SHANDONG CHENMING PAPER HOLDINGS LIMITED 2021 Interim Financial Report
SHANDONG CHENMING PAPER HOLDINGS LIMITED
Interim Financial Report 2021
August 2021
I 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
Unit: RMB
Item 30 June 2021 31 December 2020
CURRENT ASSETS:
Monetary funds 16393514831.45 17759537598.98
Financial assets held for trading 101188881.03 192907800.62
Accounts receivable 1814158093.60 1984931665.82
Accounts receivable financing 921201223.62 488385666.76
Prepayments 695582134.61 964290512.36
Other receivables 2269274220.18 2417240559.46
Including: Interest receivable
Dividend receivable
Inventories 6901922518.26 5135293347.82
Non-current assets due within one year 3637802641.72 4222744207.34
Other current assets 3174933090.46 2716918695.85
Total current assets 35909577634.93 35882250055.01
NON-CURRENT ASSETS:
Long-term receivables 3645414234.30 4658884857.95
Long-term equity investments 3957602691.69 3906158402.45
Other non-current financial assets 1221910000.00 145910000.00
Investment property 5864080247.34 5943159568.00
Fixed assets 36554340755.44 37651706658.97
Construction in progress 220315554.79 179857941.83
Right-of-use assets 201808375.55 205876719.75
Intangible assets 1630226450.23 1774624509.33
Goodwill 32916531.95 32916531.95
Long-term prepaid expenses 51004948.82 51061485.49
Deferred income tax assets 1074398436.81 1084164679.14
Other non-current assets 237433282.50 58886418.75
Total non-current assets 54691451509.42 55693207773.61
Total assets 90601029144.35 91575457828.62
CURRENT LIABILITIES:
Short term borrowings 33167277711.37 32793992957.86
SHANDONG CHENMING PAPER HOLDINGS LIMITED 1
FINANCIAL REPORT 2021
I Financial Report
II. Financial Statements (Cont’d)
1. Consolidated Balance Sheet (Cont’d)
Item 30 June 2021 31 December 2020
Bills payable 3632929014.89 2998936736.34
Accounts payable 3540439024.95 4042430732.31
Contract liabilities 2186935751.42 1051147044.74
Employee benefits payable 264189760.62 232376585.31
Taxes payable 297515949.58 652647840.63
Other payables 2543329575.93 1956715367.83
Including: Interest payable 114998461.03 178992959.85
Dividend payable 661044485.66
Non-current liabilities due within one year 5252532028.56 7160949615.93
Other current liabilities – 157037833.35
Total current liabilities 50885148817.32 51046234714.30
NON-CURRENT LIABILITIES:
Long-term borrowings 6973604410.20 8077150979.15
Bonds payable 1536877351.46
Lease liabilities 60507444.90 60271769.90
Long-term payables 2294420531.46 2295309357.74
Provisions 325259082.28 325259082.28
Deferred income 1625472296.55 1637996636.51
Deferred income tax liabilities 6123405.17 6572535.97
Other non-current liabilities 1197016666.67 789521686.07
Total non-current liabilities 12482403837.23 14728959399.08
Total liabilities 63367552654.55 65775194113.38
OWNERS’ EQUITY:
Share capital 2984208200.00 2984208200.00
Other equity instruments 3234750000.00 5473500000.00
Including: Preference Shares 2238750000.00 4477500000.00
Perpetual Bonds 996000000.00 996000000.00
Capital reserves 5259395722.26 5321911413.75
Less: Treasury shares 226860000.00 226860000.00
Other comprehensive income -503780907.79 -561686607.66
Surplus reserves 1212009109.97 1212009109.97
General risk provisions 74122644.20 74122644.20
Retained profit 11261714960.62 9999764028.74
Total equity attributable to owners of the Company 23295559729.26 24276968789.00
Minority interest 3937916760.54 1523294926.24
Total owners’ equity 27233476489.80 25800263715.24
Total liabilities and owners’ equity 90601029144.35 91575457828.62
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
2 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company
Unit: RMB
Item 30 June 2021 31 December 2020
CURRENT ASSETS:
Monetary funds 5353674088.80 4720330804.07
Bills receivable 2214270000.00 1470720000.00
Accounts receivable 888035432.20 694836561.24
Accounts receivable financing 32503281.77 24339933.19
Prepayments 649108811.53 1697770445.12
Other receivables 12578118025.08 10637425503.02
Including: Dividend receivable 600000000.00 200000000.00
Inventories 910467941.76 637293495.29
Non-current assets due within one year 25000000.00 146934211.22
Other current assets 40621651.83 45764272.71
Total current assets 22691799232.97 20075415225.86
NON-CURRENT ASSETS:
Long-term receivables 61662304.85 64762373.99
Long-term equity investments 23098730054.75 22192108035.92
Other non-current financial assets 121910000.00 141910000.00
Fixed assets 3867514839.29 3984339880.51
Construction in progress 83773845.17 80192749.46
Intangible assets 527484352.71 534900368.31
Deferred income tax assets 344372815.11 418717829.13
Other non-current assets
Total non-current assets 28105448211.88 27416931237.32
Total Assets 50797247444.85 47492346463.18
CURRENT LIABILITIES:
Short-term borrowings 13549861184.52 10929616612.59
Bills payable 9329871983.83 7603416890.27
Accounts payable 3434010104.64 812111491.23
Contract liabilities 2206531454.37 156487086.88
Staff remuneration payables 102061005.75 89416732.50
Tax payables 99800601.54 147669266.97
Other payables 1779557232.73 5869352883.62
Including: Interest payable 87838138.92 97497305.56
Dividend payable 661044485.66
Non-current liabilities due within one year 1896218473.69 2374029490.27
Other current liabilities 312130833.35
Total current liabilities 32397912041.07 28294231287.68
SHANDONG CHENMING PAPER HOLDINGS LIMITED 3
FINANCIAL REPORT 2021
I Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company (Cont’d)
Item 30 June 2021 31 December 2020
NON-CURRENT LIABILITIES:
Long-term borrowings 828500000.00 1295000000.00
Bonds payable 439957250.00
Long-term payables 479023939.84 631776192.80
Provisions 325259082.28 325259082.28
Deferred income 36614078.19 38017165.55
Other non-current liabilities 1197016666.67 1194883344.67
Total non-current liabilities 2866413766.98 3924893035.30
Total liabilities 35264325808.05 32219124322.98
OWNERS’ EQUITY:
Share capital 2984208200.00 2984208200.00
Other equity instruments 3234750000.00 5473500000.00
Including: Preference Shares 2238750000.00 4477500000.00
Perpetual bonds 996000000.00 996000000.00
Capital reserves 5139388499.31 5124308464.42
Less: Treasury shares 226860000.00 226860000.00
Surplus reserves 1199819528.06 1199819528.06
Retained profit 3201615409.43 718245947.72
Total owners’ equity 15532921636.80 15273222140.20
Total liabilities and owners’ equity 50797247444.85 47492346463.18
4 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
II. Financial Statements (Cont’d)
3. Consolidated income statement
Unit: RMB
Item First half of 2021 First half of 2020
I. Total revenue 17172816354.53 13599805765.86
Including: Revenue 17172816354.53 13599805765.86
II. Total operating costs 14740489809.82 13331852506.55
Including: Operating costs 11861060977.92 10679861701.47
Taxes and surcharges 163794026.94 107048098.21
Sales and distribution expenses 147622738.74 158180752.19
General and administrative expenses 492048555.49 491987245.33
Research and development expense 757021354.57 548557146.89
Finance expenses 1318942156.16 1346217562.46
Including: Interest expenses 1399107777.11 1439500160.77
Interest income 221507514.16 276115018.97
Plus: Other income 123098748.58 133433974.45
Investment income (“-” denotes loss) 98631701.79 136893482.97
Including: Investment income from
associates and joint ventures 82955115.52 120115440.96
Gain on change in fair value (“-” denotes loss) -99119691.89 -9246743.86
Credit impairment loss (“-” denotes loss) -279757983.46 -257855903.60
Loss on impairment of assets (“-” denotes loss) – -163717.76
Gain on disposal of assets (“-” denotes loss) 48920358.12 -4705886.89
III. Operating profit (“-” denotes loss) 2324099677.85 266308464.62
Plus: Non-operating income 18721283.64 642400117.78
Less: Non-operating expenses 2332530.96 9007544.18
IV. Total profit (“-” denotes loss) 2340488430.53 899701038.22
Less: Income tax expenses 274057779.20 237960188.15
V. Net profit (“-” denotes loss) 2066430651.33 661740850.07
(I) Classification according to the continuity of operation
1. Net profit from continuing operations
(“-” denotes loss) 2066430651.33 661740850.07
(II) Classification according to ownership
1. Net profit attributable to shareholders
of the Company 2021095417.54 516326703.48
2. Profit or loss of minority interest 45335233.79 145414146.59
VI. Net other comprehensive income after tax 50956682.73 -108564087.60
Net other comprehensive income after tax attributable to
shareholders of the Company 50956682.73 -108564087.60
(I) Other comprehensive income that cannot be reclassified
to profit and loss in subsequent periods
(II) Other comprehensive income that will be reclassified to
profit and loss in subsequent periods 50956682.73 -108564087.60
1. Translation differences of financial statements
denominated in foreign currency 50956682.73 -108564087.60
SHANDONG CHENMING PAPER HOLDINGS LIMITED 5
FINANCIAL REPORT 2021
I Financial Report
II. Financial Statements (Cont’d)
3. Consolidated income statement (Cont’d)
Item First half of 2021 First half of 2020
VII. Total comprehensive income 2117387334.06 553176762.47
Total comprehensive income attributable to shareholders
of the Company 2072052100.27 407762615.88
Total comprehensive income attributable to minority interest 45335233.79 145414146.59
VIII. Earnings per share:
(I) Basic earnings per share 0.604 0.051
(II) Diluted earnings per share 0.604 0.051
For the business combination involving enterprises under common control during the reporting period the net profit
realised by the parties being absorbed before the combination was nil (the same period last year: nil).Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
6 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
II. Financial Statements (Cont’d)
4. Income statement of the Company
Unit: RMB
Item First half of 2021 First half of 2020
I. Revenue 4683453465.64 3847193657.53
Less: Operating costs 3511074075.94 3148005927.42
Taxes and surcharges 42172707.76 20730087.42
Sales and distribution expenses 6054328.93 4616320.89
General and administrative expenses 133937050.37 159106436.16
Research and development expense 183256544.45 128662995.77
Finance expenses 206076531.65 380567325.04
Including: Interest expenses 442271605.59 803815024.42
Interest income 304371806.49 512123486.08
Plus: Other income 2494987.66 4164682.46
Investment income (“-” denotes loss) 2679672292.80 682669031.07
Including: Investment income from associates and
joint ventures -4587981.17 -1660968.93
Credit impairment loss (“-” denotes loss) 29056014.19 15237901.51
Loss on impairment of assets (“-” denotes loss) –
Gain on disposal of assets (“-” denotes loss) 4656034.96 16102859.30
II. Operating profit (“-” denotes loss) 3316761556.15 723679039.17
Plus: Non-operating income 486916.50 54685565.61
Less: Non-operating expenses 389511.26 1252862.97
III. Total profit (“-” denotes total loss) 3316858961.39 777111741.81
Less: Income tax expenses 74345014.02 -34907.18
IV. Net profit (“-” denotes net loss) 3242513947.37 777146648.99
(I) Net profit from continuing operations (“-” denotes net
loss) 3242513947.37 777146648.99
V. Net other comprehensive income 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
VI. Total comprehensive income 3242513947.37 777146648.99
VII. Earnings per share:
(I) Basic earnings per share
(II) Diluted earnings per share
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
SHANDONG CHENMING PAPER HOLDINGS LIMITED 7
FINANCIAL REPORT 2021
I Financial Report
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement
Unit: RMB
Item First half of 2021 First half of 2020
I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 19245544236.25 14322440708.60
Tax rebates received 1118668.30 1619978.70
Cash received relating to other operating activities 1036500713.48 1563110217.95
Subtotal of cash inflows from operating activities 20283163618.03 15887170905.25
Cash paid for goods and services 12689406657.79 11303287012.69
Cash paid to and for employees 639736604.16 550988794.51
Payments of taxes and surcharges 1207344439.05 622011647.05
Cash paid relating to other operating activities 999490395.09 1083849666.32
Subtotal of cash outflows from operating activities 15535978096.09 13560137120.57
Net cash flows from operating activities 4747185521.94 2327033784.68
II. Cash flows from investing activities:
Cash received from investments 20000000.00 –
Cash received from investment income 36500000.00 1200000.00
Net cash received from disposal of fixed assets intangible
assets and other long-term assets 104108628.71 85956320.00
Net cash received from disposal of subsidiaries and other
business units 4503417.80 217547669.15
Cash received relating to other investing activities 251414794.52 129197968.06
Subtotal of cash inflows from investing activities 416526841.03 433901957.21
Cash paid for purchase of fixed assets intangible assets
and other long-term assets 221876188.00 143811622.89
Cash paid on investments 1100000000.00 19266800.00
Cash paid relating to other investing activities – 176000000.00
Subtotal of cash outflows from investing activities 1321876188.00 339078422.89
Net cash flows from investing activities -905349346.97 94823534.32
8 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement (Cont’d)
Item First half of 2021 First half of 2020
III. Cash flows from financing activities:
Cash received from investments 2500000000.00 294820000.00
Including: Cash received from subsidiaries from minority
investment 2500000000.00 67960000.00
Cash received from borrowings 15114516924.13 15228878371.99
Cash received relating to other financing activities 2734332351.51 1356957000.00
Subtotal of cash inflows from financing activities 20348849275.64 16880655371.99
Cash repayments of amounts borrowed 16987908936.87 14282539084.68
Cash paid for dividend and profit distribution or interest
payment 1427506125.27 1710006370.47
Including: Dividend and profit paid by subsidiaries to minority
shareholders 48309125.87 8375000.00
Cash paid relating to other financing activities 5519292287.81 3982494113.94
Subtotal of cash outflows from financing activities 23934707349.95 19975039569.09
Net cash flows from financing activities -3585858074.31 -3094384197.10
IV. Effect of foreign exchange rate changes on cash and cash
equivalents -19367887.88 -4518518.55
V. Net increase in cash and cash equivalents 236610212.78 -677045396.65
Plus: Balance of cash and cash equivalents as at the
beginning of the period 4389169963.79 2890328027.41
VI. Balance of cash and cash equivalents as at the end of the
period 4625780176.57 2213282630.76
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
SHANDONG CHENMING PAPER HOLDINGS LIMITED 9
FINANCIAL REPORT 2021
I Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company
Unit: RMB
Item First half of 2021 First half of 2020
1. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 5570459385.98 4646172812.15
Tax rebates received 90900.00 –
Cash received relating to other operating activities 163966043.41 155230403.66
Subtotal of cash inflows from operating activities 5734516329.39 4801403215.81
Cash paid for goods and services 3201957139.47 2208540497.88
Cash paid to and for employees 175948976.35 174694134.98
Payments of taxes and surcharges 176576815.11 58848554.36
Cash paid relating to other operating activities 301406268.10 450670347.73
Subtotal of cash outflows from operating activities 3855889199.03 2892753534.95
Net cash flows from operating activities 1878627130.36 1908649680.86
II. Cash flows from investing activities:
Cash received from investments 20000000.00 217547669.15
Cash received from investment income 2284760273.97 682430000.00
Net cash received from disposal of fixed assets intangible
assets and other long-term assets 847248.68 85956320.00
Net cash received from disposal of subsidiaries and other
business units – –
Cash received relating to other investing activities 251414794.52 129197968.06
Subtotal of cash inflows from investing activities 2557022317.17 1115131957.21
Cash paid for purchase of fixed assets intangible assets
and other long-term assets – 5310913.00
Cash paid on investments 882210000.00 –
Net cash paid for acquisition of subsidiaries and other business
units – –
Cash paid relating to other investing activities – –
Subtotal of cash outflows used in investing activities 882210000.00 5310913.00
Net cash flows from investing activities 1674812317.17 1109821044.21
10 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company (Cont’d)
Item First half of 2021 First half of 2020
III. Cash flows from financing activities:
Cash received from investments – 226860000.00
Cash received from borrowings 10020478661.27 9807671284.37
Cash received relating to other financing activities 156665920.24 794457000.00
Subtotal of cash inflows from financing activities 10177144581.51 10828988284.37
Cash repayments of amounts borrowed 8736105095.52 9591880585.58
Cash paid for dividend and profit distribution or interest payment 219435214.79 327204654.73
Cash paid relating to other financing activities 4871112670.18 2963023405.21
Subtotal of cash outflows from financing activities 13826652980.49 12882108645.52
Net cash flows from financing activities -3649508398.98 -2053120361.15
IV. Effect of foreign exchange rate changes on cash and cash
equivalents 2460284.82 86290.34
V. Net increase in cash and cash equivalents -93608666.63 965436654.26
Plus: Balance of cash and cash equivalents as at the beginning of
the period 301284723.52 136328721.71
VI. Balance of cash and cash equivalents as at the end of the period 207676056.89 1101765375.97
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
SHANDONG CHENMING PAPER HOLDINGS LIMITED 11
FINANCIAL REPORT 2021
I Financial Report
12 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
II. Financial Statements (Cont’d)
7. Consolidated statement of changes in owners’ equity
Amount for the reporting period
Unit: RMB
Item January to June 2021
Equity attributable to owners of the Company
Other equity instruments Other
Preference Perpetual Capital Less: comprehensive Special Surplus General risk Minority Total
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 2984208200.00 4477500000.00 996000000.00 5321911413.75 226860000.00 -561686607.66 1212009109.97 74122644.20 9999764028.74 24276968789.00 1523294926.24 25800263715.24
II. Balance as at the beginning of the year 2984208200.00 4477500000.00 996000000.00 – 5321911413.75 226860000.00 -561686607.66 1212009109.97 74122644.20 9999764028.74 24276968789.00 1523294926.24 25800263715.24
III. Changes in the period (“-” denotes decrease) -2238750000.00 -62515691.49 57905699.87 1261950931.88 -981409059.74 2414621834.30 1433212774.56
(I) Total comprehensive income 57905699.87 2021095417.54 2079001117.41 45335233.79 2124336351.20
(II) Capital paid in and reduced by owners -2238750000.00 -62515691.49 -2301265691.49 2417595726.38 116330034.89
1. Ordinary shares paid by shareholders 2417595726.38 2417595726.38
2．Capital paid by holders of
other equity instruments -2238750000.00 -11250000.00 -2250000000.00 -2250000000.00
3. Amount of share-based payments
recognised in owners’ equity 26330034.89 26330034.89 26330034.89
4．Others -77595726.38 -77595726.38 -77595726.38
(III) Profit distribution -759144485.66 -759144485.66 -48309125.87 -807453611.53
1. Distribution to owners (or shareholders) -759144485.66 -759144485.66 -48309125.87 -807453611.53
IV. Balance as at the end of the period 2984208200.00 2238750000.00 996000000.00 – 5259395722.26 226860000.00 -503780907.79 – 1212009109.97 74122644.20 11261714960.62 – 23295559729.26 3937916760.54 27233476489.80
I Financial Report
SHANDONG CHENMING PAPER HOLDINGS LIMITED 13
FINANCIAL REPORT 2021
II. Financial Statements (Cont’d)
7. Consolidated statement of changes in owners’ equity (Cont’d)
Amount for the prior period
Unit: RMB
Item January to June 2020
Equity attributable to owners of the Company
Other equity instruments Other
Preference Perpetual Capital Less: comprehensive Special Surplus General risk Minority Total
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 prior year 2904608200.00 4477500000.00 2988000000.00 5086686427.30 -879452135.10 1212009109.97 74122644.20 9306269617.38 25169743863.75 1170029016.80 26339772880.55
