SHANDONG CHENMING PAPER HOLDINGS LIMITED Interim Financial Report 2024

SHANDONG CHENMING PAPER HOLDINGS LIMITED

Interim Financial Report 2024

August 2024I Financial Report

I. Auditors’ Report

Is the interim report audited

□ Yes □ No

The interim financial report is unaudited.II. Financial Statements

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

1. Consolidated Balance Sheet

Prepared by: Shandong Chenming Paper Holdings Limited

30 June 2024

Unit: RMB

Item Closing balance Opening balance

CURRENT ASSETS:

Monetary funds 11386010001.55 12124832831.30

Financial assets held for trading 39197419.88 46294291.71

Bills receivable 674962254.15 411600000.00

Accounts receivable 2967220987.04 2528507059.83

Accounts receivable financing 22065605.03 215884249.97

Prepayments 947491125.52 825135156.21

Other receivables 2076983663.17 2224904557.88

Including: Interest receivable – –

Dividend receivable 22659149.81 –

Inventories 4261634676.93 4958178000.36

Including: Data resources – –

Non-current assets due within one year 3990527056.67 4161725935.75

Other current assets 1148814363.92 1068826944.78

Total current assets 27514907153.86 28565889027.79

NON-CURRENT ASSETS:

Long-term receivables 557470810.47 339293533.35

Long-term equity investments 4649654565.49 4685199385.73

Other non-current financial assets 780077745.20 781561040.57

Investment property 5945948712.41 6049242696.36

Fixed assets 32030248108.24 33186248169.56

Construction in progress 1099279935.62 859617965.16

Bearer biological assets 17962753.60 17684687.36

Right-of-use assets 162392245.57 167815311.50

Intangible assets 1954534646.07 2002360891.85

Including: Data resources – –

Goodwill 8273638.42 35220543.80

Long-term prepaid expenses 38127162.73 39979161.49

Deferred income tax assets 1814848473.90 1689857881.49

Other non-current assets 927555268.15 1067082657.57

Total non-current assets 49986374065.87 50921163925.79

Total assets 77501281219.73 79487052953.58

SHANDONG CHENMING PAPER HOLDINGS LIMITED 1

INTERIM REPORT 2024I Financial Report

II. Financial Statements (Cont’d)

1. Consolidated Balance Sheet (Cont’d)

Item Closing balance Opening balance

CURRENT LIABILITIES:

Short-term borrowings 30264463843.14 33475479021.62

Bills payable 5562384579.39 4618986463.95

Accounts payable 4077198162.78 3902620870.20

Receipts in advance 14398554.70 16242921.65

Contract liabilities 1517098339.47 1443680155.62

Employee benefits payable 45123764.43 74337158.44

Taxes payable 117268252.12 99709707.56

Other payables 3257911098.58 2414752127.19

Including: Interest payable – –

Dividend payable 123000000.00 –

Non-current liabilities due within one year 3446557991.71 3631937677.82

Other current liabilities 70000000.00 100000000.00

Total current liabilities 48372404586.32 49777746104.05

NON-CURRENT LIABILITIES:

Long-term borrowings 4824800796.90 4681014489.64

Lease liabilities 40363786.09 41987022.85

Long-term payables 2279402749.15 2541095217.66

Deferred income 1287765254.49 1337864114.70

Deferred income tax liabilities 5309034.50 9490159.05

Total non-current liabilities 8437641621.13 8611451003.90

Total liabilities 56810046207.45 58389197107.95

OWNERS’ EQUITY:

Share capital 2956813200.00 2956813200.00

Capital reserves 5250308143.66 5328790899.61

Less: Treasury shares 63432450.00 63432450.00

Other comprehensive income -880417248.35 -864881489.08

Special reserves 25448968.92 23322829.57

Surplus reserves 1212009109.97 1212009109.97

General risk provisions 79383656.75 79370294.91

Retained profit 8048815645.13 8020182801.55

Total equity attributable to owners of the Company 16628929026.08 16692175196.53

Minority interest 4062305986.20 4405680649.10

Total owners’ equity 20691235012.28 21097855845.63

Total liabilities and owners’ equity 77501281219.73 79487052953.58

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

Chen Hongguo Dong Lianming Zhang Bo

2 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

II. Financial Statements (Cont’d)

2. Balance sheet of the Company

Unit: RMB

Item Closing balance Opening balance

CURRENT ASSETS:

Monetary funds 3742119283.91 4421608897.40

Bills receivable 1321153335.77 3024868267.23

Accounts receivable 596472975.92 28216771.01

Prepayments 796610369.65 476746114.74

Other receivables 8434729619.19 9237241240.86

Including: Interest receivable – –

Dividend receivable – –

Inventories 458644458.00 554028121.69

Including: Data resources – –

Non-current assets due within one year 11999841.81 3428684.19

Other current assets 60160557.12 62834527.02

Total current assets 15421890441.37 17808972624.14

NON-CURRENT ASSETS: – –

Long-term receivables – 12485720.05

Long-term equity investments 18350419572.99 18298999830.51

Other non-current financial assets 120978728.82 122462024.19

Fixed assets 3309104120.55 3415454701.17

Construction in progress 68141078.94 38707761.30

Intangible assets 469179017.08 476297197.96

Including: Data resources – –

Deferred income tax assets 595834951.98 571194789.79

Other non-current assets 12692260.70 12692260.70

Total non-current assets 22926349731.06 22948294285.67

Total assets 38348240172.43 40757266909.81

CURRENT LIABILITIES: – –

Short-term borrowings 10214591919.09 13172491176.11

Bills payable 7054959474.13 6699118643.16

Accounts payable 1767901706.21 1817323321.03

Contract liabilities 447913981.07 1454807158.83

Employee benefits payable 24946017.66 38778024.93

Taxes payable 11430805.78 9022105.28

Other payables 698141854.70 1412965873.90

Including: Interest payable – –

Dividend payable – –

Non-current liabilities due within one year 1619986231.69 734311029.42

Total current liabilities 21839871990.33 25338817332.66

SHANDONG CHENMING PAPER HOLDINGS LIMITED 3

INTERIM REPORT 2024I Financial Report

II. Financial Statements (Cont’d)

2. Balance sheet of the Company (Cont’d)

Item Closing balance Opening balance

NON-CURRENT LIABILITIES: – –

Long-term borrowings 879554888.89 1795000000.00

Long-term payables 3274187773.93 1281983636.99

Deferred income 30670590.28 31530836.20

Total non-current liabilities 4184413253.10 3108514473.19

Total liabilities 26024285243.43 28447331805.85

OWNERS’ EQUITY: – –

Share capital 2956813200.00 2956813200.00

Capital reserves 5073338869.19 5073338869.19

Less: Treasury shares 63432450.00 63432450.00

Special reserves 6008954.43 4612641.99

Surplus reserves 1199819528.06 1199819528.06

Retained profit 3151406827.32 3138783314.72

Total owners’ equity 12323954929.00 12309935103.96

Total liabilities and owners’ equity 38348240172.43 40757266909.81

4 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

II. Financial Statements (Cont’d)

3. Consolidated Income Statement

Unit: RMB

Item First half of 2024 First half of 2023

I. Total revenue 13884731519.04 12564962781.31

Including: Revenue 13884731519.04 12564962781.31

II. Total operating costs 14187361954.59 13439844164.10

Including: Operating costs 12185505709.00 11496731662.58

Taxes and surcharges 116747402.65 105817810.49

Sales and distribution expenses 99303831.21 106666717.54

General and administrative expenses 317435416.15 328296224.86

Research and development expense 611914096.41 552804828.58

Finance expenses 856455499.17 849526920.05

Including: Interest expenses 854610967.90 856872614.18

Interest income 104024655.22 94532686.92

Add: Other income 159945128.64 108155697.19

Investment income (“-” denotes loss) 181332096.11 -42756726.88

Including: In vestment income from associates and joint

ventures -38682172.19 23934269.81

Ga ins on derecognition of financial assets

measured at amortised cost -23412008.23 -67175214.10

Gain on change in fair value (“-” denotes loss) -2221596.44 -19815797.83

Credit impairment loss (“-” denotes loss) -124386619.66 -43081750.88

Lo ss on impairment of assets

(“-” denotes loss) -3041427.75 -43314485.76

Gain on disposal of assets (“-” denotes loss) 19222812.60 11759266.91

III. Operating profit (“-” denotes loss) -71780042.05 -903935180.04

Add: Non-operating income 2751486.93 940805.30

Less: Non-operating expenses 1013551.00 3138190.06

IV. Total profit (“-” denotes total loss) -70042106.12 -906132564.80

Less: Income tax expenses -96400954.34 -211491182.14

V. Net profit (“-” denotes net loss) 26358848.22 -694641382.66

(i) Classification according to the continuity of operation

1. Net profit from continuing operations (“-” denotes

net loss) 26358848.22 -694641382.66

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) 28646205.42 -688080164.10

2. Profit or loss of minority interest (“-” denotes net

loss) -2287357.20 -6561218.56

VI. Net other comprehensive income after tax -15535759.27 -85733908.54

Net other comprehensive income after tax attributable to

owners of the Company -15535759.27 -85733908.54

(i) Other comprehensive income that cannot be reclassified

to profit and loss – –

(ii) Other comprehensive income that will be reclassified to

profit and loss -15535759.27 -85733908.54

1. Exchange differences arising from translation

of financial statements denominated in foreign

currencies -19208272.66 -88339013.66

2. Other comprehensive income that may be

reclassified to profit and loss under the equity

method 3672513.39 2605105.12

Other comprehensive income net of tax attributable to

minority interest – –

SHANDONG CHENMING PAPER HOLDINGS LIMITED 5

INTERIM REPORT 2024I Financial Report

II. Financial Statements (Cont’d)

3. Consolidated Income Statement (Cont’d)

Item First half of 2024 First half of 2023

VII. Total comprehensive income 10823088.95 -780375291.20

To tal comprehensive income attributable to owners of the

Company 13110446.15 -773814072.64

Total comprehensive income attributable to minority interest -2287357.20 -6561218.56

VIII. Earnings per share:

(i) Basic earnings per share 0.01 -0.25

(ii) Diluted earnings per share 0.01 -0.25

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

Chen Hongguo Dong Lianming Zhang Bo

6 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

II. Financial Statements (Cont’d)

4. Income statement of the Company

Unit: RMB

Item First half of 2024 First half of 2023

I. Revenue 4405643431.81 3904584964.10

Less: Operating costs 4045995379.91 3746877337.08

Taxes and surcharges 24633366.92 19988361.19

Sales and distribution expenses 4006101.04 4148207.41

General and administrative expenses 87291113.29 51547136.68

Research and development expense 125852983.90 117941892.00

Finance expenses 122304383.31 125869235.74

Including: Interest expenses 215154909.24 245995158.97

Interest income 151576285.23 212850374.32

Add: Other income 29945854.40 13833015.46

Investment income (“-” denotes loss) -54484706.48 55178952.64

Including: I nvestment income from associates and joint

ventures -36830257.52 -2829947.39

Ga ins on derecognition of financial assets measured at

amortised cost (“-” denotes loss) -10845725.80 -22621312.74

Gain on change in fair value (“-” denotes loss)

Credit impairment loss (“-” denotes loss) -1228938.13 -6264582.46

Loss on impairment of assets (“-” denotes loss) -673567.00

Gain on disposal of assets (“-” denotes loss) 18393499.78 9745045.43

II. Operating profit (“-” denotes loss) -12487753.99 -89294774.93

Add: Non-operating income 1065964.61 451184.77

Less: Non-operating expenses 594860.21 1912008.53

III. Total profit (“-” denotes total loss) -12016649.59 -90755598.69

Less: Income tax expenses -24640162.19 -41697391.77

IV. Net profit (“-” denotes net loss) 12623512.60 -49058206.92

(i) Net profit from continuing operations

(“-” denotes net loss) 12623512.60 -49058206.92

(ii) Net profit from discontinued operations

(“-” denotes net loss) – –

V. Total comprehensive income 12623512.60 -49058206.92

SHANDONG CHENMING PAPER HOLDINGS LIMITED 7

INTERIM REPORT 2024I Financial Report

II. Financial Statements (Cont’d)

5. Consolidated cash flow statement

Unit: RMB

Item First half of 2024 First half of 2023

I. Cash flows from operating activities:

Cash received from sales of goods and rendering of services 14231647331.45 12654981362.62

Tax rebates received 8107525.70 109519774.17

Cash received relating to other operating activities 150658134.92 880312282.56

Subtotal of cash inflows from operating activities 14390412992.07 13644813419.35

Cash paid for goods and services 10553832290.81 9962778364.17

Cash paid to and for employees 657515276.65 667506780.80

Payments of taxes and surcharges 242371386.74 428775626.59

Cash paid relating to other operating activities 944194644.80 802664900.20

Subtotal of cash outflows from operating activities 12397913599.00 11861725671.76

Net cash flows from operating activities 1992499393.07 1783087747.59

II. Cash flows from investing activities:

Cash received from investments 1483295.37 6376301.89

Cash received from investment income 1298463.59 1730212.77

Ne t cash received from disposal of fixed assets intangible

assets and other long-term assets 14657469.09 147784119.60

Ne t cash received from disposal of subsidiaries and other

business units 610107490.67 –

Subtotal of cash inflows from investing activities 627546718.72 155890634.26

Ca sh paid for purchase of fixed assets intangible assets and

other long-term assets 56241530.58 104455019.88

Ne t cash paid for acquisition of subsidiaries and other

business units – 4934751.03

Subtotal of cash outflows from investing activities 56241530.58 109389770.91

Net cash flows from investing activities 571305188.14 46500863.35

8 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

II. Financial Statements (Cont’d)

5. Consolidated cash flow statement (Cont’d)

Item First half of 2024 First half of 2023

III. Cash flows from financing activities:

Cash received from borrowings 15651271993.47 17765551073.77

Cash received relating to other financing activities 1852785703.00 1128264589.15

Subtotal of cash inflows from financing activities 17504057696.47 18893815662.92

Cash repayments of amounts borrowed 17359068511.55 18186471433.20

Ca sh paid for dividend and profit distribution or interest

payment 905617475.65 853357265.46

Including: Di vidend and profit paid by subsidiaries to minority

shareholders – 9419178.08

Cash paid relating to other financing activities 1787061193.13 1942169772.07

Subtotal of cash outflows from financing activities 20051747180.33 20981998470.73

Net cash flows from financing activities -2547689483.86 -2088182807.81

IV. Effect of foreign exchange rate changes on cash and cash

equivalents 22481244.59 -58096458.38

V. Net increase in cash and cash equivalents 38596341.94 -316690655.25

Add: Bal ance of cash and cash equivalents as at the

beginning of the period 764233742.61 2159460149.51

VI. Balance of cash and cash equivalents as at the end of the

period 802830084.55 1842769494.26

SHANDONG CHENMING PAPER HOLDINGS LIMITED 9

INTERIM REPORT 2024I Financial Report

II. Financial Statements (Cont’d)

6. Cash flow statement of the Company

Unit: RMB

Item First half of 2024 First half of 2023

I. Cash flows from operating activities:

Cash received from sales of goods and rendering of services 4389348030.24 3929585126.95

Tax rebates received – 10186261.55

Cash received relating to other operating activities 159626585.94 244461863.48

Subtotal of cash inflows from operating activities 4548974616.18 4184233251.98

Cash paid for goods and services 3833931092.64 3646421670.77

Cash paid to and for employees 152875362.26 159974284.62

Payments of taxes and surcharges 23260283.18 23767270.65

Cash paid relating to other operating activities 185450974.46 222463991.65

Subtotal of cash outflows from operating activities 4195517712.54 4052627217.69

Net cash flows from operating activities 353456903.64 131606034.29

II. Cash flows from investing activities:

Cash received from investments 488776095.37 6376301.89

Cash received from investment income 110698463.59 81730212.77

Ne t cash received from disposal of fixed assets intangible

assets and other long-term assets 14521469.09 40443619.60

Subtotal of cash inflows from investing activities 613996028.05 128550134.26

Ca sh paid for purchase of fixed assets intangible assets

and other long-term assets 5342093.92 19406565.34

Subtotal of cash outflows from investing activities 5342093.92 19406565.34

Net cash flows from investing activities 608653934.13 109143568.92

10 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

II. Financial Statements (Cont’d)

6. Cash flow statement of the Company (Cont’d)

Item First half of 2024 First half of 2023

III. Cash flows from financing activities:

Cash received from borrowings 10107406194.25 10014688564.21

Cash received relating to other financing activities 757331971.66 1362715891.06

Subtotal of cash inflows from financing activities 10864738165.91 11377404455.27

Cash repayments of amounts borrowed 11078908500.08 10389789485.97

Ca sh paid for dividend and profit distribution or interest

payment 207045676.09 242860355.63

Cash paid relating to other financing activities 464307395.90 438804497.05

Subtotal of cash outflows from financing activities 11750261572.07 11071454338.65

Net cash flows from financing activities -885523406.16 305950116.62

IV. Effect of foreign exchange rate changes on cash and cash

equivalents 1254926.56 -3138503.82

V. Net increase in cash and cash equivalents 77842358.17 543561216.01

Add: Bal ance of cash and cash equivalents as at the

beginning of the period 350786839.40 233971948.99

VI. Balance of cash and cash equivalents as at the end of the

period 428629197.57 777533165.00

SHANDONG CHENMING PAPER HOLDINGS LIMITED 11

INTERIM REPORT 2024I Financial Report

12 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024

II. Financial Statements (Cont’d)

7. Consolidated statement of changes in owners’ equity

Amount for the period

Unit: RMB

First half of 2024

Equity attributable to owners of the Company

Other equity instruments Other

Preference Perpetual Capital Less: comprehensive Special Surplus General risk Minority Total

Item Share capital shares bonds Others reserves Treasury shares income reserves reserves provisions Retained profit Others Subtotal interest owners’ equity

I. Balance as at the end of the prior year 2956813200.00 – – – 5328790899.61 63432450.00 -864881489.08 23322829.57 1212009109.97 79370294.91 8020182801.55 – 16692175196.53 4405680649.10 21097855845.63

II. Balance as at the beginning of the year 2956813200.00 – – – 5328790899.61 63432450.00 -864881489.08 23322829.57 1212009109.97 79370294.91 8020182801.55 – 16692175196.53 4405680649.10 21097855845.63

III. Changes in the period (“-” denotes decrease) – – – – -78482755.95 – -15535759.27 2126139.35 – 13361.84 28632843.58 – -63246170.45 -343374662.90 -406620833.35

(i) Total comprehensive income – – – – – – -15535759.27 – – – 28646205.42 – 13110446.15 -2287357.20 10823088.95

(ii) Capital paid in and reduced by owners – – – – -78482755.95 – – – – – – – -78482755.95 -290042380.45 -368525136.40

1. Ordinary shares paid by owners – – – – – – – – – – – – – -290042380.45 -290042380.45

2. Others – – – – -78482755.95 – – – – – – – -78482755.95 – -78482755.95

(III) Profit distribution – – – – – – – – – 13361.84 -13361.84 – – -123000000.00 -123000000.00

1. Transfer to general risk provisions – – – – – – – – – 13361.84 -13361.84 – – – –

2. Distribution to owners (or shareholders) – – – – – – – – – – – – – -123000000.00 -123000000.00

(IV) Transfer within owners’ equity – – – – – – – – – – – – – 71955074.75 71955074.75

1. Others – – – – – – – – – – – – – 71955074.75 71955074.75

(V) Special reserves – – – – – – – 2126139.35 – – – – 2126139.35 – 2126139.35

1. Withdrawn in the period – – – – – – – 5053378.02 – – – – 5053378.02 – 5053378.02

2. Used in the period – – – – – – – -2927238.67 – – – – -2927238.67 – -2927238.67

IV. Balance as at the end of the period 2956813200.00 – – – 5250308143.66 63432450.00 -880417248.35 25448968.92 1212009109.97 79383656.75 8048815645.13 – 16628929026.08 4062305986.20 20691235012.28I Financial Report

SHANDONG CHENMING PAPER HOLDINGS LIMITED 13

INTERIM REPORT 2024

II. Financial Statements (Cont’d)

7. Consolidated statement of changes in owners’ equity (Cont’d)

Amounts for the prior year

Unit: RMB

First half of 2023

Equity attributable to owners of the Company

Other equity instruments Other

Preference Perpetual Capital Less: comprehensive Special Surplus General risk Retained Minority Total

Item Share capital shares bonds Others reserves Treasury shares income reserves reserves provisions profit Others Subtotal interest owners’ equity

I. Balance as at the end of the prior year 2979742200.00 – 996000000.00 – 5361200522.29 128780100.00 -821940694.57 15791710.95 1212009109.97 79900268.71 9390642477.57 – 19084565494.92 4643688325.69 23728253820.61

II. Balance as at the beginning of the year 2979742200.00 – 996000000.00 – 5361200522.29 128780100.00 -821940694.57 15791710.95 1212009109.97 79900268.71 9390642477.57 – 19084565494.92 4643688325.69 23728253820.61

III. Changes in the period (“-” denotes decrease) – – – – -27467521.92 – -85733908.54 4123023.54 – – -688080164.10 – -797158571.02 -15980396.64 -813138967.66

(i) Total comprehensive income – – – – – – -85733908.54 – – – -688080164.10 – -773814072.64 -6561218.56 -780375291.20

(ii) Capital paid in and reduced by owners – – – – -27467521.92 – – – – – – – -27467521.92 – -27467521.92

1. Amount of share-based payments

recognised in owners’ equity – – – – -27467521.92 – – – – – – – -27467521.92 – -27467521.92

(iii) Profit distribution – – – – – – – – – – – – – -9419178.08 -9419178.08

1. Distribution to shareholders (or owners) – – – – – – – – – – – – – -9419178.08 -9419178.08

(iv) Special reserves – – – – – – – 4123023.54 – – – – 4123023.54 – 4123023.54

1. Withdrawn in the period – – – – – – – 13373517.00 – – – – 13373517.00 – 13373517.00

2. Used in the period (denotes in “-”) – – – – – – – -9250493.46 – – – – -9250493.46 – -9250493.46

IV. Balance as at the end of the period 2979742200.00 – 996000000.00 – 5333733000.37 128780100.00 -907674603.11 19914734.49 1212009109.97 79900268.71 8702562313.47 – 18287406923.90 4627707929.05 22915114852.95I Financial Report

14 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024

II. Financial Statements (Cont’d)

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

Amount for the period

Unit: RMB

First half of 2024

Other equity instruments Other

Preference Perpetual Less: comprehensive Special Surplus Retained Total

Item Share capital shares bonds Others Capital reserves Treasury shares income reserves reserves profit Others owners’ equity

I. Balance as at the end of the prior year 2956813200.00 – – – 5073338869.19 63432450.00 – 4612641.99 1199819528.06 3138783314.72 – 12309935103.96

II. Balance as at the beginning of the year 2956813200.00 – – – 5073338869.19 63432450.00 – 4612641.99 1199819528.06 3138783314.72 – 12309935103.96

III. Changes in the period (“-” denotes decrease) – – – – – – – 1396312.44 – 12623512.60 – 14019825.04

(i) Total comprehensive income – – – – – – – – – 12623512.60 – 12623512.60

(ii) Special reserves – – – – – – – 1396312.44 – – – 1396312.44

1. Withdrawn in the period – – – – – – – 1396312.44 – – – 1396312.44

IV. Balance as at the end of the period 2956813200.00 – – – 5073338869.19 63432450.00 – 6008954.43 1199819528.06 3151406827.32 – 12323954929.00I Financial Report

SHANDONG CHENMING PAPER HOLDINGS LIMITED 15

INTERIM REPORT 2024

II. Financial Statements (Cont’d)

8. Statement of changes in owners’ equity of the Company (Cont’d)

Amounts for the prior year

Unit: RMB

First half of 2023

Other equity instruments Other

Preference Perpetual Less: comprehensive Special Surplus Retained Total

Item Share capital shares bonds Others Capital reserves Treasury shares income reserves reserves profit Others owners’ equity

I. Balance as at the end of the prior year 2979742200.00 – 996000000.00 – 5147225041.11 128780100.00 – 2066138.15 1199819528.06 3121934271.16 – 13318007078.48

II. Balance as at the beginning of the year 2979742200.00 – 996000000.00 – 5147225041.11 128780100.00 – 2066138.15 1199819528.06 3121934271.16 – 13318007078.48

III. Changes in the period (“-” denotes decrease) – – – – -27467521.92 – – 1261601.44 – -65980906.92 – -92186827.40

(i) Total comprehensive income – – – – – – – – – -65980906.92 – -65980906.92

(ii) Capital paid in and reduced by owners – – – – -27467521.92 – – – – – – -27467521.92

1. Amount of share-based payments

recognised in owners’ equity – – – – -27467521.92 – – – – – – -27467521.92

(iv) Special reserves – – – – – – – 1261601.44 – – – 1261601.44

1. Withdrawn in the period – – – – – – – 1284902.41 – – – 1284902.41

2. Used in the period – – – – – – – -23300.97 – – – -23300.97

IV. Balance as at the end of the period 2979742200.00 – 996000000.00 – 5119757519.19 128780100.00 – 3327739.59 1199819528.06 3055953364.24 – 13225820251.08I Financial Report

III. Company overview

The predecessor of Shandong Chenming Paper Holdings Limited (hereinafter referred to as the “Company” a joint-stock

company incorporated in Shouguang City Shandong Province) was Shandong Shouguang Paper Mill Corporation which was

changed 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 limited

liability established by share offer. The Company’s headquarters is located at No. 2199 Nongsheng East Road Shouguang

City Shandong Province.In May 1997 with approval by Zheng Wei Fa [1997] No. 26 issued by the Securities Committee of the State Council the

Company issued 115000000 domestic listed foreign shares (B shares) under public offering which were listed and traded on

Shenzhen Stock Exchange from 26 May 1997.In September 2000 with approval by Zheng Jian Gong Si Zi [2000] No. 151 issued by the China Securities Regulatory

Commission the Company issued additional 70000000 RMB ordinary shares (A shares) which were listed and traded on

Shenzhen Stock Exchange from 20 November 2000.In June 2008 with approval by the Stock Exchange of Hong Kong Limited the Company issued 355700000 H shares.At the same time 35570000 H shares were allocated to the National Council for Social Security Fund by our relevant

state-owned shareholder and converted into overseas listed foreign shares (H shares) for the purpose of reducing the number

of state-owned shares. The additionally issued H shares were listed and traded on Hong Kong Stock Exchange on 18 June

2008.

As at 30 June 2024 the total share capital of the Company was 2956813200 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 paper

products (including machine-made paper and paper board) paper making raw materials machinery and chemicals; generation

and sale of electric power and thermal power; forestry saplings growing processing and sale of timber and construction

materials; manufacturing processing and sale of wood products; and hotel service and equipment financial and operating

leasing 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 directors

of the Company (the “Board”) on 14 August 2024.

16 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 the

application guidelines thereof interpretations and other related rules (collectively referred to as “ASBEs”) promulgated

by 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 assets

occurs 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 months

since the end of the reporting period.V. Significant Accounting Policies and Accounting Estimates

Specific accounting policies and accounting estimates are indicated as follows:

The Company and its subsidiaries are principally engaged in machine-made paper electricity and steam construction

materials paper making chemical products processing of moulds hotel management and other operations. The Company

and its subsidiaries formulated certain specific accounting policies and accounting estimates for the transactions and matters

such as revenue recognition determination of performance progress and R&D expenses based on their actual production and

operation 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 financial

position of the consolidated entity and the Company as at 30 June 2024 and relevant information such as the operating

results 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.SHANDONG CHENMING PAPER HOLDINGS LIMITED 17

INTERIM REPORT 2024I 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 the

Company recognise U.S. dollar (“USD” or “US$”) Japanese yen (“JPY”) Euro (“EUR”) and South Korean Won (“KRW”)

as their respective functional currency according to the general economic environment in which these subsidiaries

operate. The Company prepares the financial statements in RMB.

5. Determination method and selection basis of importance standards

Item Importance standards

Significant accounts receivable with single provision for bad Overdue accounts receivable and the amount of a single

debt reserves receivable exceeds 0.5% of total assets

Write-off of significant accounts receivable during the The amount of a single write-off exceeds 0.5% of net

period assets

Significant prepayments aged more than one year Aged more than one year and the single amount exceeds

0.5% of total assets

Significant receipts in advance aged more than one year Aged more than one year and the single amount exceeds

0.5% of total assets

Significant other payables aged more than one year Aged more than one year and the single amount exceeds

0.5% of total assets

Significant accounts payable aged more than one year Aged more than one year and the single amount exceeds

0.5% of total assets

Bad debt provisions with significant amounts reversed or Individually identified or classified into the third stage the

recovered during the current period amount transferred or recovered exceeds 0.5% of total

assets

Significant construction in progress Projects with budgets exceeding 0.5% of total assets

Significant non-wholly owned subsidiaries The 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 activities Investment amount exceeds 0.5% of total assets

Significant joint ventures and associates The joint venture or associate operates normally with an

accounting amount exceeding 0.5% of total assets

Significant debt restructuring The restructuring amount exceeds 0.5% of total assets

18 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 being

merged that are obtained in the business combination by the absorbing party shall be measured at the carrying

amounts as recorded by the ultimate controlling party in the consolidated financial statements at the combination

date. The difference between the carrying amount of the consideration paid for the combination and the carrying

amount of the net assets obtained in the combination is charged to the capital reserve. If the capital reserve is not

sufficient to absorb the difference any excess shall be adjusted against retained earnings.Business combinations involving entities under common control and achieved in stages

The assets and liabilities of the party being merged that are obtained at the combination by the absorbing party

shall be measured at the carrying value as recorded by the ultimate controlling party in the consolidated financial

statements at combination date. The difference between the sum of the carrying value from original shareholding

portion and the new investment cost incurred at combination date and the carrying value of net assets obtained

at combination date shall be adjusted to capital reserve if the balance of capital reserve is not sufficient to absorb

the differences any excess is adjusted to retained earnings. The long-term investment prior to the absorbing party

obtaining the control of the party being merged the recognised profit or loss comprehensive income and other

change of owners’ equity at the closer date of the acquisition date and combination date under common control

shall 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 is

measured at the aggregate fair value at acquisition date of assets given liabilities incurred or assumed and

equity securities issued by the acquirer in exchange for control of the acquiree. At acquisition date the acquired

assets liabilities or contingent liabilities of acquiree are measured at their fair value.SHANDONG CHENMING PAPER HOLDINGS LIMITED 19

INTERIM REPORT 2024I 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 net

assets the difference is recognised as goodwill and subsequently measured on the basis of its cost minus

accumulative impairment provision; Where the cost of combination is less than the acquirer’s interest in the fair

value of the acquiree’s identifiable net assets the difference is recognised in profit or loss for the current period

after reassessment.Business combinations involving entities not under common control and achieved in stages

The combination cost is the sum of consideration paid at acquisition date and fair value of the acquiree’s equity

investment held prior to acquisition date. The cost of equity of the acquiree held prior to acquisition date shall be

remeasured at the fair value at acquisition date and the difference between the fair value and carrying amount

shall be recognised as investment income or loss for the current period. Other comprehensive income and

changes of other owners’ equity related with acquiree’s equity held prior to acquisition date shall be transferred

to investment profit or loss for current period at acquisition date except for the other comprehensive income

incurred by the changes of net assets or net liabilities due to the remeasurement of defined benefit plans and

the other comprehensive income related to investments in non-trading equity instruments that were previously

designated 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 arising

from business combinations are recognised in profit or loss when incurred. Transaction costs of equity or debt

securities issued as the considerations of business combination are included in the initial recognition amounts.

