basicearnings per share
(RMB per share)
Dilutedearnings per share
(RMB per share)
Net profit attributable to ordinary shareholders of the Company0.170.010.01Net profit after extraordinary gains or lossesattributable to ordinary shareholders of the Company-1.63-0.09-0.09
3. Accounting data difference under accounting standard at home and abroad
(1) Differences of net profit and net assets disclosed in financial reports prepared under IAS and Chinese
accounting standards Applicable ? Not applicable
(2) Differences of net profit and net assets disclosed in financial reports prepared under oversea and Chinese
accounting standards Applicable ? Not applicable
The Board of Shandong Chenming Paper Holdings Limited
14 Aug 2024