II. Balance as at the beginning of the year 2904608200.00 4477500000.00 2988000000.00 – 5086686427.30 – -879452135.10 1212009109.97 74122644.20 9306269617.38 25169743863.75 1170029016.80 26339772880.55
III. Changes in the period (“-” denotes decrease) 79600000.00 177314104.00 226860000.00 -100282332.31 -191882963.68 -262111191.99 173949146.59 -88162045.40
(I) Total comprehensive income -100282332.31 516326703.48 416044371.17 145414146.59 561458517.76
(II) Capital paid in and reduced by owners 79600000.00 177314104.00 226860000.00 30054104.00 36910000.00 66964104.00
1. Ordinary shares paid by owners 79600000.00 177314104.00 256914104.00 36910000.00 293824104.00
2．Amount of share-based payments
recognised in owners’ equity 226860000.00 -226860000.00 -226860000.00
(III) Profit distribution -708209667.16 -708209667.16 -8375000.00 -716584667.16
1. Distribution to owners (or shareholders) -708209667.16 -708209667.16 -8375000.00 -716584667.16
IV. Balance as at the end of the period 2984208200.00 4477500000.00 2988000000.00 – 5264000531.30 226860000.00 -979734467.41 – 1212009109.97 74122644.20 9114386653.70 – 24907632671.76 1343978163.39 26251610835.15
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
I Financial Report
14 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
II. Financial Statements (Cont’d)
8. Statement of changes in owners’ equity of the Company
Amounts for the period
Unit: RMB
January to June 2021
Other equity instruments Other
Preference Perpetual Share Less: comprehensive Total
Item Share capital shares bonds Others capital Treasury shares income Special reserves Surplus reserves Retained profit Others owners’ equity
I. Balance as at the end of the
prior year 2984208200.00 4477500000.00 996000000.00 5124308464.42 226860000.00 1199819528.06 718245947.72 15273222140.20
II. Balance as at the beginning of the
year 2984208200.00 4477500000.00 996000000.00 5124308464.42 226860000.00 1199819528.06 718245947.72 15273222140.20
III. Changes in the period (“-” denotes
decrease) -2238750000.00 15080034.89 2483369461.71 259699496.60
(I) Total comprehensive income 3242513947.37 3242513947.37
(II) Capital paid in and reduced by
owners -2238750000.00 15080034.89 -2223669965.11
1. Capital paid by holders of other
equity instruments -2238750000.00 -11250000.00 -2250000000.00
2. Amount of share-based payments
recognised in owners’ equity 26330034.89 26330034.89
(III) Profit distribution -759144485.66 -759144485.66
1. Distribution to owners (or
shareholders) -759144485.66 -759144485.66
IV. Balance as at the end of the period 2984208200.00 2238750000.00 996000000.00 – 5139388499.31 226860000.00 – – 1199819528.06 3201615409.43 15532921636.80
I Financial Report
SHANDONG CHENMING PAPER HOLDINGS LIMITED 15
FINANCIAL REPORT 2021
II. Financial Statements (Cont’d)
8. Statement of changes in owners’ equity of the Company (Cont’d)
Amount for the prior period
Unit: RMB
January to June 2020
Other equity instruments Other
Preference Perpetual Capital Less: comprehensive Total
Item Share capital shares bonds Others reserves treasury shares income Special reserves Surplus reserves Retained profit Other owners’ equity
I. Balance as at the end of the
prior year 2904608200.00 4477500000.00 2988000000.00 4953557435.19 1199819528.06 812690534.91 17336175698.16
II. Balance as at the beginning of the
year 2904608200.00 4477500000.00 2988000000.00 4953557435.19 1199819528.06 812690534.91 17336175698.16
III. Changes in the period (“-” denotes
decrease) 79600000.00 146264104.00 226860000.00 68936981.83 67941085.83
(I) Total comprehensive income 777146648.99 777146648.99
(II) Capital paid in and reduced by
owners 79600000.00 146264104.00 226860000.00 -995896.00
1. Ordinary shares paid by
owners 79600000.00 146264104.00 226860000.00 -995896.00
(III) Profit distribution -708209667.16 -708209667.16
1. Distribution to owners (or
shareholders) -708209667.16 -708209667.16
IV. Balance as at the end of the period 2984208200.00 4477500000.00 2988000000.00 – 5099821539.19 226860000.00 – – 1199819528.06 881627516.74 – 17404116783.99
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
I Financial Report
III. General Information of the Company
1. Company overview
The predecessor of Shandong Chenming Paper Holdings Limited (hereinafter referred to as the “Company”) 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.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 an 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 2021 the total share capital of the Company was changed to 2984208200 shares. For details please
refer to Note VII. 38.The Company has established a corporate governance structure comprising the general meeting the board of directors
and the supervisory committee and has human resources department information technology department corporate
management department legal department financial management department capital management department
securities investment department procurement department audit department and other departments.The Company and its subsidiaries (hereinafter referred to as the “Group”) are principally engaged in among other things
processing and sale of paper products (including machine-made paper and paper board) paper making raw materials
and machinery; generation and sale of electric power and thermal power; forestry saplings growing processing and
sale of timber; manufacturing processing and sale of wood products; and manufacturing and sale of laminated boards
and fortified wooden floorboards hotel service and equipment financial and operating leasing real estate and property
service.The financial statements and notes thereto were approved by the board of directors of the Group (the “Board”) on 26
August 2021.2. Scope of consolidation
Subsidiaries of the Group included in the scope of consolidation in 2021 totalled 76. For details please refer to Note
IX “Equity in other entities”. The scope of consolidation of the Group during the year had one more company includedand one company less compared to the prior year. For details please refer to Note VIII “Changes in the scope ofconsolidation”.16 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I 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 (hereinafter referred to as “ASBEs”) promulgated
by the Ministry of Finance. In addition the Group 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 2014) of the CSRC.The financial statements are presented on a going concern.The Group’s financial statements have been prepared on an accrual basis. Except for certain financial instruments and
inventories the financial statements are prepared under the historical cost convention. In the event that depreciation 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 Group’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 heat construction materials
paper making chemical products financial leasing 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 accounting standards for business enterprises. For details
please refer to this Note V. 35 “Revenue”. For the critical accounting judgments and estimates made by the management
please refer to Note V. 39 “Change of Significant accounting policies and accounting estimates”.1. Statement of compliance with the Accounting Standards for Business Enterprises
These financial statements have been prepared in conformity with the ASBEs which truly and fully reflect the financial
position of the consolidated entity and the Group as at 30 June 2021 and relevant information such as the operating
results and cash flows of the consolidated entity and the Company for the first half of 2021.2. Accounting period
The accounting period of the Group is from 1 January to 31 December of each calendar year.3. Operating cycle
The operating cycle of the Group lasts for 12 months.SHANDONG CHENMING PAPER HOLDINGS LIMITED 17
FINANCIAL REPORT 2021
I 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 Group prepares the financial statements in RMB.5. Accounting treatment of business combinations under common control and not under common control
Business combinations refer to the transactions or events in which two or more separate enterprises merged as a single
reporting entity. Business combinations are divided into business combinations under common control and not under
common control.
(1) Business combination under common control
A business combination involving enterprises under common control is a business combination in which all of the
combining enterprises are ultimately controlled by the same party or parties before and after the combination
and that control is not transitory. The party that on the combination date obtains control of another enterprise
participating in the combination is the absorbing party while that other enterprise participating in the combination
is a party being absorbed. The combination date is the date on which the absorbing party effectively obtains
control of the party being absorbed.Assets and liabilities obtained by the absorbing party are measured at their carrying amount at the combination
date as recorded by the party being merged. The difference between the carrying amount of the net assets
obtained and the carrying amount of the consideration paid for the combination (or the aggregate nominal value of
shares issued as consideration) is charged to the capital reserve (share capital premium). If the capital reserve (share
capital premium) is not sufficient to absorb the difference any excess shall be adjusted against retained earnings.Cost incurred by the absorbing party that is directly attributable to the business combination shall be charged to
profit or loss in the period in which they are incurred.
(2) Business combination not under common control
A business combination not involving enterprises under common control is a business combination in which
all of the combining enterprises are not ultimately controlled by the same party or parties before and after the
combination. For a business combination not involving enterprises under common control the party that on the
acquisition date obtains control of another enterprise participating in the combination is the acquirer while that
other enterprise participating in the combination is the acquiree. The acquisition date is the date on which the
acquirer effectively obtains control of the acquiree.18 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
5. Accounting treatment of business combinations under common control and not under common control
(Cont’d)
(2) Business combination not under common control (Cont’d)
For business combination involving entities not under common control the cost of a business combination is the
aggregate of the fair values on the date of acquisition of assets given liabilities incurred or assumed and equity
instruments issued by the acquirer to be paid by the acquirer in exchange for control of the acquire plus agency
fee such as audit legal service and evaluation consultation and other management fees charged to the profit or
loss for the period when incurred. Transaction cost attributable to equity or debt securities issued by the acquirer
as consideration is included in the initial costs. Contingent consideration involved is charged to the combination
cost at its fair value on the acquisition date in the event that adjustment on the contingent consideration is
required as a result of new or additional evidence in relation to circumstances existed on the acquisition date
emerges within 12 months from the acquisition date the combination goodwill shall also be adjusted. The
combination cost incurred by the acquirer and the identifiable net assets acquired from the combination are
measured at their fair values on the acquisition date. Where the cost of a business combination exceeds the
acquirer’s interest in the fair value of the acquiree’s identifiable net assets on the acquisition date the difference
is recognised as goodwill. Where the cost of a business combination is less than the acquirer’s interest in the
fair value of the acquiree’s identifiable net assets the acquirer shall first reassess the measurement of the fair
value of the acquiree’s identifiable assets liabilities and contingent liabilities and the measurement of the cost of
combination. If after such reassessment the cost of combination is still less than the acquirer’s interest in the fair
value of the acquiree’s identifiable net assets the difference is charged to profit or loss for the period.In relation to the deductible temporary difference acquired from the acquiree which was not recognised as
deferred tax assets due to non-fulfilment of the recognition criteria at the date of the acquisition if new or
further information that is obtained within 12 months after the acquisition date indicates that related conditions
at the acquisition date already existed and that the implementation of the economic benefits brought by the
deductible temporary difference of the acquiree can be expected the relevant deferred tax assets shall be
recognised and goodwill shall be deducted. When the amount of goodwill is less than the deferred tax assets that
shall be recognised the difference shall be recognised in the profit or loss of the period. Except for the above
circumstances deferred tax assets in relation to business combination are recognised in the profit or loss of the
period.For combination of business not under common control achieved by several transactions these several
transactions will be judged whether they belong to “transactions in a basket” in accordance with the judgement
standards on “transactions in a basket” as set out in the Notice of the Ministry of Finance on Issuing AccountingStandards for Business Enterprises Interpretation No. 5 (Cai Kuai [2012] No. 19) and Rule of 51 to “AccountingStandard for Business Enterprises No. 33 – Consolidated Financial Statements”. If they belong to “transactions ina basket” they are accounted for with reference to the descriptions as set out in the previous paragraphs of this
section and Note V. 17 “Long-term equity investments” and if they do not belong to “transactions in a basket”
they are accounted for in separate financial statements and consolidated financial reports:
SHANDONG CHENMING PAPER HOLDINGS LIMITED 19
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I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
5. Accounting treatment of business combinations under common control and not under common control
(Cont’d)
(2) Business combination not under common control (Cont’d)
In separate financial statements the initial equity investment cost is the aggregate of the carrying amount of the
equity investment in the acquiree held prior to the acquisition date and the investment cost newly added as at the
acquisition date. In respect of any other comprehensive income attributable to the equity interest in the acquiree
prior to the acquisition date other comprehensive income is accounted for on the same accounting treatment
as direct disposal of relevant asset or liability by the acquiree at the time of disposal (i.e. to be transferred to
investment income for the period except for the changes arising from remeasuring net assets or net liabilities of
defined benefit plan using the equity method attributable to the acquiree).In consolidated financial statements the equity interest in the acquiree held prior to the acquisition date is
remeasured at fair value as at the acquisition date and the difference between the fair value and the carrying
amount is recognised as investment income for the current period. In respect of any other comprehensive income
attributable to the equity interest in the acquiree held prior to the acquisition date other comprehensive income is
accounted for on the same accounting treatment as direct disposal of relevant asset or liability by the acquiree (i.e.to be transferred to investment income at the acquisition date except for the changes arising from remeasuring
net assets or net liabilities of defined benefit plan using the equity method attributable to the acquiree) is
transferred to investment income in the period of the acquisition date.6. Preparation of consolidated financial statements
(1) Scope of consolidation
The scope of consolidation of the consolidated financial statements is determined on the basis of control. 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. A subsidiary is an entity controlled by the Company (including an enterprise a separable part of an
investee a structured entity etc.).
(2) Basis for preparation of the consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial statements of 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.20 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
6. Preparation of consolidated financial statements (Cont’d)
(2) Basis for preparation of the consolidated financial statements (Cont’d)
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) 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 sun 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 transferred to current
profit or loss at the time when the control is lost except for other comprehensive income arising from changes in
net assets or net liabilities due to remeasurement of defined benefit plan by the investee.7. Classification of joint arrangements and accounting treatment for joint ventures
A joint arrangement refers to an arrangement of two or more parties have joint control. The joint arrangements of the
Group comprise joint operations and joint ventures.
(1) Joint operations
Joint operations refer to a joint arrangement during which the Group is entitled to relevant assets and obligations
of this arrangement.The Group 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;
SHANDONG CHENMING PAPER HOLDINGS LIMITED 21
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
7. Classification of joint arrangements and accounting treatment for joint ventures (Cont’d)
(1) Joint operations (Cont’d)
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 Group only is entitled to net assets of this
arrangement.The Group accounts for its investments in joint ventures in accordance with the requirements relating to
accounting treatment using equity method for long-term equity investments.8. Standards for recognising cash and cash equivalents
Cash refers to cash on hand and deposits readily available for payment purpose. Cash equivalents refer to short-term
and highly liquid investments held by the Group which are readily convertible into known amount of cash and which are
subject to insignificant risk of value change.9. Foreign currency operations and translation of statements denominated in foreign currency
(1) Foreign currency operations
The foreign currency operations of the Group are translated into the functional currency at the prevailing spot
exchange rate on the date of exchange i.e. usually the middle price of RMB exchange rate published by the
People’s Bank of China on that date in general and the same hereinafter.On the balance sheet date foreign currency monetary items shall be translated at the spot exchange rate 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 for the period.22 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
9. Foreign currency operations and translation of statements denominated in foreign currency (Cont’d)
(2) Translation of financial statements denominated in foreign currency
When translating the financial statements denominated in foreign currency of overseas subsidiaries assets 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 average exchange rate for the period in
which the transaction occurred.All items in the cash flow statements shall be translated at the average exchange rate for the period in which
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 owners’ 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.10. Financial instruments
A financial instrument is a contract that gives rise to a financial asset of one party and a financial liability or equity
instrument of another party.