20 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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. The

term “control” refers to the fact that the Company has power over the investee and is entitled to variable returns

from its involvement with the investee and the ability to use its power over the investee to affect the amount of

those returns. The Company will reassess when changes in relevant facts and circumstances result in changes in

the relevant elements involved in the definition of control.When judging whether to include a structured entity into the scope of consolidation the Company

comprehensively considers all facts and circumstances including assessing the purpose and design of the

structured entity identifying the types of variable returns and assessing whether to control the structured entity

on 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 the

Company 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 and

intra-company significant transactions and balances are eliminated.A subsidiary and its business acquired through a business combination involving entities under common control

during the reporting period shall be included in the scope of the consolidation of the Company from the date

of being controlled by the ultimate controlling party and its operating results and cash flows from the date of

being controlled by the ultimate controlling party are included in the consolidated income statement and the

consolidated cash flow statement respectively.For a subsidiary and its business acquired through a business combination involving entities not under common

control during the reporting period its income expenses and profits are included in the consolidated income

statement and cash flows are included in the consolidated cash flow statement from the acquisition date to the

end of the reporting period.The shareholders’ equity of the subsidiaries that is not attributable to the Company is presented under

shareholders’ equity in the consolidated balance sheet as minority interest. The portion of net profit or loss of

subsidiaries for the period attributable to minority interest is presented in the consolidated income statement

under the “profit or loss of minority interest”. When the amount of loss attributable to the minority shareholders of

a 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-controlling

interests and the share of the net assets from subsidiaries from the date of acquisition or the date of combination

based on the new shareholding ratio as well as the difference between the proceeds from the partial disposal

of the equity investment without losing control over its subsidiary and the disposal of the long-term equity

investment corresponding to the share of the net assets of the subsidiaries from the date of acquisition or the date

of combination is adjusted to the capital reserve. If the capital reserve is not sufficient any excess is adjusted to

retained earnings.

(4) Accounting treatment for loss of control over subsidiaries

For the loss of control over a subsidiary due to disposal of a portion of the equity investment or other reasons

the remaining equity is measured at fair value on the date when the control is lost. The difference arising from

the sum of consideration received for disposal of equity interest and the fair value of remaining equity interest

over the sum of the share of the carrying amount of net assets of the former subsidiary calculated continuously

from the purchase date based on the shareholding percentage before disposal and the goodwill is recognised as

investment 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 the

same basis as the former subsidiary’s direct disposal of relevant assets or liabilities when the control is lost. Other

changes in owners’ equity related to the former subsidiary that are accounted for using the equity method shall be

transferred to current profit or loss at the time when the control is lost

SHANDONG CHENMING PAPER HOLDINGS LIMITED 21

INTERIM REPORT 2024I 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 the

Company 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 and

obligations of this arrangement.The Company recognises the following items in relation to its interest in a joint operation and accounts for them in

accordance 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 this

arrangement.The Company accounts for its investments in joint ventures in accordance with the requirements relating to

accounting 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 – term

and highly liquid investments held by the Company which are readily convertible into known amount of cash and which

are subject to insignificant risk of value change.

22 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 spot

exchange rate on the date of exchange.On the balance sheet date foreign currency monetary items shall be translated at the spot exchange rate on

the balance sheet date. The exchange difference arising from the difference between the spot exchange rate

on the balance sheet date and the spot exchange rate upon initial recognition or the last balance sheet date will

be recognised in profit or loss for the period. The foreign currency non-monetary items measured at historical

cost shall still be measured by the functional currency translated at the spot exchange rate on the date of the

transaction. Foreign currency non-monetary items measured at fair value are translated at the spot exchange

rate on the date of determination of the fair value. The difference between the amounts of the functional currency

before and after the translation will be recognised in profit or loss or other comprehensive income for the period

based 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 and

liabilities 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 which

such items arose.Income and expenses items in the income statement are translated at the prevailing spot exchange rate on the

transaction date.All items in the cash flow statements shall be translated at the prevailing spot exchange rate on the date that

the cash flow transaction occurred. Effects arising from changes of exchange rate on cash shall be presented

separately as the “effect of foreign exchange rate changes on cash and cash equivalents” item in the cash flow

statements.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 financial

statements denominated in foreign currencies related to the disposed foreign operations which has been included

in shareholders’ equity in the balance sheet shall be transferred to profit or loss in whole or in proportionate share

in the period in which the disposal took place.SHANDONG CHENMING PAPER HOLDINGS LIMITED 23

INTERIM REPORT 2024I 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 equity

instrument 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 a

financial 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 financial

asset as described below.A financial liability (or a part thereof) is derecognised only when the present obligation is discharged in full or in

part. If an agreement is entered between the Company (debtor) and a creditor to replace the existing financial

liabilities with new financial liabilities and the contractual terms of the new financial liabilities are substantially

different from those of the existing financial liabilities the existing financial liabilities shall be derecognised and the

new 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 assets

and characteristics of the contractual cash flows as follows: financial assets measured at amortised cost financial

assets measured at fair value through other comprehensive income and financial assets measured at fair value

through profit or loss.Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair value

through 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 designated

at 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 solely

payments of principal and interest on the principal amount outstanding.Subsequent to initial recognition such financial assets are measured at amortised cost using the effective interest

method. A gain or loss on a financial asset that is measured at amortised cost and is not part of a hedging

relationship 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.

24 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 the

following 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 collect

contractual cash flows and selling such financial assets;

The contractual terms of the financial asset stipulate that cash flows generated on specific dates are solely

payments of principal and interest on the principal amount outstanding.Subsequent to initial recognition such financial assets are subsequently measured at fair value. Interest calculated

using the effective interest method impairment losses or gains and foreign exchange gains and losses are

recognised in profit or loss for the current period and other gains or losses are recognised in other comprehensive

income. On derecognition the cumulative gain or loss previously recognised in other comprehensive income is

reclassified from other comprehensive income to profit or loss.Financial assets measured at fair value through profit or loss

The Company classifies the financial assets other than those measured at amortised cost and measured at fair

value through other comprehensive income as financial assets measured at fair value through profit or loss. Upon

initial recognition the Company irrevocably designates certain financial assets that are required to be measured

at amortised cost or at fair value through other comprehensive income as financial assets measured at fair value

through 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 hedging

purposes gains or losses (including interests and dividend income) arising from such financial assets are

recognised 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 in

order to generate cash flows. That is the Company’s business model determines whether cash flows will result

from collecting contractual cash flows selling financial assets or both. The Company determines the business

model for managing financial assets on the basis of objective facts and specific business objectives for managing

financial assets determined by key management personnel.The Company assesses the characteristics of the contractual cash flows of financial assets to determine whether

the contractual cash flows generated by the relevant financial assets on a specific date are solely payments of

principal and interest on the principal amount outstanding. The principal refers to the fair value of the financial

assets at the initial recognition. Interest includes consideration for the time value of money for the credit risk

associated with the principal amount outstanding during a particular period of time and for other basic lending

risks costs and profits. In addition the Company evaluates the contractual terms that may result in a change in

the time distribution or amount of contractual cash flows from a financial asset to determine whether it meets the

requirements of the above contractual cash flow characteristics.SHANDONG CHENMING PAPER HOLDINGS LIMITED 25

INTERIM REPORT 2024I 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 in

the 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 value

through 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 value

through profit or loss and financial liabilities measured at amortised cost. For financial liabilities not classified

as measured at fair value through profit or loss relevant transaction costs are included in the amount initially

recognised.Financial liabilities measured at fair value through profit or loss

Financial liabilities measured at fair value through profit or loss comprise held-for-trading financial liabilities and

financial liabilities designated at fair value through profit or loss upon initial recognition. Such financial liabilities

are subsequently measured at fair value and the gains or losses from the change in fair value and the dividend or

interest expenses related to the financial liabilities are included in the profit or loss of the current period.Financial liabilities measured at amortised cost

Other 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 current

period.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 equity

instruments and the entity will deliver a variable number of its own equity instruments according to such

contract.* 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 asset

with a fixed number of its own equity instruments.

26 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 all

of its liabilities.If the Company cannot unconditionally avoid the performance of a contractual obligation by paying cash or

delivering 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’s

own equity instruments used to settle such instrument should be considered as to whether it is as a substitute

for cash or other financial assets or for the purpose of enabling the holder of the instrument to be entitled to the

remaining interest in the assets of the issuer after deducting all of its liabilities. For the former it is a financial

liability 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 continuing

involvement of transferred financial assets or the transfer does not qualify for derecognition).SHANDONG CHENMING PAPER HOLDINGS LIMITED 27

INTERIM REPORT 2024I 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 ECLs

ECLs are the weighted average of credit losses of financial instruments weighted by the risk of default. Credit

losses refer to the difference between all contractual cash flows receivable according to the contract and

discounted according to the original effective interest rate and all cash flows expected to be received i.e. the

present value of all cash shortages.The Company takes into account reasonable and well-founded information such as past events current conditions

and forecasts of future economic conditions and calculates the probability-weighted amount of the present value

of the difference between the cash flows receivable from the contract and the cash flows expected to be received

weighted by the risk of default.The Company measures ECLs of financial instruments at different stages. If the credit risk of the financial

instrument did not increase significantly upon initial recognition it is at the first stage and the Company makes

provision for impairment based on the ECLs within the next 12 months; if the credit risk of a financial instrument

increased 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 financial

instrument incurred credit impairment upon initial recognition it is at the third stage and the Company makes

provision 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 credit

risk did not increase significantly upon initial recognition and makes provision for impairment based on the ECLs

within the next 12 months.Lifetime ECLs represent the ECLs resulting from all possible default events over the expected life of a financial

instrument. The 12-month ECLs are the ECLs resulting from possible default events on a financial instrument

within 12 months (or a shorter period if the expected life of the financial instrument is less than 12 months) after

the 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 the

Company 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 calculates

the interest income based on the book balance and the effective interest rate before deducting the impairment

provisions. For financial instruments at the third stage interest income is calculated based on the amortised cost

after 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 receivables

and contract assets if the credit risk characteristics of a customer are significantly different from other customers

in the portfolio or the credit risk characteristics of such customer change significantly the Company will make a

separate provision for bad debts for such receivables. In addition to the receivables for which bad debt provisions

are made individually the Company divides the receivables into portfolios based on credit risk characteristics and

calculates bad debt provisions on a combined basis.

28 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 receivable

For bills receivable and accounts receivable regardless of whether there is a significant financing component the

Company 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 reasonable

cost 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 receivable

Bills receivable portfolio 1: Bank acceptance bills

Bills receivable portfolio 2: Commercial acceptance bills

B. Accounts receivable

Accounts receivable portfolio 1: Due from related party customers

Accounts receivable portfolio 2: Due from non-related party customers

Accounts receivable portfolio 3: Factoring receivables

For bills 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 calculate the ECLs based on default

risk exposure and lifetime ECL rate.For accounts receivable classified as a portfolio the Company refers to the historical credit loss experience

combined with the current situation and the forecast of future economic conditions to prepare a comparison table

of the ageing/overdue days of accounts receivable and the lifetime ECL rate to calculate the ECLs. The aging of

accounts receivable is calculated from the date of recognition.Other receivables

The Company classifies other receivables into portfolios based on credit risk characteristics and calculates the

ECLs on a portfolio basis. The basis for determining the portfolios is as follows:

Other receivables portfolio 1: Amount due from government authorities

Other receivables portfolio 1: Amount due from related parties

Other receivables portfolio 3: Other receivables

For other receivables classified as a portfolio the Company calculates the ECLs based on default risk exposure

and the ECL rate over the next 12 months or the entire lifetime. For other receivables grouped by aging the aging

is calculated from the date of recognition.SHANDONG CHENMING PAPER HOLDINGS LIMITED 29

INTERIM REPORT 2024I 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 receivables

The 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 credit

risk characteristics and calculates the ECLs on a portfolio basis. The basis for determining the portfolios is as

follows:

A. Finance lease receivables

Finance lease receivables portfolio 1: Receivables not past due

Finance lease receivables portfolio 2: Overdue receivables

B. Other long-term receivables

Other long-term receivables portfolio 1: Deposits receivable

Other long-term receivables portfolio 2: Other receivables

For accounts receivable financing and deposits receivable the Company refers to the historical credit loss

experience combined with the current situation and the forecast of future economic conditions and calculates

the 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 next

12 months or the entire lifetime.

Debt investments and other debt investments

For debt investments and other debt investments the Company measures the ECLs based on the nature of the

investment the types of counterparty and risk exposure and default risk exposure and ECL rate within the next

12 months or the entire lifetime.

30 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 risk

In assessing whether the credit risk of a financial instrument has increased significantly upon initial recognition the

Company compares the risk of default of the financial instrument at the balance sheet date with that at the date

of initial recognition to determine the relative change in risk of default within the expected lifetime of the financial

instrument.In determining whether the credit risk has increased significantly upon initial recognition the Company considers

reasonable and well-founded information including forward-looking information which can be obtained without

unnecessary 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 significant

adverse 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 significant

increase in credit risk on either an individual basis or a collective basis. When the assessment is performed on a

collective basis the financial instruments are grouped based on their common credit risk characteristics such as

past 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 30

days past due.Credit-impaired financial assets

At balance sheet date the Company assesses whether financial assets measured at amortised cost and debt

investments measured at fair value through other comprehensive income are credit-impaired. A financial asset is

credit-impaired when one or more events that have an adverse effect on the estimated future cash flows of the

financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable

events:

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 to

the 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 or

debtor.SHANDONG CHENMING PAPER HOLDINGS LIMITED 31

INTERIM REPORT 2024I 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 ECLs

ECLs are remeasured at each balance sheet date to reflect changes in the financial instrument’s credit risk upon

initial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit or loss for

the current period. For financial assets measured at amortised cost the provisions of impairment is deducted

from the carrying amount of the financial assets presented in the balance sheet; for debt investments at fair value

through other comprehensive income the Company makes provisions of impairment in other comprehensive

income without reducing the carrying amount of the financial asset.Write-offs

The book balance of a financial asset is directly written off to the extent that there is no realistic prospect of

recovery of the contractual cash flows of the financial asset (either partially or in full). Such write-off constitutes

derecognition of such financial asset. This is generally the case when the Company determines that the debtor

does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject

to the write-off. However financial assets that are written off could still be subject to enforcement activities in

order 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 in

which 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 the

issuer of such financial assets (the transferee).If the Company transfers substantially all the risks and rewards of ownership of the financial asset to the

transferee the financial asset shall be derecognised. If the Company retains substantially all the risks and rewards

of 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 financial

asset it accounts for the transaction as follows: if the Company does not retain control it derecognises the

financial 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 transferred

financial 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 financial

liabilities on a net amount basis or simultaneously the net amount of financial assets and financial liabilities shall

be presented in the balance sheet upon offsetting. Otherwise financial assets and financial liabilities are presented

separately in the balance sheet without offsetting.

32 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 transaction

between market participants at the measurement date.The Company measures the relevant asset and liability at fair value based on the presumption that the orderly

transaction to sell the asset or transfer the liability takes place either in the principal market for the relevant asset or

liability or in the absence of a principal market in the most advantageous market for relevant the asset or liability. The

principal or the most advantageous market must be a trading market accessible by the Company at the measurement

date. The Company adopts the presumption that market participants would use when pricing the asset or liability in their

best economic interest.If there exists an active market for a financial asset or financial liability the Company uses the quotation on the active

market as its fair value. If the market for a financial instrument is inactive the Company uses valuation technique to

recognise its fair value.Fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic

benefits by using the asset in its best use or by selling it to another market participant that would use the asset in its

best use.The Company adopts valuation techniques that are appropriate in the current circumstance and for which sufficient data

and other information are available prioritises the use of relevant observable inputs and uses unobservable inputs only

under 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 the

fair 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 measurement

date. 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 recognised

in the financial statements on a recurring basis to determine whether transfers have occurred between fair value

measurement hierarchy levels.

13. Inventories

(1) Classification of inventories

Inventories of the Company mainly include raw materials work in progress goods in stock development products

and 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 in

stock 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. Consumable

biological assets without a stock are stated at historical cost at initial recognition and subsequently measured

at fair value when there is a stock. Changes in fair values shall be recognised as profit or loss in the current

period. The cost of self-planting self-cultivating consumable biological assets is the necessary expenses

directly 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 loss

for the current period.The cost of consumable biological assets shall at the time of harvest or disposal be carried forward at carrying

amount using the stock volume proportion method.SHANDONG CHENMING PAPER HOLDINGS LIMITED 33

INTERIM REPORT 2024I 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 net

realisable 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 incurred

upon completion estimated sales expenses and taxes and levies. The realisable value of inventories shall be

determined 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 impairment

according to inventory categories.At the balance sheet date in case the factors causing inventory impairment no longer exists the original provision

for 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. Associates

of 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 investment

acquired through a business combination involving enterprises under common control the investment cost shall

be the absorbing party’s share of the carrying amount of the owners’ equity under the consolidated financial

statements of the ultimate controlling party on the date of combination. For a long-term equity investment

acquired through a business combination involving enterprises not under common control the investment cost of

the 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 cash

payment the initial investment cost shall be the purchase cost actually paid; for a long-term equity investment

acquired by issuing equity securities the initial investment cost shall be the fair value of equity securities issued.

34 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 meet

the conditions of holding for sale investments in associates and joint ventures shall be accounted for using the

equity method.For a long-term equity investment accounted for using the cost method the cash dividends or profits declared by

the investees for distribution shall be recognised as investment gains and included in profit or loss for the current

period except the case of receiving the actual consideration paid for the investment or the declared but not yet

distributed 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 cost

exceeds the investor’s interest in the fair value of the investee’s identifiable net assets at the acquisition date no

adjustment shall be made to the investment cost of the long-term equity investment. Where the initial investment

cost is less than the investor’s interest in the fair value of the investee’s identifiable net assets at the acquisition

date adjustment shall be made to the carrying amount of the long-term equity investment and the difference shall

be charged to profit or loss for the current period.Under the equity method investment gain and other comprehensive income shall be recognised based on the

Company’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 of

long-term equity investment shall be reduced based on the Group’s share of profit or cash dividend distributed

by the investee. In respect of the other movement of net profit or loss other comprehensive income and profit

distribution of investee the carrying amount of long-term equity investment shall be adjusted and included in

the capital reserves (other capital reserves). The Group shall recognise its share of the investee’s net profits or

losses 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 the

Company.For additional equity investment made in order to obtain significant influence or common control over investee

without resulted in control the initial investment cost under the equity method shall be the aggregate of fair value

of previously held equity investment and additional investment cost on the date of transfer. For investments

in non-trading equity instruments that were previously classified as at fair value through other comprehensive

income the cumulative fair value changes associated with them that were previously included in other

comprehensive 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 equity

investment the remaining equity interest after disposal shall be accounted for according to the Accounting

Standard for Business Enterprises No. 22 – Recognition and measurement of Financial Instruments. The difference

between its fair value and carrying amount shall be included in profit or loss for the current period. In respect

of other comprehensive income recognised under previous equity investment using equity method it shall be

accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability by

investee at the time when equity method was ceased to be used. Movement of other owners’ equity related to the

previous 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 equity

interest which can apply common control or impose significant influence over the investee after disposal shall be

accounted for using equity method. Such remaining equity interest shall be treated as accounting for using equity

method since it is obtained and adjustment was made accordingly. For the remaining equity interest which cannot

apply common control or impose significant influence over the investee after disposal it shall be accounted for

using the Accounting Standard for Business Enterprises No. 22 – Recognition and measurement of Financial

Instruments. The difference between its fair value and carrying amount as at the date of losing control shall be

included in profit or loss for the current period.SHANDONG CHENMING PAPER HOLDINGS LIMITED 35

INTERIM REPORT 2024I 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 the

investee the net asset increase due to the capital increase of the investee attributable to the Company shall be

recognised according to the new shareholding ratio and the difference with the original carrying amount of the

long-term equity investment corresponding to the shareholding ratio reduction part that should be carried forward

shall be recorded in the profit or loss for the current period; and then it shall be adjusted according to the new

shareholding 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 unrealised

gain 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 internal

transactions between the Company and an investee is not eliminated to the extent that the loss is impairment loss

of 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 of

such arrangement must be decided by unanimously agreement from parties who share control. When determining

if there is any common control it should first be identified if the arrangement is controlled by all the participants

or the group consisting of the participants and then determined if the decision on the arranged activity can be

made only with the unanimous consent of the participants sharing the control. If all the participants or a group

of participants can only decide the relevant activities of certain arrangement through concerted action it can

be considered that all the participants or a group of participants share common control on the arrangement. If

there are two or more participant groups that can collectively control certain arrangement it does not constitute

common control. When determining if there is any common control the relevant protection rights will not be taken

into account.Significant influence is the power of the investor to participate in the financial and operating policy decisions of

an investee but to fail to control or joint control the formulation of such policies together with other parties. When

determining if there is any significant influence on the investee the influence of the voting shares of the investee

held by the investor directly and indirectly and the potential voting rights held by the investor and other parties

which 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 shares

of the investee it is generally considered to have significant influence on the investee unless there is concrete

evidence to prove that it cannot participate in the production and operation decision-making of the investee and

cannot pose significant influence in this situation. When the Company owns less than 20% of the voting shares

of the investee it is generally considered that it has not significantly influenced on the investee unless there

is concrete evidence to prove that it can participate in the production and operation decision – making of the

investee 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.

36 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 property

of 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 or

amortisation 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 subsequent

measurement please refer to Note V. 23.When an investment property is sold transferred retired or damaged the amount of proceeds on disposal of the

property net of the carrying amount and related tax and surcharges 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 of

services 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 and

the 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 probable

that 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 to

current profit or loss or included in the cost of the related assets in accordance with the beneficiary object when

incurred. 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 the

fixed asset reaches its expected usable state and stopped when the fixed asset is derecognised or classified as a

non-current asset held for sale. Without regard to the depreciation provision the Company determines the annual

depreciation rate by category estimated useful lives and estimated residual value of the fixed assets as below:

Year of Estimated residual Annual depreciation

Category depreciation value rate

Housing and building structure 20-40 5-10 2.25-4.75

Machinery and equipment 8-20 5-10 4.50-11.88

Transportation equipment 5-8 5-10 11.25-19.00

Electronic equipment and others 5 5-10 18.00-19.00

Where for the fixed assets for which impairment provision is made to determine the depreciation rate the

accumulated amount of the fixed asset impairment provision that has been made shall be deducted.SHANDONG CHENMING PAPER HOLDINGS LIMITED 37

INTERIM REPORT 2024I 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 useful

lives of the fixed asset shall be adjusted. When there is any difference between the estimated net residual value

estimate 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 arising

from using or after disposal. Where the fixed assets are sold transferred retired or damaged the income received

after disposal after deducting the carrying amount and related taxes are recognised in profit or loss for the current

period.The Company regards the fixed assets that have been replaced due to technological transformation or elimination

of outdated production capacity and have no subsequent plan for use but have not reached the retirement

standard as idle fixed assets. The depreciation method for idle fixed assets remains unchanged from before it

was idle.

17. Construction in progress

Construction in progress of the Company is recognised based on the actual construction cost including all necessary

expenditures incurred for construction projects capitalised borrowing costs for the construction in progress before it

has reached the working condition for its intended use and other related expenses during the construction period.A construction in progress is reclassified to fixed assets when it 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 a

period of time (usually three months) upon completion of construction. After the internal acceptance is completed during

the 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 including

construction 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 to

construction in progress. After the completion of the project the remaining materials for project are transferred to

inventory.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.

38 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 production

of a qualifying asset will be capitalised and included in the cost of relevant asset. Other borrowing costs will be

recognised as expenses when incurred according to the incurred amount and included in the profit or loss for the

current 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 or

producing the qualifying assets;

* the borrowing costs have been incurred; and

* the acquisition construction or production activity necessary for the asset to be ready for its intended use

or 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 asset

is ready for its intended use or sale shall be recognised as expenses when incurred according to the incurred

amount 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 or

production of a qualifying asset is interrupted abnormally when the interruption is for a continuous period of more

than 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 actual

interest expense incurred on that borrowing for the period less any bank interest earned from depositing the

borrowed funds before being used into banks or any investment income on the temporary investment of those

funds. Where funds are borrowed for general purpose the Company shall determine the amount of interest

to be capitalised on such borrowings by applying a capitalisation rate to the weighted average of the excess

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

borrowings.During the capitalisation period exchange differences on a specific purpose borrowing denominated in foreign

currency shall be capitalised. Exchange differences related to general-purpose borrowings denominated in foreign

currency shall be included in profit or loss for the current period.SHANDONG CHENMING PAPER HOLDINGS LIMITED 39

INTERIM REPORT 2024I 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. Bearer

biological assets are initially measured at cost. The cost of a planted or propagated bearer biological asset

includes the expenses directly attributable to the asset and necessarily incurred before the asset is ready for its

intended 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 the

asset 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 closure

stage.Depreciation of bearer biological assets is calculated using the straight-line method over the estimated useful life

of each biological asset less its residual value as follows:

Estimated residual Annual depreciation

Type of bearer biological assets Useful life (year) value rate

Tea tree 20 5%

The Company reviews the useful life and estimated net residual value of a bearer biological asset and the

depreciation method applied at least at each financial year-end. A change in the useful life or estimated net

residual value of a fixed asset or the depreciation method used shall be accounted for as a change in accounting

estimate.The difference between the disposal income of the sale loss death or damage of a bearer biological asset net of

its 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.

40 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 is

finite the intangible asset will be amortised over the estimated useful life using the amortisation method that can reflect

the 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. The

intangible assets with uncertain useful life will not be amortised.The amortisation methods for the intangible assets with finite useful life are as follows:

The basis for determining Method of

Type Useful life useful life amortisation Remark

Land use rights 50-70 Years of certificate Straight-line method

Software 5-10 Estimated years for Straight-line method

software replacement

Patents 5-20 Useful life of purchase Straight-line method

Certificates of third party right 3 Useful life of purchase Straight-line method

The Company reviews the useful life and amortisation method of the intangible assets with finite useful life at the end of

each year. If it is different from the previous estimates the original estimates will be adjusted and will be treated as a

change in accounting estimate.If it is estimated on the balance sheet date that certain intangible asset can no longer bring future economic benefit to

the company the carrying amount of the intangible asset will be entirely transferred into the profit or loss for the current

period.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 the

wages 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 other

expenses. Among them the wages of R&D staff are included in R&D expenses based on working hours of related

projects. Equipment production lines and sites shared between R&D activities and other production and operation

activities 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 the

development phase. All R&D expenses of the Company are included in the current profits and losses when incurred.SHANDONG CHENMING PAPER HOLDINGS LIMITED 41

INTERIM REPORT 2024I 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 on

investment 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 any

evidence indicating that an asset may be impaired recoverable amount shall be estimated for impairment test. Goodwill

arising from business combinations intangible assets with an indefinite useful life and intangible assets not ready for

use 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 the

future cash flows expected to be derived from the asset. The Company estimates the recoverable amount of an

individual asset. If it is not possible to estimate the recoverable amount of the individual asset the Company shall

determine the recoverable amount of the asset group to which the asset belongs. The determination of an asset group

is based on whether major cash inflows generated by the asset group are independent of the cash inflows from other

assets or asset groups.When the recoverable amount of an asset or an asset group is less than its carrying amount the carrying amount is

reduced to its recoverable amount. The reduction amount is charged to profit or loss and an impairment provision is

made accordingly.For the purpose of impairment test of goodwill the carrying amount of goodwill acquired in a business combination is

allocated to the relevant asset groups on a reasonable basis from the acquisition date; where it is difficult to allocate

to the related asset groups it is allocated to the combination of related asset groups. The related asset groups or

combination of asset groups are those which can benefit from the synergies of the business combination and are not

larger 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 goodwill

may 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 carried

out on the asset group or combination of asset groups containing goodwill by comparing its carrying amount with its

recoverable amount. If the recoverable amount is lower than the carrying amount an impairment loss is recognised for

goodwill.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 evenly

amortised over the estimated benefit period. For the long-term prepaid expense that cannot benefit the subsequent

accounting 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 has

received consideration (or an amount of consideration is due) from the customer. If the customer has already paid

the contract consideration before the Company transfers goods to the customer or the Company has obtained the

unconditional collection right the Company will recognise such amount received or receivable as contract liabilities

at earlier of the actual payment by the customer or the amount payable becoming due. Contract assets and contract

liabilities under the same contract are presented on a net basis and contract assets and contract liabilities under

different contracts are not offset.

42 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 services

rendered by employees or for the termination of employment. Employee benefits include short-term staff

remuneration post-employment benefits termination benefits and other long-term employee benefits. Employee

benefits include benefits provided to employees’ spouses children other dependants survivors of the deceased

employees or other beneficiaries.Employee benefits are presented as “employee benefits payable” and “long-term employee benefits payable” in

the balance sheet respectively according to liquidity.

(2) Short-term staff remuneration

Employee wages or salaries actually incurred bonuses and social insurance contributions such as medical

insurance work injury insurance maternity insurance and housing fund contributed at the applicable benchmarks

and rates are recognised as a liability as the employees provide services with a corresponding charge to profit or

loss 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 defined

contribution plan is a post-employment benefit plan under which the Company pays fixed contributions

into a separate fund and the Company has no further obligations for payment. A defined benefit plan is a

post-employment benefit plan other than a defined contribution plan.Defined contribution plans

Defined contribution plans include basic pension insurance unemployment insurance and enterprise annuity plan (if

any).During the accounting period in which an employee provides service the amount payable calculated according to

the defined contribution plan is recognised as a liability and included in the profit or loss for the current period or

the cost of relevant assets.Defined benefit plans

For defined benefit plans the actuarial valuation is carried out by an independent actuary on the annual balance

sheet date and the cost of providing benefits is determined by the expected cumulative benefit unit method. The

cost 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 plans

arising from the service provided by staff in the current period; the past service cost refers to the increase or

decrease in the present value of obligations of defined benefit plans related to the service of the staff in the

previous 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 assets

under the plans interest expense arising from the obligations of defined benefit plans and interest affected

by 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 other

comprehensive 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 income

shall be transferred to retained profit within the scope of equity.SHANDONG CHENMING PAPER HOLDINGS LIMITED 43

INTERIM REPORT 2024I 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 from

termination benefits are recognised in profit or loss for the current period at the earlier of the following dates: when

the Company cannot revoke unilaterally compensation for dismissal due to the cancellation of labour relationship

plans and employee redundant proposals; the Company recognises cost and expenses related to payment of

compensation for dismissal and restructuring.For the early retirement plans economic compensations before the actual retirement date were classified as

termination benefits. During the period from the date of cease of render of services to the actual retirement

date relevant wages and contribution to social insurance for the employees proposed to be paid are recognised

in profit or loss on a one-off basis. Economic compensation after the official retirement date such as normal

pension 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 defined

contribution plans are accounted for in accordance with the relevant provisions relating to defined contribution

plans 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 be

included 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 as

provisions:

(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 performance

of the current obligation after taking into account relevant risks uncertainties time value of money and other

factors pertinent to the contingencies. If the time value of money has significant influence the best estimates shall

be determined after discounting the relevant future cash outflow. The Company reviews the carrying amount of the

provisions 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 amount

recognised shall not be more than the carrying amount of provisions.