(1) Recognition and derecognition of financial instruments
Financial asset or financial liability will be recognised when the Group became one of the parties under a financial
instrument contract.Financial asset that satisfied any of the following criteria shall be derecognised:
① the contract right to receive the cash flows of the financial asset has terminated;
② 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 Group (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.SHANDONG CHENMING PAPER HOLDINGS LIMITED 23
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I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(2) Classification and measurement of financial assets
The Group classifies the financial assets according to the business model for managing the financial assets 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 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 other comprehensive income:
The Group’s business model for managing such financial assets is to collect contractual cash flows;
The contractual terms of the financial asset stipulate that cash flows generated on specific dates are 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.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 Group’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.24 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(2) Classification and measurement of financial assets (Cont’d)
Financial assets measured at fair value through profit or loss
The Group 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 Group 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 Group manages its financial assets in order to
generate cash flows. That is the Group’s business model determines whether cash flows will result from collecting
contractual cash flows selling financial assets or both. The Group 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 Group 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 Group 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.All affected financial assets are reclassified on the first day of the first reporting period following the change in the
business model where the Group 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 or notes 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 Group.SHANDONG CHENMING PAPER HOLDINGS LIMITED 25
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I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(3) Classification and measurement of financial liabilities
At initial recognition financial liabilities of the Group are classified as financial liabilities measured at fair 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:
① it has a contractual obligation to pay in cash or other financial assets to other parties.② it has a contractual obligation to exchange financial assets or financial liabilities under potential adverse
condition with other parties.③ 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.④ 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
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I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(3) Classification and measurement of financial liabilities (Cont’d)
Classification between financial liabilities and equity instruments (Cont’d)
Equity instruments are any contract that evidences a residual interest in the assets of an entity after deducting all
of its liabilities.If the Group 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 Group’s own equity instruments the Group’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
Group; for the latter it is the Group’s own equity instruments.
(4) Derivative financial instruments
The Group’s derivative financial instruments are mainly forward foreign exchange contracts which are initially
recognised at fair value on the date a derivative contract is entered into and are subsequently measured at their
fair value. A derivative financial instrument is recognised as an asset when the fair value is positive and as a
liability when the fair value is negative. Any gain or loss arising from changes in fair value and not complying with
the accounting requirements on hedging shall be recognised in profit or loss for current period.
(5) Fair value of financial instruments
The methods for determining the fair value of the financial assets or financial liabilities are set out in Note V. 40.
(6) Impairment of financial assets
The Group makes provision for impairment based on expected credit losses (ECLs) on the following items:
Financial assets measured at amortised cost;
Debt investments measured at fair value through other comprehensive income;
SHANDONG CHENMING PAPER HOLDINGS LIMITED 27
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(6) Impairment of financial assets (Cont’d)
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 Group 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 Group 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 Group 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
Group 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 Group 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 Group 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
Group is exposed to credit risk including renewal options.For the financial instruments at the first and second stages and with low credit risks the Group calculates 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 bills receivable accounts receivable and contract assets regardless of whether there is a significant financing
component the Group always makes provision for impairment at an amount equal to lifetime ECLs.28 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(6) Impairment of financial assets (Cont’d)
Measurement of ECLs (Cont’d)
When the Group is unable to assess the information of ECLs for an individual financial asset at a reasonable cost
it classifies bills receivable and accounts receivable into portfolios based on the credit risk characteristics 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: Factoring receivables
Accounts receivable portfolio 2: Receivables from non-related party customers
Accounts receivable portfolio 3: Due from related party customers
For bills receivable classified as a portfolio the Group refers to the historical credit loss experience combined
with the current situation and the forecast of future economic conditions to calculate the ECLs based on default
risk exposure and lifetime ECL rate.For accounts receivable classified as a portfolio the Group refers to the historical credit loss experience
combined with the current situation and the forecast of future economic conditions to prepare a comparison table
of the ageing/overdue days of accounts receivable and the lifetime ECL rate to calculate the ECLs.Other receivables
The Group 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 2: Amount due from related parties
Other receivables portfolio 3: Other receivables
For other receivables classified as a portfolio the Group calculates the ECLs based on default risk exposure and
the ECL rate over the next 12 months or the entire lifetime.SHANDONG CHENMING PAPER HOLDINGS LIMITED 29
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(6) Impairment of financial assets (Cont’d)
Long-term receivables
The Group’s long-term receivables include finance lease receivables and deposits receivable.The Group classifies the finance lease receivables deposits receivable and other receivables into portfolios 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 deposits receivable and other receivables the Group 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 Group 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
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(6) Impairment of financial assets (Cont’d)
Assessment of significant increase in credit risk
In assessing whether the credit risk of a financial instrument has increased significantly upon initial recognition
the Group compares the risk of default of the financial instrument at the balance sheet date with that at the 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 Group considers
reasonable and well-founded information including forward-looking information which can be obtained without
unnecessary extra costs or efforts. Information considered by the Group includes:
The debtor’s failure to make payments of principal and interest on their contractually due dates;
An actual or expected significant deterioration in a financial instrument’s external or internal credit rating (if any);
An actual or expected significant deterioration in the operating results of the debtor;
Existing or expected changes in the technological market economic or legal environment that have a significant
adverse effect on the debtor’s ability to meet its obligation to the Group.Depending on the nature of the financial instruments the Group assesses whether there has been a 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 Group 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 Group 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 Group 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
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(6) Impairment of financial assets (Cont’d)
Presentation of provisions for 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 Group 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 Group 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 Group’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.
(7) 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 Group transfers substantially all the risks and rewards of ownership of the financial asset to the transferee
the financial asset shall be derecognised. If the Group retains substantially all the risks and rewards of ownership
of a financial asset the financial asset shall not be derecognised.If the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset
it accounts for the transaction as follows: if the Group does not retain control it derecognises the financial 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.
(8) Offset of financial assets and financial liabilities
If the Group owns the legitimate rights of offsetting the recognised financial assets and financial liabilities which
are enforceable currently and the Group 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
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. Bills receivable
Method for determining the ECLs of bills receivable
The Company measures the loss provisions for bills receivable in accordance with the ECLs amount for the entire
period. Based on the credit risk characteristics of bills receivable bills receivable are divided into different groups:
Item Basis for determining the groups
Bank acceptance bills The acceptance party is a bank with less credit risk
Commercial acceptance bills The acceptance party is a company with higher credit risk
12. Accounts receivable
Method for determining the ECLs of accounts receivable
For receivables and contract assets that do not contain significant financing components the Company measures loss
provisions based on the ECL amount for the entire period.For receivables contract assets and lease receivables that contain significant financing components the Company
chooses to always measure the loss provision based on the ECL amount for the entire period.In addition to accounts receivable and contract assets which are individually assessed for credit risk they are also
classified into different groups based on their credit risk characteristics:
Item Basis for determining the groups
Amount due from related parties This group comprises amounts due from related parties with lower risks.Factoring receivables This group comprises factoring receivables with special risks.Amount due from distributor
customers This group comprises receivables with their ageing as credit risk characteristics.SHANDONG CHENMING PAPER HOLDINGS LIMITED 33
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
13. Accounts receivable financing
As for notes receivable and Accounts receivable that classified as measured at fair value through other
comprehensive income the portion within one year (inclusive) from the date of acquisition is presented
as financing receivables. For relevant accounting policies please refer to note V. 10. Financial instruments.14. Other receivables
Determination and accounting treatment of ECLs of other receivables
The Company measures impairment losses using the ECL amount in the next 12 months or the entire duration based
on whether the credit risk of other receivables has increased significantly upon initial recognition. In addition to other
receivables which are individually assessed for credit risk they are also classified into different groups based on their
credit risk characteristics:
Item Basis for determining the groups
Dividends receivable This group comprises dividends receivable.Interest receivable This group comprises interest due from financial institutions.Amount due from government This group comprises amount due from government agencies with less risks.agencies
Amount due from related parties This group comprises amount due from related parties with less risks.Other receivables This group comprises for all types of deposits advances and premiums receivable
during daily and recurring activities.15. Inventories
(1) Classification of inventories
Inventories of the Group 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 Group 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.34 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
15. Inventories (Cont’d)
(3) Recognition of net realisable value of inventories and provision for inventory impairment
Net realisable value of inventories refers to the amount of the estimated price of inventories less the estimated
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.At the balance sheet date provision for inventory impairment is made when the cost is higher than the net
realisable value. The Group usually make provision for inventory impairment based on categories of inventories. At
the balance sheet date in case the factors causing inventory impairment no longer exists the original provision for
inventory impairment shall be reversed.
(4) Inventory stock taking system
The Group implements permanent inventory system as its inventory stock taking system.
(5) Amortisation of low-value consumables and packaging materials
The low-value consumables of the Group are amortised when issued for use.Packaging materials for turnover are amortised when issued for use.16. Contract assets
Contract assets are the Company’s right to consideration in exchange for goods that the Company has transferred to
customers when that right is conditioned on something other than the passage of time. The Company’s unconditional
right to receive consideration from customers (only the passage of time is required) is accounted for as accounts
receivable.The methods for determination and accounting treatment of the ECLs on contract assets are detailed in Note V. 10
Financial instruments.17. 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. an incremental sales commission. The
Company recognises as an asset the incremental costs of obtaining a contract with a customer if it expects to recover
those costs. Other costs of obtaining a contract are expensed when incurred.If the costs to fulfil a contract with a customer are not within the scope of inventories or other accounting standards
the Company recognises an asset from the costs incurred to fulfil a contract only if those costs meet all of the following
criteria:
① 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 Group entered into the contract;
② 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;
③ the costs are expected to be recovered.SHANDONG CHENMING PAPER HOLDINGS LIMITED 35
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Contract costs (Cont’d)
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. An expense is recognised when incurred if the amortisation period is less than one year.The Company recognises an impairment loss in profit or loss to the extent that the carrying amount of an asset related
to contract costs exceeds:
① remaining amount of consideration that the Company expects to receive in exchange for the goods or services to
which the asset relates;
② the cost estimated to be happened for the transfer of related goods or services.The costs of contract performance recognised as assets if the amortisation period is less than one year or a normal
operating cycle upon the initial recognition are presented as “Inventories” item and if the amortisation period is more
than one year or a normal operating cycle upon the initial recognition are presented as “Other non-current assets” item.The contract obtaining costs recognised as assets if the amortisation period is less than one year or a normal operating
cycle upon the initial recognition are presented as “Other current assets” item and if the amortisation period is more
than one year or a normal operating cycle upon the initial recognition are presented as “Other non-current assets” item.18. Held for sale
A non-current asset or disposal group is classified as held for sale if its carrying amount will be recovered principally
through a sale transaction (including a non-monetary asset exchange with commercial substance) rather than through
continuing use.The aforesaid non-current asset does not include the investment property subsequently measured at fair value the
biological assets measured at the net amount of the fair value deducting the sales expense the assets generated from
remuneration financial assets deferred income tax assets and rights from insurance contract.A disposal group is a group of assets to be disposed of together as a whole by sale or other means in a transaction and
liabilities directly associated with those assets that will be transferred in the transaction. In certain circumstances the
disposal group includes the goodwill acquired in the business combination.A non-current asset or a disposal group is classified as held for sale if it meets all of the following conditions: the non-
current asset or disposal group is available for immediate sale in its present condition subject only to terms that are
usual and customary for sales of such asset or disposal group; the sale is highly probable i.e. a sale plan has been
resolved and a firm purchase commitment has been obtained and the sale is expected to be completed within one year.When the Group loses control of a subsidiary due to reasons such as disposal of investment in a subsidiary regardless
of whether the Group retains part of the equity investment after the disposal when the investment in a subsidiary
intended to be disposed of meets the conditions for classification as held for sale the investment in a subsidiary is
classified as held for sale as a whole in the separate financial statements and all assets and liabilities of the subsidiary
are classified as held for sale in the consolidated financial statements.When the non-current assets or disposal groups held for sale are initially measured or remeasured at the balance sheet
date the excess of the carrying amount over the net amount of the fair value less selling expenses is recognised as
asset impairment loss. For the amount of impairment loss recognised on disposal groups held for sale the carrying
amount of the goodwill of the disposal group shall be offset against first and then be offset against the carrying amount
of non-current assets according to the proportion of the carrying amount of non-current assets.36 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
18. Held for sale (Cont’d)
If the net amount of the fair value of the non-current assets or disposal groups held for sale less the selling expenses
increases on the subsequent balance sheet date the amount previously written down shall be recovered and reversed
in the amount of asset impairment loss recognised after be classified as held for sale and the reversed amount shall be
included in the current profit and loss. The carrying amount of goodwill written off shall not be reversed.Non-current assets held for sale and assets in disposal group held for sale are not depreciated or amortised. Interest
and other expenses of a disposal group classified as held for sale continue to be recognised. For all or part of an
investment in an associate or a joint venture that is classified as held for sale the part of being classified as held for sale
shall cease to be accounted for using the equity method while any retained portion (not classified as held for sale) shall
continue to be accounted for using the equity method; The Group ceases to use the equity method from the date when
the Group ceases to have significant influence over an associate or a joint venture.If a non-current asset or disposal group is classified as held for sale but subsequently no longer meets the criteria for
being classified as held for sale the Group shall cease to classify it as held for sale and measure it at the lower of:
(1) the carrying amount of the asset or disposal group before being classified as held for sale is adjusted by the
depreciation amortisation or impairment that would have been recognised if the asset or disposal group had not
been classified as held for sale;
(2) recoverable amount.
19. Long-term receivables
The Company measures the impairment loss of long-term receivables at an amount equal to the ECLs in the next 12
months or the lifetime ECLs depending on whether its credit risk has significantly increased upon initial recognition.Other than the long-term receivables assessed individually for credit risks long-term receivables are classified into
different groups based on their credit risk characteristics:
Item Basis for determining the groups
Long-term receivables The group is comprised of long-term receivables not yet past due with normal
not yet past due exposures.Long-term receivables overdue This group is comprised of long-term receivables with higher past due exposures.SHANDONG CHENMING PAPER HOLDINGS LIMITED 37
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
20. Long-term equity investments
Long-term equity investments include the equity investments in subsidiaries joint ventures and associates. Associates
of the Group are those investees that the Group imposes significant influence over.
(1) Determination of initial investment cost
Long-term equity investments acquired through business combinations: for a long-term equity 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.
(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
Group.38 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
20. Long-term equity investments (Cont’d)
(2) Subsequent measurement and method for profit or loss recognition (Cont’d)
For additional equity investment made in order to obtain significant influence or common control over 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. The difference
between the fair value and carrying amount of previously held equity investment on the date of transfer and the
accumulated change in fair value originally included in other comprehensive income shall be recognised in the
profit or loss for the current period under the equity method.In the event of loss of common control or significant influence over investee due to partial disposal of 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.If the shareholding ratio of the Group 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 Group 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 Group.Investment gain shall be recognised accordingly. However any unrealised loss arising from internal transactions
between the Group and an investee is not eliminated to the extent that the loss is impairment loss of the
transferred assets.SHANDONG CHENMING PAPER HOLDINGS LIMITED 39
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
20. Long-term equity investments (Cont’d)
(3) Basis for determining the common control and significant influence on the investee
Common control is the contractually agreed sharing of control over an arrangement which relevant activities 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 Group 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 Group 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
cannot pose significant influence in this situation.
(4) Method for impairment test and measurement of impairment provision
For the method for making impairment provision for the investment in subsidiaries associates and joint ventures
please refer to Note V. 27.21. Investment property
Investment property refers to real estate held to earn rentals or for capital appreciation or both. The investment property
of the Group includes leased land use rights land use rights held for sale after appreciation and leased buildings.The investment property of the Group is measured initially at cost upon acquisition and subject to depreciation 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. 27.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.40 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
22. Fixed assets
(1) Conditions for recognition
Fixed assets of the Group are tangible assets that are held for use in the production or supply of goods or
services for rental to others or for administrative purposes; and have a useful life of more than one accounting
year. Fixed assets are recognised only if the Company is very likely to receive economic benefits from the asset
and its cost can be measured reliably. A fixed asset of the Group shall be initially measured at actual cost when
acquired.
(2) Depreciation method
Useful lives of Estimated Annual
depreciation residual value depreciation
Category Depreciation method (Year) (%) rate (%)
Housing and building structure Straight-line method 20-40 5-10 2.25-4.75
Machinery and equipment Straight-line method 8-20 5-10 4.50-11.88
Transportation equipment Straight-line method 5-8 5-10 11.25-19.00
Electronic equipment and others Straight-line method 5 5-10 18.00-19.00
The Group 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 Group determines the
depreciation rate by category estimated useful lives and estimated residual value of the fixed assets. Where for
the fixed assets for which depreciation provision is made to determine the depreciation rate the accumulated
amount of the fixed asset depreciation provision that has been made shall be deducted.The impairment test method and impairment provision method of the fixed assets are set out in Note V. 27.The Group will re-check the useful lives estimated net residual value and depreciation method of the fixed assets
at the end of each year. When there is any difference between the useful lives estimate and the originally estimated
value the 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.For the overhaul expense incurred by the Group during the regular inspection on the fixed assets if there is
concrete evidence to prove that it meets the fixed asset recognition condition it shall be included in the cost of
fixed asset; if it does not meet the fixed asset recognition condition it shall be included in the profit or loss for the
current period. The depreciation of fixed assets shall be continued in the intervals of the regular overhaul of the
fixed asset.23. Construction in progress
Construction in progress of the Group 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.The method for impairment provision of construction in progress is set out in Note V. 27.SHANDONG CHENMING PAPER HOLDINGS LIMITED 41
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
24. Borrowing costs
(1) Recognition principle for the capitalisation of the borrowing costs
The borrowing costs incurred by the Group directly attributable to the acquisition construction or 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:
① 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;
② The borrowing costs have been incurred;
③ 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 Group 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.42 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
25. Right-of-use assets
(1) Conditions for recognition of right-of-use assets
Right-of-use assets of the Group are defined as the right of underlying assets in the lease term for the Group as 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 Group 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 Group as lessee. As
a lessee the Group 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 Group uses the straight-line method for depreciation. Where the Group 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. 27.