44 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 fair

value is determined at the quoted price in the active market. For options and other equity instruments with no

active market option pricing model shall be used to estimate the fair value of the equity instruments. The following

factors shall be taken into account using option pricing models: A. the exercise price of the option; B. the validity

period 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 to

vest is revised based on the best estimate made by the Company according to the latest available subsequent

information as to changes in the number of employees with exercisable rights. On the vesting date the final

estimated number of equity instruments expected to vest should equal the actual number of equity instruments

expected 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 to

employees. For those may immediately vest after the grant the fair value of equity instrument at the grant date

shall 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 performance

conditions are met on each balance sheet date within the vesting period the services obtained in the current

period shall based on the best estimate of the number of vested equity instruments be included in the relevant

costs or expenses and the capital reserve at the fair value of the equity instrument at the grant date. After the

vesting period relevant costs or expenses and total shareholders’ equity which have been recognised will not be

adjusted.Cash-settled share-based payment shall be measured in accordance with the fair value of liability calculated

and recognised based on the shares or other equity instruments undertaken by the Company. For those may

immediately vest after the grant the fair value of the liability undertaken by the Company shall on the date of the

grant be included in the relevant costs or expenses and the liabilities shall be increased accordingly. If the right

may not be exercised until the vesting period comes to an end or until the specified performance conditions are

met on each balance sheet date within the vesting period the services obtained in the current period shall based

on the best estimate of the information about the exercisable right be included in the relevant costs or expenses

and the corresponding liabilities at the fair value of the liability undertaken by the Company. For each of the

balance sheet date and settlement date before the settlement of the relevant liabilities fair value of the liabilities

shall be remeasured and the changes will be included in the profit or loss for the current period.SHANDONG CHENMING PAPER HOLDINGS LIMITED 45

INTERIM REPORT 2024I 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 of

the equity instruments granted corresponding recognition of service increase in accordance with the increase in

the 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 modified

date. If the modification reduces the total fair value of shares paid or not conductive to the use of other employees

share-based payment plans to modify the terms and conditions of service it will continue to be accounted for in

the accounting treatment as if the change had not occurred unless the Company cancelled some or all of the

equity instruments granted.During the vesting period if the cancelled equity instruments (except for failure to meet the conditions of the

non-market vesting conditions) granted by the Company to cancel the equity instruments granted amount

treated as accelerated vesting of the remaining period should be recognised immediately in profit or loss while

recognising capital reserves. If employees or other parties can choose to meet non-vesting conditions but they are

not 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 incentive

participants shall subscribe for the shares first. If the unlocking conditions stipulated in the equity incentive plan

cannot be fulfilled subsequently the Company repurchase the shares at the predetermined price. If the registration

and other capital increase procedures for the restricted shares issued to employees are completed in accordance

with relevant regulations the Company recognises share capital and capital reserve (or capital premium) based on

the subscription money received from the employees on the grant date; and recognises treasury shares and other

payables for repurchase obligation.

46 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 equity

instruments on the basis of the substance of the contractual arrangements and the economic nature not only

its legal form together with the definition of financial asset financial liability and equity instruments on initial

recognition.

(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 the

financial instrument standards; thereafter interest or dividends are accrued on each balance sheet date and

accounted for in accordance with relevant specific ASBEs i.e. to determine the accounting treatment for interest

expenditure 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 are

treated as profit distribution of the Company and their repurchases and cancellations are treated as changes in

equity; for financial instruments classified as financial liabilities their interest expenses or dividend distribution are

in principle accounted for with reference to borrowing costs and the gains or losses arising from their repurchases

or 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 financial

instruments if such financial instruments are classified as debt instruments and measured at amortised cost they

are included in the initial measured amount of the instruments issued; if such financial instruments are classified

as equity instruments they are deducted from equity.SHANDONG CHENMING PAPER HOLDINGS LIMITED 47

INTERIM REPORT 2024I 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 the

customer obtains control of the relevant goods or services.Where a contract has two or more performance obligations the Company allocates the transaction price to each

performance obligation based on the percentage of respective unit price of goods or services guaranteed by

each performance obligation and recognises as revenue based on the transaction price that is allocated to each

performance obligation.If one of the following conditions is fulfilled the Company performs its performance obligation within a certain

period; otherwise it performs its performance obligation at a point of time:

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

Company performs its obligations under the contract;

* when the customer is able to control the goods in progress in the course of performance by the Company

under the contract;

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

right to payment for performance completed to date during the whole contract term.For performance obligations performed within a certain period the Company recognises revenue by measuring

the progress towards complete of that performance obligation within that certain period. When the progress

of performance cannot be reasonably determined if the costs incurred by the Company are expected to be

compensated the revenue shall be recognised at the amount of costs incurred until the progress of performance

can be reasonably determined.For performance obligation performed at a point of time the Company recognises revenue at the point of time at

which the customer obtains control of relevant goods or services. To determine whether a customer has obtained

control 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.

48 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 and

property services and provision of financial leasing and factoring services.Sales of goods

The Company produces and sells machine-made paper and raw materials electricity and steam construction

materials 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 transferred

after the Company has delivered the goods (other than electricity and steam) sold to the location as specified in

the 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 certain

period. For sales of electricity the Company recognises revenue from sales of electricity based on the quantity of

electricity delivered to customers every month at a price agreed in the contract. For sales of steam the Company

recognises revenue from sales of steam based on the amount of steam delivered to customers every month at a

price agreed in the contract.The credit periods granted by the Company to customers in various industries are consistent with the practices of

various industries therefore there is no significant financing component.The Company provides product quality assurance for the sales of products and recognises corresponding

provisions. The Company does not provide any additional services or additional quality assurance so the product

quality assurance does not constitute a separate fulfilment obligation.The Company’s cooperation model with distributors is outright sales and the recognition of sales revenue under

the distribution model is consistent with the direct sales model.Certain contracts between the Company and its customers contain arrangements on sales rebates which will give

rise to variable consideration. Where a contract contains variable consideration the Company determines the best

estimates on the variable consideration based on expected values or the most probable amount provided that

transaction prices including variable consideration shall not exceed the cumulative amount of recognised revenue

upon 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 cumulative

amount of recognised revenue in connection with which a significant reversal is highly unlikely. The Company

recognises the liabilities according to the expected amount of refund and recognises the carrying amount of the

goods returned at the time of transfer deducting the estimated cost of recovering the goods as an asset (including

the loss of the value of the returned goods).SHANDONG CHENMING PAPER HOLDINGS LIMITED 49

INTERIM REPORT 2024I 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 services

The Company provides hotel and property services to external parties. Since the customers obtain and consume

the economic benefits brought by the Company’s performance of the contract while the Company performs the

contract the Company recognises revenue according to the progress of the contract performance. Since the

performance progress occurs evenly the Company recognises revenue by amortising on a straight – line basis

over the service period.Provision of financial leasing and factoring services

The Company recognises revenue from external financial leasing and factoring services according to the effective

interest rate.For assets that have not experienced credit impairment the Company determines its interest income based on

the amount of the book balance of the financial asset (i.e. without considering the impact of impairment) multiplied

by 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 in

subsequent periods the Company shall in the subsequent periods when impairment occurs determine its

income based on the amount of the amortised cost of the financial asset (i.e. the book balance minus the accrued

impairment) multiplied by the effective interest rate (the effective interest rate determined at the time of initial

recognition 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 initial

recognition determines its income based on the amount of the amortised cost of the financial asset multiplied

by the credit-adjusted effective interest rate (i.e. the interest rate at which the projected future cash flows after

impairment are discounted to the amortised cost at the time of purchase or origination).

50 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 contract

with a customer.Incremental costs of obtaining a contract are those costs that the Company incurs to obtain a contract with a customer

that it would not have incurred if the contract had not been obtained e.g. sales commission. The Company recognises

the incremental costs of obtaining a contract with a customer as an asset if it expects to recover those costs. Other

costs of obtaining a contract other than incremental costs that are expected to be recovered are recognised in profit or

loss 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 Company

recognises 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 direct

labour direct materials allocations of overheads (or similar costs) costs that are explicitly chargeable to the

customer 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 a

contract (the “assets related to contract costs”) are amortised on a systematic basis that is consistent with the transfer

to the customer of the goods or services to which the assets relate and recognised in profit or loss for the current

period. 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 related

to 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.SHANDONG CHENMING PAPER HOLDINGS LIMITED 51

INTERIM REPORT 2024I 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 conditions

attaching 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 a

government grant is in the form of non-monetary asset it is measured at fair value; if the fair value cannot be obtained in

a reliable way it is measured at the nominal amount of RMB1.Government grants obtained for acquisition or construction of long-term assets or other forms of long-term asset

formation are classified as government grants related to assets while the remaining government grants are classified as

government grants related to revenue.Regarding the government grant not clearly defined in the official documents and can form long-term assets the part

of government grant which can be referred to the value of the assets is classified as government grant related to assets

and 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 loss

over the useful life of the asset in a reasonable and systematic manner. For a government grant related to revenue if

the grant is a compensation for related costs expenses or losses incurred the grant shall be recognised in profit or

loss for the current period or used to offset related costs; if the grant is a compensation for related costs expenses or

losses to be incurred in subsequent periods the grant shall be recognised as deferred income and recognised in profit

or loss over the periods in which the related costs expenses or losses are recognised or used to offset related costs. A

government grant measured at nominal amount is directly included in profit or loss for the current period. The Company

adopts 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 on

the essence of economic business; otherwise recognised in non-operating income or used to offset non-operating

expenses.For the repayment of a government grant already recognised if the carrying amount of relevant assets was written off

at initial recognition the carrying amount of the assets shall be adjusted; if there is any related deferred income the

repayment shall be offset against the carrying amount of the deferred income and any excess shall be recognised in

profit or loss for the current period; otherwise the repayment shall be recognised immediately in profit or loss for the

current period.

52 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 or

loss for the current period as income tax expenses except for deferred tax related to transactions or events that are

directly recognised in owners’ equity which are recognised in owners’ equity and deferred tax arising from a business

combination 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 base

at the balance sheet date of the Company shall be recognised as deferred income tax using the balance sheet liability

method.All the taxable temporary differences are recognised as deferred income tax liabilities except for those incurred in the

following 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 transaction

occurs (other than a single transaction that the initially recognised assets and liabilities result in an equal amount

of 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 the

temporary 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 profits

will 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 result

in 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 is

probable that the temporary difference will reverse in the foreseeable future and it is probable that taxable profits

will 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 tax

rates that are expected to apply to the period when the asset is realised or the liability is settled and their tax effect is

reflected accordingly.At the balance sheet date the Company reviews the carrying amount of a deferred income tax asset. If it is probable

that sufficient taxable profits will not be available in future periods to allow the benefit of the deferred tax asset to be

utilised the carrying amount of the deferred tax asset is reduced. Any such reduction in amount is reversed when it

becomes probable that sufficient taxable profits will be available.SHANDONG CHENMING PAPER HOLDINGS LIMITED 53

INTERIM REPORT 2024I 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 net

amount 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 in

the contract has the right to obtain substantially all of the economic benefits from use of the identified asset

throughout the period of use and has the right to direct the use of the identified asset throughout the period of

use. If a contract conveys the right to control the use of an identified asset and multiple identified assets for a

period 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 beginning

date of the lease using the interest rate implicit in the lease. Where the interest rate implicit in the lease cannot be

determined the incremental borrowing rate is used as the discount rate. Lease payments include fixed payments

and in-substance fixed payments less any lease incentives receivable; variable lease payments that are based

on an index or a rate; the exercise price of a purchase option if the lessee is reasonably certain to exercise

that option; payments for terminating the lease if the lease term reflects the lessee exercising that option of

terminating; and amounts expected to be payable by the lessee under residual value guarantees. Subsequently

the interest expense on the lease liability for each period during the lease term is calculated using a constant

periodic rate of interest and is recognised in profit or loss for the current period. Variable lease payments not

included in the measurement of lease liabilities are recognised in profit or loss for the period in which they actually

arise.

54 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

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

34. Lease (Cont’d)

(2) The Company as lessee (Cont’d)

Short-term lease

Short-term leases refer to leases with a lease term of less than 12 months from the commencement date except

for 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 a

straight-line basis over the lease term.For short-term leases the Company chooses to adopt the above simplified approach for the following types of

assets that meet the conditions of short-term lease according to the classification of leased assets.Low-value equipment

Transportation vehicles

Low-value asset lease

A low-value asset lease is a lease that the value of a single leased asset is below RMB40000 when it is a new

asset.Lease payments on low-value asset leases are recognised on a straight-line basis over the lease term and either

included 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 specific

circumstances of each lease.Lease modification

The Company accounts for a lease modification as a separate lease when the modification occurs and the

following conditions are met: * the lease modification expands the scope of lease by adding the right to use

one or more of the leased assets; and * the increase in consideration is equivalent to the separate price for the

expanded 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 remeasures

the lease liability based on the present value of the lease payments after the modification and the revised discount

rate.If a lease modification results in a reduction in the scope of the lease or a shortening of the lease term the

Company reduces the carrying amount of the right-of-use asset accordingly and includes in the profit or loss for

the 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 carrying

amount of the right-of-use asset accordingly.SHANDONG CHENMING PAPER HOLDINGS LIMITED 55

INTERIM REPORT 2024I 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 transfer

substantially all the risks and rewards of asset ownership to the lessee. All leases other than financial leases are

classified as operating leases.Finance leases

Under finance leases the Company accounts for finance lease receivables at the beginning of the lease term at

the net lease investment which is the sum of the unsecured residual value and the present value of the lease

receipts 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 on

a fixed periodic interest rate. Variable lease payments acquired by the Company as lessor that are not included

in the net measurement of lease investments are included in profit or loss for the period when they are actually

incurred.Derecognition and impairment of finance lease receivables are accounted for in accordance with the requirements

under the Accounting Standard for Business Enterprises No. 22 – Recognition and Measurement of Financial

Instruments 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 a

straight-line basis over the lease term. Lease payments under operating leases are recognised in profit or loss on

a straight-line basis over the lease term. Initial direct costs incurred in relation to operating leases are capitalised

and amortised over the lease term on the same basis as rental income and recognised in profit or loss for the

current period. The variable lease payments obtained in relation to operating leases that are not included in the

lease 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 the

modification and the amount of lease receipts received in advance or receivable in respect of the lease prior to the

modification 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 and

the following conditions are met: * the modification expands the scope of lease by adding the right to use one

or more of the leased assets; and * the increase in consideration is equivalent to the separate price for the

expanded 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 the

modified lease in the following circumstances: * If the modification takes effect on the lease commencement

date the lease will be classified as an operating lease the Company will account for it as a new lease from the

effective date of the lease modification and use the net lease investment before the effective date of the lease

modification; * If the modification takes effect on the lease commencement date the lease will be classified as a

finance lease and the Company will conduct accounting treatment in accordance with the Accounting Standards

for Business Enterprises No. 22 – Recognition and Measurement of Financial Instruments on modifying or

renegotiating contracts.

56 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 assets

arising from the head lease. If the head lease is a short-term lease for which the Company adopts a simplified

approach 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 leaseback

transaction 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 assets

related to right of use obtained upon leaseback and only recognise relevant profit or loss for the right transferred

to the lessor. The lessor shall account for the purchase of assets in accordance with other applicable ASBEs and

account 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 to

recognise the transferred assets while recognising a financial liability equal to the transfer income and account

for such liability according to the Accounting Standard for Business Enterprises No. 22 – Recognition and

Measurement of Financial Instruments; or not to recognise the transferred assets but recognise a financial asset

equal to the transfer income and account for such asset according to the Accounting Standard for Business

Enterprises 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 the

amount of the initial measurement of lease liability; lease payments made at or before the inception of the lease

less any lease incentives enjoyed; initial direct costs incurred by the Company as lessee; costs to be incurred in

dismantling and removing the underlying assets restoring the site on which it is located or restoring the underlying

asset to the condition required by the terms and conditions of the lease incurred by the Company as lessee. As

a lessee the Company recognises and measures the costs of dismantling and restoration in accordance with the

Accounting Standard for Business Enterprises No. 13 – Contingencies. Subsequently the lease liability is adjusted

for 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 reasonably

certain to obtain ownership of the leased asset at the end of the lease term such asset is depreciated over the

remaining useful life of the leased asset. Where ownership of the lease assets during the lease term cannot be

reasonably determined right-of-use assets are depreciated over the lease term or the remainder of useful lives of

the lease assets whichever is shorter.

(3) For the methods of impairment test and impairment provision of right-of-use assets please refer to Note V. 23.

SHANDONG CHENMING PAPER HOLDINGS LIMITED 57

INTERIM REPORT 2024I 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 revenue

of the power plant in the previous year and the prescribed percentages. The specific provisions are as follows: * if

the revenue of the previous year did not exceed RMB10 million provisions would be made at 3%; * if the revenue of

the 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 RMB1000 million provisions would

be made at 1%; * if the revenue of the previous year exceeded RMB1000 million but did not exceed RMB5000

million provisions would be made at 0.8%; * if the revenue of the previous year exceeded RMB5000 million but did

not exceed RMB10000 million provisions would be made at 0.6%; * if the revenue of the previous year exceeded

RMB10000 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 current

period 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 assets

when the status of the assets is ready for intended use. They are then offset against specific reserve based on the

amount included in fixed assets while corresponding amount is recognised in accumulated depreciation. Such fixed

assets 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 share

repurchase as cost of treasury shares in the treasury share account. Considerations and transaction fee incurred from

the repurchase of shares shall lead to the elimination of owners’ equity and does not recognise profit or loss when

shares 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 as

capital reserve when the treasury shares are transferred if the capital reserve is not sufficient to be offset the excess

amount 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 difference

between 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 and

retained profit.

58 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 uncertainty

about the execution process and results of the debt restructuring 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 derecognise the relevant

assets and the debts paid off when they meet the conditions for derecognition and the difference between the

book value of the debts paid off and the book value of the transferred assets shall be included in the current profit

and loss.If the debt is converted into equity instruments for debt restructuring the Company shall derecognise the debts

paid off when they meet the conditions for derecognition. When the Company initially recognises an equity

instrument it is measured based on the fair value of the equity instrument. If the fair value of the equity instrument

cannot be measured reliably it is measured based on the fair value of the debt paid off. The difference between

the book value of the debts paid off and the recognised amount of the equity instrument shall be included in the

current profit and loss.When a debt restructuring involves the modification of other terms of a debt the Company shall recognise and

measure 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 Enterprises

No. 37 – Presentation of Financial Instruments.When a debt is settled by multiple assets or combination of various methods in a debt restructuring the Company

shall recognise and measure the equity instruments and restructured debts in accordance with the aforementioned

methods and the difference between the book value of the debts paid off and the sum of the book value of the

transferred assets and the recognised amount of the equity instruments and restructured debts shall be included

in the current profit and loss.SHANDONG CHENMING PAPER HOLDINGS LIMITED 59

INTERIM REPORT 2024I 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 debt

receivable expire. Specifically when the uncertainty about the execution process and results of the debt

restructuring 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 assets

other than the transferred financial assets at cost. In particular the cost of inventories includes the fair value of the

debt 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 in

associates 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 directly

attributable expenditure including taxes; the cost of fixed assets includes the fair value of the debt receivable

and 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 of

intangible assets includes the fair value of the debt receivable and any directly attributable expenditure including

taxes for bringing the assets to the status for intended use. The difference between the fair value and the book

value 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 joint

ventures or associates the Company shall measure the equity investment based on the sum of the fair value of

debt receivable and any directly attributable taxes and other costs of the investment. The difference between the

fair 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 and

measures the restructured debt receivable in accordance with the Accounting Standards for Business Enterprises

No. 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 Company

first recognises and measures the financial assets received and restructured debt receivable in accordance

with the Accounting Standards for Business Enterprises No. 22 – Recognition and Measurement of Financial

Instruments and then allocates the net value which is the fair value of the debt receivable deducted by the

recognised amount of financial assets received and restructured debt receivable to the costs of non – financial

assets received based on their relative fair value. The difference between the fair value and the book value of the

debt receivable is included in the current profit and loss.

60 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 and

the 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 the

carrying amount of assets and liabilities for the next financial year are listed as follows:

Classification of financial assets

Significant judgements involved in determining the classification of financial assets include the analysis of business

models and contractual cash flow characteristics.Factors considered by the Company in determining the business model for a group of financial assets include how the

asset’s performance is evaluated and reported to key management personnel how risks are assessed and managed

and how the relevant management personnel are compensated.When the Company assesses whether the contractual cash flows of the financial assets are consistent with basic

lending arrangements the main judgements are described as below: whether the principal amount may change over

the life of the financial asset (for example if there are repayments of principal); whether the interest includes only

consideration for the time value of money credit risk other basic lending risks and a profit margin and cost. For

example whether the amount repaid in advance reflects only the outstanding principal and interest thereon as well as

reasonable compensation paid for early termination of the contract.Measurement of the ECLs of accounts receivable

The Company calculates the ECLs of accounts receivable using the exposure to default risk and ECL rate of accounts

receivable and determines the ECL rate based on default probability and default loss rate. When determining the ECL

rate the Company adjusts its historical data by referring to information such as historical credit loss experience as well

as current situation and forward-looking information. When considering the forward-looking information indicators used

by the Company include the risk of economic downturn external market environment technology environment and

changes in customers. The assumptions relating to the ECL calculation are monitored and reviewed by the Company on

a regularly basis.Measurement of past due credit losses on finance lease receivables

The Company calculates the ECLs of accounts receivable using the exposure to default risk and ECL rate of accounts

receivable and determines the ECL rate based on default probability and default loss rate. When determining the ECL

rate the Company takes into account the current status and repayment ability of the counterparty while considering the

value of collateral guarantees and other credit enhancement measures related to the lease receivables.Deferred income tax assets

Deferred income tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit

will be available against which the losses can be utilised. Significant management judgement is required to determine

the amount of deferred income tax assets that can be recognised based upon the likely timing and level of future

taxable profits together with future tax planning strategies.SHANDONG CHENMING PAPER HOLDINGS LIMITED 61

INTERIM REPORT 2024I Financial Report

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

39. Critical accounting judgments and estimates (Cont’d)

Impairment of goodwill

The Company assesses the impairment of goodwill at least annually which requires estimates of the use value of asset

groups allocated with goodwill. When estimating the use value the Company is required to estimate the future cash

flows from such asset groups while selecting the appropriate discount rate to calculate the present value of future cash

flows.Impairment of inventories

On the balance sheet date the Company determines the net realisable value of its inventories based on the estimated

selling prices of the inventories less costs estimated to be incurred upon completion estimated selling expenses and

related taxes. The realisable value of inventories shall be determined on the basis of definite evidence purpose of

holding the inventories and effect of after-balance – sheet-date events. If the net realisable value is below the cost of

inventories a provision for inventory impairment is made.Impairment of fixed assets and long-term equity investments

The Company assesses the impairment of fixed assets and long-term equity investments at least annually. When any

event or change in circumstances indicates that the carrying amount may not be recoverable the carrying amount of

such project is reviewed for impairment. If the carrying amount of an asset exceeds its recoverable amount impairment

loss is recognised for the difference. The recoverable amount is determined as the higher of the asset’s fair value less

costs of disposal and the present value of the asset’s estimated future cash flows. A number of assumptions are made

in estimating the recoverable amount of assets including future cash flows and discount rates relating to non-current

assets. If future events differ from these assumptions the recoverable amount shall be revised which may have an

impact 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

62 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

VI. Taxation

1. Main tax types and tax rates

Tax type Tax base Tax rate

Value added tax (VAT) VAT payable (VAT payable is calculated 13/9/6

by multiplying taxable sales amount

by the applicable tax rate less current

deductible input VAT)

Property tax Rental income and property price 1.2/12

Urban maintenance and construction tax Actual turnover tax paid 7

Enterprise income tax (EIT) Taxable income 25

Disclosure of taxable entities subject to different EIT tax rates

Name of taxable entity EIT tax rate

Shandong Chenming Paper Holdings Limited 15

Shouguang Meilun Paper Co. Ltd. 15

Jilin Chenming Paper Co. Ltd. 15

Jiangxi Chenming Paper Co. Ltd. 15

Zhanjiang Chenming Pulp & Paper Co. Ltd. 15

Huanggang Chenming Pulp & Paper Co. Ltd. 15

Shouguang Xinyuan Coal Co. Ltd. 20

Shouguang Chenming Papermaking Machine Co. Ltd. 20

Shouguang Wei Yuan Logistics Company Limited 20

Shouguang Shun Da Customs Declaration Co. Ltd. 20

Zhanjiang Chenming Arboriculture Development Co. Ltd. Exempt from EIT

Nanchang Chenming Arboriculture Development Co. Ltd Exempt from EIT

Chenming Arboriculture Co. Ltd. Exempt from EIT

Yangjiang 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 certification

number of GR202137005666. Pursuant to the requirements under the Law of the People’s Republic of China on

Enterprise Income Tax and the relevant policies the Company is subject to a corporate income tax rate of 15% of

taxable 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 enterprise

certificate with a certification number of GR202137005468 on 15 December 2021. Pursuant to the requirements

under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies Shouguang

Meilun is subject to an enterprise income tax rate of 15% of taxable income and is entitled to the preferential

treatment from 2021 to 2023.SHANDONG CHENMING PAPER HOLDINGS LIMITED 63

INTERIM REPORT 2024I 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 enterprise

certificate with a certification number of GR202222000414 on 29 November 2022. Pursuant to the requirements

under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies Jilin

Chenming is subject to an enterprise income tax rate of 15% of taxable income and is entitled to the preferential

treatment from 2022 to 2024.Jiangxi Chenming Paper Co. Ltd. a subsidiary of the Company received a high and new technology enterprise

certificate with a certification number of GR202236000018 on 4 November 2022. Pursuant to the requirements

under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies Jiangxi

Chenming is subject to an enterprise income tax rate of 15% of taxable income and is entitled to the preferential

treatment from 2022 to 2024.Zhanjiang Chenming Pulp & Paper Co. Ltd. a subsidiary of the Company received a high and new technology

enterprise certificate with a certification number of GR202144001212 on 20 December 2021. Pursuant to the

requirements 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 the

preferential treatment from 2021 to 2023.Huanggang Chenming Pulp & Paper Co. Ltd. a subsidiary of the Company received a high and new technology

enterprise certificate with a certification number of GR202342003128 on 5 December 2023. Pursuant to the

requirements 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 the

preferential 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 and

Rule 86(1) of regulations for the Implementation of Law of the People’s Republic of China on Enterprise Income

Tax Zhanjiang Chenming Arboriculture Development Co. Ltd. Yangjiang Chenming Arboriculture Development

Co. Ltd. Nanchang Chenming Arboriculture Development Co. Ltd. and Chenming Arboriculture Co. Ltd. which

are 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 Wei

Yuan Logistics Company Limited and Shouguang Shun Da Customs Declaration Co Ltd. which are subsidiaries

of the Company are small and micro enterprises. Pursuant to the Announcement of the Ministry of Finance

and the State Administration of Taxation on Further Implementation of Preferential Income Tax Policies for

Small and Micro Enterprises (Cai Shui [2022] No. 13) and the Announcement of the Ministry of Finance and the

State Administration of Taxation on the Implementation of Preferential Income Tax Policies for Small and Micro

Enterprises and Individual Industrial and Commercial Business (Cai Shui [2023] No. 6) the annual taxable income

of a small low-profit enterprise that is less than RMB3 million shall be included in its taxable income at a reduced

rate 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 Zhanjiang

Chenming Arboriculture Development Co. Ltd. Yangjiang Chenming Arboriculture Development Co. Ltd.Nanchang Chenming Arboriculture Development Co. Ltd. and Chenming Arboriculture Co. Ltd. which are

subsidiaries of the Company are exempt from VAT and have completed the filings for VAT reduction for

exemption from VAT.

64 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of the Consolidated Financial Statements

1. Monetary funds

Unit: RMB

Item Closing balance Opening balance

Treasury cash 4129836.09 3674805.36

Bank deposit 798700248.46 760558937.25

Other monetary funds 10543555422.05 11321241125.05

Interest accrued on deposits 39624494.95 39357963.64

Total 11386010001.55 12124832831.30

Of which: Total deposits in overseas banks 214470161.75 261470228.68

Other explanations:

* Other monetary funds of RMB7492911199.09 were the guarantee deposit for the application for acceptance bills

by the Company;

* Other monetary funds of RMB2598772139.21 were the guarantee deposit for the application for letter of credit

with the banks by the Company;

* Other monetary funds of RMB408529872.18 were the guarantee deposit for the application for loans with the

banks by the Company;

* Other monetary funds of RMB33260000.00 were the Company’s statutory reserve deposits with the People’s

Bank of China;

* Other monetary funds of RMB10082211.57 were locked-up due to reasons such as litigations or being unused

for a long time resulting in restriction on the use of that account’s balance.

2. Financial assets held for trading

Unit: RMB

Item Closing balance Opening balance

Financial assets measured at fair value through profit or loss 39197419.88 46294291.71

Of which: Investment in equity instruments 39197419.88 46294291.71

Total 39197419.88 46294291.71

Explanation: Financial assets held for trading were shares of China Bohai Bank subscribed by the Company.SHANDONG CHENMING PAPER HOLDINGS LIMITED 65

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of the Consolidated Financial Statements (Cont’d)

3. Bills receivable

(1) Bills receivable by category

Unit: RMB

Item Closing balance Opening balance

Commercial acceptance bills 674962254.15 411600000.00

Total 674962254.15 411600000.00

(2) Disclosure by bad debt provision method

Unit: RMB

Closing balance Opening balance

Book balance Bad debts provision Book balance Bad debts provision

Provision Provision

Category Amount Percentage Amount percentage Carrying amount Amount Percentage Amount percentage Carrying amount

Bills receivable assessed

collectively for bad debt provision 674962254.15 100.00% 674962254.15 411600000.00 100.00% 411600000.00

Including:

Commercial acceptance bills 674962254.15 100.00% 674962254.15 411600000.00 100.00% 411600000.00

Total 674962254.15 100.00% 674962254.15 411600000.00 100.00% 411600000.00

Name of category being assessed collectively for bad debt provision: Commercial acceptance bills

Unit: RMB

Closing balance

Bad debts Provision

Name Book balance provision percentage

Commercial acceptance bills 674962254.15

Total 674962254.15

66 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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

Amount Amount not yet

derecognised as derecognised as

at the end at the end

Item of the period of the period

Commercial acceptance bills 77408961.64

Total 77408961.64

4. Accounts receivable

(1) Disclosure by ageing

Unit: RMB

Closing book Opening book

Ageing balance balance

Within 1 year (including 1 year) 2018934956.91 1561046809.05

1 to 2 years 231466242.34 385112389.04

2 to 3 years 907544853.12 722669952.03

Over 3 years 407392203.57 408747914.19

Subtotal 3565338255.94 3077577064.31

Bad debts provision 598117268.90 549070004.48

Total 2967220987.04 2528507059.83

The basis used by the ageing analysis of the accounts receivable of the Company: the ageing of accounts

receivable is the length of time of the Company’s outstanding accounts receivable based on invoice date. The

closing balance is recognised one by one from the end of the period onwards until the amounts add up to the

balance. It is also broken up by intervals of within 1 year 1-2 years 2-3 years and over 3 years.SHANDONG CHENMING PAPER HOLDINGS LIMITED 67

INTERIM REPORT 2024I 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

Closing balance Opening balance

Book balance Bad debts provision Book balance Bad debts provision

Provision Provision

Percentage percentage Percentage percentage

Category Amount (%) Amount (%) Carrying amount Amount (%) Amount (%) Carrying amount

Accounts receivable assessed

individually for bad debt provision 200147048.86 5.61 192205340.86 96.03 7941708.00 201074254.68 6.53 193132546.68 96.05 7941708.00

Accounts receivable assessed

collectively for bad debt provision 3365191207.08 94.39 405911928.04 12.06 2959279279.04 2876502809.63 93.47 355937457.80 12.37 2520565351.83

Including:

Due from related party customers 4454075.91 0.12 982547.42 22.06 3471528.49 2359.03 0.00 23.18 0.98 2335.85

Due from non-related party

customers 2028298177.39 56.89 84942867.56 4.19 1943355309.83 1545540409.94 50.22 81008019.20 5.24 1464532390.74

Factoring receivables 1332438953.78 37.37 319986513.06 24.02 1012452440.72 1330960040.66 43.25 274929415.42 20.66 1056030625.24

Total 3565338255.94 100.00 598117268.90 16.78 2967220987.04 3077577064.31 100.00 549070004.48 17.84 2528507059.83

Items assessed individually for bad debt provision

Unit: RMB

Opening balance Closing balance

Provision

Bad debts Bad debts percentage

Name Book balance provision Book balance provision (%) Provision reason

Hengfeng Hongyuan Real Estate Holdings Co. Ltd. 45493811.40 45493811.40 45493811.40 45493811.40 100.00 Long outstanding

Foshan Shunde Xingchen Paper Co. Ltd. 26697528.70 26697528.70 26697528.70 26697528.70 100.00 Long outstanding

Wuhan Tianrui Paper Co. Ltd. 17600000.00 9658292.00 17600000.00 9658292.00 54.88 Long outstanding

Shandong Bisheng Printing Materials Co. Ltd. 14813369.27 14813369.27 14813369.27 14813369.27 100.00 Long outstanding

Zhengzhou Hongyang Paper Products Co. Ltd. 14753432.93 14753432.93 14573432.93 14573432.93 100.00 Long outstanding

Henan Yibang Technology Trading Co. Ltd. 13396601.22 13396601.22 13396601.22 13396601.22 100.00 Long outstanding

49 companies including Shandong Yiming New

Material Technology Corp Co. Ltd. 68319511.16 68319511.16 67572305.34 67572305.34 100.00 Long outstanding

Total 201074254.68 193132546.68 200147048.86 192205340.86 96.03

68 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 customers

Closing balance

Bad debts Provision

Name Book balance provision percentage (%)

Within 1 year 4451716.88 982382.29 22.07

1 to 2 years 2359.03 165.13 7.00

Total 4454075.91 982547.42 22.06

Items assessed collectively for bad debt provision: Receivables from non-related party customer

Unit: RMB

Closing balance

Bad debts Provision

Name Book balance provision percentage (%)

Within 1 year 1909978867.41 30445041.38 1.59

1 to 2 years 55550505.52 5708109.05 10.28

2 to 3 years 5475630.97 1815779.28 33.16

Over 3 years 57293173.49 46973937.85 81.99

Total 2028298177.39 84942867.56 4.19

Items assessed collectively for bad debt provision: Factoring receivables

Unit: RMB

Closing balance

Bad debts Provision

Name Book balance provision percentage (%)

Within 1 year 104504372.62 5514174.58 5.28

1 to 2 years 175913377.79 32121647.90 18.26

2 to 3 years 902069222.15 212199833.59 23.52

Over 3 years 149951981.22 70150856.99 46.78

Total 1332438953.78 319986513.06 24.02

SHANDONG CHENMING PAPER HOLDINGS LIMITED 69

INTERIM REPORT 2024I 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: RMB

Changes in the period

Recovery

Category Opening balance Provision or reversal Written-off Others Closing balance

Bad debts provision 549070004.48 52619258.38 2605396.98 -966596.98 598117268.90

Total 549070004.48 52619258.38 2605396.98 -966596.98 598117268.90

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 for

the period amounted to RMB1126885955.42 in total accounting for 31.61% of the total closing balance of

accounts receivable and contract assets. The closing balance of the corresponding bad debt provision amounted

to RMB270139608.82 in total.Unit: RMB

As a percentage

of the closing

Closing balance balance of the Closing balance

of accounts total accounts of bad debt

Name of entity receivable receivable (%) provision

Customer 1 481810233.33 13.51 108757408.67

Customer 2 222656666.64 6.25 53542297.56

Customer 3 198948388.79 5.58 36107859.62

Customer 4 121908333.33 3.42 31619632.99

Customer 5 101562333.33 2.85 40112409.98

Total 1126885955.42 31.61 270139608.82

70 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of the Consolidated Financial Statements (Cont’d)

5. Accounts receivable financing

(1) Accounts receivable financing by category

Unit: RMB

Item Closing balance Opening balance

Bank acceptance bills 22065605.03 215884249.97

Total 22065605.03 215884249.97

Explanation:

All the accounts receivable financing of the Company were bank acceptance bills. Since the terms of the bank

acceptance bills did not exceed one year and both parties to the endorsement of the bills agreed to offset equal

amounts of accounts receivable and payable based on the face value of the bills fair value equalled amortised

cost.Certain subsidiaries of the Company discount and endorse part of the bank acceptance bills based on their daily

capital management needs. Therefore the bank acceptance bills of the subsidiaries are classified as financial

assets measured at fair value through other comprehensive income.The Company has no bank acceptance bill assessed individually for impairment provision. At the end of the

period the Company believed that there is no significant credit risk in the bank acceptance bills held and no major

losses will be incurred due to default of banks.

(2) Disclosure by bad debt provision method

Unit: RMB

Closing balance Opening balance

Book balance Bad debts provision Book balance Bad debts provision

Provision Provision

Category Amount Percentage Amount percentage Carrying amount Amount Percentage Amount percentage Carrying amount

Items assessed collectively for

bad debt provision 22065605.03 22065605.03 215884249.97 215884249.97

Including:

Bank acceptance bills 22065605.03 22065605.03 215884249.97 215884249.97

Total 22065605.03 22065605.03 215884249.97 215884249.97

Name of category being assessed collectively for bad debt provision: Bank acceptance bills

Unit: RMB

Closing balance

Bad debts Provision

Name Book balance provision percentage

Bank acceptance bills 22065605.03

Total 22065605.03

SHANDONG CHENMING PAPER HOLDINGS LIMITED 71

INTERIM REPORT 2024I 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: RMB

Amount pledged

as at the end

Item of the period

Bank acceptance bills 20000.00

Total 20000.00

(4) Accounts receivable financing endorsed or discounted but not yet due as at the balance sheet date

Unit: RMB

Amount Amount not yet

derecognised as derecognised as

at the end at the end

Item of the period of the period

Bank acceptance bills 7834710831.76

Total 7834710831.76

6. Other receivables

Unit: RMB

Item Closing balance Opening balance

Dividend receivable 22659149.81

Other receivables 2054324513.36 2224904557.88

Total 2076983663.17 2224904557.88

(1) Dividends receivable

1) Classification of dividends receivable

Unit: RMB

Item (or investee) Closing balance Opening balance

Weifang Chenchuang Equity Investment Fund Partnership

(Limited Partnership) 22659149.81

Total 22659149.81

72 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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: RMB

Closing book Opening book

Nature balance balance

Open credit 2528395095.81 2691372170.61

Reserve and borrowings 23191956.67 27444170.92

Guarantee deposit and deposit 15279813.49 12578821.54

Others 9674231.25 3445072.68

subtotal 2576541097.22 2734840235.75

Bad debt provision 522216583.86 509935677.87

Total 2054324513.36 2224904557.88

2) Disclosure by ageing

Unit: RMB

Closing book Opening book

Ageing balance balance

Within 1 year (including 1 year) 825043943.26 1052737595.00

1 to 2 years 361343970.53 291207253.53

2 to 3 years 233310980.82 204348508.24

Over 3 years 1156842202.61 1186546878.98

subtotal 2576541097.22 2734840235.75

Bad debt provision 522216583.86 509935677.87

Total 2054324513.36 2224904557.88

The basis used by the ageing analysis: the ageing of other receivables is the length of time of the Company’s

outstanding other receivables based on invoice date. The closing balance is recognised one by one from the

end of the period onwards until the amounts add up to the balance. It is also broken up by intervals of within

1 year 1-2 years 2-3 years and over 3 years.

SHANDONG CHENMING PAPER HOLDINGS LIMITED 73

INTERIM REPORT 2024I 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

Stage 1 Stage 2 Stage 3

Lifetime ECLs Lifetime ECLs

ECLs for the (not credit- (credit-

Bad debts provision next 12 months impaired) impaired) Total

Balance as at 1 January 2024 87540266.28 422395411.59 509935677.87

Balance as at 1 January 2024 for

the period

– Transferred to stage 2

– Transferred to stage 3

– Reversed to stage 2

– Reversed to stage 1

Provision for the period 2888840.71 25844198.73 28733039.44

Reversal for the period 1016204.97 74074.59 1090279.56

Transfer for the period

Write-off for the period

Other changes -1635900.55 -13725953.34 -15361853.89

Balance as at 30 June 2024 87777001.47 434439582.39 522216583.86

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

Bad debt provision for the period:

Unit: RMB

Changes in the period

Opening Recovery Transfer or

Category balance Provision or reversal write-off Others Closing balance

Other receivables 509935677.87 28733039.44 1090279.56 -15361853.89 522216583.86

Total 509935677.87 28733039.44 1090279.56 -15361853.89 522216583.86

Explanation of others: Others was the external transfer of subsidiary and transfer of debts.

74 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 the

year was RMB1720808887.00 which accounted for 66.79% of the closing balance of the total other

receivables. The closing balance of corresponding bad debt provision amounted to RMB250907576.27.Unit: RMB

As a percentage

of the closing Closing balance

balance of total of bad debt

Name of entity Nature Closing balance Ageing other receivables provision

Customer 1 Consideration for debt transfer 472854783.56 3 to 4 years 18.35% 84556765.37

Customer 2 Consideration for debt transfer 453002316.85 4 to 5 years 17.58% 158550810.90

Customer 3 Consideration for debt transfer 390000000.00 Within 1 year 15.14% 7800000.00

Customer 4 Financial support 232643410.74 Within 1 year 9.03%

Customer 5 Consideration for debt transfer 172308375.85 Within 1 year 6.69%

Total 1720808887.00 66.79% 250907576.27

SHANDONG CHENMING PAPER HOLDINGS LIMITED 75

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of the Consolidated Financial Statements (Cont’d)

7. Prepayments

(1) Prepayments by ageing

Unit: RMB

Closing balance Opening balance

Ageing Amount Percentage (%) Amount Percentage (%)

Within 1 year 901296304.14 95.12 790687918.61 95.83

1 to 2 years 46194821.38 4.88 34447237.60 4.17

Total 947491125.52 100.00 825135156.21 100.00

(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 to

RMB295215506.98 accounting for 31.16% of the closing balance of the total prepayments.Unit: RMB

As a percentage

of the closing

balance of the

Closing balance total prepayments

Name of entity of prepayments (%)

Customer 1 112414309.24 11.86

Customer 2 64772536.70 6.84

Customer 3 45579894.13 4.81

Customer 4 36419766.91 3.84

Customer 5 36029000.00 3.80

Total 295215506.98 31.16

76 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 industries

No

(1) Categories of inventories

Unit: RMB

Closing balance Opening balance

Impairment Impairment

provision for provision for

inventories or inventories or

performance performance

Item Book balance costs Carrying amount Book balance costs Carrying amount

Raw materials 1684074471.64 18015768.76 1666058702.88 1977478797.85 18030837.14 1959447960.71

Work-in-process products 83546759.61 83546759.61 102415558.33 102415558.33

Goods in stock 1031894480.01 3041427.75 1028853052.26 1413366440.57 1030048.86 1412336391.71

Consumable biological assets 1483176162.18 1483176162.18 1483978089.61 1483978089.61

Total 4282691873.44 21057196.51 4261634676.93 4977238886.36 19060886.00 4958178000.36

Note: Consumable biological assets are forestry assets.

(2) Impairment provision for inventories and performance costs

Unit: RMB

Increase during the period Decrease during the period

Opening Reversal or

Item balance Provision Others written-off Others Closing balance

Raw materials 18030837.14 15068.38 18015768.76

Goods in stock 1030048.86 3041427.75 1030048.86 3041427.75

Total 19060886.00 3041427.75 1045117.24 21057196.51

Basis for recognition of net realisable Reason for reversal or written-off of

value/residual consideration impairment provision for inventories/

Item with future cost performance costs during the period

Raw materials The cost of raw materials is higher than Written-off of impairment provision for

their net realisable value inventories due to sales of impaired spare

parts during the period

Goods in stock The cost of goods in stock is higher than Written-off of impairment provision for

their net realisable value inventories due to sales of impaired goods

in stock during the period

SHANDONG CHENMING PAPER HOLDINGS LIMITED 77

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of the Consolidated Financial Statements (Cont’d)

9. Non-current assets due within one year

Unit: RMB

Item Closing balance Opening balance

Long-term receivables due within one year 3990527056.67 4161725935.75

Total 3990527056.67 4161725935.75

Explanations: * Long-term receivables due within one year amounting to RMB3892561045.68 (amount for

the prior year: RMB4054545080.32) were financial lease receivables;

* Long-term receivables due within one year amounting to RMB97966010.99 (amount for the

prior year: RMB107180855.43) were deposits receivable.

1) Particulars of impairment provision

Unit: RMB

Stage 1 Stage 2 Stage 3

Lifetime ECLs

ECLs for the (not credit- Lifetime ECLs

Bad debts provision next 12 months impaired) (credit-impaired) Total

Balance as at 1 January 2024 1067619552.90 1067619552.90

Balance as at 1 January 2024

for the period

– Transferred to stage 2

– Transferred to stage 3

– Reversed to stage 2

– Reversed to stage 1

Provision for the period 55740138.52 55740138.52

Reversal for the period 25674797.18 25674797.18

Transfer for the period

Write-off for the period 41314296.74 41314296.74

Other changes -18883742.54 -18883742.54

Balance as at 30 June 2024 1037486854.96 1037486854.96

Explanation of other changes: Other changes are the decrease in the amount of bad debt provision for the transfer

of debt for the Shandong Leasing Xuchang Chenming Project.

78 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of the Consolidated Financial Statements (Cont’d)

10. Other current assets

Unit: RMB

Item Closing balance Opening balance

Receivables under financial lease due within one year 494989361.76 400411532.31

Prepaid expenses 290816055.05 201963827.62

Factoring receivables due within one year 254389157.48 261871191.52

Input tax amount to be deducted 52532417.19 119271427.68

Prepaid tax 18423599.16 47645192.37

Other payments 37663773.28 37663773.28

Total 1148814363.92 1068826944.78

11. Long-term receivables

(1) Particulars of long-term receivables

Unit: RMB

Closing balance Opening balance Discount

Item Book balance Bad debts provision Carrying amount Book balance Bad debts provision Carrying amount rate range

Finance lease payments 5443874214.18 1038902375.27 4404971838.91 5329611463.14 1070429664.01 4259181799.13 4%-12%

Less: Unrealised financing income 144584049.03 144584049.03 66941274.36 66941274.36

Deposit for finance lease 304882741.47 304882741.47 329246696.64 329246696.64

Less: Unrealised financing income 17272664.21 17272664.21 20467752.31 20467752.31

Subtotal 5586900242.41 1038902375.27 4547997867.14 5571449133.11 1070429664.01 4501019469.10

Less: Long-term receivables due within

one year 5028013911.63 1037486854.96 3990527056.67 5229345488.65 1067619552.90 4161725935.75

Total 558886330.78 1415520.31 557470810.47 342103644.46 2810111.11 339293533.35

(2) Disclosure by bad debt provision method

Unit: RMB

Closing balance Opening balance

Book balance Bad debts provision Book balance Bad debts provision

Provision Provision

Percentage percentage Percentage percentage

Category Amount (%) Amount (%) Carrying amount Amount (%) Amount (%) Carrying amount

Items assessed collectively for bad

debt provision 558886330.78 100.00 1415520.31 0.25 557470810.47 342103644.46 100.00 2810111.11 0.82 339293533.35

Including:

Receivables not past due 369242264.51 66.07 1415520.31 0.38 367826744.20 140505555.56 41.07 2810111.11 2.00 137695444.45

Deposits receivable 189644066.27 33.93 189644066.27 201598088.90 58.93 201598088.90

Total 558886330.78 100.00 1415520.31 0.25 557470810.47 342103644.46 100.00 2810111.11 0.82 339293533.35

SHANDONG CHENMING PAPER HOLDINGS LIMITED 79

INTERIM REPORT 2024I 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: RMB

Closing balance

Bad debts Provision

Name Book balance provision percentage (%)

Maturity date within 1 year

Maturity date 1 to 2 years 149595206.83 1415520.31 0.95

Maturity date 2 to 3 years 79361873.50

Maturity date over 3 year 140285184.18

Total 369242264.51 1415520.31 0.38

Name of category being assessed collectively for bad debt provision: Deposits receivable

Unit: RMB

Closing balance

Bad debts Provision

Name Book balance provision percentage

Maturity date within 1 year

Maturity date 1 to 2 years 144907006.65

Maturity date 2 to 3 years 38737059.62

Maturity date over 3 year 6000000.00

Total 189644066.27

Provision for bad debts made on a general model of ECL:

Unit: RMB

Stage 1 Stage 2 Stage 3

Lifetime ECLs Lifetime ECLs

ECLs for the (not credit- (credit-

Bad debts provision next 12 months impaired) impaired) Total

Balance as at 1 January 2024 2810111.11 2810111.11

Balance as at 1 January 2024 for the

period

– Transferred to stage 2

– Transferred to stage 3

– Reversed to stage 2

– Reversed to stage 1

Provision for the period

Reversal for the period

Transfer for the period

Write-off for the period

Other changes -1394590.80 -1394590.80

Balance as at 30 June 2024 1415520.31 1415520.31

Other explanations: Other changes in the period was the amount of bad debt provision reclassified to non-current

assets due within one year.

80 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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: RMB

Changes in the period

Opening Recovery or Transfer or Closing

Category balance Provision reversal write-off Others balance

Bad debts provision 2810111.11 -1394590.80 1415520.31

Total 2810111.11 -1394590.80 1415520.31

Other explanations: Others in the period was the amount of bad debt provision reclassified to non-current assets

due within one year.

12. Long-term equity investments

Unit: RMB

Change for the period

Investment Distribution

Opening Opening gain or loss Adjustment Other of cash

balance balance of recognised of other change dividend Closing balance

(carrying impairment Additional Withdrawn under equity comprehensive in equity or profit Impairment Closing balance of impairment

Investee amount) provision contribution contribution method income interest declared provision Others (carrying amount) provision

I. Joint ventures

Shouguang Chenming

Huisen New-style

Construction Materials

Co. Ltd. 7400283.59 466616.49 7866900.08

Weifang Port Wood Chip

Wharf Co. Ltd. 79142080.56 8850767.29 87992847.85

Shouguang Meite

Environmental

Technology Co. Ltd. 19066523.79 1141859.56 20208383.35

Shouguang Jintou

Industrial Investment

Partnership

(Limited Partnership) 2344570247.55 -19202925.23 2325367322.32

Weifang Xingxing United

Chemical Co. Ltd. 91874385.12 91874385.12

Subtotal 2542053520.61 -8743681.89 2533309838.72

SHANDONG CHENMING PAPER HOLDINGS LIMITED 81

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of the Consolidated Financial Statements (Cont’d)

12. Long-term equity investments (Cont’d)

Change for the period

Investment Distribution

Opening Opening gain or loss Adjustment Other of cash

balance balance of recognised of other change dividend Closing balance

(carrying impairment Additional Withdrawn under equity comprehensive in equity or profit Impairment Closing balance of impairment

Investee amount) provision contribution contribution method income interest declared provision Others (carrying amount) provision

II. Associates

Zhuhai Dechen New

Third Board Equity

Investment

Fund Company

(Limited Partnership) 27263804.36 -4094.51 27259709.85

Ningbo Kaichen Huamei

Equity Investment Fund

Partnership

(Limited Partnership) 278128830.13 -45877685.10 232251145.03

Nanchang Tianchen

Port Co. Ltd. 58147506.39 3213081.57 61360587.96

Goldtrust Futures

Co. Ltd. 187786626.28 5646638.65 193433264.93

Xuchang Chenming

Paper Co. Ltd. 5994545.96 5994545.96

Chenming (Qingdao)

Asset Management

Co. Ltd. 8377144.65 -265861.69 8111282.96

Wuhan Chenming

Hanyang Paper

Holdings Co. Ltd. 251918902.31 -3070493.34 248848408.97

Guangdong Nanyue

Bank Co. Ltd. 1331523051.00 10419924.12 3672513.39 -535161.44 1345080327.07

Subtotal 2143145865.12 5994545.96 -29938490.30 3672513.39 -535161.44 2116344726.77 5994545.96

Total 4685199385.73 5994545.96 -38682172.19 3672513.39 -535161.44 4649654565.49 5994545.96

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 Weifang

Xingxing United Chemical Co. Ltd. using the equity method and the carrying amount as at the end of the period was

basically in line with the expected recoverable amount.Determination of net amount of recoverable amount measured at fair value after deducting disposal expenses

□ Applicable □ Not applicable

Determination of present value of recoverable amount based on expected cash flows

□ Applicable □ Not applicable

82 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of the Consolidated Financial Statements (Cont’d)

13. Other non-current financial assets

Unit: RMB

Item Closing balance Opening balance

Investment in debt instruments 659099016.38 659099016.38

Investment in equity instruments 120978728.82 122462024.19

Total 780077745.20 781561040.57

14. Investment property

(1) Investment property under the cost method

□ Applicable □ Not applicable

Unit: RMB

Housing and

Item building structure Total

I. Original carrying amount

1. Opening balance 7142921213.87 7142921213.87

2. Increase during the period

3. Decrease during the period 6005490.93 6005490.93

(1) Disposal 6005490.93 6005490.93

4. Closing balance 7136915722.94 7136915722.94

II. Accumulated depreciation and accumulated amortisation

1. Opening balance 1093678517.51 1093678517.51

2. Increase during the period 98230727.37 98230727.37

(1) Provision or amortisation 98230727.37 98230727.37

3. Decrease during the period 942234.35 942234.35

(1) Disposal 942234.35 942234.35

4. Closing balance 1190967010.53 1190967010.53

III. Impairment provision

IV. Carrying amount

1. Closing carrying amount 5945948712.41 5945948712.41

2. Opening carrying amount 6049242696.36 6049242696.36

SHANDONG CHENMING PAPER HOLDINGS LIMITED 83

INTERIM REPORT 2024I 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 office

property of Shanghai Hongtai Real Estate Co. Ltd. a subsidiary of the Company and leasehold land mainly used for external rental

or office purposes;

* Jinan Chenming Finance Building (濟南晨鳴金融大廈) located in No. 7 Zone Hanyu Financial Business Center No. 7000 Jingshi

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

Company and leasehold land mainly used for external rental or office purposes;

* Fatum Apartment (法朵公寓) located at No. 463 Anbo Road No. 22 Lane 467 Anbo Road Yangpu District Shanghai is a

long-term held apartment property of Shanghai Heruiming Property Management Co. Ltd. a subsidiary of the Company and

leasehold land mainly used for external rental purposes;

* Guangzhou Zhengjia Plaza (廣州正佳廣場) 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 and

leasehold land mainly used for external rental purposes;

* Shenzhen Zhuoyue Baozhong Times Square (深圳卓越寶中時代廣場) located at Room 3201-3210 Building C Zhuoyue Baozhong

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

Property 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 Wuhan

Junheng 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 applicable

Determination 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: RMB

Item Closing balance Opening balance

Fixed assets 32030248108.24 33186248169.56

Total 32030248108.24 33186248169.56

84 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of the Consolidated Financial Statements (Cont’d)

15. Fixed assets (Cont’d)

(1) Particulars of fixed assets

Unit: RMB

Electronic

Housing and Machinery and Transportation equipment

Item building structure equipment equipment and others Total

I. Original carrying amount:

1. Opening balance 11722953106.41 43133736594.15 294812326.00 398874518.61 55550376545.17

2. Increase during the period 14898024.10 63006764.77 15391.42 3650702.64 81570882.93

(1) Acquisition 5822121.62 63006764.77 15391.42 3650702.64 72494980.45

(2) Debt restructuring 9075902.48 9075902.48

3. Decrease during the period 232951355.76 80766052.43 6155991.15 133382484.79 453255884.13

(1) Disposal or retirement 232951355.76 80766052.43 6155991.15 133382484.79 453255884.13

4. Closing balance 11504899774.75 43115977306.49 288671726.27 269142736.46 55178691543.97

II. Accumulated depreciation

1. Opening balance 2624265582.21 19050501794.09 222005103.33 263312432.67 22160084912.30

2. Increase during the period 146873482.40 886740254.94 9309022.49 3901562.14 1046824321.97

(1) Provision 146873482.40 886740254.94 9309022.49 3901562.14 1046824321.97

3. Decrease during the period 73439297.48 67585194.44 5478653.88 116006116.05 262509261.85

(1) Disposal or retirement 73439297.48 67585194.44 5478653.88 116006116.05 262509261.85

4. Closing balance 2697699767.13 19869656854.59 225835471.94 151207878.76 22944399972.42

III. Impairment provision

1. Opening balance 27808852.79 168785487.47 13889.13 7435233.92 204043463.31

2. Increase during the period

3. Decrease during the period

4. Closing balance 27808852.79 168785487.47 13889.13 7435233.92 204043463.31

IV. Carrying amount

1. Closing carrying amount 8779391154.83 23077534964.43 62822365.20 110499623.78 32030248108.24

2. Opening carrying amount 9070878671.41 23914449312.59 72793333.54 128126852.02 33186248169.56

SHANDONG CHENMING PAPER HOLDINGS LIMITED 85

INTERIM REPORT 2024I 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: RMB

Original

carrying Accumulated Impairment Carrying

Item amount depreciation provision amount Remark

Housing and building structure 72585434.37 26237134.48 3093008.64 43255291.25

Machinery and equipment 915384576.13 605131651.56 147820099.87 162432824.70

Electronic equipment and others 478399.18 430559.26 7187.27 40652.65

Total 988448409.68 631799345.30 150920295.78 205728768.60

(3) Particulars of fixed assets without obtaining property right certificates

Unit: RMB

Reason for not yet

obtaining property

Item Carrying amount right certificates

Housing and building structure

(Zhanjiang Chenming Pulp & Paper Co. Ltd.) 964116878.13 Under application

Housing and building structure

(Huanggang Chenming Pulp & Paper Co. Ltd.) 537475350.83 Under application

Housing and building structure (Shouguang Meilun Paper Co. Ltd.) 474762523.91 Under application

Housing and building structure (Jilin Chenming Paper Co. Ltd.) 357832450.57 Under application

Housing and building structure (Jiangxi Chenming Paper Co. Ltd.) 192089591.58 Under application

Housing and building structure

(Shandong Chenming Paper Holdings Limited) 133131559.85 Under application

Total 2659408354.87

(4) Impairment test on fixed assets

□ Applicable □ Not applicable

16. Construction in progress

Unit: RMB

Item Closing balance Opening balance

Construction in progress 1092039980.28 852139418.48

Materials for project 7239955.34 7478546.68

Total 1099279935.62 859617965.16

86 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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: RMB

Closing balance Opening balance

Book Impairment Carrying Book Impairment Carrying

Item balance provision amount balance provision amount

Relocation of Wuhan 4800

papermaking machine

project (Zhanjiang

Chenming) 569740174.02 569740174.02 533417722.83 533417722.83

Chemical pulp flue gas

denitrification technological

transformation project

(Huanggang Pulp & Paper) 290050326.03 290050326.03 156604031.76 156604031.76

Technological transformation

project 182762744.92 662764.60 182099980.32 130674807.30 662764.60 130012042.70

300000 tonnes softwood

pulp project

(Shandong Chenming) 11564392.43 11564392.43 8941631.08 8941631.08

Others 59723779.24 21138671.76 38585107.48 44302661.87 21138671.76 23163990.11

Total 1113841416.64 21801436.36 1092039980.28 873940854.84 21801436.36 852139418.48

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

Unit: RMB

Including:

Capitalised Capitalisation

Transfer to Other interest rate of the

fixed asset deductions Accumulated Accumulated amount interest

Opening Increase during during the during Closing investment Construction capitalised during amount during

Project name Budget balance the period period the period balance to budget progress interest the period the period Source of fund

Relocation of Wuhan

4800 papermaking

machine project

(Zhanjiang Self-owned funds

Chenming) 800000000.00 533417722.83 36322451.19 569740174.02 71.22% 71.00% and borrowings

300000 tonnes

softwood

pulp project

(Shandong Self-owned funds

Chenming) 1488980000.00 8941631.08 2622761.35 11564392.43 0.78% 0.70% and borrowings

Total 2288980000.00 542359353.91 38945212.54 581304566.45

(3) Impairment provision for construction in progress

□ Applicable □ Not applicable

SHANDONG CHENMING PAPER HOLDINGS LIMITED 87

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of the Consolidated Financial Statements (Cont’d)

16. Construction in progress (Cont’d)

(4) Materials for project

Unit: RMB

Closing balance Opening balance

Book Impairment Carrying Book Impairment Carrying

Item balance provision amount balance provision amount

Special materials 7239955.34 7239955.34 7478546.68 7478546.68

Total 7239955.34 7239955.34 7478546.68 7478546.68

17. Bearer biological assets

(1) Bearer biological assets under the cost method

□ Applicable □ Not applicable

Unit: RMB

Item Tea tree Total

I. Original carrying amount

1. Opening balance 17684687.36 17684687.36

2. Increase during the period 278066.24 278066.24

(1) Cultivation 278066.24 278066.24

3. Decrease during the period

4. Closing balance 17962753.60 17962753.60

II. 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 amount 17962753.60 17962753.60

2. Opening carrying amount 17684687.36 17684687.36

(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

88 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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: RMB

Housing

and building

Item Land use rights structure Total

I. Original carrying amount

1. Opening balance 198089207.01 5521837.26 203611044.27

2. Increase during the period

3. Decrease during the period 2250074.74 12385.32 2262460.06

(1) Transfer 2126221.54 2126221.54

(2) Other decreases 123853.20 12385.32 136238.52

4. Closing balance 195839132.27 5509451.94 201348584.21

II. Accumulated depreciation

1. Opening balance 34470758.27 1324974.50 35795732.77

2. Increase during the period 3725504.84 135477.64 3860982.48

(1) Provision 3725504.84 135477.64 3860982.48

3. Decrease during the period 700376.61 700376.61

(1) Disposal 700376.61 700376.61

4. Closing balance 37495886.50 1460452.14 38956338.64

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 amount 158343245.77 4048999.80 162392245.57

2. Opening carrying amount 163618448.74 4196862.76 167815311.50

Explanation: The reason for other decreases is that the original recognised amount of right-of-use assets was

tax included and as the invoices for leasing have been received the input tax amount offset the original carrying

amount of the right-of-use assets.