26. Intangible assets
(1) Measurement method useful life and impairment testing
The intangible assets of the Group include land use rights software and certificates of third party right.The intangible asset is initially measured at cost and its useful life is determined upon acquisition. If the useful life
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:
Type Useful life (year) Method of amortisation Remark
Land use rights 50-70 Straight-line method
Software 5-10 Straight-line method
Certificates of third party right 3 Straight-line method
The Group 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. 27.SHANDONG CHENMING PAPER HOLDINGS LIMITED 43
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
26. Intangible assets (Cont’d)
(2) Accounting policy for internal research and development expenditure
Research and development expenditure of the Group is divided into expenses incurred during the research phase
and expenses incurred during the development phase.Expenses incurred during the research phase and the development phase are recognised in profit or loss in the
current period.27. Long-term asset impairment
Impairment of long-term equity investments in subsidiaries associates and joint ventures asset impairment on
investment property fixed assets construction in progress materials for project right-of-use assets intangible assets
goodwill and others (excluding inventories deferred tax assets and financial assets) subsequently measured at cost is
determined as follows:
The Group determines if there is any indication of asset impairment as at the balance sheet date. If there is any 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 Group estimates the recoverable amount of an individual
asset. If it is not possible to estimate the recoverable amount of the individual asset the Group 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 Group.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 Group first tests the asset group or set of asset groups excluding goodwill for impairment
calculates the recoverable amount and recognises the corresponding impairment loss. An impairment test is then 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.28. Long-term prepaid expenses
The long-term prepaid expenses incurred by the Group 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.44 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
29. 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.30. 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 to 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. Where the payment of liability is expected not to be fully
settled within 12 months after the end of the annual reporting period in which the employees render the related
services and the financial impact would be material these liabilities are measured at their discounted values.
(3) Post-employment benefits
Post-employment benefit plans include defined contribution plans and defined benefit plans. A defined
contribution plan is a post-employment benefit plan under which the Group pays fixed contributions into a
separate fund and the Group 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 and unemployment insurance both of which are
operated and managed by the government authorities and are non-refundable whereas the Company has no
access nor any discretion after making contributions and hence there were not any forfeited contributions as
under paragraph 26(2) of appendix 16 of the Hong Kong Listing Rules for the financial year ended 31 December
2020. In other words the Group did not forfeit any contributions on behalf of its employees who leave the plan
prior to vesting fully in such contributions. Hence there were no such an issue whether forfeited contributions may
be used by the Group under paragraph 26(2) of appendix 16 of the Hong Kong Listing Rules for the Group.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.SHANDONG CHENMING PAPER HOLDINGS LIMITED 45
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
30. Employee benefits (Cont’d)
(4) Termination benefits
When the Group 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 Group
cannot revoke unilaterally compensation for dismissal due to the cancellation of labour relationship plans and
employee redundant proposals; the Group 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 employee 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 the net liabilities or net assets of the defined benefit plans” in the relevant employee benefits
shall be included in the current profit or loss or the relevant asset cost.31. Lease liabilities
(1) Initial measurement
At the commencement date of a lease term the Company shall initially measure the lease liabilities at the present
value of the lease payments that are not paid at that date.1) Lease payments
The lease payments mean the payments made by the Company to a lessor for the right to use the leased
assets during the lease term including: ① fixed payments and in-substance fixed payments less any lease
incentives receivable; ② variable lease payments that depend on an index or a rate initially measured using
the index or rate as at the commencement date of the lease term; ③ the exercise price of a purchase option
if the Company is reasonably certain to exercise that option; ④ payments for terminating the lease if the
lease term reflects the Company exercising an option to terminate the lease; ⑤ amounts expected to be
payable by the Company under residual value guarantees.2) Discount rate
The present value of the lease payments shall be calculated using the Company’s incremental borrowing
rate.46 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
31. Lease liabilities (Cont’d)
(2) Subsequent measurement
After the commencement date of a lease term the Company shall subsequently measure the lease liabilities by: ①
increasing the carrying amount to reflect interest on the lease liabilities; ② reducing the carrying amount to reflect
the lease payments made; ③ remeasuring the carrying amount to reflect the change in the lease payments due to
any reassessment or lease modifications
The interest expense on the lease liabilities in 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 except for the interest expense to
be capitalised. The periodic rate of interest is the discount rate used by the Company in the initial measurement of
lease liabilities or the revised discount rate used by the Company when the Company has to remeasure the lease
liabilities based on a revised discount rate due to a change in the lease payments or lease modifications.
(3) Remeasurement
After the commencement date of a lease term the Company shall remeasure the lease liabilities using the
changes to the lease payments and the revised discount rate and adjust the carrying amount of the right-of-use
assets accordingly in the circumstances set out below. If the carrying amount of the right-of-use assets is reduced
to zero and there is a further reduction in the measurement of the lease liabilities the Company shall recognise
any remaining amount of the remeasurement in profit or loss: ① there is any change in the amount of in-substance
fixed payments; ② there is any change in the amounts expected to be payable under a residual value guarantee;
③ there is any change in the index or rate used to determine the lease payments; ④ there is any change in the
assessment results in the purchase option; and ⑤ there is any change in the assessment results or the exercise of
the extension option or termination option.32. Provisions
Obligations pertinent to the contingencies which satisfy the following conditions are recognised as provisions:
(1) the obligation is a current obligation borne by the Group;
(2) it is likely that an outflow of economic benefits from the Group will be resulted from the performance of the
obligation; and
(3) the amount of the obligation can be reliably measured.
The provisions shall be initially measured based on the best estimate for the expenditure required for the 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 Group 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.SHANDONG CHENMING PAPER HOLDINGS LIMITED 47
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
33. Share-based payments
(1) Category of share-based payment
The Group’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 Group 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 Group 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 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 Group. For those may immediately
vest after the grant the fair value of the liability undertaken by the Group 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 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 Group. 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.48 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
33. Share-based payments (Cont’d)
(4) Accounting treatment of implementation modification and termination of share-based payment (Cont’d)
When there are changes in Group’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.Increase in the fair value of equity instruments refer to the difference between the fair values of the modified date.If the modification reduces the total fair value of shares paid or not conductive to the use of other 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 Group 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 Group 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 Group will treat them as cancelled equity instruments granted.34. Preference Shares Perpetual Bonds and other financial instruments
(1) Classification of financial liabilities and equity instruments
Financial instruments issued by the Group are classified into financial assets financial liabilities or 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 Preference Shares Perpetual Bonds and other financial instruments
Financial instruments issued by the Group 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 Group and their repurchases and cancellations are treated as changes in equity;
for financial instruments classified as financial liabilities their interest expenses or dividend distribution are 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 Group 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 49
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
35. Revenue
(1) General principles
The Group 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 Group 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 Group performs its performance obligation within a certain period;
otherwise it performs its performance obligation at a point of time:
① when the customer simultaneously receives and consumes the benefits provided by the Group when the
Group performs its obligations under the contract;
② when the customer is able to control the goods in progress in the course of performance by the Group
under the contract;
③ when the goods produced by the Group under the contract are irreplaceable and the Group has the right to
payment for performance completed to date during the whole contract term.For performance obligations performed within a certain period the Group recognises revenue by 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 Group 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 Group 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 Group considers the following indications:
① The Group has the current right to receive payment for the goods which is when the customer has the
current payment obligations for the goods.② The Group has transferred the legal title of the goods to the customer which is when the client possesses
the legal title of the goods.③ The Group has transferred the physical possession of goods to the customer which is when the customer
obtains physical possession of the goods.④ The Group has transferred all of the substantial risks and rewards of ownership of the goods to the
customer which is when the customer obtain all of the substantial risks and rewards of ownership of the
goods to the customer.⑤ The customer has accepted the goods.⑥ Other information indicates that the customer has obtained control of the goods.50 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
35. Revenue (Cont’d)
(1) General principles (Cont’d)
The Group’s right to consideration in exchange for goods or services that the Group has transferred to customers
(and such right depends on factors other than passage of time) is accounted for as contract assets and contract
assets are subject to impairment based on ECLs. The Group’s unconditional right to receive consideration from
customers (only depends on passage of time) is accounted for as accounts receivable. The Group’s obligation to
transfer goods or services to customers for which the Group has received or should receive consideration from
customers is accounted for as contract liabilities.Contract assets and contract liabilities under the same contract are presented on a net basis. Where the net
amount has a debit balance it is presented in “contract assets” or “other non-current assets” according to its
liquidity. Where the net amount has a credit balance it is presented in “contract liabilities” or “other non-currentliabilities” according to its liquidity.
(2) Specific methods
Specific method for revenue recognition of machine-made paper business of the Group: in terms of domestic
sales of machine-made paper revenue is recognised when goods are delivered to the customers and such
deliveries are confirmed; while in terms of overseas sales of machine-made paper revenue is recognised on the
day when goods are loaded on board and declared.Specific method for recognition of finance lease income of the Group: according to the repayment schedule the
income is recognised by instalments according to the effective interest rate.Specific method for recognition of revenue from real estate of the Group: revenue is recognised by amortising the
rental income on a straight-line basis over the lease term.36. Government grants
A government grant is recognised when there is reasonable assurance that the grant will be received and that the Group
will comply with the conditions attaching to the grant.If a government grant is in the form of a transfer of a monetary asset it is measured at the amount received or
receivable. If a government grant is in the form of a transfer 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; 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. A government grant measured at nominal amount is directly included
in profit or loss for the current period. The Group adopts a consistent approach to the same or similar government
grants.SHANDONG CHENMING PAPER HOLDINGS LIMITED 51
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
36. Government grants (Cont’d)
A government grant related to daily activities is recognised in other gains relying on the essence of economic business;
otherwise recognised in non-operating income or non-operating expenses.For the repayment of a government grant already recognised if there is any related deferred income the repayment
shall be off set 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.For the policy preferential interest subsidy if it is provided by the financial authority through banks it is recognised
at the amount of borrowings actually received and the borrowings costs are calculated based on the principal of the
borrowings and the policy preferential interest rate; if it is provided by the financial authority directly the corresponding
interest will be used to offset the relevant borrowing expenses.37. 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 Group 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;
(2) The taxable temporary differences associated with investments in subsidiaries associates and joint ventures
and the Group is able to control the timing of the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.The Group 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;
(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.52 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
37. 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 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 Group 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.38. Lease
(1) Identification of leases
On the beginning date of the contract the Group (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 Group identifies such contract is or contains a lease.
(2) The Group as lessee
On the beginning date of the lease the Group 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. 25.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 or the incremental borrowing 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 charged to profit or loss in the period in which they actually
arise. The Group calculates the interest expense of the lease liability for each period of the lease term based on
the fixed periodic interest rate and is included in the current profit and loss. The variable lease payments that are
not included in the measurement of the lease liability are recognised in profit or loss when incurred.Short-term lease
Short-term leases refer to leases with a lease term of less than 12 months from the commencement date 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.SHANDONG CHENMING PAPER HOLDINGS LIMITED 53
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I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
38. Lease (Cont’d)
(2) The Group as lessee (Cont’d)
Short-term lease (Cont’d)
For short-term leases the Group 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 machinery and 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 RMB2000000 when it is a new
asset.For a low-value asset lease the Group chooses the above simplified approach based on the specific
circumstances of each lease.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.
(3) The Group as lessor
When the Group is a lessor a lease is classified as a finance lease whenever the terms of the lease transfer
substantially all the risks and rewards of asset ownership to the lessee. All leases other than financial leases are
classified as operating leases.Operating lease
Lease payments under operating leases are recognised in profit or loss on a straight-line basis over the lease term.Initial direct costs incurred in relation to operating leases are capitalised and amortised over the lease term on 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.
(4) Sublease
When the Group 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 Group adopts a simplified
approach then the Group classifies the sublease as an operating lease.54 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
38. Lease (Cont’d)
(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.39. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
□ Applicable √ Not Applicable
(2) Changes in significant accounting estimates
□ Applicable √ Not Applicable
(3) Adjustment to the relevant items in the financial statements at the beginning of the year due to the firs
adoption of the New Leases Standard in 2021
Not applicable
(4) Reason for retrospective adjustment to the comparative data in the prior period due to the first adoption of the
New Leases Standard in 2021
□ Applicable √ Not Applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITED 55
FINANCIAL REPORT 2021
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
40. Others
The fair value refers to the price that will be received when selling an asset or the price to be paid to transfer a liability in
an orderly transaction between market participants on the date of measurement.The Group measures the relevant assets or liabilities at fair value assuming that the orderly transaction of selling the
assets or transferring the liabilities is conducted in the main market of the relevant assets or liabilities; in the absence of
the main market the Group assumes that the transaction is conducted in the most advantageous market for the relevant
asset or liability. The main (or the most advantageous) market must be accessible to by the Group on the measurement
date. The Group uses assumptions that market participants would use when pricing the asset or liability assuming that
market participants act in their economic best interest.For financial assets or financial liabilities exist in an active market fair value is determined based on the quoted price
in such market. While financial instruments do not exist in an active market the fair value is determined using valuation
techniques.Fair value measurement for 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 Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value and gives priority to relevant observable inputs. Unobservable inputs are used only when
relevant observable inputs are not accessible or the access to which is impracticable.All assets and liabilities measured at fair value or disclosed in the financial statements are categorised within the fair
value hierarchy described as follows based on the lowest level input that is significant to the fair value measurement
as a whole: Level 1 inputs are available quoted prices (unadjusted) in active markets for identical assets or liabilities at
the measurement date; Level 2 inputs are inputs other than Level 1 inputs that are observable for the asset or liability
either directly or indirectly; Level 3 inputs are unobservable inputs for the asset or liability.For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis the Group re-
assess them at each balance sheet date to determine whether transfers have occurred between levels in the hierarchy.56 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VI. Taxation
1. Main tax types and tax rates
Tax type Tax Base Tax rate
Value added tax (VAT) Taxable income 13/9/6
Urban maintenance and construction tax Turnover tax payable 7
Enterprise income tax (EIT) Taxable income 25
Property tax Rental income and property price 1.2/12
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
Wuhan Chenming Hanyang Paper Holdings Co. Ltd. 15
Huanggang Chenming Pulp & Paper Co. Ltd. 15
Kunshan Tuoan Plastic Products Co. Ltd. 15
Shouguang Shun Da Customs Declaration Co Ltd. 10
Qingdao Chenming Pulp & Paper Electronic Commodity Spot Trading Co. Ltd. 10
Zhanjiang Chenming Arboriculture Development Co. Ltd. Exempt from 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 16 August 2018 the Group received a high and new technology enterprise certificate with a certification
number of GR201837000311. Pursuant to the requirements under the Law of the People’s Republic of China on
Enterprise Income Tax and the relevant policies the Group is subject to a corporate income tax rate of 15% of
taxable income and is entitled to the preferential treatment from 2018 to 2020.Shouguang Meilun Paper Co. Ltd. a subsidiary of the Group received a high and new technology enterprise
certificate with a certification number of GR201837000455 on 16 August 2018. 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 2018 to 2020.Jilin Chenming Paper Co. Ltd. a subsidiary of the Group received a high and new technology enterprise
certificate with a certification number of GR201922000658 on 2 September 2019. 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 2019 to 2021.SHANDONG CHENMING PAPER HOLDINGS LIMITED 57
FINANCIAL REPORT 2021
I Financial Report
VI. Taxation (Cont’d)
2. Tax incentives (Cont’d)
(1) Enterprise income tax (Cont’d)
Jiangxi Chenming Paper Co. Ltd. a subsidiary of the Group received a high and new technology enterprise
certificate with a certification number of GR201936002184 on 3 December 2019. 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 2019 to 2021.Zhanjiang Chenming Pulp & Paper Co. Ltd. a subsidiary of the Group received a high and new technology
enterprise certificate with a certification number of GR20184400547 on 28 November 2018. 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 2018 to 2020.Wuhan Chenming Hanyang Paper Holdings Co. Ltd. a subsidiary of the Group received a high and new
technology enterprise certificate with a certification number of GR202042001502 on 1 December 2020. Pursuant
to the requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant
policies Wuhan Chenming is subject to an enterprise income tax rate of 15% of taxable income and is entitled to
the preferential treatment from 2020 to 2022.Huanggang Chenming Pulp & Paper Co. Ltd. a subsidiary of the Group received a high and new technology
enterprise certificate with a certification number of GR202042001471 on 1 December 2020. 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 2020 to 2022.Kunshan Tuoan Plastic Products Co. Ltd. a subsidiary of the Group received a high and new technology
enterprise certificate with a certification number of GR202032004526 on 2 December 2020. Pursuant to the
requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies
Kunshan Tuoan is subject to an enterprise income tax rate of 15% of taxable income and is entitled to the
preferential treatment from 2020 to 2022.Pursuant to the requirements of Rule 27(1) of Law of the People’s Republic of China on Enterprise Income Tax 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 Group have completed the filings for EIT reduction for exemption from EIT.Shouguang Shun Da Customs Declaration Co Ltd. and Qingdao Chenming Pulp & Paper Electronic Commodity
Spot Trading Co. Ltd. which are subsidiaries of the Group are small and micro enterprises. Pursuant to the
Notice on Implementing the Inclusive Tax Deduction and Exemption Policies for Micro and Small Enterprises (Cai
Shui [2019] No. 13) the annual taxable income of a small low-profit enterprise that is more than RMB1 million but
not exceeding RMB3 million shall be included in its taxable income at a reduced rate of 50% with the applicable
enterprise income tax rate of 10%.58 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VI. Taxation (Cont’d)
2. Tax incentives (Cont’d)
(1) Enterprise income tax (Cont’d)
Guangdong Chenming Panels Co. Ltd. a subsidiary of the Group meets the requirements of Rule 99 of the
Regulations for the Implementation of Law of the People’s Republic of China on Enterprise Income Tax (Decree
No. 512 of the State Council of the People’s Republic of China) and the Notice of the Ministry of Finance and
the State Taxation Administration on Issues Concerning the Implementation of the Catalogue of Preferential Tax
Treatments for Comprehensive Resource Utilisation Enterprises (Cai Shui [2008] No. 47): since 1 January 2008
for enterprises that derive income from the products listed in the Catalogue which are in line with related national
or industry standards by making use of the resources listed in the Catalogue as the main raw materials taxable
income will be calculated at a reduced rate of 90% of the total revenue for that year. To be entitled to the above
tax benefits the ratio of the resources listed in the Catalogue and the raw materials used for the product shall be
consistent with the required technical standards stated in the Catalogue.
(2) Value-added Tax (“VAT”)
Pursuant to Rule 10 of the Interim Regulation of the People’s Republic of China on Value Added Tax 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 Group are exempt from VAT and have completed the filings for VAT reduction for exemption
from VAT.Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use of
Resources (Cai Shui [2015] No. 78) taxpayers who sell self-produced products and services applying integrated
use of resources may enjoy the immediate VAT refund policy. Shandong Chenming Panels Co. Ltd. a subsidiary
of the Group produces products applying integrated use of resources and is therefore subject to the immediate
VAT refund policy in 2021.Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use of
Resources (Cai Shui [2015] No. 78) taxpayers who sell self-produced products and services applying integrated
use of resources may enjoy the immediate VAT refund policy. Shouguang Chenming Cement Co. Limited a
subsidiary of the Company produces products applying integrated use of resources and is therefore subject to
the immediate VAT refund policy in 2021.Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use of
Resources (Cai Shui [2015] No. 78) taxpayers who sell self-produced products and services applying integrated
use of resources may enjoy the immediate VAT refund policy. Guangdong Chenming Panels Co. Ltd. a subsidiary
of the Company produces products applying integrated use of resources and is therefore subject to the
immediate VAT refund policy in 2021.SHANDONG CHENMING PAPER HOLDINGS LIMITED 59
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements
1. Monetary funds
Unit: RMB
Item Closing balance Opening balance
Treasury cash 2903620.96 2161684.57
Bank deposit 4622876555.61 4387725487.05
Other monetary funds 11767734654.88 13369650427.36
Total 16393514831.45 17759537598.98
Of which: Total deposits in overseas banks 561226417.07 229837092.53
Other explanations
① Other monetary funds of RMB7889043053.81 were the guarantee deposit for the application for bank
acceptance with the banks by the Group;
② Other monetary funds of RMB1871619947.75 were the guarantee deposit for the application for letter of credit
with the banks by the Group;
③ Other monetary funds of RMB1532022545.14 were the guarantee deposit for the application for guarantees with
the banks by the Group;
④ Other monetary funds of RMB50000000.00 were the guarantee deposit for the application for loans with the
banks by the Group;
⑤ Other monetary funds of RMB143420000.00 were the Group’s statutory reserve deposits at the People’s Bank of
China;
⑥ Other monetary funds of RMB9670354.00 were locked-up due to litigations resulting in restriction on the use of
that account’s balance;
⑦ Bank deposit included interest receivable of RMB271958754.18.2. Financial assets held for trading
Unit: RMB
Item Closing balance Opening balance
Financial assets measured at fair value through profit or loss 101188881.03 192907800.62
Of which:
Equity instrument investments 101188881.03 192907800.62
Total 101188881.03 192907800.62
Other explanation:
Financial assets held for trading were shares of China Bohai Bank subscribed by the Group.60 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
3. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Provision Carrying Provision Carrying
Category Amount Percentage Amount percentage amount Amount Percentage Amount percentage amount
Accounts receivable assessed individually
for impairment 318325746.32 13.62% 318325746.32 100.00% 338943643.26 13.7% 338943643.26 100.00%
Accounts receivable assessed collectively
for impairment 2018546104.45 86.38% 204388010.85 10.13% 1814158093.60 2135216813.32 86.30% 150285147.50 7.04% 1984931665.82
Of which:
Accounts receivable from related parties 1199064.72 0.05% 59811.28 4.99% 1139253.44 2000017.96 0.08% 87306.27 4.37% 1912711.69
Accounts receivable from non-related
parties 1701489663.04 72.81% 138233778.56 8.12% 1563255884.48 1815359418.67 73.37% 97096893.56 5.35% 1718262525.11
Factoring receivables 315857376.69 13.52% 66094421.01 20.93% 249762955.68 317857376.69 12.85% 53100947.67 16.71% 264756429.02
Total 2336871850.77 100.00% 522713757.17 22.37% 1814158093.60 2474160456.58 100.00% 489228790.76 19.77% 1984931665.82
SHANDONG CHENMING PAPER HOLDINGS LIMITED 61
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VII. Notes to items of the consolidated financial statements (Cont’d)
3. Accounts receivable (Cont’d)
(1) Disclosure of accounts receivable by category (Cont’d)
Items assessed collectively for impairment:
Accounts receivable with collective provision for bad debts based on receivables from related parties
Unit: RMB
Closing balance
Provision for Provision
Name Book balance bad debts percentage
Within 1 year 1199064.72 59811.28 4.99%
Total 1199064.72 59811.28 –
Accounts receivable with collective provision for bad debts based on receivables from non-related party
customers
Unit: RMB
Closing balance
Provision for Provision
Name Book balance bad debts percentage
Within 1 year 1516568359.64 75895519.81 5.00%
1 to 2 years 26841149.32 2636550.27 9.82%
2 to 3 years 100179071.22 11383928.65 11.36%
Over 3 years 57901082.86 48317779.83 83.45%
Total 1701489663.04 138233778.56 –
62 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
3. Accounts receivable (Cont’d)
(1) Disclosure of accounts receivable by category (Cont’d)
Accounts receivable with collective provision for bad debts based on factoring receivables
Unit: RMB
Closing balance
Provision for Provision
Name Book balance bad debts percentage
Within 1 year 0.00 0.00 0.00%
1 to 2 years 167718416.69 28512130.84 17.00%
2 to 3 years 148138960.00 37582290.17 25.37%
Total 315857376.69 66094421.01 –
Disclosure by ageing
Unit: RMB
Ageing Closing balance Opening balance
Within 1 year (including 1 year) 1517767424.36 1822584474.74
1 to 2 years 194559566.01 379812071.80
2 to 3 years 248318031.22 87426356.99
Over 3 years 376226829.18 184337553.05
Subtotal 2336871850.77 2474160456.58
Provision for bad debts 522713757.17 489228790.76
Total 1814158093.60 1984931665.82
(2) 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 or Closing
Category balance Provision reversal Write-off Others balance
Accounts receivable with provision
for bad debt 489228790.76 65298080.13 24375703.85 1299472.95 6137936.92 522713757.17
Total 489228790.76 65298080.13 24375703.85 1299472.95 6137936.92 522713757.17
Note: Other changes are disposal of subsidiaries during the period.SHANDONG CHENMING PAPER HOLDINGS LIMITED 63
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
3. Accounts receivable (Cont’d)
(3) Top five accounts receivable based on closing balance of debtors
The top five accounts receivable based on closing balance of debtors for the period amounted to
RMB521931696.14 in total accounting for 22.33% of the total closing balance of accounts receivable. The
closing balance of the corresponding bad debt provision amounted to RMB26096584.81 in total.4. Accounts receivable financing
Unit: RMB
Item Closing balance Opening balance
Bills receivable 921201223.62 488385666.76
Total 921201223.62 488385666.76
Changes (increase or decrease) during the period and change in fair value of accounts receivable financing
□ Applicable √Not applicable
If the provision for impairment of accounts receivable financing is made in accordance with the general model of
ECLs please disclose the information about provision for impairment with reference to the way of disclosure of other
receivables:
□ Applicable √ Not applicable
5. Prepayments
(1) Disclosure of prepayments stated according to ageing analysis
Unit: RMB
Closing balance Opening balance
Ageing Amount Percentage Amount Percentage
Within 1 year 607221765.55 87.30% 871877663.55 90.42%
1 to 2 years 88360369.06 12.70% 92412848.81 9.58%
Total 695582134.61 – 964290512.36 –
(2) Top five prepayments according to closing balance of prepaid unit
Top five prepayments according to closing balance of prepaid units for the period amounted to
RMB273416339.52 which accounted for 39.31% of the closing balance of the total accounts payable.64 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
6. Other receivables
Unit: RMB
Item Closing balance Opening balance
Other receivables 2269274220.18 2417240559.46
Total 2269274220.18 2417240559.46
(1) Other receivables
1) Other receivables by nature
Unit: RMB
Closing Opening
Nature book balance book balance
Open credit 2075007543.45 2184530376.61
Guarantee deposit 33031885.35 9579812.57
Insurance premium 617242.43 519803.12
Reserve and borrowings 25467008.58 35466058.33
Others 135150540.37 187144508.83
Total 2269274220.18 2417240559.46
2) Particulars of bad debt provision
Unit: RMB
Phase 1 Phase 2 Phase 3
ECLs over the ECLs over
ECLs for the entire life (not the entire life
Bad debt provision next 12 months credit-impaired) (credit-impaired) Total
Balance as at 1 January 2021 140645700.07 402660101.59 543305801.66
Balance as at 1 January 2021 for the period – – – –
Provision for the period 68684323.17 2099829.32 70784152.49
Reversal for the period 74841399.01 17917679.69 92759078.70
Write-off for the period 15582.40 15582.40
Other changes 9827.97 9827.97
Balance as at 30 June 2021 134463213.86 386842251.22 521305465.08
Note: Other changes were caused by disposal of Zhanjiang Chenming Newstyle Wall Materials Co. Ltd. during the period.Changes in carrying book balances with significant changes in loss provision for the period
□ Applicable √ Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITED 65
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VII. Notes to items of the consolidated financial statements (Cont’d)
6. Other receivables (Cont’d)
(1) Other receivables (Cont’d)
2) Particulars of bad debt provision (Cont’d)
Disclosed by ageing
Unit: RMB
Ageing Closing balance Opening balance
Within 1 year (including 1 year) 1538418810.65 1356457308.62
1 to 2 years 949091474.36 813310977.70
2 to 3 years 119206732.50 634042365.77
Over 3 years 183862667.75 156735709.03
Subtotal 2790579685.26 2960546361.12
Less: Bad debt provision 521305465.08 543305801.66
Total 2269274220.18 2417240559.46
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 for other receivables 543305801.66 70784152.49 92759078.70 15582.40 9827.97 521305465.08
Total 543305801.66 70784152.49 92759078.70 15582.40 9827.97 521305465.08
Note: Other deductions are the disposal of subsidiaries during the period.66 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
6. Other receivables (Cont’d)
(1) Other receivables (Cont’d)
4) Top five other receivables according to closing balance of debtors
The top five other accounts receivable based on closing balance of debtors for the period amounted
to RMB2048615346.66 in total accounting for 73.41% of the total closing balance of other accounts
receivable. The closing balance of the corresponding bad debt provision amounted to RMB198653622.35
in total.7. Inventories
(1) Categories of inventories
Unit: RMB
Closing balance Opening balance
Impairment provision Impairment provision
for inventories or for inventories or
Item Book balance performance costs Carrying amount Book balance performance costs Carrying amount
Raw materials 1923849842.30 20535018.69 1903314823.61 1712610505.63 20535018.69 1692075486.94
Work-in-process products 168807300.68 168807300.68 128761554.31 128761554.31
Goods in stock 2999936294.14 2999936294.14 1464455062.79 1464455062.79
Consumable biological assets 1515249721.49 1515249721.49 1535386865.44 1535386865.44
Developing products 314614378.34 314614378.34 314614378.34 314614378.34
Total 6922457536.95 20535018.69 6901922518.26 5155828366.51 20535018.69 5135293347.82
SHANDONG CHENMING PAPER HOLDINGS LIMITED 67
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VII. Notes to items of the consolidated financial statements (Cont’d)
7. Inventories (Cont’d)
(2) Impairment provision for inventories or performance costs
Unit: RMB
Increase during the period Decrease during the period
Item Opening balance Provision Others Reversal or transfer Others Closing balance
Raw materials 20535018.69 20535018.69
8. Non-current assets due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term receivables due within one year 3637802641.72 4222744207.34
Total 3637802641.72 4222744207.34
9. Other current assets
Unit: RMB
Item Closing balance Opening balance
VAT recoverable 935039690.72 1041552455.22
Prepaid tax 71437914.25 53146519.47
Receivables under financial lease due within one year 1082406809.15 601364577.40
Factoring receivables due within one year 555154041.32 596856928.35
Prepaid expenses 436636302.42 329739882.81
Other payments 94258332.60 94258332.60
Total 3174933090.46 2716918695.85
68 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
10. Long-term receivables
(1) Particulars of long-term receivables
Unit: RMB
Closing balance Opening balance
Bad debt Carrying Bad debt Carrying Discount
Item Book balance provision amount Book balance provision amount rate range
Financial leasing payments 8804858990.32 1216417328.04 7588441662.28 9963461389.49 1103339754.72 8860121634.77 4%-20%
Less: Unrealised financing income 554639036.73 554639036.73 351498895.63 351498895.63
Less: Non-current assets due within
one year 4565549280.03 974150909.28 3591398370.75 4624874317.67 585446099.51 4039428218.16
Subtotal 3684670673.56 242266418.76 3442404254.80 4987088176.19 517893655.21 4469194520.98
Deposit for financial leasing 277800000.00 277800000.00 412239088.74 412239088.74
Less: Unrealised financing income 28385749.53 28385749.53 39232762.59 39232762.59
Less: Non-current assets due within
one year 46404270.97 46404270.97 183315989.18 183315989.18
Subtotal 203009979.50 203009979.50 189690336.97 189690336.97
Total 3887680653.06 242266418.76 3645414234.30 5176778513.16 517893655.21 4658884857.95
Particulars of bad debt impairment provision
Unit: RMB
Phase 1 Phase 2 Phase 3
ECLs over the ECLs over the
ECLs for the entire life (not entire life
Bad debt provision next 12 months credit-impaired) (credit-impaired) Total
Balance as at 1 January 2021 1480724.26 516412930.95 517893655.21
Balance as at 1 January 2021 during the period – – – –
Reversal for the period 163301.64 275463934.81 275627236.45
Balance as at 30 June 2021 1317422.62 240948996.14 242266418.76
Changes in book balances with significant changes in loss provision for the period
□ Applicable √ Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITED 69
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VII. Notes to items of the consolidated financial statements (Cont’d)
11. Long-term equity investments
Unit: RMB
Change for the period
Investment
Opening gain or loss Adjustment Other Distribution of Closing Closing
balance recognised of other change cash dividend balance balance of
(carrying Additional Withdrawn under equity comprehensive in equity or profit Impairment (carrying impairment
Investee amount) contribution contribution method income interest declared provision Others amount) provision
I. Joint venture
Shouguang Chenming Huisen
New-style Construction
Materials Co. Ltd. 4945742.03 1242575.51 500000.00 5688317.54
Weifang Sime Darby West Port
Co. Ltd. 81943506.92 -90771.22 81852735.70
Shouguang Meite Environmental
Technology Co. Ltd. 17087192.44 -451198.35 16635994.09
Weifang Chenrong New
and Old Kinetic Energy
Conversion Equity Investment
Fund Partnership (Limited
Partnership) 199705636.28 17501451.16 16959843.42 200247244.02
Weifang Xingxing United
Chemical Co. Ltd. 91874385.12 -725059.41 91149325.71
Subtotal 395556462.79 17476997.69 17459843.42 395573617.06
II. Associates
Jiangxi Jiangbao Media Colour
Printing Co. Ltd.Zhuhai Dechen New Third
Board Equity Investment
Fund Company (Limited
Partnership) 52401659.62 -6105696.08 46295963.54
Ningbo Kaichen Huamei Equity
Investment Fund Partnership
(Limited Partnership) 198549926.27 343561.57 198893487.84
Jiangxi Chenming Port Co. Ltd. 1310585.65 -246185.91 1064399.74
Goldtrust Futures Co. Ltd. 189366931.59 -6055220.25 183311711.34
Chenming (Qingdao) Asset
Management Co. Ltd. 8674551.18 22349.05 8696900.23
Guangdong Nanyue Bank Co.Ltd. 3060298285.35 77519309.45 6949017.14 21000000.00 3123766611.94
Subtotal 3510601939.66 65478117.83 6949017.14 21000000.00 3562029074.63
Total 3906158402.45 82955115.52 6949017.14 38459843.42 3957602691.69
70 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
12. Other non-current financial assets
Unit: RMB
Item Closing balance Opening balance
Investment in debt instruments 1100000000.00 4000000.00
Investment in equity instruments 121910000.00 141910000.00
Total 1221910000.00 145910000.00
13. 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 6446222194.78 6446222194.78
2. Increase during the period 1841533.04 1841533.04
(1) Other 1841533.04 1841533.04
3. Decrease during the period
4. Closing balance 6448063727.82 6448063727.82
II. Accumulated depreciation and accumulated amortisation
1. Opening balance 503062626.78 503062626.78
2. Increase during the period 80920853.70 80920853.70
(1) Provision or amortisation 80920853.70 80920853.70
3. Decrease during the period
4. Closing balance 583983480.48 583983480.48
III. Provision for impairment
IV. Carrying amount
1. Closing carrying amount 5864080247.34 5864080247.34
2. Opening carrying amount 5943159568.00 5943159568.00
(2) Investment property under the fair value method
□ Applicable √ Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITED 71