(2) Impairment test on right-of-use assets

□ Applicable □ Not applicable

SHANDONG CHENMING PAPER HOLDINGS LIMITED 89

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of the Consolidated Financial Statements (Cont’d)

19. Intangible assets

(1) Particulars of intangible assets

Unit: RMB

Certificates of

Item Land use rights Software Patents third party right Total

I. Original carrying amount

1. Opening balance 2525157831.82 23309148.71 27493613.05 15908674.87 2591869268.45

2. Increase during the period 20708694.00 20708694.00

(1) Increase due to debt

restructuring 20708694.00 20708694.00

3. Decrease during the period 63881675.77 1020714.08 64902389.85

(1) Disposal 63881675.77 1020714.08 64902389.85

4. Closing balance 2481984850.05 22288434.63 27493613.05 15908674.87 2547675572.60

II. Accumulated amortisation

1. Opening balance 549448621.95 22999984.34 1151095.44 15908674.87 589508376.60

2. Increase during the period 26669309.88 47475.00 26716784.88

(1) Provision 26669309.88 47475.00 26716784.88

3. Decrease during the period 22072347.46 1011887.49 23084234.95

(1) Disposal 22072347.46 1011887.49 23084234.95

4. Closing balance 554045584.37 21988096.85 1198570.44 15908674.87 593140926.53

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 amount 1927939265.68 300337.78 26295042.61 1954534646.07

2. Opening carrying amount 1975709209.87 309164.37 26342517.61 2002360891.85

Explanation: (1) For details of restricted ownership please refer to note VII. 24.

(2) Impairment test on intangible assets

□ Applicable □ Not applicable

90 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of The Consolidated Financial Statements (Cont’d)

20. Goodwill

(1) Original carrying amount of goodwill

Unit: RMB

Increase during Decrease during

the period the period

Arising from

business

Name of investee or event generating goodwill Opening balance combinations Disposal Closing balance

Kunshan Tuoan Plastic Products Co. Ltd. 26946905.38 26946905.38

Jilin Chenming Paper Co. Ltd. 14314160.60 14314160.60

Jiangxi Chenming Port Co. Ltd. 8273638.42 8273638.42

Total 49534704.40 26946905.38 22587799.02

(2) Provision for impairment of goodwill

Unit: RMB

Increase during Decrease during

the period the period

Name of investee or event generating goodwill Opening balance Provision Disposal Closing balance

Jilin Chenming Paper Co. Ltd. 14314160.60 14314160.60

Total 14314160.60 14314160.60

(3) Relevant information on goodwill for asset group or combination of asset groups

Whether it is

Composition and basis of asset group or Operating segment consistent with

Name combination of asset groups and basis prior year

Jilin Chenming Paper Co. Ltd. The company as a whole is regarded as an asset group or Machine-made paper segment Yes

combination of asset groups

Jiangxi Chenming Port Co. Ltd. The company as a whole is regarded as an asset group or Other segment Yes

combination of asset groups

Other explanation: With the category of the principal activities as the basis for determining its reporting

segments the Company regarded Jilin Chenming Paper Co. Ltd. and Jiangxi Chenming Port Co. Ltd. as an

asset group as a whole respectively.SHANDONG CHENMING PAPER HOLDINGS LIMITED 91

INTERIM REPORT 2024I 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 applicable

Determination of present value of recoverable amount based on expected cash flows

□ Applicable □ Not applicable

Unit: RMB

Basis of

determination of

Term of key parameter

Carrying Recoverable forecast Key parameter Key parameter for stabilisation

Item amount amount Impairment period for forecast period for stabilisation period period

Jiangxi Chenming Port Co. Ltd. -2458522.71 13494715.71 0.00 5 Discount rate of 6.23% Value added of zero Estimation

Total -2458522.71 13494715.71 0.00

21. Long-term prepaid expenses

Unit: RMB

Opening Increase during Amortisation Other

Item balance the period during the period deductions Closing balance

Woodland expenses 5952099.77 306730.58 5645369.19

Others 34027061.72 1357483.45 187784.73 32481793.54

Total 39979161.49 1664214.03 187784.73 38127162.73

Other Explanation: Other deduction was due to the disposal of subsidiary.

92 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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

Closing balance Opening balance

Deductible Deferred Deductible Deferred

temporary income temporary income

Item difference tax assets difference tax assets

Deductible loss 7733097173.05 1257426863.67 7008265437.96 1138659379.33

Provision for impairment of assets 2197977157.68 515876810.64 2170702373.93 509035457.40

Deferred income 142842333.42 21426350.01 144721508.43 21708225.98

Outstanding payables 107821937.83 16497569.18 121528026.20 18553482.43

Unrealised profit arising from intra-group

transactions 14483521.60 3620880.40 7605345.40 1901336.35

Total 10196222123.58 1814848473.90 9452822691.92 1689857881.49

(2) Deferred income tax liabilities before offsetting

Unit: RMB

Closing balance Opening balance

Taxable temporary Deferred income Taxable temporary Deferred income

Item differences tax liabilities differences tax liabilities

Asset valuation increment from business

combinations involving entities not under

common control 21236138.00 5309034.50 37960636.20 9490159.05

Total 21236138.00 5309034.50 37960636.20 9490159.05

(3) The breakdown of unrecognised deferred income tax assets

Unit: RMB

Item Closing balance Opening balance

Deductible loss 600327728.14 721381744.55

Deductible temporary difference 51626100.24 53265395.05

Total 651953828.38 774647139.60

SHANDONG CHENMING PAPER HOLDINGS LIMITED 93

INTERIM REPORT 2024I 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: RMB

Year Closing balance Opening balance Remark

2024—158265081.51

2025208380555.63226672646.51

202673280337.3861481717.71

202724609377.9477967748.73

2028140072946.12196994550.09

2029153984511.07—

Total 600327728.14 721381744.55

23. Other non-current assets

Unit: RMB

Closing balance Opening balance

Book Impairment Book Impairment

Item balance provision Carrying amount balance provision Carrying amount

Payments for engineering and equipment 915667751.58 915667751.58 1055195141.00 1055195141.00

Others 11887516.57 11887516.57 11887516.57 11887516.57

Total 927555268.15 927555268.15 1067082657.57 1067082657.57

94 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of The Consolidated Financial Statements (Cont’d)

24. Assets with restricted ownerships or right to use

Unit: RMB

Closing balance Opening balance

Type of Type of

Item Book balance Carrying amount restriction Restriction Book balance Carrying amount restriction Restriction

Monetary funds 10583179917.00 10583179917.00 Pledged As deposits for acceptance 11360599088.69 11360599088.69 Pledged As deposits for acceptance bills and

bills and letters of credit letters of credit deposits for letter

deposits for letter of of guarantee security deposits for

guarantee security loans deposit reserves interest

deposits for loans receivable etc. (Note VII. 1)

deposit reserves interest

receivable etc. (Note VII. 1)

Fixed assets 9383901424.59 6097926811.05 Charged As collateral for bank 9411111670.62 6303095864.20 Charged As collateral for bank borrowings and

borrowings and long-term long-term payables (Note VII. 15)

payables (Note VII. 15)

Investment 6114818654.81 5075202994.63 Charged As collateral for bank 5941741699.60 5004776921.76 Charged As collateral for bank borrowings

properties borrowings (Note VII. 14) (Note VII. 14)

Intangible assets 849460775.99 645269711.95 Charged As collateral for bank 865105844.99 665784045.39 Charged As collateral for bank borrowings and

borrowings and long-term long-term payables (Note VII. 19)

payables (Note VII. 19)

Accounts receivable 84955640.31 84502139.21 Pledged As pledge for borrowings 403349324.55 398710807.32 Pledged As pledge for borrowings (Note VII. 4)

(Note VII. 4)

Accounts receivable 20000.00 20000.00 Pledged As pledge for obtaining letters 90551168.01 90551168.01 Pledged As pledge for obtaining letters of credit

financing of credit (Note VII. 5) (Note VII. 5)

Total 27016336412.70 22486101573.84 28072458796.46 23823517895.37

Other explanation:

As at 30 June 2024 housing building structure and equipment with the carrying amount of RMB6097926811.05

(31 December 2023: carrying amount of RMB6303095864.20) investment properties with the carrying amount of

RMB5075202994.63 (31 December 2023: carrying amount of RMB5004776921.76) and intangible assets with the

carrying amount of RMB645269711.95 (31 December 2023: carrying amount of RMB665784045.39) were pledged as

collateral for long-term borrowings of RMB4140020848.22 (31 December 2023: RMB4262800469.08) and short-term

borrowings of RMB20000000.00 (31 December 2023: RMB85000000.00).SHANDONG CHENMING PAPER HOLDINGS LIMITED 95

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of The Consolidated Financial Statements (Cont’d)

25. Short-term borrowings

(1) Classification of short-term borrowings

Unit: RMB

Item Closing balance Opening balance

Discounted borrowings 11608999222.36 12270872000.00

Credit borrowings 9359698029.18 9908287425.27

Guaranteed borrowings 8882107193.62 9785629371.41

Pledged borrowings 393659397.98 1425690224.94

Mortgage borrowings 20000000.00 85000000.00

Total 30264463843.14 33475479021.62

Explanation of the classification of short-term borrowings:

* For classification and amount of mortgage borrowings and mortgage assets please see 1. Monetary funds

and 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 funds

and 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 end

of the year amounted to RMB0.00.* Short-term borrowings included accrued interest of RMB25209675.76.

26. Bills payable

Unit: RMB

Category Closing balance Opening balance

Commercial acceptance bills 4267192499.15 3604737193.92

Bank acceptance bills 1295192080.24 1014249270.03

Total 5562384579.39 4618986463.95

Total outstanding bills payable due as at the end of the period amounted to RMB0.00.

96 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of The Consolidated Financial Statements (Cont’d)

27. Accounts payable

(1) Particulars of accounts payable

Unit: RMB

Item Closing balance Opening balance

Payment for goods 3398430307.19 3329807929.61

Payment for engineering 193203879.71 222541200.98

Payment for equipment 170057669.66 107663951.56

Others 315506306.22 242607788.05

Total 4077198162.78 3902620870.20

(2) Disclosure by ageing

Unit: RMB

Ageing Closing balance Opening balance

Within 1 year (including 1 year) 3625253454.21 3361203746.72

1 to 2 years 187319359.25 267905274.76

2 to 3 years 26049232.73 30677976.15

Over 3 years 238576116.59 242833872.57

Total 4077198162.78 3902620870.20

The basis used by the ageing analysis of the accounts payable of the Company: the ageing of accounts payable

is the length of time of the Company’s outstanding accounts payable based on invoice date. The closing balance

is recognised one by one from the end of the period onwards until the amounts add up to the balance. It is also

broken up by intervals of within 1 year 1-2 years 2-3 years and over 3 years.

28. Other payables

Unit: RMB

Item Closing balance Opening balance

Other payables 3134911098.58 2414752127.19

Dividend payable 123000000.00

Total 3257911098.58 2414752127.19

SHANDONG CHENMING PAPER HOLDINGS LIMITED 97

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of The Consolidated Financial Statements (Cont’d)

28. Other payables (Cont’d)

(1) Dividend payable

Unit: RMB

Item Closing balance Opening balance

Dividend declared but not yet distributed to minority

shareholders by subsidiary 123000000.00

Total 123000000.00

(2) Other payables

1) Other payables by nature

Unit: RMB

Item Closing balance Opening balance

Open credit 1800239769.12 1090141993.83

Deposit 825462360.02 785572067.82

Accrued expenses 387260893.04 381781932.14

The obligation to repurchase shares under the share

incentive scheme 63764745.74 63764745.74

Others 58183330.66 93491387.66

Total 3134911098.58 2414752127.19

2) Significant other payables aged over 1 year

Unit: RMB

Reason for

outstanding or

Item Closing balance not transfer

MCC Fujian Investment Construction Co. Ltd. 570000000.00 Project deposits

29. Receipts in advance

(1) Particulars of receipts in advance

Unit: RMB

Item Closing balance Opening balance

Prepaid rents and property fees 14398554.70 16242921.65

Total 14398554.70 16242921.65

98 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of The Consolidated Financial Statements (Cont’d)

30. Contract liabilities

Unit: RMB

Item Closing balance Opening balance

Payment for goods in advance 1517098339.47 1443680155.62

Total 1517098339.47 1443680155.62

31. Staff remuneration payables

(1) Particulars of staff remuneration payables

Unit: RMB

Increase Decrease

Opening during during Closing

Item balance the period the period balance

I. Short-term remuneration 73907233.82 529423606.94 561292469.88 42038370.88

II. Retirement benefit plan-defined

contribution scheme 429924.62 99262593.28 96607124.35 3085393.55

III. Termination benefits 125413.81 125413.81

Total 74337158.44 628811614.03 658025008.04 45123764.43

(2) Particulars of short-term remuneration

Unit: RMB

Decrease

Increase during during

Item Opening balance the period the period Closing balance

1. Salaries bonuses allowance and subsidies 54425637.71 425802119.58 458852591.65 21375165.64

2. Staff welfare 15273065.83 15273065.83

3. Social insurance premium 1399223.32 46066674.16 45310915.75 2154981.73

Including: Medical insurance premium 494472.68 41159193.08 40339349.29 1314316.47

Maternity insurance premium 15635.74 4275281.74 4157106.70 133810.78

Work-related injury insurance premium 889114.90 632199.34 814459.76 706854.48

4. Housing provident funds 6932114.30 33425836.04 34912499.03 5445451.31

5. Union funds and workers’ education 7813758.78 8010810.96 3540075.58 12284494.16

6. Other short-term remuneration 3336499.71 845100.37 3403322.04 778278.04

Total 73907233.82 529423606.94 561292469.88 42038370.88

SHANDONG CHENMING PAPER HOLDINGS LIMITED 99

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of The Consolidated Financial Statements (Cont’d)

31. Staff remuneration payables (Cont’d)

(3) Defined contribution plan

Unit: RMB

Increase Decrease

Opening during during Closing

Item balance the period the period balance

1. Basic pension insurance premiums 415282.27 95010017.51 92753288.64 2672011.14

2. Unemployment insurance premiums 14642.35 4252575.77 3853835.71 413382.41

Total 429924.62 99262593.28 96607124.35 3085393.55

32. Tax payables

Unit: RMB

Item Closing balance Opening balance

Value added tax 45997159.91 40076417.59

Property tax 24506123.53 15486094.67

Stamp duty 13952948.04 10875401.17

Land use tax 11754662.06 11149858.80

Enterprise income tax 7007345.92 6720397.49

Environmental protection tax 3199355.75 3698248.00

Resource tax 3000000.00 3000000.00

Urban maintenance and construction tax 2251418.40 2396420.76

Land appreciation tax 2024028.20 2059693.25

Educational surcharges and others 1889242.09 2062463.52

Individual income tax 1685968.22 2184712.31

Total 117268252.12 99709707.56

33. Non-current liabilities due within one year

Unit: RMB

Item Closing balance Opening balance

Long-term payables due within one year 2226743234.92 2354342454.51

Long-term borrowings due within one year 1216122189.54 1273902656.06

Lease liabilities due within one year 3692567.25 3692567.25

Total 3446557991.71 3631937677.82

100 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of The Consolidated Financial Statements (Cont’d)

34. Other non-current liabilities

Unit: RMB

Item Closing balance Opening balance

Short-term financial leasing borrowings 70000000.00 100000000.00

Total 70000000.00 100000000.00

35. Long-term borrowings

(1) Types of long-term borrowings

Unit: RMB

Item Closing balance Opening balance

Mortgage borrowings 4140020848.22 4262800469.08

Guaranteed borrowings 1074338325.07 857571273.74

Credit borrowings 826563813.15 834545402.88

Less: Long-term borrowings due within one year 1216122189.54 1273902656.06

Total 4824800796.90 4681014489.64

Explanation of the types of long-term borrowings:

* For classification and amount of mortgage borrowings and mortgage assets please see 1. Monetary funds

and 24. Assets with restricted ownerships or right to use in Note VII.* Long-term borrowings included accrued interest of RMB554888.89.

36. Lease liabilities

Unit: RMB

Item Closing balance Opening balance

Lease payments payable 61566153.14 64264374.68

Less: Unrecognised financing expenses 17509799.80 18584784.58

Less: Lease liabilities due within one year 3692567.25 3692567.25

Total 40363786.09 41987022.85

SHANDONG CHENMING PAPER HOLDINGS LIMITED 101

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of The Consolidated Financial Statements (Cont’d)

37. Long-term payables

Unit: RMB

Item Closing balance Opening balance

Long-term payables 2279402749.15 2541095217.66

Total 2279402749.15 2541095217.66

(1) Long-term payables by nature

Unit: RMB

Item Closing balance Opening balance

Financial leasing borrowings 4031251825.85 4345793513.95

China Development Bank Special Fund 275000000.00 343750000.00

Contributions by other partners 199894158.22 199894158.22

Retention for the financial leasing operations 6000000.00

Less: Long-term payables due within one year 2226743234.92 2354342454.51

Total 2279402749.15 2541095217.66

Other explanations:

Contributions by other partners refer to the contributions made by other partners to Weifang Chenming Growth

Driver Replacement Equity Investment Fund Partnership (Limited Partnership) and Weifang Chendu Equity

Investment Partnership (Limited Partnership) the special structured entities of the Company and such contributions

are reclassified as financial liabilities on a consolidation basis.

38. Deferred income

Unit: RMB

Increase during Decrease during

Item Opening balance the period the period Closing balance Reason

Government grants 1337864114.70 3270000.00 53368860.21 1287765254.49 Financial provision

Total 1337864114.70 3270000.00 53368860.21 1287765254.49

102 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of The Consolidated Financial Statements (Cont’d)

38. Deferred income (Cont’d)

Items in respect of government grants:

New grants Include in

Opening during the other income Other Closing Asset-related/

Liability item balance period for the period changes balance income-related

Funding for environmental protection 524694035.24 25239041.36 499454993.88 Asset-related

Huanggang forestry-pulp-paper project 445968305.25 12513108.90 433455196.35 Asset-related

Infrastructure and environmental protection

engineering 196803377.25 5758794.72 191044582.53 Asset-related

Financial subsidies for technological

transformation project 95106015.68 3270000.00 4416552.48 93959463.20 Asset-related

Zhanjiang forestry-pulp-paper project 42617331.35 2047316.46 40570014.89 Asset-related

Project fund for National Key Technology

Research and Development Program 793725.00 82350.00 711375.00 Asset-related

Others 31881324.93 3311696.29 28569628.64 Asset-related

Total 1337864114.70 3270000.00 53368860.21 1287765254.49

39. Share capital

Unit: RMB

Increase/decrease during the year (+/-)

Shares

converted from

Opening balance New issue Bonus issue reserves Others Subtotal Closing balance

Total number of shares 2956813200.00 2956813200.00

40. Capital reserves

Unit: RMB

Increase during Decrease during

Item Opening balance the period the period Closing balance

Capital premium (share premium) 4599770312.40 1240406.74 79723162.69 4521287556.45

Other capital reserves 729020587.21 729020587.21

Total 5328790899.61 1240406.74 79723162.69 5250308143.66

SHANDONG CHENMING PAPER HOLDINGS LIMITED 103

INTERIM REPORT 2024I 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 minority

shareholders resulting in a decrease in capital reserves of RMB9957619.55; * the Company contributed capital

to Shandong Yujing Grand Hotel Co. Ltd. resulting in a decrease in capital reserves of RMB67989974.96; *

Guangdong Nanyue Bank Co. Ltd. an associate of the Company purchased certain interests from minority

shareholders resulting in decrease in capital reserves of RMB535161.44.

41. Treasury shares

Unit: RMB

Increase during Decrease during

Item Opening balance the period the period Closing balance

Share incentive 63432450.00 63432450.00

Total 63432450.00 63432450.00

42. Other comprehensive income

Other comprehensive income attributable to the Company in the balance sheet is as follows:

Unit: RMB

Amount for the period

Less:

Transferred

from other

comprehensive

income in prior

Attributable to periods to

the parent retained

company earnings during

Item Opening balance after tax the period Closing balance

I. Other comprehensive income that cannot be reclassified to profit and loss

II. Other comprehensive income that will be reclassified to profit and loss -864881489.08 -15535759.27 -880417248.35

1. Other comprehensive income that may be reclassified to profit and loss

under the equity method -11140109.71 3672513.39 -7467596.32

2. Exchange differences arising from translation of financial statements

denominated in foreign currencies -853741379.37 -19208272.66 -872949652.03

Total other comprehensive income -864881489.08 -15535759.27 -880417248.35

104 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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

Amount for the period

Less:

Transferred

from other

comprehensive

income in prior Less:

Incurred periods to Attributable to Attributable to

before income profit or loss minority the parent

tax for during Less: Income shareholders company

Item the period the period tax expenses after tax after tax

I. Other comprehensive income that cannot be reclassified to profit and loss

II. Other comprehensive income that will be reclassified to profit and loss -15535759.27 -15535759.27

1. Other comprehensive income that may be reclassified to profit and loss

under the equity method 3672513.39 3672513.39

2. Exchange differences arising from translation of financial statements

denominated in foreign currencies -19208272.66 -19208272.66

Total other comprehensive income -15535759.27 -15535759.27

43. General risk provisions

Unit: RMB

Increase during Decrease during

Item Opening balance the period the period Closing balance

General risk provisions 79370294.91 13361.84 79383656.75

Total 79370294.91 13361.84 79383656.75

Explanation: The general risk provisions are accrued by the Company’s subsidiaries Shandong Chenming Group

Finance 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: RMB

Increase during Decrease during

Item Opening balance the period the period Closing balance

Production safety expenses 23322829.57 5053378.02 2927238.67 25448968.92

Total 23322829.57 5053378.02 2927238.67 25448968.92

SHANDONG CHENMING PAPER HOLDINGS LIMITED 105

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of The Consolidated Financial Statements (Cont’d)

45. Surplus reserves

Unit: RMB

Increase during Decrease during

Item Opening balance the period the period Closing balance

Statutory surplus reserves 1212009109.97 1212009109.97

Total 1212009109.97 1212009109.97

46. Retained profit

Unit: RMB

Item The period The prior period

Retained profit as at the end of the prior period before adjustment 8020182801.55 9390642477.57

Adjustment to opening balance of retained earnings (increase + decrease -)

Opening balance of retained profit after adjustment 8020182801.55 9390642477.57

Add: Ne t profit for the period attributable to shareholders of the parent

company 28646205.42 -1281289649.82

Less: Transfer of statutory surplus reserves

Transfer of discretionary surplus reserves

Transfer of general risk reserves 13361.84 -529973.80

Perpetual bonds interest payable 89700000.00

Retained profit as at the end of the period 8048815645.13 8020182801.55

47. Revenue and operating costs

Unit: RMB

Amount for the period Amount for the prior period

Item Revenue Costs Revenue Costs

Principal activities 13762711500.16 12089871177.87 12420935712.78 11377205194.89

Other activities 122020018.88 95634531.13 144027068.53 119526467.69

Total 13884731519.04 12185505709.00 12564962781.31 11496731662.58

106 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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

Machine-made paper Financial services Properties and rentals Others Total

Category of contract Revenue Operating costs Revenue Operating costs Revenue Operating costs Revenue Operating costs Revenue Operating costs

Type of business 13481661035.71 11924438705.06 146357054.10 731119.28 96646679.91 105057448.14 160066749.32 155278436.52 13884731519.04 12185505709.00

Including:

Machine-made paper 12429565296.10 11003034856.86 12429565296.10 11003034856.86

Chemical pulp 676203401.45 559225217.42 676203401.45 559225217.42

Electricity and steam 123938936.52 150426816.88 123938936.52 150426816.88

Construction materials – – 87284048.72 88181069.93 87284048.72 88181069.93

Properties and rentals 93524660.28 94794899.59 – – 93524660.28 94794899.59

Paper chemicals 54442131.87 47128441.11 54442131.87 47128441.11

Others 197511269.77 164623372.79 146357054.10 731119.28 3122019.63 10262548.55 72782700.60 67097366.59 419773044.10 242714407.21

By geographical area 13481661035.71 11924438705.06 146357054.10 731119.28 96646679.91 105057448.14 160066749.32 155278436.52 13884731519.04 12185505709.00

Including:

Mainland China 10649460195.79 9236419177.40 146357054.10 731119.28 96646679.91 105057448.14 160066749.32 155278436.52 11052530679.12 9497486181.34

Other countries and regions 2832200839.92 2688019527.66 2832200839.92 2688019527.66

By the timing of delivery 13481661035.71 11924438705.06 146357054.10 731119.28 96646679.91 105057448.14 160066749.32 155278436.52 13884731519.04 12185505709.00

Including:

Goods (at a point in time) 13355608712.96 11768812209.08 159251216.13 155278436.52 13514859929.09 11924090645.60

Services (within a certain period) 126052322.75 155626495.98 146357054.10 731119.28 96646679.91 105057448.14 815533.19 – 369871589.95 261415063.40

By sales channel 13481661035.71 11924438705.06 146357054.10 731119.28 96646679.91 105057448.14 160066749.32 155278436.52 13884731519.04 12185505709.00

Including:

Distribution 9515928871.04 8395207255.25 9515928871.04 8395207255.25

Direct sales 3965732164.67 3529231449.81 146357054.10 731119.28 96646679.91 105057448.14 160066749.32 155278436.52 4368802648.00 3790298453.75

Total 13481661035.71 11924438705.06 146357054.10 731119.28 96646679.91 105057448.14 160066749.32 155278436.52 13884731519.04 12185505709.00

SHANDONG CHENMING PAPER HOLDINGS LIMITED 107

INTERIM REPORT 2024I 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:

Types of

Nature of goods that Whether the Company’s quality assurance

Time for fulfilment of the Company person is the commitments offered by the

performance Significant terms of undertakes primary person expected to be Company and

Item obligations payment to transfer in charge refunded to customers related obligations

Machine-made paper Do mestic sales on the Do mestic sales tend to Produces easily Yes None Gu aranteed quality

day of delivery to the be provided on an distinguishable assurance should

customer; foreign invoice basis; foreign there be objections

sales on the day of sales tend to be to product quality

customs clearance prepaid within 7 days of

arrival the products

can be returned and

exchanged.Other explanations: The Company’s performance obligations for sales of machine-made paper are generally less than

one year and the Company takes advance payments or provides credit terms depending on the customer. When the

Company is the primary responsible party for a sale it generally obtains the unconditional right to receive payment

when control of the merchandise is transferred to the customer either at the time of shipment or upon delivery to the

destination 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 uncompleted

performance obligation was RMB1517098339.47 in which RMB1517098339.47 was expected to be recognised in

2024.