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VII. Notes to items of the consolidated financial statements (Cont’d)
14. Fixed assets
Unit: RMB
Item Closing balance Opening balance
Fixed assets 36554310527.18 37651706658.97
Disposal of fixed assets 30228.26
Total 36554340755.44 37651706658.97
(1) Particulars of fixed assets
Unit: RMB
Electronic
Housing and Machinery and equipment
Item building structure equipment Vehicles and others Total
I. Original carrying amount:
1. Opening balance 10640660046.65 44092418191.46 308616664.66 456461101.41 55498156004.18
2. Increase during the period 76884998.10 56397693.62 2431186.96 4010485.51 139724364.19
(1) Acquisition 5070546.78 56397693.62 2431186.96 4010485.51 67909912.87
(2) Other increases 71814451.32 71814451.32
3. Decrease during the period 41982979.47 56454482.42 9832690.37 89746900.33 198017052.59
(1) Disposal or retirement 20441645.96 26851014.38 9391079.64 88779933.62 145463673.60
(2) Other deductions 21541333.51 29603468.04 441610.73 966966.71 52553378.99
4. Closing balance 10675562065.28 44092361402.66 301215161.25 370724686.59 55439863315.78
II. Accumulated depreciation
1. Opening balance 2055823328.64 15125890831.31 182038050.14 276762643.94 17640514854.03
2. Increase during the period 126136626.04 923630492.59 11541324.84 22344615.20 1083653058.67
(1) Provision 126136626.04 923630492.59 11541324.84 22344615.20 1083653058.67
3. Decrease during the period 9196494.90 24283398.56 8281045.82 1809630.56 43570569.84
(1) Disposal or retirement 3909353.07 10132145.43 8041881.78 1516369.06 23599749.34
(2) Other deductions 5287141.83 14151253.13 239164.04 293261.50 19970820.50
4. Closing balance 2172763459.78 16025237925.34 185298329.16 297297628.58 18680597342.86
III. Provision for impairment
1. Opening balance 27808852.79 170676515.34 13889.13 7435233.92 205934491.18
2. Increase during the period
(1) Provision
3. Decrease during the period 979045.44 979045.44
(1) Disposal or retirement 979045.44 979045.44
4. Closing balance 27808852.79 169697469.90 13889.13 7435233.92 204955445.74
IV. Carrying amount
1. Closing carrying amount 8474989752.71 27897426007.42 115902942.96 65991824.09 36554310527.18
2. Opening carrying amount 8557027865.22 28795850844.81 126564725.39 172263223.55 37651706658.97
Other explanation: Other deductions in the original amount and accumulated depreciation are due to the selling of
the subsidiary Zhanjiang Chenming Newstyle Wall Materials Co. Ltd. during the period.72 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
14. Fixed assets (Cont’d)
(2) Particulars of temporarily idle fixed assets
Unit: RMB
Original Accumulated Provision for Carrying
Item carrying amount depreciation impairment amount Remark
Housing and building structure 76252901.86 21471411.70 3103215.82 51678274.34
Machinery and equipment 1021802729.82 536559530.93 166037071.06 319206127.83
Transportation equipment 25020.51 21917.50 1883.01 1220.00
Electronic equipment 1167911.72 1043812.64 34063.64 90035.44
Total 1099248563.91 559096672.77 169176233.53 370975657.61
(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.) 1030792226.30 Under application
Housing and building structure (Huanggang Chenming Pulp & Paper
Co. Ltd.) 512518573.49 Under application
Housing and building structure (Shouguang Meilun Paper Co. Ltd.) 483380108.53 Under application
Housing and building structure (Jilin Chenming Paper Co. Ltd.) 384659520.77 Under application
Housing and building structure (Jiangxi Chenming Paper Co. Ltd.) 208341021.49 Under application
Housing and building structure (Shandong Chenming Paper Holdings
Limited) 115152708.00 Under application
Housing and building structure (Wuhan Chenming Hanyang Paper
Holdings Co. Ltd.) 78337160.26 Under application
Housing and building structure (Chengdu Chenming Culture
Communication Co. Ltd.) 12323614.94 Under application
SHANDONG CHENMING PAPER HOLDINGS LIMITED 73
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VII. Notes to items of the consolidated financial statements (Cont’d)
15. Construction in progress
Unit: RMB
Item Closing balance Opening balance
Construction in progress 212365974.34 171178595.73
Materials for project 7949580.45 8679346.10
Total 220315554.79 179857941.83
Note: Construction in progress in the above table means constructions in progress less materials for project.
(1) Particulars of construction in progress
Unit: RMB
Closing balance Opening balance
Impairment Carrying Impairment Carrying
Item Book balance provision amount Book balance provision amount
Technological modification project 97153954.16 97153954.16 59209256.24 59209256.24
Fly ash cement ceramsite production project 54246139.19 54246139.19 54246139.19 54246139.19
Household paper project (Phase II) (Meilun) 10623447.20 10623447.20 10210593.75 10210593.75
Light calcium carbonate project (Meilun) 15371226.55 15371226.55 13836002.27 13836002.27
Others 64659665.41 29688458.17 34971207.24 63365062.45 29688458.17 33676604.28
Total 242054432.51 29688458.17 212365974.34 200867053.90 29688458.17 171178595.73
(2) Materials for project
Unit: RMB
Closing balance Opening balance
Impairment Carrying Impairment Carrying
Item Book balance provision amount Book balance provision amount
Special materials 7949580.45 7949580.45 8679346.10 8679346.10
Total 7949580.45 7949580.45 8679346.10 8679346.10
74 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
16. Right-of-use assets
Unit: RMB
Land use Housing and
Item rights building structure Total
I. Original carrying amount
1. Opening balance 219101390.27 5571378.54 224672768.81
2. Decrease during the period 441950.75 441950.75
(1) Sublease 441950.75 441950.75
3. Closing balance 218659439.52 5571378.54 224230818.06
II. Accumulated depreciation
1. Opening balance 18548990.80 247058.26 18796049.06
2. Increase during the period 3820811.57 138727.87 3959539.44
(1) Provision 3820811.57 138727.87 3959539.44
3. Decrease during the period 333145.99 333145.99
(1) Sublease 333145.99 333145.99
4. Closing balance 22036656.38 385786.13 22422442.51
III. Provision for impairment
IV. Carrying amount
1. Closing carrying amount 196622783.14 5185592.41 201808375.55
2. Opening carrying amount 200552399.47 5324320.28 205876719.75
17. Intangible assets
(1) Particulars of intangible assets
Unit: RMB
Certificates
Land of third
Item use rights Software Patents party right Total
I. Original carrying amount
1. Opening balance 2191720025.23 21573963.25 27358613.05 15908674.87 2256561276.40
2. Increase during the period 430015.51 430015.51
(1) Acquisition 430015.51 430015.51
3. Decrease during the period 128966741.06 57153.12 129023894.18
(1) Disposal 128966741.06 57153.12 129023894.18
4. Closing balance 2062753284.17 21946825.64 27358613.05 15908674.87 2127967397.73
II. Accumulated amortisation
1. Opening balance 448158030.38 20561952.90 911953.77 12304830.02 481936767.07
2. Increase during the period 22634438.90 994100.43 1367930.65 2649202.12 27645672.10
(1) Provision 22634438.90 994100.43 1367930.65 2649202.12 27645672.10
3. Decrease during the period 11841491.67 11841491.67
(1) Disposal 11841491.67 11841491.67
4. Closing balance 458950977.61 21556053.33 2279884.42 14954032.14 497740947.50
III. Impairment provision
IV. Carrying amount
1. Closing carrying amount 1603802306.56 390772.31 25078728.63 954642.73 1630226450.23
2. Opening carrying amount 1743561994.85 1012010.35 26446659.28 3603844.85 1774624509.33
SHANDONG CHENMING PAPER HOLDINGS LIMITED 75
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VII. Notes to items of the consolidated financial statements (Cont’d)
18. Goodwill
(1) Original carrying amount of goodwill
Unit: RMB
Increase during
the period
Arising from Decrease during
business the period
Name of investee or event generating goodwill Opening balance combinations Disposal Closing balance
Shandong Chenming Panels Co. Ltd. 5969626.57 5969626.57
Jilin Chenming Paper Co. Ltd. 14314160.60 14314160.60
Kunshan Tuoan Plastic Products Co. Ltd. 26946905.38 26946905.38
Total 47230692.55 47230692.55
(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
Note: The Group assessed the recoverable amount of goodwill and determined that the goodwill related to the Group’s panel and plastic
business was not impaired. With the category of the principal activities as the basis for determining the reporting segments the
Group regards Shandong Chenming Panels Co. Ltd. and Kunshan Tuoan Plastic Products Co. Ltd. as two separate asset groups.Their recoverable amount is determined based on the present value of the estimated future cash flows. Future cash flows are
determined based on the financial budget for 2021 to 2025 as approved by the management and adopt 7.28% as the discount rate
which is the interest rate of the 5-year bonds issued by the Company in 2018. The cash flows for more than 5 years are calculated
based on the growth rate of 5%. Other key assumptions used in estimating future cash flows include the estimated sales and gross
profit based on the performance of such asset group in the past and the expectation to market development by the management.The management believes that any reasonable change in the above assumptions will not result in the total book value of the
asset group Shandong Chenming Panels Co. Ltd. and the asset group Kunshan Tuoan Plastic Products Co. Ltd. exceeding its
recoverable amount.76 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
19. Long-term prepaid expenses
Unit: RMB
Increase during Amortisation
Item Opening balance the period during the period Other deductions Closing balance
Woodland expenses 9036428.60 302898.00 8733530.60
Others 42025056.89 1737095.39 1490734.06 42271418.22
Total 51061485.49 1737095.39 1793632.06 51004948.82
20. 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 tax temporary income tax
Item difference assets difference assets
Provision for impairment of assets 2581199406.29 607142610.54 2210402262.82 509732949.61
Unrealised profit arising from intra-group transactions 223445636.80 55861409.20 205628008.40 51407002.10
Outstanding payables 491129734.58 74450015.62 538679932.17 88774034.53
Deferred income 138559855.82 20783978.37 127445713.46 21358762.71
Deductible loss 1959592584.00 316160423.08 2445427000.05 400915339.22
Debt reconstructing 47906363.94 11976590.97
Total 5393927217.49 1074398436.81 5575489280.84 1084164679.14
(2) Deferred income tax liabilities before offsetting
Unit: RMB
Closing balance Opening balance
Taxable Deferred Taxable Deferred
temporary income tax temporary income tax
Item differences liabilities differences liabilities
Asset valuation increment from business combinations
involving entities not under common control 40822701.13 6123405.17 43816906.47 6572535.97
Total 40822701.13 6123405.17 43816906.47 6572535.97
SHANDONG CHENMING PAPER HOLDINGS LIMITED 77
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VII. Notes to items of the consolidated financial statements (Cont’d)
20. Deferred income tax assets/deferred income tax liabilities (Cont’d)
(3) The breakdown of unrecognised deferred income tax assets
Unit: RMB
Item Closing balance Opening balance
Deductible temporary difference 141286586.65 59564220.72
Deductible loss 668089327.64 776900858.71
Total 809375914.29 836465079.43
(4) Expiry of deductible loss of unrecognised deferred income tax assets falls in the periods as follows
Unit: RMB
Year Closing amount Opening amount Remark
2021 66234527.65
2022 156438853.14 187801057.21
2023 128426672.96 138151854.93
2024 156201868.17 108619258.72
2025 200865382.78 276094160.20
2026 26156550.59
Total 668089327.64 776900858.71 –
21. Other non-current assets
Unit: RMB
Closing balance Opening balance
Impairment Carrying Impairment
Item Book balance provision amount Book balance provision Carrying amount
Prepayments for land transfer fees 211072250.68 211072250.68
Prepayments for engineering and equipment 26361031.82 26361031.82 58886418.75 58886418.75
Total 237433282.50 237433282.50 58886418.75 58886418.75
78 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
22. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMB
Item Closing balance Opening balance
Mortgage borrowings 275331174.98 279524407.05
Pledged borrowings 60000000.00 35075833.33
Guaranteed borrowings 7005407751.87 7536960272.39
Credit borrowings 9528352184.52 8189875845.09
Discounted borrowings 16298186600.00 16752556600.00
Total 33167277711.37 32793992957.86
Explanation of the classification of short-term borrowings:
① For classification and amount of mortgage borrowing and mortgage borrowing please see 1. Monetary funds
and 63. Assets with restricted ownerships or right to use in Note VII; ② For classification and amount of pledged
borrowing and mortgage borrowing please see notes in relation please see 1. Monetary funds and 63. Assets
with restricted ownerships or right to use in Note VII; ③ Overdue short-term borrowings: total outstanding
accounts payable as at the end of the year amounted to RMB0.00.23. Bills payable
Unit: RMB
Item Closing balance Opening balance
Commercial acceptance bills 1816089052.29 984661462.19
Bank acceptance bills 1816839962.60 2014275274.15
Total 3632929014.89 2998936736.34
Total outstanding bills payable as at the end of the period amounted to RMB0.00.SHANDONG CHENMING PAPER HOLDINGS LIMITED 79
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VII. Notes to items of the consolidated financial statements (Cont’d)
24. Accounts payable
(1) Particulars of accounts payable
Unit: RMB
Item Closing balance Opening balance
Payment for goods 2846452304.68 3416069031.99
Payment for equipment 171284544.60 260995383.02
Payment for engineering 141094426.64 139679646.76
Others 381607749.03 225686670.54
Total 3540439024.95 4042430732.31
(2) Significant advance receipts for over 1 year
Unit: RMB
Item Closing balance Reasons
BEIJING GUODIAN FUTONG SCIENCE AND DEVELOPMENT 46122225.40 Quality guarantee deposit
CO. LTD.OMYA HAIMING (NANCHANG) CHEMICAL CO. LTD. 16000000.00 Quality guarantee deposit
CHINA ENERGY ENGINEERING GROUP GUANGZHOU 14128415.00 Quality guarantee deposit
ELECTRIC POWER DESIGN INSTITUTE CO. LTD.ZHEJIANG JNDIA PIPELINE INDUSTRY CO. LTD. 10556896.91 Quality guarantee deposit
CSSC 704TH RESEARCH INSTITUTE 7263929.00 Quality guarantee deposit
Total 94071466.31 –
25. Contract liabilities
Unit: RMB
Item Closing balance Opening balance
Advance loans 2186935751.42 1051147044.74
Total 2186935751.42 1051147044.74
80 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
26. Staff remuneration payables
(1) Particulars of staff remuneration payables
Unit: RMB
Opening Increase during Decrease during Closing
Item balance the period the period balance
I. Short-term remuneration 231749583.09 665596739.51 633424471.85 263921850.75
II. Retirement benefit plan-defined contribution scheme 627002.22 103997435.53 104356527.88 267909.87
III. Termination benefits 219835.00 219835.00
Total 232376585.31 769814010.04 738000834.73 264189760.62
(2) Particulars of short-term remuneration
Unit: RMB
Opening Increase during Decrease during Closing
Item balance the period the period balance
1. Salaries bonuses allowance and subsidies 170642761.74 539324293.60 513512375.29 196454680.05
2. Staff welfare 26232148.70 26232148.70
3. Social insurance premium 585607.73 47823645.25 48275268.91 133984.07
Of which: Medical insurance premium 575413.71 43096714.67 43667538.94 4589.44
Work-related injury insurance premium 3538.60 3040833.94 3006158.52 38214.02
Maternity insurance premium 6655.42 1686096.64 1601571.45 91180.61
4. Housing provident funds 7998911.38 36494364.13 36363639.78 8129635.73
5. Union funds and workers’ education 30774839.48 13472605.48 4569443.80 39678001.16
6. Other short-term remuneration 21747462.76 2249682.35 4471595.37 19525549.74
Total 231749583.09 665596739.51 633424471.85 263921850.75
(3) Defined contribution plan
Unit: RMB
Opening Increase during Decrease during Closing
Item balance the period the period balance
1. Basic pension insurance premiums 559683.60 99998398.95 100490658.84 67423.71
2. Unemployment insurance premiums 67318.62 3999036.58 3865869.04 200486.16
Total 627002.22 103997435.53 104356527.88 267909.87
SHANDONG CHENMING PAPER HOLDINGS LIMITED 81
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VII. Notes to items of the consolidated financial statements (Cont’d)
27. Taxes payable
Unit: RMB
Item Closing balance Opening balance
Enterprise income tax 146270920.28 274637537.42
Value added tax 54512695.27 294438467.26
Land use tax 13381808.86 7522959.20
Property tax 22028641.92 9232558.17
Urban maintenance and construction tax 1488643.17 10137043.67
Educational surcharges 1509812.72 8112168.27
Individual income tax 41736958.86 41648852.90
Stamp duty 3170695.43 2630037.02
Land appreciation tax 4153352.86 2024028.20
Environmental Protection Tax 4762420.21 2263933.52
Resource tax 4500000.00 255.00
Total 297515949.58 652647840.63
28. Other payables
Unit: RMB
Item Closing balance Opening balance
Interest payable 114998461.03 178992959.85
Dividend payable 661044485.66
Other payables 1767286629.24 1777722407.98
Total 2543329575.93 1956715367.83
(1) Interest payable
Unit: RMB
Item Closing balance Opening balance
Interest on borrowings 27160322.11 81495654.29
Interest on corporate bonds 7116611.16 17401472.25
Interest on medium-term notes 80721527.76 80095833.31
Total 114998461.03 178992959.85
82 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
28. Other payables (Cont’d)
(2) Dividend payable
Unit: RMB
Item Closing balance Opening balance
Ordinary shares dividends 552078517.00
Dividends of preferred stocks/perpetual bonds classified as equity
instruments 108965968.66
Total 661044485.66
(3) Other payables
1) Other payables by nature
Unit: RMB
Item Closing balance Opening balance
Open credit 607351554.68 625546672.65
Deposit 262051453.61 259341777.01
Accrued expenses 469043342.97 525268287.87
The obligation to repurchase shares under the share incentive
scheme 226860000.00 226860000.00
Others 201980277.98 140705670.45
Total 1767286629.24 1777722407.98
2) Significant other payables for over 1 year
Unit: RMB
Item Closing balance Reasons
NINE DRAGONS DAWEI HOLDINGS CO. LTD. 30000000.00 Deposit
SHOUGUANG LONGYUAN PAPER COATING CO. LTD. 13350000.00 Deposit
SHANGHAI YINHU INDUSTRY CO. LTD. 13000000.00 Open credit
STATE-OWNED SHOUGUANG QINGSHUIPO FARM 8800000.00 Open credit
WUHAN TIANRUI PAPER CO. LTD. 7341708.00 Deposit
Total 72491708.00
SHANDONG CHENMING PAPER HOLDINGS LIMITED 83
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
29. Non-current liabilities due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term receivables due within one year 1630025500.00 2935835697.30
Bonds payable due within one year 1527790296.70
Long-term payables due within one year 1490109514.28 1621095530.96
Lease liabilities due within one year 4606717.58 4606717.58
Other non-current liabilities due within one year 600000000.00 2599411670.09
Total 5252532028.56 7160949615.93
30. Other current liabilities
Unit: RMB
Item Closing balance Opening balance
Short-term bonds payable – 157037833.35
Total – 157037833.35
Increase/decrease in short-term bonds payable:
Unit: RMB
Amortisation Redemption
Name of Date of Opening Issue during Interest at of premium/ during Closing
commercial paper Par value issue Term Amount balance the period par value discount the period balance
2020 first tranche of super
& short-term commercial
paper 300000000.00 2020-04-22 270 days 299550000.00 157037833.35 6065416.68 163103250.03 0.00
Total – – – 299550000.00 157037833.35 6065416.68 163103250.03 0.00
84 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
31. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMB
Item Closing balance Opening balance
Secured borrowings 4319788510.20 4618249057.65
Guarantee borrowings 2325101400.00 4319737618.80
Credit borrowings 1958740000.00 2075000000.00
Less: Long-term borrowings due within ones year 1630025500.00 2935835697.30
Total 6973604410.20 8077150979.15
32. Bonds payable
(1) Bonds payable
Unit: RMB
Item Closing balance Opening balance
17 Chenming Bond 01- Chenming Group 89957250.00 89957250.00
18 Chenming Bond 01- Chenming Group 350013500.00 350000000.00
Chenming USD Bonds 1087819546.70 1096920101.46
Subtotal 1527790296.70 1536877351.46
Less: Bonds payable due within one year 1527790296.70
Total – 1536877351.46
(2) Increase/decrease in bonds payable (excluding other financial instruments such as Preference Shares and
Perpetual Bonds classified as financial liabilities)
Unit: RMB
Bond name Par value Date of issue Term Amount
17 Chenming Bond 01- Chenming Group 1200000000.00 2017/8/22 5 years 1198200000.00
18 Chenming Bond 01- Chenming Group 350000000.00 2018/4/2 5 years 350000000.00
Chenming USD Bonds 1137120600.00 2019/8/6 2.6 years 1125276863.46
Subtotal 2687120600.00 2673476863.46
SHANDONG CHENMING PAPER HOLDINGS LIMITED 85
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
32. Bonds payable (Cont’d)
(2) Increase/decrease in bonds payable (excluding other financial instruments such as Preference Shares and
Perpetual Bonds classified as financial liabilities) (Cont’d)
Changes in
foreign
Issue Amortisation Redemption exchange Of which the
Opening during Interest at of premium/ during gains and Closing amount due
Bond name balance the period par value discount the period losses balance within one year
17 Chenming Bond 01- Chenming Group 89957250.00 89957250.00 89957250.00
18 Chenming Bond 01- Chenming Group 350000000.00 13500.00 350013500.00 350013500.00
Chenming USD Bonds 1096920101.46 9100554.76 1087819546.70 1087819546.70
Subtotal 1536877351.46 13500.00 – 9100554.76 1527790296.70 1527790296.70
33. Lease liabilities
Unit: RMB
Item Closing balance Opening balance
Lease payments payable 81362458.45 85933149.45
Less: Unrecognised financing expenses 16248295.97 21054661.97
Subtotal 65114162.48 64878487.48
Less: Lease liabilities due within one year 4606717.58 4606717.58
Total 60507444.90 60271769.90
34. Long-term payables
Unit: RMB
Item Closing balance Opening balance
Long-term payables 2294420531.46 2295309357.74
Total 2294420531.46 2295309357.74
86 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
34. Long-term payables (Cont’d)
(1) Long-term payables by nature
Unit: RMB
Item Closing balance Opening balance
Retention for the financial leasing operations 1000000.00 64196192.92
China Development Bank Special Funds 488000000.00 517500000.00
Contributions by other partners 267000000.00 34210000.00
Financial leasing 3028530045.74 3300498695.78
Subtotal 3784530045.74 3916404888.70
Less: Long-term payables due within one year 1490109514.28 1621095530.96
Total 2294420531.46 2295309357.74
35. Provisions
Unit: RMB
Item Closing balance Opening balance Reason
Pending litigation 325259082.28 325259082.28 Losses from Arjo’s lawsuit
Total 325259082.28 325259082.28 –
Other explanations including the explanations on significant assumptions and estimation related to significant provision:
In February 2017 Arjowiggins HKK2 Limited (“HKK2 Company”) submitted a H share winding-up petition to Hong Kong
High Court due to a joint venture dispute which required a compensation for economic loss of RMB167 million and
interest thereon and legal costs of USD3.54 million and arbitration fee of HK$3.3 million and interest thereon to HKK2.The Company made provision of RMB320 million for such pending litigation in 2017. On 5 August 2020 Hong Kong
High Court rejected the Group’s appeal. The Group is seeking ways of appeal again to safeguard the lawful rights and
interests of the Company and the investor community.SHANDONG CHENMING PAPER HOLDINGS LIMITED 87
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
36. Deferred income
Unit: RMB
Opening Increase during Decrease during Closing
Item balance the period the period balance Reason
Government grants 1637996636.51 53605132.80 66129472.76 1625472296.55 Financial provision
Total 1637996636.51 53605132.80 66129472.76 1625472296.55 –
Items in respect of government grants:
Unit: RMB
Include in Asset-related/
Opening New grants other income Other Closing income-
Liabilities item balance for the period for the period changes balance related
Project fund for National technological
support scheme 1287825.00 – 82350.00 – 1205475.00 Asset-related
Sewage treatment and water conservation
reconfiguration project 59601116.33 6555470.06 53045646.27 Asset-related
Huanggang forestry-pulp-paper project 653165566.26 – 12513108.90 13216025.00 627436432.36 Asset-related
Zhanjiang forestry-pulp-paper project 54901230.11 – 2047316.46 – 52853913.65 Asset-related
Financial subsidies for technical
transformation project 155686141.08 – 5767903.86 – 149918237.22 Asset-related
Funding for environmental protection 677639567.56 – 25296070.94 – 652343496.62 Asset-related
Huanggang Pulp and Paper Project
Phase II 53605132.80 53605132.80 Asset-related
Others 35715190.17 – 651227.54 – 35063962.63 Asset-related
Total 1637996636.51 53605132.80 52913447.76 13216025.00 1625472296.55 Asset-related
88 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
II. Notes to items of the consolidated financial statements (Cont’d)
37. Other non-current liabilities
Unit: RMB
Item Closing balance Opening balance
Medium-term notes 1797016666.67 3388933356.16
Subtotal 1797016666.67 3388933356.16
Less: Other non-current liabilities due within one year 600000000.00 2599411670.09
Total 1197016666.67 789521686.07
Other explanation:
38. Share capital
Unit: RMB
Increase/decrease during the year (+/-)
Shares
Opening converted
balance New issue Bonus issue from reserves Others Subtotal Closing balance
Total number of shares 2984208200.00 2984208200.00
39. Other equity instruments
(1) Preference Shares Perpetual Bonds and other financial instruments outstanding at the end of the period
Outstanding financial Year of Accounting Dividend or Issue Amount Maturity date or Condition for
instruments issuance classification interest rate price Issue size (RMB) renewal status conversion Conversion
17 Lu Chenming MTN001 2017 Equity instrument 8.97% 100.00 10000000.00 1000000000.00 No defined None Non-convertible
maturity date
Chenming You 02 2016 Equity instrument 5.17% 100.00 10000000.00 1000000000.00 No defined None Non-convertible
maturity date
Chenming You 03 2016 Equity instrument 5.17% 100.00 12500000.00 1250000000.00 No defined None Non-convertible
maturity date
Total 3250000000.00
SHANDONG CHENMING PAPER HOLDINGS LIMITED 89
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
39. Other equity instruments (Cont’d)
(2) Changes in Preference Shares Perpetual Bonds and other financial instruments outstanding at the end of the
period
Unit: RMB
Beginning of the period Increase during the period Decrease during the period End of the period
Outstanding financial Carrying Carrying
instruments Number Carrying amount Number amount Number amount Number Carrying amount
17 Lu Chenming MTN001 10000000.00 996000000.00 10000000.00 996000000.00
Chenming You 01 22500000.00 2238750000.00 22500000.00 2238750000.00
Chenming You 02 10000000.00 999000000.00 10000000.00 999000000.00
Chenming You 03 12500000.00 1239750000.00 12500000.00 1239750000.00
Total 55000000.00 5473500000.00 22500000.00 2238750000.00 32500000.00 3234750000.00
Changes (increase or decrease) in other equity instruments during the period the reasons for such changes and
the basis for relevant accounting treatment:
The Company non-publicly issued Preference Shares amounting to RMB4500 million on 17 March 17 August
and 22 September 2016 respectively. The proceeds net of issue costs amounted to RMB4477.50 million. On 17
March 2021 the Company exercised the option to redeem preference shares amounting to RMB2250 million.40. Capital reserves
Unit: RMB
Opening Increase during Decrease during Closing
Item balance the period the period balance
Capital premium (share premium) 4619101981.31 82404273.62 171250000.00 4530256254.93
Other capital reserves 702809432.44 26330034.89 729139467.33
Total 5321911413.75 108734308.51 171250000.00 5259395722.26
Other explanations including changes (increase or decrease) during the period and reasons for such changes: During
the period
① the Group recognised the capital reserve during the vesting period for the share-based payments of
RMB26330034.89;
② the Group repaid other equity instruments – Perpetual Bonds with a decrease of capital reserves of
RMB11250000.00;
③ the Group acquired non-controlling interest in Wuhan Chenming Hanyang Paper Holdings Co. Ltd. with a
decrease of capital reserves of RMB160000000.00;
④ other investors made unilateral investments in Shouguang Meilun Paper Co. Ltd. a subsidiary of the Group
which caused a decrease in the shareholding of the Group without loss of control and an increase of capital
reserves of RMB82404273.62.90 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
41. Treasury shares
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance
Share incentive 226860000.00 226860000.00
Total 226860000.00 226860000.00
42. Other comprehensive income
Unit: RMB
During the period
Less: Less:
Transferred Transferred
from other from other
comprehensive comprehensive
income in prior income in prior
Incurred periods to periods to Attributable to Attributable
before income profit or loss retained parent to minority
Opening tax for during earnings during Less: Income company shareholders Closing
Item balance the period the period the period tax expenses after tax after tax balance
I. Other comprehensive income that cannot be
reclassified to profit or loss in subsequent periods
II. Other comprehensive income that will be reclassified
to profit and loss in subsequent periods -561686607.66 57905699.87 57905699.87 -503780907.79
Including: O ther comprehensive income that may be
reclassified to profit and loss under the equity
method -12359143.50 6949017.14 6949017.14 -5410126.36
Translation differences of financial statements denominated
in foreign currency -549327464.16 50956682.73 50956682.73 -498370781.43
Total other comprehensive income -561686607.66 57905699.87 57905699.87 -503780907.79
SHANDONG CHENMING PAPER HOLDINGS LIMITED 91
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
43. General risk reserves
Unit: RMB
Opening Increase during Decrease during Closing
Item balance the period the period balance
General risk reserves 74122644.20 74122644.20
Total 74122644.20 74122644.20
44. Surplus reserves
Unit: RMB
Opening Increase during Decrease during Closing
Item balance the period the period balance
Statutory surplus reserves 1212009109.97 1212009109.97
Total 1212009109.97 1212009109.97
45. Retained profit
Unit: RMB
Item The period The prior period
Retained profit as at the end of the prior period before adjustment 9999764028.74 9306269617.38
Retained profit as at the beginning of the year after adjustment 9999764028.74 9306269617.38
Plus: N et profit for period attributable to shareholders of the parent
company 2021095417.54 516326703.48
Less: Transfer of statutory surplus reserves
Ordinary dividend payable 552078517.00 437433593.74
Preference shares dividend payable 207065968.66 270776073.42
Retained profit as at the end of the period 11261714960.62 9114386653.70
92 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
46. Revenue and operating costs
Unit: RMB
Amount for the period Amount for the prior period
Item Revenue Costs Revenue Costs
Principal activities 16368937751.59 11107531244.57 12956373458.78 10200246961.22
Other activities 803878602.94 753529733.35 643432307.08 479614740.25
Total 17172816354.53 11861060977.92 13599805765.86 10679861701.47
Information related to revenue:
Unit: RMB
Machine-made
Category of contract paper segment Financial segment Properties Others Total
Type of goods
Including: Machine-made paper 14898851438.25 14898851438.25
Financial leasing 206068787.05 206068787.05
Electricity and steam 119023236.57 14136584.02 133159820.59
Construction materials 174782023.02 174782023.02
Paper chemicals 71994410.87 71994410.87
Hotel services 11556339.95 11556339.95
Others 1339213809.06 58732734.96 278456990.78 1676403534.80
Total 16429082894.75 206068787.05 58732734.96 478931937.77 17172816354.53
47. Taxes and surcharges
Unit: RMB
Amount for Amount for
Item the period the prior period
Urban maintenance and construction tax 27858367.33 16351064.21
Educational surcharges 19989461.94 11385806.59
Property tax 37450589.35 35765283.62
Land use tax 24349448.93 15431134.06
Vehicle and vessel tax 85669.29 12010.68
Stamp duty 18130742.66 13063555.43
Water engineering funds 516687.03 849304.03
Environmental tax 10751303.03 7919659.65
Water resource tax 15486250.50 6270279.94
Land appreciation tax 9175506.88
Total 163794026.94 107048098.21
SHANDONG CHENMING PAPER HOLDINGS LIMITED 93
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
48. Selling and distribution expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Wages and surcharges 70949714.14 58686281.82
Depreciation expenses 5712298.99 6122536.00
Office expenses 1299490.73 1843778.51
Selling commissions 7029390.00 21030123.34
Travel expenses 9694437.71 9122159.33
Business hospitality expenses 25673227.63 21137948.35
Warehouse expenses 252549.57 1116656.86
Rental expenses 5295433.81 3513698.23
Others 21716196.16 35607569.75
Total 147622738.74 158180752.19
49. General and administrative expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Wages and surcharges 169081336.44 158698083.16
Welfare expenses 34628571.86 29416491.43
Insurance premium 14955132.42 13706761.09
Depreciation expenses 51326963.11 58348214.94
Waste disposal expenses 1035662.97 6215674.32
Hospitality expenses 27155232.97 40625251.74
Amortisation of intangible assets 25323097.56 22805226.17
Production interruption loss 48338437.27 59359808.22
Repair fees 13610506.54 16847259.15
Share-based payments 26330034.89
Others 80263579.46 85964475.11
Total 492048555.49 491987245.33
94 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
50. R&D expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Installation expenses 372517.00 609432.49
Depreciation expenses 27969754.45 27731869.06
Consumption of raw materials 366439019.85 198168322.21
Consumption of semi-finished products 66656701.37 87624595.31
Consumption of auxiliary materials 100156151.93 78527925.39
Wages and surcharges 83767837.01 69924624.21
Welfare expenses 5060144.67 3526275.77
Housing provident funds 2786507.56 3787143.40
Insurance premium 15104675.76 8279960.27
Union funds 815212.59 391146.46
Utilities 86755891.97 69857222.28
Other expenses 1136940.41 128630.04
Total 757021354.57 548557146.89
51. Finance expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Interest expenses 1399107777.11 1459184970.39
Less: capitalised interest amount – 19684809.62
Interest income 221507514.16 276115018.97
Foreign exchange gains and losses -35419357.17 -1552952.90
Bank charges and others 176761250.38 184385373.56
Total 1318942156.16 1346217562.46
52. Other income