108 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of The Consolidated Financial Statements (Cont’d)

48. Taxes and surcharges

Unit: RMB

Amount for Amount for

Item the period the prior period

Property tax 41691189.19 43867342.48

Stamp duty 27045444.39 20624364.19

Land use tax 23596390.50 17689934.66

Water resource tax 7474477.00 7866553.80

Environmental protection tax 6753382.64 6474664.23

Urban maintenance and construction tax 5628724.65 5065031.72

Educational surcharges and local education surcharge 4107340.96 3832275.95

Local water conservation funds 424555.73 375223.40

Vehicle and vessel tax 25897.59 22420.06

Total 116747402.65 105817810.49

49. General and administrative expenses

Unit: RMB

Amount for Amount for

Item the period the prior period

Wages and surcharges 107661916.80 118217373.00

Depreciation expenses 59471794.52 44973785.82

Hospitality expenses 47703471.67 44140876.01

Amortisation of intangible assets 25046414.18 23286773.73

Welfare expenses 23910644.65 31454087.17

Legal costs 10840988.90 6650909.23

Insurance premium 6695006.66 9440871.93

Repair fees 6462342.01 9337357.64

Intermediary service expenses 4654917.80 8597192.82

Others 24987918.96 32196997.51

Total 317435416.15 328296224.86

SHANDONG CHENMING PAPER HOLDINGS LIMITED 109

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of The Consolidated Financial Statements (Cont’d)

50. Sales and distribution expenses

Unit: RMB

Amount for Amount for

Item the period the prior period

Wages and surcharges 48843122.23 50366970.26

Hospitality expenses 21071398.70 23235804.11

Travel expenses 13823032.53 12003217.19

Rental expenses 3428387.22 3238179.10

Selling commissions 2472705.10 3387483.92

Depreciation expenses 1480291.62 2820127.76

Office expenses 1175994.99 1137272.19

Warehouse expenses 301394.66 429220.85

Others 6707504.16 10048442.16

Total 99303831.21 106666717.54

51. Research and development expense

Unit: RMB

Amount for Amount for

Item the period the prior period

Consumption of materials 414455113.32 366319485.67

Utilities 76607858.27 75235547.39

Wages and surcharges 63586172.66 66209728.31

Depreciation expenses 36311580.22 23682873.40

Insurance premium 13601674.17 13868772.48

Welfare expenses 3372176.58 3443387.62

Housing provident funds 2265763.36 2384161.81

Other expenses 1713757.83 1660871.90

Total 611914096.41 552804828.58

52. Finance expenses

Unit: RMB

Amount for Amount for

Item the period the prior period

Interest expenses 854610967.90 856872614.18

Interest income 104024655.22 94532686.92

Foreign exchange gains and losses -40639311.96 -34863785.35

Bank charges and others 146508498.45 122050778.14

Total 856455499.17 849526920.05

110 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of The Consolidated Financial Statements (Cont’d)

53. Other income

Unit: RMB

Amount for Amount for

Source of other income the period the prior period

Additional deduction of VAT 94956915.41

Government grants – amortised deferred income included in profit or loss 53368860.21 82410962.30

Government grants – directly included in profit or loss 10932524.83 25744734.89

Refund of handling fees for withholding and payment of individual income

tax 498630.65

Gain on debt restructuring 188197.54

Total 159945128.64 108155697.19

54. Gain on change in fair value

Unit: RMB

Amount for Amount for

Source of gain on change in fair value the period the prior period

Gain on change in fair value of consumable biological assets measured

at fair value 5184193.11 5749779.42

Financial assets held for trading -7405789.55 -25565577.25

Total -2221596.44 -19815797.83

55. Investment income

Unit: RMB

Amount for Amount for

Item the period the prior period

Investment gain on disposal of long-term equity investments 216154711.23

Investment income on holding other non-current financial assets 23957613.40 630212.77

Gain on debt restructuring 3313951.90 -145995.36

Income from long-term equity investments accounted for using

the equity method -38682172.19 23934269.81

Investment gain on derecognition of financial assets -23412008.23 -67175214.10

Total 181332096.11 -42756726.88

56. Credit impairment loss

Unit: RMB

Amount for Amount for

Item the period the prior period

Bad debt loss of accounts receivable -124386619.66 -43081750.88

Total -124386619.66 -43081750.88

SHANDONG CHENMING PAPER HOLDINGS LIMITED 111

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of The Consolidated Financial Statements (Cont’d)

57. Loss on impairment of assets

Unit: RMB

Amount for Amount for

Item the period the prior period

Loss on inventory impairment -3041427.75 -43314485.76

Total -3041427.75 -43314485.76

58. Non-operating income

Unit: RMB

Included in non-

Amount for Amount for recurring profit or

Item the period the prior period loss in the period

Fine income 1900470.03 323305.00 1900470.03

Gain on damage and retirement of non-current

assets 395610.51 433184.77 395610.51

Exempted debts 366717.74 12888.00 366717.74

Others 88688.65 171427.53 88688.65

Total 2751486.93 940805.30 2751486.93

59. Non-operating expenses

Unit: RMB

Included in non-

Amount for Amount for recurring profit or

Item the period the prior period loss in the period

Loss on damage and retirement of non-current

assets 639215.79 3074424.63 639215.79

Donation 300000.00 300000.00

Others 74335.21 63765.43 74335.21

Total 1013551.00 3138190.06 1013551.00

60. Asset disposal income

Unit: RMB

Amount for Amount for

Source of asset disposal income the period the prior period

Gain on disposal of fixed assets (“-” denotes loss) 19222812.60 11759266.91

Total 19222812.60 11759266.91

112 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of The Consolidated Financial Statements (Cont’d)

61. Income tax expenses

(1) Particulars of income tax expenses

Unit: RMB

Amount for Amount for

Item the period the prior period

Income tax expenses for the period 30685170.68 22508021.82

Deferred income tax expenses -127086125.02 -233999203.96

Total -96400954.34 -211491182.14

(2) Reconciliation between accounting profit and income tax expenses

Unit: RMB

Amount for

Item the period

Total profit -70042106.12

Income tax expenses calculated at statutory/applicable tax rates -10506315.92

Effect of different tax rates applicable to subsidiaries -46483903.78

Effect of adjustments for income tax for prior periods 11537775.39

Profit and loss of joint ventures and associates accounted for using the equity method -10700688.45

Effect of income not subject to tax -3690697.97

Effect of non-deductible costs expenses and losses 10819433.00

Effect of utilisation of previously unrecognised deductible loss on deferred income

tax assets -27072452.40

Effect of current unrecognised deductible temporary difference or deductible loss

arising from deferred tax income assets 37402548.77

Tax effect of R&D fee deduction (listed with“-”) -57706652.98

Income tax expense -96400954.34

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: RMB

Amount for Amount for

Item the period the prior period

Interest income 98034655.22 96517182.23

Open credit and other income 37948513.99 128779296.53

Government grants 14674965.71 16978364.27

Net proceedings from the financial leasing business 638037439.53

Total 150658134.92 880312282.56

SHANDONG CHENMING PAPER HOLDINGS LIMITED 113

INTERIM REPORT 2024I 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: RMB

Amount for Amount for

Item the period the prior period

Expenses and open credit 944194644.80 802664900.20

Total 944194644.80 802664900.20

(2) Cash relating to financing activities

Cash received relating to other financing activities

Unit: RMB

Amount for Amount for

Item the period the prior period

Equipment finance lease received 1075100000.00 1122264589.15

Deposit for finance lease 6000000.00

Net recovery of guarantee deposit 777685703.00

Total 1852785703.00 1128264589.15

114 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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: RMB

Amount for Amount for

Item the period the prior period

Repayment of equipment finance lease 1379961193.13 1376861062.23

Acquisition of non-controlling interests 300000000.00

Repayment of borrowings from China Development Bank funds 68750000.00 68750000.00

Current accounts 19350000.00

Payment of deposit for equipment finance lease 19000000.00 49250000.00

Repayment of bonds 350000000.00

Net expense of guarantee deposit 97308709.84

Total 1787061193.13 1942169772.07

Changes in liabilities arising from financing activities

□ Applicable □ Not applicable

Unit: RMB

Increase during the period Decrease during the period

Item Opening balance Cash changes Non-cash changes Cash changes Non-cash changes Closing balance

Short-term borrowings 33475479021.62 14019854718.40 101648246.53 16828518143.41 504000000.00 30264463843.14

Long-term borrowings 5954917145.70 612417275.07 27366519.99 524387954.32 29390000.00 6040922986.44

Long-term payables 4895437672.17 1075100000.00 167914684.43 1483163328.15 149143044.38 4506145984.07

Lease liabilities 45679590.10 881727.48 1272376.61 1232587.63 44056353.34

Other payables (financing) 282524750.00 1019000000.00 156030000.00 1145494750.00

Long-term receivables

(deposit for financial leasing) 308778944.33 51600826.68 19000000.00 11431959.61 287610077.26

Other monetary funds

(net change of guarantee deposit) 11321241125.05 777685703.00 10543555422.05

Total 56284058248.97 17504057696.47 349412005.11 19012371802.49 695197591.62 52832249416.30

SHANDONG CHENMING PAPER HOLDINGS LIMITED 115

INTERIM REPORT 2024I 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: RMB

Amount for Amount for

Supplementary information the period the prior period

1. Reconciliation of net profit as cash flows from operating activities:

Net profit 26358848.22 -694641382.66

Add: Provision for impairment of assets 127428047.41 86396236.64

Depreciation of fixed assets and investment property 1145055049.34 1128930791.82

Depreciation of right-of-use assets 3860982.48 3572130.01

Amortisation of intangible assets 26716784.88 26601501.33

Amortisation of long-term prepaid expenses 1664214.03 2970626.13

Loss on disposal of fixed assets intangible assets and other -19222812.60 -11759266.91

long-term assets (“-” denotes gain)

Loss on retirement of fixed assets (“-” denotes gain) 243605.28 2641239.86

Loss on changes in fair value (“-” denotes gain) 2221596.44 19815797.83

Finance expenses (“-” denotes gain) 854610967.90 856872614.18

Investment loss (“-” denotes gain) -181332096.11 42756726.88

Decrease in deferred income tax assets (“-” denotes -124990592.41 -226570060.35

increase)

Increase in deferred income tax liabilities (“-” denotes -4181124.55 5466650.50

decrease)

Decrease in inventories (“-” denotes increase) 694547012.92 35683655.24

Decrease in operating receivables (“-” denotes increase) -544020781.43 643109345.71

Increase in operating payables (“-” denotes decrease) -16460308.73 -138758858.62

Others

Net cash flows from operating activities 1992499393.07 1783087747.59

2. Major investing and financing activities not involving cash

settlements:

Capital converted from debts

Convertible corporate bonds due within one year

Fixed assets under finance leases

3. Net change in cash and cash equivalents:

Closing balance of cash 802830084.55 1842769494.26

Less: Opening balance of cash 764233742.61 2159460149.51

Add: Closing balance of cash equivalents

Less: Opening balance of cash equivalents

Net increase in cash and cash equivalents 38596341.94 -316690655.25

116 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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: RMB

Amount

Cash or cash equivalents received in the current period from disposal of subsidiaries during

the period 251022800.00

Including: Kunshan Tuoan Plastic Products Co. Ltd. 143730000.00

Shandong Yujing Grand Hotel Co. Ltd. 107292800.00

Less: Cash and cash equivalents held by the subsidiary on the date of

loss of control 20915309.33

Including: Kunshan Tuoan Plastic Products Co. Ltd. 20091053.42

Shandong Yujing Grand Hotel Co. Ltd. 824255.91

Add: Cash or cash equivalents received in the current period from disposal

of subsidiaries during previous periods 380000000.00

Including: Wuhan Chenming Hanyang Paper Holdings Co. Ltd. 380000000.00

Net cash received from disposal of subsidiaries 610107490.67

(3) Cash and cash equivalents composition

Unit: RMB

Item Closing balance Opening balance

I. Cash 802830084.55 764233742.61

Including: Treasury cash 4129836.09 3674805.36

Bank deposit that can be used for payment at any time 798700248.46 760558937.25

II. Cash equivalents

III. Balance of cash and cash equivalent at end of period 802830084.55 764233742.61

(4) Monetary funds other than cash and cash equivalents

Unit: RMB

Amount for Amount for Reasons why it is not cash and

Item the period the prior period cash equivalents

Other monetary funds 10543555422.05 11321241125.05 See Note VII.1 for details

Interest accrued on deposits 39624494.95 39357963.64 See Note VII.1 for details

Total 10583179917.00 11360599088.69

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

SHANDONG CHENMING PAPER HOLDINGS LIMITED 117

INTERIM REPORT 2024I Financial Report

VII. Notes to Items of The Consolidated Financial Statements (Cont’d)

66. Foreign currency items

(1) Foreign currency items

Unit: RMB

Closing foreign Closing balance

Item currency balance Exchange rate in RMB

Monetary funds

Including: USD 39951997.81 7.1268 284729897.99

EUR 1570740.11 7.6617 12034539.50

HKD 394815.28 0.9127 360340.01

GBP 1777.90 9.0430 16077.55

JPY 1197.00 0.0447 53.55

Accounts receivable

Including: USD 8726610.89 7.1268 62192810.49

EUR 17223.10 7.6617 131958.23

JPY 146734998.00 0.0447 6559054.41

Other receivables

Including: USD 1084115.80 7.1268 7726276.48

EUR 80841.81 7.6617 619385.70

Accounts payable

Including: USD 18990945.76 7.1268 135344672.24

EUR 766383.12 7.6617 5871797.55

Long-term borrowings

Including: EUR 4492120.00 7.6617 34417275.80

(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 there

is any change in the functional currency.□ Applicable □ Not applicable

Principal place of Place of Functional

No. Name of subsidiary business incorporation currency

1 Chenming GmbH Hamburg Germany Hamburg Germany EUR

2 Chenming Paper Korea Co. Ltd. Seoul Korea Seoul Korea KRW

3 Chenming International Co. Ltd. Los Angeles USA Los Angeles USA USD

4 Chenming Paper Japan Co. Ltd. Tokyo Japan Tokyo Japan JPY

5 Chenming Paper United States Co. Ltd. Los Angeles USA Los Angeles USA USD

6 Chenming (Overseas) Limited Hong Kong China Hong Kong China USD

7 Chenming (Singapore) Limited Singapore Singapore USD

8 Chenming (HK) Limited Hong Kong China Hong Kong China USD

118 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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: RMB

Amount for

Item the period

Short-term lease 3235879.40

Total 3235879.40

(2) The Company as a lessor

Operating lease as a lessor

□ Applicable □ Not applicable

Unit: RMB

Including: income related to

variable lease payments

Item Lease income not included in lease receipts

Lease income 88182141.14

Total 88182141.14

Financial lease as a lessor

□ Applicable □ Not applicable

SHANDONG CHENMING PAPER HOLDINGS LIMITED 119

INTERIM REPORT 2024I 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: RMB

Annual undiscounted lease payments

Item Closing balance Opening balance

The first year 174536416.38 179905002.33

The second year 165465795.09 168651189.37

The third year 167667038.24 167585064.63

The fourth year 161101058.01 162996827.55

The fifth year 162012344.71 159887562.91

Five years later 163111818.84 165396559.34

Total undiscounted lease payments after five years 993894471.27 1004422206.13

VIII. R&D Expenses

Unit: RMB

Amount for Amount for

Item the period the prior period

Consumption of materials 414455113.32 366319485.67

Utilities 76607858.27 75235547.39

Wages and surcharges 63586172.66 66209728.31

Depreciation expenses 36311580.22 23682873.40

Insurance premium 13601674.17 13868772.48

Welfare expenses 3372176.58 3443387.62

Housing provident funds 2265763.36 2384161.81

Other expenses 1713757.83 1660871.90

Total 611914096.41 552804828.58

Including: R&D expenses included in profit or loss 611914096.41 552804828.58

120 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

SHANDONG CHENMING PAPER HOLDINGS LIMITED 121

INTERIM REPORT 2024

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

Determination

Carrying and key

amount of assumption

Difference remaining Fair value of of fair value of Relevant other

between shareholding remaining remaining comprehensive

consideration and as of the date shareholding shareholding income of former

Disposal Disposal Disposal The basis for share of net assets of Remaining of loss of as of the date of Gain or loss as of the date of subsidiary

consideration percentage method determining the relevant subsidiary shareholding as control as per loss of control in fair value of loss of control as transferred

at the date of at the date of at the date of Date of date of loss of as per consolidated of the date of consolidated as per consolidated remaining per consolidated to profit or loss

Name of subsidiary loss of control loss of control loss of control loss of control control financial statements loss of control financial statements financial statements shareholding financial statements or retained profit

Shandong Yujing Grand

Hotel Co. Ltd. 162992813.25 90.05% Transfer 2024-3-31 Loss of control 203535106.51

Kunshan Tuoan Plastic

Products Co. Ltd. 143730000.00 100.00% Transfer 2024-2-29 Loss of control 12619604.72

Any 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.I Financial Report

X. Interest in Other Entities

1. Interest in subsidiaries

(1) Constitution of the Group

Unit: RMB’0000

Principle Shareholding

place of Place of Nature of Type of Issued debt Issued share

Name of subsidiary Register capital business incorporation business legal person Direct Indirect Acquisition securities capital

Shouguang Meilun Paper 480104.55 Shouguang Shouguang Paper making For-profit corporation 68.28% Establishment 0 0

Co. Ltd.Shouguang Meichen Energy 100.00 Shouguang Shouguang Electricity For-profit corporation 100% Establishment 0 0

Technology Co. Ltd.Shouguang Chenming Art 2000.00(USD) Shouguang Shouguang Paper making For-profit corporation 75% Establishment 0 0

Paper Co. Ltd.Shandong Chenming Paper 10000.00 Shouguang Shouguang Sales of paper For-profit corporation 100% Establishment 0 0

Sales Co. Ltd. product

Shanghai Chenming Pulp & 10000.00 Shanghai Shanghai Paper product For-profit corporation 100% Establishment 0 0

Paper Sales Co. Ltd. trading

Shouguang Chenming Import 70000.00 Shouguang Shouguang Trading For-profit corporation 35.71% 64.29% Establishment 0 0

and Export Trade Co. Ltd.Jiangxi Chenming Supply Chain 200.00 Jiangxi Jiangxi Trading For-profit corporation 70% Establishment 0 0

Management Co. Ltd.Zhanjiang Chenming Pulp & 691357.24 Zhanjiang Zhanjiang Paper making For-profit corporation 80.28% Establishment 0 0

Paper Co. Ltd.Zhanjiang Chenming 130000.00 Zhanjiang Zhanjiang Arboriculture For-profit corporation 100% Establishment 0 0

Arboriculture Development

Co. Ltd.Yangjiang Chenming 22000.00 Yangjiang Yangjiang Arboriculture For-profit corporation 100% Establishment 0 0

Arboriculture Development

Co. Ltd.Guangdong Huirui Investment 25800.00 Zhanjiang Zhanjiang Investment For-profit corporation 100% Establishment 0 0

Co. Ltd.Hubei Changjiang Chenming 200100.00 Huanggang Huanggang Fund For-profit corporation 59.97% Establishment 0 0

Huanggang Equity Investment

Fund Partnership (Limited

Partnership)

Hainan Chenming Technology 20000.00 Haikou Haikou Wholesale and For-profit corporation 100% Establishment 0 0

Co. Ltd. retail

Foshan Chenming Import and 20000.00 Foshan Foshan Trading For-profit corporation 100% Establishment 0 0

Export Trade Co. Ltd.Shanghai Heruiming Property 30150.00 Shanghai Shanghai Business For-profit corporation 100% Merger and 0 0

Management Co. Ltd. services acquisition

Zhanjiang Chenming Port Co. Ltd. 10000.00 Zhanjiang Zhanjiang Port services For-profit corporation 100% Establishment 0 0

Zhanjiang Meilun Pulp & 10000.00 Zhanjiang Zhanjiang Paper making For-profit corporation 100% Establishment 0 0

Paper Co. Ltd.Guangdong Chenming 1000.00 Guangdong Guangdong Panels For-profit corporation 100% Establishment 0 0

Panels Co. Ltd.Jiangxi Chenming Tea Co. Ltd. 1000.00 Jiangxi Jiangxi Tea business For-profit corporation 100% Establishment 0 0

Jiangxi Chenming Paper Co. Ltd. 32673.32(USD) Nanchang Nanchang Paper making For-profit corporation 100% Establishment 0 0

Jiangxi Chenming Logistics Co. Ltd 500.00 Nanchang Nanchang Logistics For-profit corporation 100% Establishment 0 0

Nanchang Shengheng Trading Co. 1000.00 Nanchang Nanchang Trading For-profit corporation 100% Establishment 0 0

Ltd.Nanchang Kunheng Trading Co. 1000.00 Nanchang Nanchang Trading For-profit corporation 100% Establishment 0 0

Ltd.

122 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

X. Interest in Other Entities (Cont’d)

1. Interest in subsidiaries (Cont’d)

(1) Constitution of the Group (Cont’d)

Principle Shareholding

place of Place of Nature of Type of Issued debt Issued share

Name of subsidiary Register capital business incorporation business legal person Direct Indirect Acquisition securities capital

Nanchang Chenming Arboriculture 1000.00 Nanchang Nanchang Arboriculture For-profit corporation 100% Establishment 0 0

Development Co. Ltd.Jiangxi Chenming Port Co. Ltd. 1507.00 Jiangxi Jiangxi Cargo For-profit corporation 100% Merger and 0 0

transportation acquisition

Shandong Dingkun Asset 100100.00 Shouguang Shouguang Business services For-profit corporation 100% Establishment 0 0

Management Partnership

(Limited Partnership)

Shouguang Kunhe Trading Co. Ltd. 1000.00 Shouguang Shouguang Trading For-profit corporation 100% Establishment

Jilin Chenming Paper Co. Ltd. 150000.00 Jilin Jilin Paper making For-profit corporation 100% Acquisition 0 0

Fuyu Chenming Paper Co. Ltd. 30800.00 Fuyu Fuyu Paper making For-profit corporation 100% Establishment 0 0

Jilin Chenming New-style Wall 1000.00 Jilin Jilin Wall materials For-profit corporation 100% Establishment 0 0

Materials Co. Ltd

Jilin Chenming Logistics Co. Ltd. 500.00 Jilin Jilin Logistics For-profit corporation 100% Establishment 0 0

Huanggang Chenming Pulp & Paper 335000.00 Huanggang Huanggang Pulp production For-profit corporation 70.15% 29.85% Establishment 0 0

Co. Ltd.Huanggang Chenming Paper 100000.00 Huanggang Huanggang Paper making For-profit corporation 100% Establishment 0 0

Technology Co. Ltd.Huanggang Chenming Port Service 5000.00 Huanggang Huanggang Port services For-profit corporation 100% Establishment 0 0

Co. Ltd.Huanggang Chenming Pulp & Fiber 5000.00 Huanggang Huanggang Trading For-profit corporation 100% Establishment 0 0

Trading Co. Ltd.Hubei Huanggang Chenming Equity 300.00 Huanggang Huanggang Capital market For-profit corporation 60% Establishment 0 0

Investment services

Fund Management Co. Ltd.Shandong Chenming Group 500000.00 Jinan Jinan Finance For-profit corporation 80% 20% Establishment 0 0

Finance Co. Ltd.Shandong Chenming Financial 587200.00 Jinan Jinan Finance leases For-profit corporation 100% Establishment 0 0

Leasing Co. Ltd.Chenming (HK) Limited 9990.00 (USD) Hong Kong Hong Kong Paper product For-profit corporation 100% Establishment 0 0

trading

Qingdao Chenming Nonghai 500000.00 Qingdao Qingdao Finance leases For-profit corporation 100% Establishment 0 0

Financial Leasing Co. Ltd

Shanghai Chenming Financial 100000.00 Shanghai Shanghai Finance leases For-profit corporation 100% Establishment 0 0

Leasing Co. Ltd.Wuhan Junheng Property 39600.00 Wuhan Wuhan Property For-profit corporation 100% Merger and 0 0

Management Co. Ltd. acquisition

Guangzhou Chenming Property 100000.00 Guangzhou Guangzhou Property For-profit corporation 100% Establishment 0 0

Management Co. Ltd.Shandong Chenming Investment 20000.00 Jinan Jinan Investment For-profit corporation 100% Establishment 0 0

Limited

Shanxi Fuyin Industrial Trading Co. 36000.00 Taiyuan Taiyuan Wholesale and For-profit corporation 100% Acquisition 0 0

Ltd. retail

SHANDONG CHENMING PAPER HOLDINGS LIMITED 123

INTERIM REPORT 2024I Financial Report

X. Interest in Other Entities (Cont’d)

1. Interest in subsidiaries (Cont’d)

(1) Constitution of the Group (Cont’d)

Principle Shareholding

place of Place of Nature of Type of Issued debt Issued share

Name of subsidiary Register capital business incorporation business legal person Direct Indirect Acquisition securities capital

Chongmin Culture Development 20000.00 Shanghai Shanghai Leasing and For-profit corporation 100% Acquisition 0 0

(Shanghai) Co. Ltd. business

services

Jinan Chenming Paper Sales Co. 10000.00 Jinan Jinan Investment For-profit corporation 100% Establishment 0 0

Ltd. management/

Paper product

trading

Shandong Chenming Commercial 20000.00 Jinan Jinan Business For-profit corporation 100% Establishment 0 0

Factoring Co. Ltd. factoring

Chenming GmbH 65.00 (USD) Germany Germany Paper product For-profit corporation 100% Establishment 0 0

trading

Chenming Paper Japan Co. Ltd. 150.00 (USD) Japan Japan Paper product For-profit corporation 100% Establishment 0 0

trading

Chenming International Co. Ltd. 100.00 (USD) The United The United Paper product For-profit corporation 100% Establishment 0 0

States States trading

Chenming Paper United States Co. 100.00 (USD) The United The United Paper product For-profit corporation 100% Establishment 0 0

Ltd. States States trading

Chenming Paper Korea Co. Ltd. 100.00 (USD) Korea Korea Paper product For-profit corporation 100% Establishment 0 0

trading

Chenming (Overseas) Limited 2000.00 (USD) Hong Kong Hong Kong Paper product For-profit corporation 100% Establishment 0 0

trading

Chenming (Singapore) Limited 2000.00 (USD) Singapore Singapore Paper product For-profit corporation 100% Establishment 0 0

trading

Meilun (BVI) Limited 5.00 (USD) Cayman Cayman Commerce For-profit corporation 100% Establishment 0 0

Shanghai Chenming Industry Co. 370000.00 Shanghai Shanghai Property For-profit corporation 100% Establishment 0 0

Ltd. investment

and

management

Shanghai Chenyin Trading Co. Ltd. 41000.00 Shanghai Shanghai Trading For-profit corporation 51% Establishment 0 0

Shanghai Hongtai Real Estate Co. 60391.77 Shanghai Shanghai Real estate For-profit corporation 100% Merger and 0 0

Ltd. acquisition

Shanghai Hongtai Property 200.00 Shanghai Shanghai Property For-profit corporation 100% Merger and 0 0

Management Co. Ltd. acquisition

Shouguang Chenming Papermaking 200.00 Shouguang Shouguang Machinery For-profit corporation 100% Establishment 0 0

Machine Co. Ltd. manufacturing

Shouguang Hongxiang Printing and 80.00 Shouguang Shouguang Printing and For-profit corporation 100% Acquisition 0 0

Packaging Co. Ltd. packaging

Shouguang Chenming Modern 1000.00 Shouguang Shouguang Transportation For-profit corporation 100% Establishment 0 0

Logistic Co. Ltd.Shouguang Hongyi Decorative 200.00 Shouguang Shouguang Packaging For-profit corporation 100% Merger and 0 0

Packaging Co. Ltd. acquisition

124 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

X. Interest in Other Entities (Cont’d)

1. Interest in subsidiaries (Cont’d)

(1) Constitution of the Group (Cont’d)

Principle Shareholding

place of Place of Nature of Type of Issued debt Issued share

Name of subsidiary Register capital business incorporation business legal person Direct Indirect Acquisition securities capital

Shouguang Xinyuan Coal Co. Ltd. 300.00 Shouguang Shouguang Coal For-profit corporation 100% Merger and 0 0

acquisition

Shouguang Wei Yuan Logistics 393.00 Shouguang Shouguang Logistics For-profit corporation 100% Merger and 0 0

Company Limited acquisition

Shouguang City Run Sheng Wasted 2380.00 Shouguang Shouguang Purchase and For-profit corporation 100% Merger and 0 0

Paper Recycle Co. Ltd. sale of waste acquisition

Shouguang Shun Da Customs 150.00 Shouguang Shouguang Customs For-profit corporation 100% Establishment 0 0

Declaration Co Ltd. declaration

Huanggang Chenming Arboriculture 7000.00 Huanggang Huanggang Arboriculture For-profit corporation 100% Establishment 0 0

Development Co. Ltd.Chenming Arboriculture Co. Ltd. 10000.00 Wuhan Wuhan Arboriculture For-profit corporation 100% Establishment 0 0

Hailaer Chenming Paper Co. Ltd. 1600.00 Hailaer Hailaer Paper making For-profit corporation 75% Establishment 0 0

Weifang Chenming Growth Driver 100000.00 Weifang Weifang Fund For-profit corporation 79% Establishment 0 0

Replacement

Equity Investment Fund

Partnership (Limited Partnership)

Weifang Chendu Equity Investment 32000.00 Shouguang Shouguang Capital market For-profit corporation 79.69% Establishment 0 0

Partnership services

(Limited Partnership

Nanjing Chenming Culture 500.00 Nanjing Nanjing Marketing For-profit corporation 100% Establishment 0 0

Communication Co. Ltd.

(2) Major non-wholly owned subsidiaries

Unit: RMB

Gain or loss Dividend to

attributable to minority minority interest Closing balance

Name of subsidiary Minority interest interest during the period declared during the period of minority interest

Shouguang Meilun Paper Co. Ltd. 31.72% 14034956.42 123000000.00 1803983499.88

Zhanjiang Chenming Pulp

& Paper Co. Ltd. 19.72% -1288359.90 1579422644.51

SHANDONG CHENMING PAPER HOLDINGS LIMITED 125

INTERIM REPORT 2024I Financial Report

126 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024

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

Closing balance Opening balance

Non-current Non-current Non-current Non-current

Name of subsidiary Current assets assets Total assets Current liabilities liabilities Total liabilities Current assets assets Total assets Current liabilities liabilities Total liabilities

Shouguang Meilun

Paper Co. Ltd. 6586281476.07 9855312662.22 16441594138.29 6998813648.60 1104767705.49 8103581354.09 5534633307.08 10096140872.04 15630774179.12 6282312497.46 888031988.48 7170344485.94

Zhanjiang Chenming

Pulp & Paper

Co. Ltd. 12089985789.76 12282982933.43 24372968723.19 13847904342.71 1574758664.42 15422663007.13 12562782806.69 13116686959.25 25679469765.94 14866141937.07 1876669919.47 16742811856.54

Unit: RMB

Amount for the period Amount for the prior period

Total Total Cash flows

comprehensive Cash flows from comprehensive from operating

Name of subsidiary Revenue Net profit income operating activities Revenue Net profit income activities

Shouguang Meilun Paper Co. Ltd. 4684096701.75 40515254.62 40515254.62 759366495.73 9084559413.98 153008366.72 153008366.72 1528677090.76

Zhanjiang Chenming Pulp & Paper Co. Ltd. 6278830552.25 3686976.50 7359489.89 671266132.58 11000808231.98 -541888245.61 -543112252.63 1332553432.65I 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 Company

and Dongxing Securities Investment Co. Ltd. and SWSC Innovation Investment Co. Ltd. entered into an equity

transfer agreement in relation to the transfer of an aggregate of 3.41% equity interest in Shouguang Meilun Paper

Co. Ltd to the Company. The equity transfer transaction did not result in the loss of control over Shouguang

Meilun Paper Co. Ltd. by the Company. As at 30 June 2024 the equity transfer agreement was completed and

the total transaction consideration paid was RMB300 million. The transaction resulted in a decrease in minority

interest by RMB290.0424 million and a decrease in capital reserves by RMB9957600.

(2) Effect of the transactions on minority interest and equity attributable to the owners of the parent company

Unit: RMB

Shouguang Meilun

Item Paper Co. Ltd.Cost of acquisition/disposal consideration 300000000.00

– Cash 300000000.00

Total cost of acquisition/disposal consideration 300000000.00

Less: Share of net assets of the subsidiary calculated based on the

proportion of equity interest acquired/disposed of 290042380.45

Difference 9957619.55

Of which: Capital reserve adjustment 9957619.55

3 Interest in joint arrangements or associates

(1) Major joint ventures and associates

Accounting

method for

investment in

Principle place Place of Shareholding joint ventures

Name of joint venture and associate of business incorporation Nature of business Direct Indirect or associates

Shouguang Jintou Industrial Investment

Partnership (Limited Partnership) Shouguang Shouguang Investment 49.57% Equity method

Guangdong Nanyue Bank Co. Ltd. Guangdong Guangdong Bank 4.46% Equity method

The basis for holding less than 20% of the voting power of the investee but having significant influence and the

basis 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 largest

shareholder and is able to exercise significant influence over Guangdong Nanyue Bank Co. Ltd. by appointing

one director to the board of directors (out of a total of nine directors on the board of directors).SHANDONG CHENMING PAPER HOLDINGS LIMITED 127

INTERIM REPORT 2024I 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: RMB

Closing balance/ Opening balance/

Shouguang Jintou Industrial Investment Partnership amount for amount for the

(Limited Partnership) the period prior period

Current assets 2364434510.35 1775433885.35

Of which: Cash and cash equivalents 1897392.08 1047090.41

Non-current assets 393384007.57 408884578.74

Total assets 2757818517.92 2184318464.09

Current liabilities 696815230.96 104387199.50

Non-current liabilities 6080489.65 5805542.05

Total liabilities 702895720.61 110192741.55

Minority interest

Equity interest attributable to shareholders of the

parent company 2054922797.31 2074125722.54

Share of net assets based on shareholding 1018612901.09 1028131675.91

Adjustments

– Others 1306754421.23 1316438571.64

Carrying amount of equity investment in joint ventures 2325367322.32 2344570247.55

Fair value of equity investment in joint ventures where publicly

quoted prices exist

Revenue 305986438.14

Finance expenses 1809456.02 1620207.86

Income tax expenses -616895.19

Net profit -19202925.23 -1620207.86

Net profit from discontinued operations

Other comprehensive income

Total comprehensive income -19202925.23 -1620207.86

Dividends received from joint ventures during the year

128 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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: RMB

Closing balance/ Opening balance/

amount for amount for the

Guangdong Nanyue Bank Co. Ltd. the period prior period

Current assets 204880976101.06 194828415917.54

Non-current assets 115126420036.44 111581185310.11

Total assets 320007396137.50 306409601227.65

Current liabilities 262494142140.38 250233916389.30

Non-current liabilities 27354502269.11 26252549634.28

Total liabilities 289848644409.49 276486466023.58

Minority interest 68358275.97

Equity interest attributable to shareholders of the parent company 30158751728.01 29854776928.10

Share of net assets based on shareholding 1345080327.07 1331523051.00

Adjustments

－Goodwill

－Unrealised profit arising from intra-group transactions

－Others

Carrying amount of equity investment in associates 1345080327.07 1331523051.00

Fair value of equity investment in associates where publicly quoted

prices exist

Revenue 1263828453.62 2739283882.64

Net profit 233504987.79 416331873.52

Net profit from discontinued operations

Other comprehensive income 82343349.45 -9346709.52

Total comprehensive income 315848337.24 406985164.00

Dividends received from associates during the year

SHANDONG CHENMING PAPER HOLDINGS LIMITED 129

INTERIM REPORT 2024I 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: RMB

Closing balance/ Opening balance/

amount for amount for the

the period prior period

Joint ventures:

Total carrying amount of investment 207942516.40 197483273.06

Total amount of the following items based on shareholding

– Net profit 10459243.34 5160237

– Other comprehensive income

– Total comprehensive income 10459243.34 5160237

Associates:

Total carrying amount of investment 771264399.70 811622814.12

Total amount of the following items based on shareholding

– Net profit -40358414.42 3643661.92

– Other comprehensive income

– Total comprehensive income -40358414.42 3643661.92

XI. Government Grants

1. Government grants recognised at the end of the reporting period at the amount receivable

□ Applicable □ Not applicable

Reasons for not receiving the estimated amount of government grants at the estimated time

□ Applicable □ Not applicable

130 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

XI. Government Grants (Cont’d)

2. Liabilities in respect of government grants

□ Applicable □ Not applicable

Unit: RMB

Include in

New grants non-operating Include in other

during the income for the income for Other changes Asset-related/

Subsidy item Accounting item Opening balance period period the period for the period Closing balance income-related

Funding for environmental protection Deferred income 524694035.24 25239041.36 499454993.88 Asset-related

Huanggang pulp-forestry-paper project Deferred income 445968305.25 12513108.90 433455196.35 Asset-related

Infrastructure and environmental

protection engineering transformation

project Deferred income 196803377.25 5758794.72 191044582.53 Asset-related

Financial subsidies for technical

transformation project Deferred income 95106015.68 3270000.00 4416552.48 93959463.20 Asset-related

Zhanjiang forestry-pulp-paper project Deferred income 42617331.35 2047316.46 40570014.89 Asset-related

Project fund for National Key

Technology

Research and Development Program Deferred income 793725.00 82350.00 711375.00 Asset-related

Others Deferred income 31881324.93 3311696.29 28569628.64 Asset-related

Total 1337864114.70 3270000.00 53368860.21 1287765254.49

SHANDONG CHENMING PAPER HOLDINGS LIMITED 131

INTERIM REPORT 2024I Financial Report

XI. Government Grants (Cont’d)

3. Government grants included in profit or loss for the period

□ Applicable □ Not applicable

Unit: RMB

Amount for Amount for

Subsidy item Accounting item the period the prior period

Funding for environmental protection Other income 25239041.36 26594207.20

Huanggang forestry-pulp-paper project Other income 12513108.90 12513108.90

Financial subsidies for technological

transformation project Other income 11626552.48 35191957.48

Sewage treatment and water conservation

transformation project Other income 5758794.72

Zhanjiang forestry-pulp-paper project Other income 2047316.46 2047316.46

Government rewards Other income 1510920.00 7220880.00

Subsidy for job expansion Other income 938615.16 52000.00

Afforestation subsidy

Other income 491960.00 459000.12

Incentive fund for smart manufacturing

regulatory Enterprises Other income 400000.00 612000.00

Job stabilisation subsidy Other income 288435.21 9500.00

Project fund for National Key Technology Research

and Development Program Other income 82350.00 82350.00

Unemployment Insurance Other income 46500.00

Refund of tax Other income 30124.00 2877613.59

Refund of tax service handling fees Other income 15170.46

Railway subsidy Other income 800.00

Special subsidy for foreign trade Other income 10833800.00

Infrastructure and environmental protection

engineering Other income 5758794.72

Immediate VAT refund Other income 3186241.18

Others Other income 3311696.29 716927.54

Total 64301385.04 108155697.19

132 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

XII. Risk Relating to Financial Instruments

Main financial instruments of the Group include monetary funds bills receivable accounts receivable accounts receivable

financing 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-term

borrowings non-current liabilities due within one year long-term borrowings bonds payable lease liabilities and long-term

payables. Details of financial instruments refer to related notes. The risks associated with these financial instruments and

the risk management policies adopted by the Company to mitigate these risks are described below. The management of the

Company manages and monitors these exposures to ensure that the above risks are controlled in 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 adverse

effects on the Company’s financial performance from financial risk. Based on such objectives the Company’s risk

management policies are established to identify and analyse the risks faced by the Company to set appropriate risk

limits and devise corresponding internal control procedures and to monitor risks faced by the Company. Such risk

management policies and internal control systems are reviewed regularly to adapt to changes in market conditions and

the Company’s activities. The internal audit department of the Company undertakes both regular and ad-hoc reviews of

risk management controls and procedures

Risks 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 risk

management policies and related guidelines and supervise the implementation of risk management. The Company has

already made risk management risks to identify and analyse risks that the Company face. These policies mentioned

specific risks covering market credit risk and liquidity risk etc. The Company regularly assesses market environment

and 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 the

board of directors. The Risk Management Committee works closely with other business department of the Company to

identify evaluating and avoiding certain risks. The Company’s internal audit department will audit the risk management

control 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 management

policy 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 in

financial 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 listed

banks. The Company anticipated that the bank deposit does not have significant credit risk.SHANDONG CHENMING PAPER HOLDINGS LIMITED 133

INTERIM REPORT 2024I 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 control

exposure of credit risks. The Company evaluates client’s credit quality and set related credit period based on the

client’s financial status credit records and other factors such as current market situation etc. The Company keeps

monitor the client’s credit record and for client with deteriorate credit records the Company will ensure the credit

risk 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 credit

evaluation 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 balance

sheet. 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 the

Company’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 its

financial 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 finance

the Company’s operations and mitigate the effects of fluctuations in cash flows. The management of the Company

monitors 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 meet

short-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 RMB41846.7437 million (31 December 2023: RMB44131.5478

million). The closing balance of financial assets of the Company due within one year amounted to RMB24099.4235

million while the closing balance of financial liabilities due within one year amounted to RMB46718.3898 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 greater

efforts in recovery of financial lease payment. In addition to controlling its capital expenditures the Company will

also strengthen internal control and further lower its costs. The Company will enhance market operations boost

sales volume and enhance corporate efficiency.

134 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 the

Company are analysed by their maturity date as below at their remaining undiscounted contractual cash flows (in

RMB’0000):

Closing balance

Item Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total

Financial assets:

Monetary funds 1134638.55 1134638.55

Financial assets held for trading 3919.74 3919.74

Bills receivable 67496.23 67496.23

Accounts receivable 356533.83 356533.83

Accounts receivable financing 2206.56 2206.56

Other receivables 257654.11 257654.11

Long-term receivables 32591.75 29728.47 62320.22

Other non-current financial assets 78007.77 78007.77

Other current assets 74937.85 74937.85

Non-current assets due within one year 512555.48 512555.48

Total financial assets 2409942.35 32591.75 29728.47 78007.77 2550270.34

Financial liabilities:

Short-term borrowings 3023925.42 3023925.42

Bills payable 556238.46 556238.46

Accounts payable 407719.82 407719.82

Other payables 313491.11 313491.11

Non-current liabilities due within one year 363464.18 363464.18

Other current liabilities 7000.00 7000.00

Long-term borrowings 148238.04 142739.05 191502.99 482480.08

Lease liabilities 183.40 354.01 5249.95 5787.36

Long-term payables 174236.65 61580.10 235816.75

Total financial liabilities and contingent liabilities 4671838.99 322658.09 204673.16 196752.94 5395923.18

SHANDONG CHENMING PAPER HOLDINGS LIMITED 135

INTERIM REPORT 2024I 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 the

Company are analysed by their maturity date as below at their remaining undiscounted contractual cash flows (in

RMB’0000):

Balance as at the end of the prior year

Item Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total

Financial assets:9

Monetary funds 1208547.49 1208547.49

Financial assets held for trading 4629.43 4629.43

Bills receivable 41160.00 41160.00

Accounts receivable 307757.71 307757.71

Accounts receivable financing 21588.42 21588.42

Other receivables 273484.02 273484.02

Long-term receivables 29478.61 6700.00 36178.61

Other non-current financial assets 78156.10 78156.10

Other current assets 69994.65 69994.65

Non-current assets due within one year 529707.20 529707.20

Total financial assets 2456868.92 29478.61 6700.00 78156.10 2571203.63

Financial liabilities:

Short-term borrowings 3344774.24 3344774.24

Bills payable 461898.65 461898.65

Accounts payable 390262.09 390262.09

Other payables 241475.21 241475.21

Non-current liabilities due within one year 374650.69 374650.69

Other current liabilities 10000.00 10000.00

Long-term borrowings 84962.58 115780.76 267358.11 468101.45

Lease liabilities 453.22 354.01 5249.95 6057.18

Long-term payables 149201.63 112355.62 261557.25

Total financial liabilities and contingent liabilities 4823060.88 234617.43 228490.39 272608.06 5558776.76

The financial liabilities disclosed above are based on cash flows that are not discounted and may differ from the

carrying amount of the line items of the balance sheet.Maximum guarantee amount for signed guarantee contracts does not represent the amount to be paid.

136 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 a

financial instrument will be fluctuated due to the changes in market price.Interest rate risk

Interest rate risk refers to the risk that the fair value or future cash flow of a financial instrument will be fluctuated

due to the floating rate. Interest rate risk arises from recognised interest-bearing financial instrument and

unrecognised financial instrument (e.g. loan commitments).The Company’s interest rate risk arises from long-term interest-bearing liabilities including long-term borrowing

and bonds payable. Financial liabilities issued at floating rate expose the Company to cash flow interest rate

risk. Financial liabilities issued at fixed rate expose the Company to fair value interest rate risk. The Company

determines the relative proportions of its fixed rate and floating rate contracts depending on the prevailing market

conditions and to maintain an appropriate combination of financial instruments at fixed rate and floating rate

through regular reviews and monitors.The Company continuously monitors the interest rate position of the Company. The Company did not enter

into any interest rate hedging arrangements. But the management is responsible to monitor the risks of interest

rate and consider to hedge significant interest risk if necessary. Increase in interest rates will increase the

cost of new borrowing and the interest expenses with respect to the Company’s outstanding floating rate

interest-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 may

include 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’0000):

Amount for Amount for

Item the period the prior period

Financial instrument with fixed interest rate

Financial liabilities

Of which: Short-term borrowings 3023925.42 3344774.24

Long-term borrowings 482480.08 468101.45

Long-term borrowings due within one year 121612.22 127390.27

Total 3628017.72 3940265.96

Financial instrument with float interest rate

Financial assets

Of which: Monetary funds 1134225.57 1208180.01

Total 1134225.57 1208180.01

SHANDONG CHENMING PAPER HOLDINGS LIMITED 137

INTERIM REPORT 2024I 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 basis

points with all other factors remain unchanged the Company’s net profit and shareholders’ equity will increase or

decrease by RMB3464300 (31 December 2023: RMB3733100). The bank’s interest settlement date is generally

the 20th of each month according to the accounting period so you need to consider the interest rate for the next

11 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 interest

rate risk. This sensitivity analysis as above has been determined assuming that the change in interest rates had

occurred at the reporting date and arisen from the recalculation of the above financial instrument issued at new

interest rates. The non-derivative tools issued at floating interest rate held by the Company at the reporting date

expose the Company to cash flow interest rate risk. The effect to the net profit and shareholder’s equity illustrated

in the sensitivity analysis as above is arisen from the effect to the annual estimate amount of interest expenses or

revenue 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 fluctuated

due to the changes in foreign currency rates. Foreign currency risk arises on financial instruments that are

denominated 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 foreign

exchange risks still exist for the assets and liabilities in foreign currencies and future foreign currency transactions

as recognised by the Company (assets and liabilities in foreign currencies and foreign currency transactions are

mainly 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 foreign

currencies and amounted to RMB as at 30 June 2024 are as follows (in RMB’0000):

Item Liabilities denominated in foreign currency Assets denominated in foreign currency

Closing Closing balance Closing Closing balance

balance of the prior year balance of the prior year

USD 13534.47 60628.27 35464.90 45596.22

EUR 4028.91 1460.24 1278.59 4305.63

HKD 36.03 204.24

JPY 655.91 736.80

GBP 1.61 1.33

Total 17563.38 62088.51 37437.04 50844.22

The Group continuously monitors the size of the Group’s foreign currency transactions and foreign currency

assets and liabilities to minimise the foreign exchange risks it faces and for this reason the Group may aim to

avoid foreign exchange risk by signing forward foreign exchange contracts or currency swap contracts.

138 SHANDONG CHENMING PAPER HOLDINGS LIMITED

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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 of

foreign currency to RMB on the current profit and loss of the Company is as follows (in RMB’0000):

Increase (decrease) in after-tax profits Amount for the period Amount for the prior period

Increase in exchange rate of USD 5% 1096.52 5% -751.60

Decrease in exchange rate of USD -5% -1096.52 -5% 751.60

Increase in exchange rate of Euro 5% -137.52 5% 142.27

Decrease 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 rate

risks and interest rate risks whether arising from factors related to a single financial instrument or its issuer or

from factors related to all similar financial instruments traded on the market. Other price risks can stem from

changes 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 other

non-current financial assets and other equity instrument investments are measured at fair value on the balance

sheet 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 in

equity securities. The Company has not taken any measures to avoid other price risks. However the management

is responsible for monitoring other price risks and will consider holding multiple equity securities portfolios to

reduce 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 equity

securities investment prices on the Company’s current profit and loss and other comprehensive income is as

follows (unit: RMB’0000):

Increase (decrease) in Increase (decrease) in other

after-tax profits comprehensive income

Balance for Balance for Balance for Balance for

Item the period the prior period the period the prior period

Due to the rise in the price of equity securities

investment

Due to the decline in the price of equity securities

investment -709.69 -2427.46

SHANDONG CHENMING PAPER HOLDINGS LIMITED 139

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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 going

concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal

capital 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 number

of dividends paid to shareholders return capital to shareholders issue new shares or disposes assets to reduce its

liabilities.The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net liabilities divided by total

capital. 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: RMB

Nature of financial Amount of financial Confirmation of

Transfer Method assets transferred assets transferred derecognition Basis for derecognition

Endorsement or discounting Bank acceptance bills 7834710831.76 Derecognised Ba nk acceptance bills were derecognised as

such bills for endorsement or discounting

were accepted by banks with higher credit

rating their credit risk and deferred payment

risk were low the interest rate risk associated

with the bills was transferred to banks and it

can be determined that the major risks and

rewards of the ownership of the bills were

transferred.External transfer Debt receivable 31119840.10 Derecognised Wh ere the Company transferred substantially

all of the risks and rewards related to the

ownership of the financial asset to the

transferee

Total 7865830671.86

140 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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: RMB

Method of financial Amount of financial Gains or losses associated

Item assets transfer assets derecognised with derecognition

Bank acceptance bills Endorsement or discounting 7834710831.76 -57402168.13

Debt receivable External transfer 31119840.10 33990159.90

Total 7865830671.86 -23412008.23

XIII. Fair Value Disclosure

1. Fair value of assets and liabilities measured at fair value as at the end of the period

Unit: RMB

Fair value as at the end of the period

Level 1 fair value Level 2 fair value Level 3 fair value

Item measurement measurement measurement Total

I. Continuous measurement of fair value － － － －

(i) Financial assets held for trading 39197419.88 39197419.88

1. Financial assets measured at fair value 39197419.88 39197419.88

through profit or loss

(1) Equity instrument investments 39197419.88 39197419.88

(ii) Accounts receivable financing 22065605.03 22065605.03

(iii) Other non-current financial assets 780077745.20 780077745.20

(iv) Biological assets 1483176162.18 1483176162.18

1. Consumable biological assets 1483176162.18 1483176162.18

Total assets continuously measured at fair value 39197419.88 2285319512.41 2324516932.29

II. Non-continuous measurement of fair value － － － －

(i) Assets held for sale

Total assets measured at fair value not on an ongoing

basis

Total liabilities measured at fair value not on an ongoing

basis

SHANDONG CHENMING PAPER HOLDINGS LIMITED 141

INTERIM REPORT 2024I 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

items

For financial assets traded in active markets the Company determines their fair value using quoted prices in active

markets.

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: RMB

Fair value as at

the end of Valuation

Item the period techniques Unobservable inputs Range

Equity instrument investments:

Shandong Hongqiao Venture 78170000.00 Cost method

Capital Co. Ltd.Weifang Chenchuang Equity 400041731.59 See explanation for

Investment Fund Partnership details

(Limited Partnership)

Jiaohui Chenming Zhuli 259057284.79 See explanation for

(Suzhou) Emerging details

Industry Development

Fund Partnership (Limited

Partnership)

Consumable biological assets:

Forestry 1483176162.18 Roll back method of Unit price per tonne of RMB550

market price Eucalyptus wood

Unit price per tonne of RMB545

wet pine

Unit price per tonne of RMB620

fir wood

Note: For other non-current financial assets not traded in an active market particularly the investment in Shandong Hongqiao Venture Capital

Co. Ltd. its fair value as at the end of the period was determined through appraisal and particularly the investment in Weifang Chenchuang

Equity 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 their

fair value as at the end of the period with reference to the transaction prices of changes in shareholders.

142 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

XIV. Related Parties and Related Party Transactions

1. Parent company of the Company

Shareholding Voting right

Registered of the parent of the parent

Place of capital company in company in

Name of parent company incorporation Business nature (RMB’0000) the Company the Company

Chenming Holdings Co. Ltd. Shouguang Investment in manufacture of 123878.77 27.78% 27.78%

paper electricity steam and

arboriculture

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 prior

periods are as follows:

Name of joint ventures or associates Relation

Shouguang Chenming Huisen New-style A joint venture of the Company

Construction Materials Co. Ltd.Weifang Port Wood Chip Wharf Co. Ltd. A joint venture of the Company

Shouguang Meite Environmental Technology Co. Ltd. A joint venture of the Company

Weifang Xingxing United Chemical Co. Ltd. A joint venture of the Company

Chenming (Qingdao) Asset Management Co. Ltd. An associate of the Company

Guangdong Nanyue Bank Co. Ltd. An associate of the Company

Wuhan Chenming Hanyang Paper Holdings Co. Ltd. An associate of the Company

Other explanation: The former name of Weifang Port Wood Chip Wharf Co. Ltd. was Weifang Sime Darby West Port

Co. Ltd.SHANDONG CHENMING PAPER HOLDINGS LIMITED 143

INTERIM REPORT 2024I Financial Report

XIV. Related Parties and Related Party Transactions (Cont’d)

4. Other related parties

Name of other related parties Relation

Shouguang Huixin Construction Materials Co. Ltd. A subsidiary of a company invested by the Directors

and Senior Management of the Company

Lide Technology Co. Ltd. An investee of the Company

Shouguang Chenming Guangyuan Real Property A subsidiary of a company invested by

Company Limited the Directors and Senior Management of

the Company

Shandong Yujing Grand Hotel Co. Ltd. A subsidiary of a company invested by

the Directors and Senior Management of

the Company

Chen Hongguo Hu Changqing Li Xingchun Li Weixian Li Feng Li Key management personnel of the Company

Kang Qiu Lanju Sang Ailing Li Xueqin Li Zhenzhong

Li Mingtang Ge Guangming Dong Lianming Yuan Xikun etc.

5. Related party transactions

(1) Purchase and sales of goods and rendering and receiving services

Table on purchase of goods/receiving of services

Unit: RMB

Whether the

Transaction transaction

Details of related Amount for facility facility is Amount for the

Related party party transaction the period approved exceeded prior period

Weifang Port Wood

Chip Wharf Co. Ltd. Port miscellaneous expenses 56191147.39 110000000.00 No 20317747.45

Shandong Yujing Grand Accommodation and food

Hotel Co. Ltd. expenses 691058.37 N/A N/A －

Shouguang Meite

Environmental Purchase of chemical

Technology Co. Ltd. materials 15577072.00 N/A N/A 45798569.04

Table on sales of goods/providing of services

Unit: RMB

Details of related Amount for Amount for

Related party party transaction the period the prior period

Shouguang Chenming Huisen New-style

Construction Materials Co. Ltd. Sales of electricity and steam 6547010.44 7876218.22

Shouguang Huixin Construction Materials

Co. Ltd. Sales of cement coal oil etc. 60485.79 55815.97

Shandong Yujing Grand Hotel Co. Ltd. Sales of electricity and oil 26143.93 －

Shouguang Meite Environmental Technology

Co. Ltd. Sales of electricity and water 2153097.10 4292299.10

(2) Related party leasing

The Company as lessor:

Unit: RMB

Lease income Lease income

recognised for recognised for

Name of lessee Type of leased asset the current period the previous period

Shouguang Meite Environmental

Technology Co. Ltd. Housing and building structure 733944.95 733944.95

Chenming (Qingdao) Asset Management

Co. Ltd. Housing and building structure 506019.39 431707.46

Lide Technology Co. Ltd. Housing and building structure 949010.43 949010.43

144 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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

Whether

Commencement performance

Amount date of Expiry date of guarantee

Party being guaranteed under guarantee guarantee of guarantee is completed

Weifang Port Wood Chip Wharf Co. Ltd. 85000000.00 2017-12-20 2027-12-20 No

Shouguang Meilun Paper Co. Ltd. 91760456.12 2023-7-25 2024-7-25 No

Shouguang Meilun Paper Co. Ltd. 20000000.00 2023-8-25 2024-8-24 No

Shouguang Meilun Paper Co. Ltd. 10000000.00 2024-1-3 2025-1-2 No

Shouguang Meilun Paper Co. Ltd. 101044826.08 2024-5-27 2025-5-28 No

Shouguang Meilun Paper Co. Ltd. 45727471.68 2024-5-31 2025-5-31 No

Shouguang Meilun Paper Co. Ltd. 98114605.57 2024-6-4 2025-6-5 No

Shouguang Meilun Paper Co. Ltd. 178130000.00 2024-6-26 2025-6-25 No

Shouguang Meilun Paper Co. Ltd. 205149907.49 2024-1-10 2024-7-9 No

Shouguang Meilun Paper Co. Ltd. 35479479.53 2024-2-6 2024-8-5 No

Shouguang Meilun Paper Co. Ltd. 44000000.00 2024-2-27 2025-2-26 No

Shouguang Meilun Paper Co. Ltd. 190445746.04 2024-6-19 2024-12-16 No

Shouguang Meilun Paper Co. Ltd. 70732488.20 2024-6-24 2024-12-23 No

Shouguang Meilun Paper Co. Ltd. 20000000.00 2023-8-25 2024-8-23 No

Shouguang Meilun Paper Co. Ltd. 5000000.00 2024-3-7 2025-3-7 No

Shouguang Meilun Paper Co. Ltd. 50000000.00 2023-7-12 2024-7-12 No

Shouguang Meilun Paper Co. Ltd. 15000000.00 2024-1-3 2024-12-27 No

Shouguang Meilun Paper Co. Ltd. 90000000.00 2023-10-23 2024-10-23 No

Shouguang Meilun Paper Co. Ltd. 185000000.00 2024-6-13 2024-12-11 No

Shouguang Meilun Paper Co. Ltd. 100000000.00 2024-6-13 2024-12-11 No

Shouguang Meilun Paper Co. Ltd. 43000000.00 2023-12-19 2024-12-18 No

Shouguang Meilun Paper Co. Ltd. 10000000.00 2024-4-12 2024-12-11 No

Shouguang Meilun Paper Co. Ltd. 10000000.00 2024-4-12 2024-12-11 No

Shouguang Meilun Paper Co. Ltd. 50000000.00 2024-6-28 2025-6-27 No

Shouguang Meilun Paper Co. Ltd. 41912850.21 2024-4-12 2025-4-12 No

Shandong Chenming Paper Sales Co. Ltd. 296829334.44 2023-8-14 2024-8-14 No

Shandong Chenming Paper Sales Co. Ltd. 111125326.61 2023-9-18 2024-9-18 No

Shandong Chenming Paper Sales Co. Ltd. 54723975.97 2023-9-26 2024-9-26 No

Shandong Chenming Paper Sales Co. Ltd. 181517502.43 2023-10-7 2024-10-7 No

Shandong Chenming Paper Sales Co. Ltd. 198262078.03 2023-10-7 2024-10-7 No

Shandong Chenming Paper Sales Co. Ltd. 50000000.00 2023-10-18 2024-10-11 No

Shandong Chenming Paper Sales Co. Ltd. 40000000.00 2023-11-28 2024-11-28 No

Shandong Chenming Paper Sales Co. Ltd. 50000000.00 2024-1-4 2024-7-2 No

Shandong Chenming Paper Sales Co. Ltd. 150000000.00 2024-2-8 2025-2-12 No

Shandong Chenming Paper Sales Co. Ltd. 329962137.74 2024-4-1 2025-4-2 No

Shandong Chenming Paper Sales Co. Ltd. 130349733.69 2024-4-3 2025-4-7 No

Shandong Chenming Paper Sales Co. Ltd. 160000000.00 2024-5-23 2024-11-19 No

Shandong Chenming Paper Sales Co. Ltd. 260000000.00 2024-5-23 2024-11-19 No

Shanghai Chenming Pulp & Paper Sales Co. Ltd. 4500000.00 2023-11-21 2024-11-20 No

Shanghai Chenming Pulp & Paper Sales Co. Ltd. 8000000.00 2024-6-4 2025-5-30 No

Shanghai Chenming Pulp & Paper Sales Co. Ltd. 9000000.00 2024-6-6 2024-11-20 No

SHANDONG CHENMING PAPER HOLDINGS LIMITED 145

INTERIM REPORT 2024I Financial Report

XIV. Related Parties and Related Party Transactions (Cont’d)

5. Related party transactions (Cont’d)

(3) Related party guarantee (Cont’d)

Whether

Commencement performance

Amount date of Expiry date of guarantee

Party being guaranteed under guarantee guarantee of guarantee is completed

Shanghai Chenming Pulp & Paper Sales Co. Ltd. 9000000.00 2024-6-14 2025-6-9 No

Shanghai Chenming Pulp & Paper Sales Co. Ltd. 8000000.00 2024-6-20 2025-5-28 No

Shanghai Chenming Pulp & Paper Sales Co. Ltd. 20000000.00 2024-6-21 2025-6-18 No

Chenming (HK) Limited 14150000.00 2024-6-17 2024-8-5 No

Chenming (HK) Limited 34417275.07 2024-1-4 2030-1-3 No

Jilin Chenming Paper Co. Ltd. 14000000.00 2024-3-11 2024-9-6 No

Jilin Chenming Paper Co. Ltd. 33505524.00 2024-1-19 2024-7-23 No

Jilin Chenming Paper Co. Ltd. 16000000.00 2024-6-19 2025-6-17 No

Jilin Chenming Paper Co. Ltd. 63640000.00 2024-4-16 2024-10-16 No

Jilin Chenming Paper Co. Ltd. 200000000.00 2024-1-19 2024-7-18 No

Jilin Chenming Paper Co. Ltd. 200000000.00 2023-12-15 2025-12-15 No

Huanggang Chenming Pulp & Paper Co. Ltd. 45000000.00 2023-8-10 2024-8-9 No

Huanggang Chenming Pulp & Paper Co. Ltd. 30000000.00 2023-7-18 2024-7-17 No

Huanggang Chenming Pulp & Paper Co. Ltd. 90000000.00 2024-5-20 2025-5-19 No

Huanggang Chenming Pulp & Paper Co. Ltd. 20000000.00 2024-4-28 2025-4-27 No

Huanggang Chenming Pulp & Paper Co. Ltd. 20000000.00 2023-8-18 2024-8-16 No

Huanggang Chenming Pulp & Paper Co. Ltd. 120000000.00 2023-7-12 2024-7-11 No

Huanggang Chenming Pulp & Paper Co. Ltd. 50000000.00 2023-9-28 2024-9-28 No

Huanggang Chenming Pulp & Paper Co. Ltd. 50000000.00 2023-10-13 2024-10-13 No

Huanggang Chenming Pulp & Fiber Trading

Co. Ltd. 10000000.00 2023-8-31 2024-8-30 No

Huanggang Chenming Pulp & Fiber Trading

Co. Ltd. 10000000.00 2023-9-26 2024-9-26 No

Huanggang Chenming Pulp & Fiber Trading

Co. Ltd. 10000000.00 2023-11-13 2024-11-13 No

Huanggang Chenming Pulp & Fiber Trading

Co. Ltd. 10000000.00 2023-11-24 2024-11-22 No

Shouguang Chenming Import and Export Trade

Co. Ltd. 149999600.00 2023-12-21 2024-6-19 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 200000000.00 2023-7-21 2024-7-20 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 60000000.00 2023-7-28 2024-7-27 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2023-8-8 2024-8-7 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2023-8-11 2024-8-10 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 3900000.00 2023-8-11 2024-8-10 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 67000000.00 2023-8-14 2024-8-13 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 59000000.00 2023-8-14 2024-8-13 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2023-8-24 2024-8-23 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2023-9-27 2024-9-26 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 78000000.00 2023-10-11 2024-10-11 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 113000000.00 2023-10-12 2024-10-12 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 85500000.00 2023-11-29 2024-11-21 No

146 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

XIV. Related Parties and Related Party Transactions (Cont’d)

5. Related party transactions (Cont’d)

(3) Related party guarantee (Cont’d)

Whether

Commencement performance

Amount date of Expiry date of guarantee

Party being guaranteed under guarantee guarantee of guarantee is completed

Zhanjiang Chenming Pulp & Paper Co. Ltd. 6000000.00 2023-12-4 2024-11-26 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2023-12-9 2024-12-8 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2024-1-3 2025-1-2 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 67000000.00 2024-1-11 2024-7-10 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 65000000.00 2024-1-16 2024-7-15 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 200000000.00 2024-1-23 2024-7-22 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 37000000.00 2024-1-18 2024-7-16 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 48000000.00 2024-2-1 2024-7-26 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 6000000.00 2024-3-18 2024-9-11 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 38000000.00 2024-3-21 2025-3-20 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 205000000.00 2024-3-20 2025-3-20 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 10500000.00 2024-3-26 2025-3-26 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 31000000.00 2024-3-28 2025-3-27 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 30000000.00 2024-3-29 2025-3-27 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2024-4-9 2024-9-6 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 50290000.00 2024-4-15 2024-10-15 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 75200000.00 2024-5-11 2024-11-11 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 23500000.00 2024-5-11 2024-11-11 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 50290000.00 2024-5-15 2024-11-15 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 209000000.00 2024-5-16 2024-11-11 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 25000000.00 2024-5-16 2025-5-15 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2024-5-22 2024-11-21 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 81200000.00 2024-5-23 2024-11-26 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 60000000.00 2024-5-27 2025-5-26 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 45000000.00 2024-5-29 2025-5-28 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 63000000.00 2024-5-31 2025-5-29 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 40000000.00 2024-6-6 2025-6-5 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 38372000.00 2024-6-6 2025-6-3 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 47784000.00 2024-6-6 2025-6-3 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 40000000.00 2024-6-12 2024-12-11 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 48000000.00 2024-6-26 2025-6-25 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 62000000.00 2024-6-28 2025-6-26 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 70540260.41 2022-6-29 2025-6-29 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 61000000.00 2023-3-31 2026-3-30 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 120000000.00 2023-6-2 2026-6-2 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 68993057.40 2023-6-20 2026-6-20 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 250000000.00 2023-7-12 2026-7-12 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2024-4-29 2025-10-29 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 182326261.08 2023-11-8 2028-11-8 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 85000000.00 2024-1-12 2024-7-12 No

SHANDONG CHENMING PAPER HOLDINGS LIMITED 147

INTERIM REPORT 2024I Financial Report

XIV. Related Parties and Related Party Transactions (Cont’d)

5. Related party transactions (Cont’d)

(3) Related party guarantee (Cont’d)

Whether

Commencement performance

Amount date of Expiry date of guarantee

Party being guaranteed under guarantee guarantee of guarantee is completed

Zhanjiang Chenming Pulp & Paper Co. Ltd. 70000000.00 2024-2-7 2024-8-7 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 65000000.00 2024-3-28 2024-9-28 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 56000000.00 2024-4-11 2024-10-11 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 42000000.00 2024-4-12 2024-10-12 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 40000000.00 2024-5-13 2024-11-13 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 20200000.00 2024-5-14 2024-11-14 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 40000000.00 2024-5-14 2024-11-14 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 65000000.00 2024-6-24 2024-12-24 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 58940000.00 2024-6-27 2024-12-27 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 70000000.00 2024-6-27 2024-12-27 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 26620000.00 2024-6-28 2024-12-28 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 25000000.00 2024-6-28 2024-12-28 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 69440000.00 2024-6-28 2024-12-28 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 70000000.00 2022-6-17 2025-6-16 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 70000000.00 2022-6-17 2025-6-16 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 42300000.00 2022-10-25 2024-10-19 No

Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2023-12-26 2025-1-24 No

Hainan Chenming Technology Co. Ltd. 60000000.00 2024-4-11 2024-10-11 No

Hainan Chenming Technology Co. Ltd. 50000000.00 2024-5-30 2024-11-30 No

Hainan Chenming Technology Co. Ltd. 50050000.00 2023-11-29 2024-11-22 No

Hainan Chenming Technology Co. Ltd. 19950000.00 2023-12-1 2024-11-25 No

Hainan Chenming Technology Co. Ltd. 56400000.00 2024-1-2 2027-7-2 No

Hainan Chenming Technology Co. Ltd. 186000000.00 2024-3-27 2024-9-27 No

Hainan Chenming Technology Co. Ltd. 30000000.00 2024-2-2 2025-1-29 No

Hainan Chenming Technology Co. Ltd. 20000000.00 2024-2-5 2025-1-31 No

Hainan Chenming Technology Co. Ltd. 39600000.00 2024-5-21 2024-11-21 No

Hainan Chenming Technology Co. Ltd. 50000000.00 2024-4-10 2025-4-7 No

Jiangxi Chenming Paper Co. Ltd. 100000000.00 2023-7-5 2024-7-4 No

Jiangxi Chenming Paper Co. Ltd. 10000000.00 2023-9-5 2024-8-30 No

Jiangxi Chenming Paper Co. Ltd. 3339000.00 2023-12-25 2024-9-30 No

Jiangxi Chenming Paper Co. Ltd. 1452000.00 2024-1-29 2024-9-30 No

Jiangxi Chenming Paper Co. Ltd. 193450000.00 2024-2-23 2024-8-20 No

Jiangxi Chenming Paper Co. Ltd. 100000000.00 2024-3-13 2025-3-8 No

Jiangxi Chenming Paper Co. Ltd. 20000000.00 2024-3-22 2024-9-18 No

Jiangxi Chenming Paper Co. Ltd. 10000000.00 2024-1-4 2024-10-30 No

Jiangxi Chenming Paper Co. Ltd. 70000000.00 2024-4-25 2025-4-24 No

Jiangxi Chenming Paper Co. Ltd. 10000000.00 2024-6-7 2025-6-3 No

Jiangxi Chenming Paper Co. Ltd. 30000000.00 2024-6-11 2025-6-9 No

Jiangxi Chenming Paper Co. Ltd. 30000000.00 2024-6-17 2025-6-13 No

Jiangxi Chenming Paper Co. Ltd. 10000000.00 2024-6-18 2025-6-16 No

Jiangxi Chenming Paper Co. Ltd. 16000000.00 2024-6-21 2025-6-17 No

Jiangxi Chenming Paper Co. Ltd. 10000000.00 2024-6-24 2025-6-20 No

Jiangxi Chenming Paper Co. Ltd. 127000000.00 2024-6-20 2024-12-19 No

Jiangxi Chenming Paper Co. Ltd. 13000000.00 2024-6-26 2024-12-25 No

Jiangxi Chenming Paper Co. Ltd. 10000000.00 2024-5-31 2025-5-26 No

Jiangxi Chenming Paper Co. Ltd. 34000000.00 2024-6-20 2025-6-15 No

148 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

XIV. Related Parties and Related Party Transactions (Cont’d)

5. Related party transactions (Cont’d)

(3) Related party guarantee (Cont’d)

Whether

Commencement performance

Amount date of Expiry date of guarantee

Party being guaranteed under guarantee guarantee of guarantee is completed

Jiangxi Chenming Paper Co. Ltd. 4600000.00 2024-4-29 2025-4-29 No

Jiangxi Chenming Paper Co. Ltd. 30000000.00 2023-12-4 2025-6-3 No

Jiangxi Chenming Paper Co. Ltd. 10000000.00 2023-9-27 2024-9-20 No

Shanghai Chenming Pulp & Paper Sales Co. Ltd. 9500000.00 2023-2-13 2026-2-12 No

Jiangxi Chenming Paper Co. Ltd. 200000000.00 2024-5-31 2025-11-29 No

Jiangxi Chenming Paper Co. Ltd. 250000000.00 2024-6-13 2025-12-12 No

Jiangxi Chenming Paper Co. Ltd. 30000000.00 2023-9-8 2026-8-22 No

Jiangxi Chenming Paper Co. Ltd. 27900000.00 2023-3-31 2024-9-30 No

Jiangxi Chenming Paper Co. Ltd. 29700000.00 2023-5-9 2024-9-30 No

Jiangxi Chenming Paper Co. Ltd. 2295000.00 2023-6-27 2024-9-30 No

Jiangxi Chenming Paper Co. Ltd. 5035000.00 2023-8-7 2024-9-30 No

Jiangxi Chenming Paper Co. Ltd. 3191050.00 2023-9-15 2024-9-30 No

Total 12006837947.79

(4) Related party lending and borrowing

Unit: RMB

Borrowing Commencement

Related party amount date Expiry date Description

Borrowing

Chenming Holdings Co. Ltd. 154750000.00 2024-4-11 2025-4-10 Controlling

shareholder

Guangdong Nanyue Bank Co. Ltd. 2185980000.00 2024-1-1 2024-12-31 Associate

Borrowing

Weifang Port Wood Chip Wharf Co. Ltd. 35000000.00 2024-6-28 2025-6-27 Joint venture

(5) Related party asset transfer and debt restructuring

Unit: RMB

Amount for Amount for

Related party Details of related party transaction the period the prior period

Shouguang Chenming Tr ansfer of 90.05% equity interest in Yujing 162992813.25 0.00

Guangyuan Real Property Hotel to Guangyuan Real Property from

Company Limited Shandong Chenming

Shouguang Chenming Tr ansfer of the debts of Yujing Hotel to 193507186.75 0.00

Guangyuan Real Property Guangyuan Real Property from Shandong

Company Limited Chenming

SHANDONG CHENMING PAPER HOLDINGS LIMITED 149

INTERIM REPORT 2024I Financial Report

XIV. Related Parties and Related Party Transactions (Cont’d)

6. Related party accounts receivable and accounts payable

(1) Receivables

Unit: RMB

Closing balance Opening balance

Item Related party Book balance Bad debts provision Book balance Bad debts provision

Accounts receivable Shouguang Chenming Huisen 1461303.22 10116.20

New-style Construction Materials

Co. Ltd.Accounts receivable Chenming (Qingdao) Asset 2359.03 165.13 2359.03 23.18

Management Co. Ltd.Accounts receivable Shandong Yujing Grand Hotel 2990413.66 972266.09

Co. Ltd.Other receivables Weifang Port Wood Chip Wharf 77465749.84 9279154.44 75554749.84 8991998.46

Co. Ltd.Other receivables Shouguang Meite Environmental 10801455.38 2151596.53 10427200.00 2102653.38

Technology Co. Ltd.Other receivables Wuhan Chenming Hanyang Paper 232643410.74 227252701.60

Holdings Co. Ltd.Other receivables Chenming (Qingdao) Asset 81000.00

Management Co. Ltd.Other receivables Shouguang Chenming Guangyuan 172308375.85

Real Property Company Limited

Prepayments Shandong Yujing Grand Hotel Co. 106953.14

Ltd.

(2) Payable

Unit: RMB

Closing book Opening book

Item Related party balance balance

Accounts payable Weifang Port Wood Chip Wharf Co. Ltd. 29897541.51 6932747.45

Accounts payable Shouguang Meite Environmental Technology Co. Ltd. 13489957.44 12973303.12

Accounts payable Weifang Xingxing United Chemical Co. Ltd. 26905494.34 26905494.34

Accounts payable Wuhan Chenming Hanyang Paper Holdings Co. Ltd. 14376757.63 14334304.63

Accounts payable Wuhan Chenming Qianneng Electric Power Co. Ltd. 4859.22 72483.77

Accounts payable Shandong Yujing Grand Hotel Co. Ltd. 3107683.37 －

Other payables Weifang Xingxing United Chemical Co. Ltd. 16860000.00 16860000.00

Other payables Chenming Holdings Co. Ltd. 118012703.34 135612917.24

Other payables Lide Technology Co. Ltd. 559897.05 559897.05

Other payables Chenming (Qingdao) Asset Management Co. Ltd. 115583.42 115583.42

Other payables Wuhan Chenming Hanyang Paper Holdings Co. Ltd. 365200000.00 305000000.00

150 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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: RMB

Closing book Opening book

Item Related party balance balance

Bank deposit Guangdong Nanyue Bank Co. Ltd. 20415.23 7189314.62

Other monetary funds Guangdong Nanyue Bank Co. Ltd. 1057450000.00 1311200000.00

(4) Loans from related parties

Unit: RMB

Closing book Opening book

Item Related party balance balance

Short-term borrowings Guangdong Nanyue Bank Co. Ltd. 2185980000.00 2069060000.00

XV. Undertaking and contingency

1. Significant commitments

Unit: RMB

Capital commitments contracted for but not yet necessary to be Balance as at the

recognised on the balance sheet Closing balance end of the prior year

Commitments in relation to acquisition and

construction of long-term assets 301225074.72 288776312.58

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.SHANDONG CHENMING PAPER HOLDINGS LIMITED 151

INTERIM REPORT 2024I 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 reporting

system the Company’s operating business is divided into 4 reporting segments. These report segments are

determined based on the financial information required by the company’s daily internal management. The

management of the Group regularly evaluates the operating results of these reporting segments to determine the

allocation of resources to them and evaluate their performance.

(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 standards

adopted by each segment when reporting to management. These accounting policies and measurement basis are

consistent with the accounting policies and measurement basis used in preparing the financial statements.

(2) Financial Information of Reporting Segment

Unit: RMB

Item Machine-made paper Financial services Property and rentals Others Inter-segment offset Total

Revenue 13742039658.85 197468294.38 105844153.54 639029301.66 799649889.39 13884731519.04

Of which: Revenue from

external transactions 13481661035.71 146357054.10 96646679.91 160066749.32 13884731519.04

Revenue from inter-segment

transactions 260378623.14 51111240.28 9197473.63 478962552.34 799649889.39

Of which: Revenue from

principal activities 13555077570.55 197468294.38 102722133.91 299057442.10 391613940.78 13762711500.16

Operating costs 12191395099.29 70513208.68 105182654.77 629707810.33 811293064.07 12185505709.00

Of which: Costs of principal

activities 11797604920.59 70377588.60 51405736.87 292234927.26 121751995.46 12089871177.86

Operating expenses 90578013.33 6328139.21 2397678.67 99303831.21

Of which: Wages 46380498.49 1631650.31 830973.43 48843122.23

Depreciation expenses 559024.67 919012.26 2254.69 1480291.62

Office expenses 1173132.24 2728.93 133.82 1175994.99

Travel expenses 13603124.89 – 219907.64 13823032.53

Selling commissions 2319517.67 153187.43 2472705.10

Rental expenses 3372915.52 – 55471.70 3428387.22

Hospitality expenses 20957240.70 29770.00 84388.00 21071398.70

Warehouse expenses 219860.17 – 81534.49 301394.66

Others 4312216.65 1425460.04 969827.47 6707504.16

Operating profit/(loss) 38220171.96 29331645.10 -133609976.95 20842194.71 26564076.87 -71780042.05

Total assets 83443926086.47 21264601133.45 9207711238.15 7376860223.71 43791817462.05 77501281219.73

Total liabilities 61722970828.65 3858321675.59 4894655332.89 2157498738.00 15823400367.68 56810046207.45

Total cost of construction in

progress incurred for the

current period 239900561.80 239900561.80

Fixed assets purchased 66028316.59 3115957.85 199070.00 3151636.01 72494980.45

Intangible assets purchased

Basis of accounting: The transfer prices among the Company’s segments were based on market prices.

152 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 Chenming

Holdings has commenced equity financing business with three overseas organisations (hereinafter referred to as

the “Lenders”). Hong Kong Chenming Holdings deposited 210.72 million B shares (representing 7.07% of the total

share capital of the Company) and 153.41 million H shares (representing 5.15% of the total share capital of the

Company) held by Hong Kong Chenming Holdings with custodian designated by the Lenders who provided the

loan to Hong Kong Chenming Holdings.After repaying the entire loan from one of the Lenders Hong Kong Chenming Holdings requested for the return of

the shares but the lender refused to co-operate in the return of the 110 million B shares and 95 million H shares

on the grounds that there had been a breach of contract of default during the life of the loan. Chenming Hong

Kong Holdings verified the custody of the shares with the other two lenders who have not yet fully repaid the

loans 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 that

there 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 collect

effective evidence. As of the date of this announcement Chenming Holdings is under normal production and

operation 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 of

shareholding of Chenming Holdings in the Company but will have no impact on the status of Chenming Holdings

as 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 dispute

and 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 Instance

to seek the dismissal or adjournment of the winding-up petition filed by HKK2 against the Company On 25 July

2023 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. Justice

Harris which ruled that the winding-up petition be stayed and the relevant arbitration hearing was held in May

2024 given that the Company’s arbitration petition filed in the Hong Kong International Arbitration Centre in June

2022 against the Joint Venture Contracts formed the basis of the Company’s cross claim against HKK2 in the

winding-up proceedings.SHANDONG CHENMING PAPER HOLDINGS LIMITED 153

INTERIM REPORT 2024I Financial Report

XVIII. Major Item Notes of the Parent Company’s Financial Statements

1. Accounts receivable

(1) Disclosure by ageing

Unit: RMB

Closing book Opening book

Ageing balance balance

Within 1 year (including 1 year) 586716474.76 18345187.32

1 to 2 years 11500000.00 11500000.00

2 to 3 years

Over 3 years 3002821.17 3002821.17

Subtotal 601219295.93 32848008.49

Less: Bad debt provision 4746320.01 4631237.48

Total 596472975.92 28216771.01

(2) Disclosure by bad debt provision method

Unit: RMB

Closing balance Opening balance

Book balance Bad debts provision Book balance Bad debts provision

Provision Provision

Percentage percentage Percentage percentage

Category Amount (%) Amount (%) Carrying amount Amount (%) Amount (%) Carrying amount

Accounts receivable assessed

individually for bad debt provision 4422600.00 0.74 4422600.00 100.00 –

Accounts receivable assessed

collectively for bad debt provision 596796695.93 99.26 323720.01 0.05 596472975.92 32848008.49 100.00 4631237.48 14.10 28216771.01

Including:

Due from related party customers 544930926.26 90.64 544930926.26 10453076.75 31.82 10453076.75

Due from non-related party customers 51865769.67 8.63 323720.01 0.62 51542049.66 22394931.74 68.18 4631237.48 20.68 17763694.26

Total 601219295.93 100.00 4746320.01 0.79 596472975.92 32848008.49 100.00 4631237.48 14.10 28216771.01

154 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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: RMB

Closing balance

Bad debts Provision

Name Book balance provision percentage (%)

Within 1 year 534930926.26

1 to 2 years 10000000.00

Total 544930926.26

Items assessed collectively for bad debt provision: Receivables from non-related party customer

Unit: RMB

Closing balance

Bad debts Provision

Name Book balance provision percentage (%)

Within 1 year 50285548.50 243498.84 0.48

1 to 2 years 1500000.00

2 to 3 years

Over 3 years 80221.17 80221.17 100.00

Total 51865769.67 323720.01 0.62

SHANDONG CHENMING PAPER HOLDINGS LIMITED 155

INTERIM REPORT 2024I 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: RMB

Changes in the period

Opening Recovery Closing

Category balance Provision or reversal Write-off Others balance

Bad debt provision 4631237.48 115082.53 4746320.01

Total 4631237.48 115082.53 4746320.01

(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 amounted

to RMB576767929.02 in total accounting for 95.93% of the total closing balance of accounts receivable. The

closing balance of the corresponding bad debt provision amounted to RMB157570.79 in total.Unit: RMB

Percentage to

total closing

Closing balance balance of Closing balance

of accounts accounts of bad debt

Name of entity receivable receivable provision

Customer I 532786324.64 88.62

Customer II 15390418.86 2.56 107732.93

Customer III 12144601.62 2.02

Customer IV 9326889.80 1.55

Customer V 7119694.10 1.18 49837.86

Total 576767929.02 95.93 157570.79

156 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I Financial Report

XVIII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)

2. Other receivables

Unit: RMB

Item Closing balance Opening balance

Other receivables 8434729619.19 9237241240.86

Total 8434729619.19 9237241240.86

(1) Other receivables

1) Other receivables by nature

Unit: RMB

Closing book Opening book

Nature balance balance

Open credit 8511123024.64 9304134372.16

Reserve and borrowings 13813236.29 22523648.60

Guarantee deposit and deposit 740000.00 740000.00

Others 2117542.39 1793548.63

Subtotal 8527793803.32 9329191569.39

Bad debt provision 93064184.13 91950328.53

Total 8434729619.19 9237241240.86

2) Disclosure by ageing

Unit: RMB

Closing book Opening book

Ageing balance balance

Within 1 year (including 1 year) 8396377054.37 9165796778.41

1 to 2 years 15192309.74 76289024.67

2 to 3 years 35152531.61 7386768.10

2 to 3 years 81071907.60 79718998.21

Subtotal 8527793803.32 9329191569.39

Bad debt provision 93064184.13 91950328.53

Total 8434729619.19 9237241240.86

SHANDONG CHENMING PAPER HOLDINGS LIMITED 157

INTERIM REPORT 2024I 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: RMB

Stage 1 Stage 2 Stage 3

ECLs for the Lifetime ECLs Lifetime ECLs

Bad debts provision next 12 months (not credit-impaired) (credit-impaired) Total

Balance as at 1 January 2024 41856357.86 50093970.67 91950328.53

Balance as at 1 January 2024 for the period

– Transferred to stage 2

– Transferred to stage 3

– Reversed to stage 2

– Reversed to stage 1

Provision for the period 838532.49 315323.11 1153855.60

Reversal for the period 40000.00 40000.00

Transfer for the period

Write-off for the period

Other changes

Balance as at 30 June 2024 42694890.35 50369293.78 93064184.13

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

Bad debt provision for the period:

Unit: RMB

Changes in the period

Opening Recovery

Category balance Provision or reversal Transfer or Write-off Others Closing balance

Other receivables 91950328.53 1153855.60 40000.00 93064184.13

Total 91950328.53 1153855.60 40000.00 93064184.13

158 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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 amounted

to RMB5617224908.44 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

Percentage

to total closing Closing balance

balance of other of bad debt

Name of entity Nature Closing balance Ageing receivables (%) provision

Customer 1 Open credit 1681156791.36 Within 1 year 19.71%

Customer 2 Open credit 1324500000.00 Within 1 year 15.53%

Customer 3 Open credit 1110117472.36 Within 1 year 13.02%

Customer 4 Open credit 1041000000.00 Within 1 year 12.21%

Customer 5 Open credit 460450644.72 Within 1 year 5.40%

Total 5617224908.44 65.87%

3. Long-term equity investments

Unit: RMB

Closing balance Opening balance

Impairment Impairment

Item Book balance provision Carrying amount Book balance provision Carrying amount

Investment in subsidiaries 17986937687.22 17986937687.22 17898687687.22 17898687687.22

Investment in associates and joint ventures 369476431.73 5994545.96 363481885.77 406306689.25 5994545.96 400312143.29

Total 18356414118.95 5994545.96 18350419572.99 18304994376.47 5994545.96 18298999830.51

SHANDONG CHENMING PAPER HOLDINGS LIMITED 159

INTERIM REPORT 2024I 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

Opening Change for the period Closing

Opening balance Closing balance of

balance of impairment Additional Withdrawn Impairment balance impairment

Investee (carrying amount) provision contribution contribution provision Others (carrying amount) provision

Chenming Paper Korea Co. Ltd. 6143400.00 6143400.00

Chenming GmbH 4083235.00 4083235.00

Hailaer Chenming Paper Co. Ltd. 12000000.00 12000000.00

Huanggang Chenming Pulp & Paper

Co. Ltd. 2350000000.00 2350000000.00

Huanggang Chenming Arboriculture

Development Co. Ltd. 70000000.00 70000000.00

Jinan Chenming Investment Management

Co. Ltd. 100000000.00 100000000.00

Shandong Yujing Grand Hotel Co. Ltd. 280500000.00 280500000.00

Zhanjiang Chenming Pulp & Paper Co. Ltd. 5206250000.00 68750000.00 5275000000.00

Shouguang Chenming Modern Logistic

Co. Ltd. 10000000.00 10000000.00

Shouguang Chenming Art Paper Co. Ltd. 113616063.80 113616063.80

Shouguang Meilun Paper Co. Ltd 4649441979.31 300000000.00 4949441979.31

Shouguang Shun Da Customs Declaration

Co Ltd. 1500000.00 1500000.00

Shouguang Chenming Import and Export

Trade Co. Ltd. 250000000.00 250000000.00

Shouguang Chenming Papermaking

Machine Co. Ltd. 2000000.00 2000000.00

Shouguang Hongxiang Printing and

Packaging Co. Ltd. 3730000.00 3730000.00

Shandong Chenming Group

Finance Co. Ltd. 4000000000.00 4000000000.00

Chenming Arboriculture Co. Ltd. 45000000.00 45000000.00

Chenming Paper United States Co. Ltd. 6407800.00 6407800.00

Weifang Chenming Growth Driver

Replacement Equity Investment Fund

Partnership (Limited Partnership) 559722323.96 559722323.96

Weifang Chendu Equity Investment

Partnership (Limited Partnership) 228292885.15 228292885.15

Total 17898687687.22 368750000.00 280500000.00 17986937687.22

160 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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

Change for the period

Investment

Opening gain or loss Adjustment Other Closing Closing

Opening balance recognised of other change in Distribution of balance balance of

balance of impairment Additional Withdrawn under comprehensive equity cash dividend or Impairment (carrying impairment

Investee (carrying amount) provision contribution contribution equity method income interest profit declared provisio n Other s amoun t) provision

I. Joint ventures

Shouguang Chenming Huisen

New-style Construction

Materials Co. Ltd. 7400283.59 466616.49 7866900.08

Weifang Port Wood Chip Wharf

Co. Ltd. 79142080.56 8850767.29 87992847.85

Subtotal 86542364.15 9317383.78 95859747.93

II. Associates

Zhuhai Dechen New Third Board

Equity Investment Fund

Company (Limited Partnership) 27263804.36 -4094.51 27259709.85

Ningbo Kaichen Huamei Equity

Investment Fund Partnership

(Limited Partnership) 278128830.13 -45877685.10 232251145.03

Chenming (Qingdao) Asset

Management Co. Ltd. 8377144.65 -265861.69 8111282.96

Xuchang Chenming Paper

Co. Ltd. 5994545.96 5994545.96

Subtotal 313769779.14 5994545.96 -46147641.30 267622137.84 5994545.96

Total 400312143.29 5994545.96 -36830257.52 363481885.77 5994545.96

Determination of net amount of recoverable amount measured at fair value after deducting disposal expenses

□ Applicable □ Not applicable

Determination of present value of recoverable amount based on expected cash flows

□ Applicable □ Not applicable

SHANDONG CHENMING PAPER HOLDINGS LIMITED 161

INTERIM REPORT 2024I Financial Report

XVIII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)

4. Revenue and operating costs

Unit: RMB

Amount for the period Amount for the prior period

Item Revenue Costs Revenue Costs

Principal activities 2708082195.91 2557283330.60 2588800023.67 2692576337.91

Other activities 1697561235.90 1488712049.31 1315784940.43 1054300999.17

Total 4405643431.81 4045995379.91 3904584964.10 3746877337.08

Breakdown information of operating revenues and operating costs:

Unit: RMB

Machine-made paper Others Total

Category of contract Operating Revenue Operating Costs Operating Revenue Operating Costs Operating Revenue Operating Costs

Type of goods 2708082195.91 2557283330.60 1697561235.90 1488712049.31 4405643431.81 4045995379.91

Including:

Machine-made paper 2368279496.79 2232200488.11 2368279496.79 2232200488.11

Others 339802699.12 325082842.49 1697561235.90 1488712049.31 2037363935.02 1813794891.80

By geographical area 2708082195.91 2557283330.60 1697561235.90 1488712049.31 4405643431.81 4045995379.91

Including:

Mainland China 2240577709.61 2045306440.76 1697561235.90 1488712049.31 3938138945.51 3534018490.07

Other countries and regions 467504486.30 511976889.84 467504486.30 511976889.84

By the timing of delivery 2708082195.91 2557283330.60 1697561235.90 1488712049.31 4405643431.81 4045995379.91

Including:

Goods (at a point in time) 2708082195.91 2557283330.60 1596441200.61 1407025247.63 4304523396.52 3964308578.23

Services (within a certain

period) 101120035.29 81686801.68 101120035.29 81686801.68

By sales channels 2708082195.91 2557283330.60 1697561235.90 1488712049.31 4405643431.81 4045995379.91

Including:

Distribution 2708082195.91 2557283330.60 2708082195.91 2557283330.60

Direct sales 1697561235.90 1488712049.31 1697561235.90 1488712049.31

Total 2708082195.91 2557283330.60 1697561235.90 1488712049.31 4405643431.81 4045995379.91

162 SHANDONG CHENMING PAPER HOLDINGS LIMITED

INTERIM REPORT 2024I 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:

Nature of goods Types of quality

Time for that the Company’s assurance

fulfilment of Significant Company Whether the person commitments offered by the

performance terms undertakes is the primary expected to be Company and

Item obligations of payment to transfer person in charge refunded to customers related obligations

Machine-made paper Do mestic sales on the Dom estic sales tend to Pro duces easily Yes None Gu aranteed quality assurance should there

day of delivery to the be provided on an distinguishable be objections to product quality within

customer; foreign invoice basis; foreign 7 days of arrival the products can be

sales on the day of sales tend to be returned and exchanged.customs clearance prepaid.Other explanations: The Company’s performance obligations for sales of machine-made paper are generally less than

one year and the Company takes advance payments or provides credit terms depending on the customer. When the

Company is the primary responsible party for a sale it generally obtains the unconditional right to receive payment

when control of the merchandise is transferred to the customer either at the time of shipment or upon delivery to the

destination 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 uncompleted

performance obligation was RMB447913981.07 in which RMB447913981.07 was expected to be recognised in 2024.

5. Investment income

Unit: RMB

Amount for Amount for

Item the period the prior period

Income from long-term equity investments accounted for using the

cost method 109400000.00 80000000.00

Income from long-term equity investments accounted for using the

equity method -36830257.52 -2829947.39

Investment gain on disposal of long-term equity investments -117507186.75

Investment gain on holding other non-current financial assets 1298463.59 630212.77

Investment gain on derecognition of financial assets -10845725.80 -22621312.74

Total -54484706.48 55178952.64

SHANDONG CHENMING PAPER HOLDINGS LIMITED 163

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XIX. Supplementary information

1. Breakdown of extraordinary gains or losses for the current period

□ Applicable □ Not applicable

Unit: RMB

Item Amount Description

Profit or loss from disposal of non-current assets 235133918.55

Government grants (except for the government grants closely related to

the normal operation of the Company granted in accordance with an

established standard and having an ongoing effect on the Company’s

profit or loss in compliance with national policies and regulations)

accounted for in profit or loss for the current period 35234521.15

Except for effective hedging business conducted in the ordinary course

of business of the Company gain or loss arising from the change in fair

value of financial assets and financial liabilities held by a non-financial

company as well as gain or loss arising from disposal of its financial

assets and financial liabilities -19293314.75

Reversal of provision for impairment of receivables individually tested for

impairment 26150527.36

Profit or loss from debt restructuring 3502149.44

Profit or loss from changes in the fair value of consumable biological assets

subsequently measured at fair value 5184193.11

Other non-operating income and expenses other than the above items 1981541.21

Net extraordinary gains or losses 287893536.07

Less: Effect of income tax -13171226.69

Less: Effect of minority interest (after tax) 1553513.83

Total 299511248.93 －

164 SHANDONG CHENMING PAPER HOLDINGS LIMITED

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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 applicable

The 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

Disclosure for Companies Offering Their Securities to the Public No.1 – Extraordinary Gains or Losses defined as its

recurring gain or loss items

□ Applicable □ Not applicable

Amount involved

Item (RMB) Reason

Other income 29066863.89 Go vernment grants related to assets and closely related to the normal

operation of the Company as extraordinary gain or loss due to the

inclusion of their subsequent amortisation in other income and their

ongoing effect on the Company’s profit or loss.

2. Return on net assets and earnings per share

Rate of return Earnings per share

on net assets Basic Diluted

on weighted earnings per share earnings per share

Profit for the reporting period average basis (%) (RMB per share) (RMB per share)

Net profit attributable to ordinary shareholders of

the Company 0.17 0.01 0.01

Net profit after extraordinary gains or losses

attributable 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

SHANDONG CHENMING PAPER HOLDINGS LIMITED 165

INTERIM REPORT 2024