Unit: RMB
Amount for Amount for
Source of other income the period the prior period
Government grants – amortised deferred income included in profit or loss 52913447.76 54911499.81
Government grants – directly included in profit or loss 70185300.82 78522474.64
Total 123098748.58 133433974.45
SHANDONG CHENMING PAPER HOLDINGS LIMITED 95
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
53. Investment income
Unit: RMB
Amount for Amount for
Item the period the prior period
Income from long-term equity investments accounted for using
the equity method 82955115.52 120115440.96
Investment gain on disposal of subsidiaries 676586.27 16778042.01
Investment gain from holding other non-current financial assets 15000000.00
Total 98631701.79 136893482.97
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
Financial assets held for trading -89980570.69
Of which: Gain on change in fair value from derivative financial instruments
Consumable biological assets measured at fair value -9139121.20 -9246743.86
Total -99119691.89 -9246743.86
55. Credit impairment loss
Unit: RMB
Amount for Amount for
Item the period the prior period
Bad debt loss of accounts receivable -279757983.46 -257855903.60
Total -279757983.46 -257855903.60
96 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
56. Loss on impairment of assets
Unit: RMB
Amount for Amount for
Item the period the prior period
1. Loss on construction in progress impairment -163717.76
Total -163717.76
57. Asset disposal income
Unit: RMB
Amount for Amount for
Source of asset disposal income the period the prior period
Net income from disposal of non-current assets 6731452.88 -4705886.89
Gain on disposal of intangible assets 42188905.24
Total 48920358.12 -4705886.89
58. Non-operating income
Unit: RMB
Amount included in
extraordinary gains
Amount for Amount for or losses for
Item the period the prior period the period
Government subsidy 2045973.21 633778881.76 2045973.21
Unpaid debt 4275104.92 4275104.92
Net income from disposal of fixed assets 1255005.76 1255005.76
Others 11145199.75 8621236.02 11145199.75
Total 18721283.64 642400117.78 18721283.64
SHANDONG CHENMING PAPER HOLDINGS LIMITED 97
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
59. Non-operating expenses
Unit: RMB
Amounts
included in
extraordinary
Amount for Amount for gains or losses
Item the period the prior period for the period
Donation 80000.00 5144077.88 80000.00
Loss on destroyed and scrapped non-current assets 2177197.00 510335.35 2177197.00
Others 75333.96 3353130.95 75333.96
Total 2332530.96 9007544.18 2332530.96
60. 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 283824021.53 306073252.16
Deferred income tax expenses -9766242.33 -68113064.01
Total 274057779.20 237960188.15
(2) The reconciliation between accounting profit and income tax expenses
Unit: RMB
Amount for
Item the period
Total profit 2340488430.53
Income tax expenses calculated at statutory/applicable tax rates 351073264.58
Effect of different tax rates applicable to subsidiaries 13690303.26
Effect of adjustments for income tax for prior periods -6115069.85
Profit and loss of joint ventures and associates accounted for using the equity method -16822224.16
Effect of income not subject to tax -416521913.64
Non-deductible costs expenses and losses 17573270.97
Effect of utilisation of previously unrecognised deductible loss on deferred income
tax assets -62909783.28
Effect of current unrecognised deductible temporary difference or deductible loss
arising from deferred tax income assets 461901237.75
Tax effect of R & D fee deduction -67811306.43
Income tax expense 274057779.20
98 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
61. Other comprehensive income
Please refer to note 42 for the details.62. Items on statements of cash flow
(1) Cash received relating to other operating activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Net proceedings from the financial leasing business 616398096.59 1056112435.52
Government support fund 111501713.53 207271356.40
Interest income 208877644.50 202247580.26
Open credit and other income 99723258.86 97478845.77
Total 1036500713.48 1563110217.95
(2) Cash paid relating to other operating activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Expenses and open credit 999490395.09 1083849666.32
Total 999490395.09 1083849666.32
(3) Cash received relating to other investing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Recovery of consideration for equity transfer 251414794.52 129197968.06
Total 251414794.52 129197968.06
(4) Cash paid relating to other investing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Acquisition of Tuoan Plastic 176000000.00
Total 176000000.00
SHANDONG CHENMING PAPER HOLDINGS LIMITED 99
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
62. Items on statements of cash flow (Cont’d)
(5) Cash received relating to other financing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Short-term commercial paper 144457000.00
Issuance of corporate bonds 350000000.00
Equipment financing 574665920.24 542500000.00
Decrease in restricted bank deposits during the period 1526876431.27
Debt financing receivable 320000000.00
Resale of medium-term notes 400000000.00
Contribution from government platforms to GDR Fund and
Chendu Fund 232790000.00
Total 2734332351.51 1356957000.00
(6) Paid relating to other financing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Repayment of short-term commercial paper and MTNs 2145000000.00 190000000.00
Repayment of equipment sale and leaseback 996692287.81 1304243353.95
Repayment of preference shares 2250000000.00
Payment of interest on preference shares 98100000.00 98100000.00
Payment of equity in China Development Bank funds 29500000.00 77500000.00
Repayment of bonds 900000000.00
Repayment of financial support from shareholders 708440865.27
Restricted bank deposits 704209894.72
Total 5519292287.81 3982494113.94
100 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
63. Supplementary information on cash flow statement
(1) Supplementary information on cash flow statement
Unit: 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 2066430651.33 661740850.07
Plus: Provision for impairment of assets 163717.76
Credit impairment loss 279757983.46 257855903.60
Depreciation of fixed assets depreciation of investment property
depreciation of right-of-use assets 1168533451.81 1103977619.973
Amortisation of intangible assets 27645672.10 24470203.82
Amortisation of long-term prepaid expenses 1793632.06 1429914.78
Loss on disposal of fixed assets intangible assets and other
long-term assets (“-” denotes gain) -47998166.88 2171437.21
Loss on changes in fair value (“-” denotes gain) 99119691.89 -9246743.86
Finance expenses (“-” denotes gain) 1399107777.11 1439500160.77
Investment loss (“-” denotes gain) -98631701.79 -136893482.97
Decrease in deferred income tax assets (“-” denotes increase) 9766242.33 -68113064.01
Increase in deferred income tax liabilities (“-” denotes decrease) -449130.80 -1411125.59
Decrease in inventories (“-” denotes increase) -1766629170.47 -927140737.58
Decrease in operating receivables (“-” denotes increase) 1272002689.91 -1749063323.95
Increase in operating payables (“-” denotes decrease) 336735899.88 1727592454.67
Net cash flows from operating activities 4747185521.94 2327033784.68
2. Major investing and financing activities not involving cash
settlements: – –
3. Net change in cash and cash equivalents: – –
Closing balance of cash 4625780176.57 2213282630.76
Less: Opening balance of cash equivalents 4389169963.79 2890328027.40
Plus: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents 236610212.78 -677045396.64
SHANDONG CHENMING PAPER HOLDINGS LIMITED 101
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
63. Supplementary information on cash flow statement (Cont’d)
(2) Cash and cash equivalents composition
Unit: RMB
Item Closing balance Opening balance
I. Cash 4625780176.57 4389169963.79
Of which: Treasury cash 2903620.96 2161684.57
Bank deposit that can be used for payment at any time 4622876555.61 4387008279.22
Other monetary funds that can be used for payment at
any time
Deposit at central bank deposit that can be used for
payment
Amount due from banks
Amount due to banks
II. Cash equivalents
Of which: Bond investment with maturity within 3 months
III. Balance of cash and cash equivalent at end of period 4625780176.57 4389169963.79
Of which: Restricted cash and cash equivalents used by the
Company or subsidiaries within the Group
64. Assets with restricted ownerships or right to use
Unit: RMB
Closing
Item carrying amount Reason for such restriction
Monetary funds 11767734654.88 As deposits for bank acceptance bills and letters of
credit deposit reserves etc.Assets held for trading 50594440.51 As collateral for margin financing
Accounts receivable financing 28550798.44 As collateral for letters of guarantee and letters of
credit
Fixed assets 10957342646.52 As collateral for bank borrowings and long-term
payables
Intangible assets 1226330911.70 As collateral for bank borrowings and long-term
payables
Investment property 4865390729.36 As collateral for bank borrowings
Total 28895944181.41
102 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
65. Foreign currency items
(1) Foreign currency items
Unit: RMB
Closing foreign Closing balance
Item currency balance Exchange rate in RMB
Monetary funds – – 558658365.42
Of which: USD 86135319.97 6.4601 556442780.52
EUR 170396.00 7.6862 1309697.73
HKD 1000678.63 0.8320 832564.62
GBP 8197.90 8.9410 73297.45
JPY 429.79 0.0584 25.10
Accounts receivables – – 114157874.90
Of which: USD 16307661.42 6.4601 105349123.52
JPY 150834783.90 0.0584 8808751.38
Accounts payable – – 243629557.02
Of which: USD 36093052.12 6.4601 233164725.98
EUR 1351899.31 7.6862 10390968.45
HKD 88777.15 0.8320 73862.59
Other receivables – – 1238689.06
Of which: USD 112116.48 6.4601 724283.67
EUR 66925.84 7.6862 514405.39
Other payables 160000505.89
Of which: USD 24767418.46 6.4601 160000000.00
JPY 8662.50 0.0584 505.89
Short-term borrowings – – 1653255791.89
Of which: USD 242677142.27 6.4601 1567718606.78
HKD 102809116.72 0.832 85537185.11
Long-term borrowings – – 1069783410.20
Of which: USD 165598583.64 6.4601 1069783410.20
Non-current liabilities due within one year – – 1507726046.70
Of which: USD 233390512.02 6.4601 1507726046.70
(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 Functional
No. Name of subsidiary business Place of incorporation currency
1 Chenming GmbH Hamburg Germany Hamburg Germany EUR
2 Chenming Paper Korea Co. Ltd. Seoul Korea Seoul Korea KRW
3 Chenming (HK) Limited Hong Kong China Hong Kong China USD
4 Chenming International Co. Ltd. Los Angeles USA Los Angeles USA USD
5 Chenming Paper Japan Co. Ltd. Tokyo Japan Tokyo Japan JPY
6 Chenming Paper United States Co. Ltd. Los Angeles USA Los Angeles USA USD
7 Chenming (Overseas) Limited Hong Kong China Hong Kong China USD
8 Chenming (Singapore) Limited Singapore Singapore USD
SHANDONG CHENMING PAPER HOLDINGS LIMITED 103
FINANCIAL REPORT 2021
I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
66. Government grants
(1) General information of government grants
Unit: RMB
Amount included
in the current
Type Amount Reporting item profit and loss
Project Funding for National Key Technology 1205475.00 Deferred income 82350.00
Research and Development Program
Sewage treatment and water conservation 52056966.55 Deferred income 6555470.06
transformation project
Huanggang Forest Pulp & Paper Integration Item 640652457.36 Deferred income 12513108.90
Zhanjiang Forest Pulp & Paper Integration Item 52853913.65 Deferred income 2047316.46
Financial subsidies for technical transformation 149918237.22 Deferred income 5767903.86
items
Funding for environmental protection 652343496.62 Deferred income 25296070.94
Other 76441750.15 Deferred income 651227.54
Working subsidies 28000.00 Non-operating income 28000.00
Subsidies for the pandemic 1537288.56 Other income and non- 1537288.56
operating income
Industrial Development fund 22359939.85 Other income 22359939.85
Rewards for new high-tech enterprise 1407800.00 Other income 1407800.00
Refund of individual tax handling fee 210242.13 Other income and non- 210242.13
operating income
Financial subsidies for technical transformation 8679800.00 Other income 8679800.00
project
Subsidies for cultivation 200000.00 Other income 200000.00
Enterprise reform and development subsidies 400000.00 Other income 400000.00
Subsidies for talents 1642000.00 Other income and non- 1642000.00
operating income
Subsidies for financing 340000.00 Other income 340000.00
Refund of tax 9100794.92 Other income 9100794.92
Employment stabilisation subsidies 532808.62 Other income 532808.62
Subsidies for forestation 2430191.20 Other income 2430191.20
Refund of VAT upon assessment 504258.75 Other income 504258.75
Government rewards 22577150.00 Other income and non- 22577150.00
operating income
Others 281000.00 Other income 281000.00
Total 1697703570.58 – 125144721.79
(2) The condition of the refund of government grants
√ Applicable □ Not applicable
Unit: RMB
Item Amount Reason
Infrastructure and environmental projects 13216025.00 Land return of Huanggang idle land
104 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
SHANDONG CHENMING PAPER HOLDINGS LIMITED 105
FINANCIAL REPORT 2021
VIII. Change in scope of consolidation
1. Disposal of subsidiaries
Whether there is loss of control over subsidiaries on a single disposal
√ Yes □ No
Unit: RMB
Difference
between
consideration
and share of Determination
net assets and key Relevant other
of relevant assumption of comprehensive
subsidiary Carrying amount Fair value of fair value of income of
Basis for as per Remaining of remaining remaining Gain or loss remaining former
Consideration Shareholding of Way of determining the consolidated shareholding shareholding shareholding in fair value of shareholding subsidiary
of disposal of disposal of disposal of Time of time of loss financial as of the date of has of the date of as of the date of remaining as of the date of transferred to
Name of subsidiary equity interest equity interest equity interest loss of control of control statements loss of control loss of control loss of control shareholding loss of control profit or loss
Zhanjiang Chenming New-style
Wall Materials Co. Ltd. 12580000.00 100.00% Transfer 2021-1-1 Without control 676586.27
Other explanation:
Whether there was disposal of the investment in a subsidiary in stages through multiple transactions and loss of control during the period
□ Yes √ No
2. Other reasons for change in scope of consolidation
During the year the scope of consolidation had 1 newly established subsidiary namely Weifang Chendu Equity Investment Partnership (Limited Partnership).I Financial Report
IX. Interest in other entities
1. Interest in subsidiaries
(1) Constitution of the Group
Shareholding
Principle place of Place of Nature of
Name of subsidiary business incorporation business Direct Indirect Acquisition
Zhanjiang Chenming Pulp & Paper Co. Ltd. Zhanjiang Zhanjiang Paper making 100.00% Establishment
Shouguang Meilun Paper Co. Ltd. Shouguang Shouguang Paper making 62.4864% Establishment
Jilin Chenming Paper Co. Ltd. Jilin Jilin Paper making 100.00% Acquisition
Huanggang Chenming Pulp & Paper Co. Ltd. Huanggang Huanggang Pulp production 70.1493% 29.8507% Establishment
Shandong Chenming Paper Sales Co. Ltd. Shouguang Shouguang Sales of paper product 100.00% Establishment
Shouguang Chenming Import and Export Trade Co. Shouguang Shouguang Trading 100.00% Establishment
Ltd.Jiangxi Chenming Supply Chain Management Co. Jiangxi Jiangxi Trading 70.00% Establishment
Ltd.Chenming GmbH Germany Germany Paper product trading 100.00% Establishment
Shouguang Chenming Papermaking Machine Co. Shouguang Shouguang Machinery 100.00% Establishment
Ltd. manufacturing
Shouguang Hongxiang Printing and Packaging Co. Shouguang Shouguang Printing and packaging 100.00% Acquisition
Ltd.Shouguang Chenming Modern Logistic Co. Ltd. Shouguang Shouguang Transportation 100.00% Establishment
Jinan Chenming Paper Sales Co. Ltd. Jinan Jinan Investment 100.00% Establishment
Management/Paper
product Trading
Huanggang Chenming Arboriculture Development Huanggang Huanggang Arboriculture 100.00% Establishment
Co. Ltd.Chenming Arboriculture Co. Ltd. Wuhan Wuhan Arboriculture 100.00% Establishment
Chenming Paper Korea Co. Ltd. Korea Korea Paper product Trading 100.00% Establishment
Shandong Chenming Power Supply Holdings Co. Shouguang Shouguang Power 100.00% Establishment
Ltd.Shouguang Shun Da Customs Declaration Co Ltd. Shouguang Shouguang Customs declaration 100.00% Establishment
Shanghai Chenming Industry Co. Ltd. Shanghai Shanghai Property investment 100.00% Establishment
and management
Shandong Chenming Group Finance Co. Ltd. Jinan Jinan Finance 80.00% 20.00% Establishment
Jiangxi Chenming Paper Co. Ltd. Nanchang Nanchang Paper making 42.46% 47.49% Establishment
Shouguang Chenming Art Paper Co. Ltd. Shouguang Shouguang Paper making 75.00% Establishment
Hailaer Chenming Paper Co. Ltd. Hailaer Hailaer Paper making 75.00% Establishment
Shandong Grand View Hotel Co. Ltd. Shouguang Shouguang Catering 70.00% Establishment
Wuhan Chenming Hanyang Paper Holdings Co. Ltd Wuhan Wuhan Paper making 65.205% 34.645% Establishment
Chengdu Chenming Culture Communication Co. Chengdu Chengdu Marketing 100.00% Establishment
Ltd
Shandong Chenming Financial Leasing Co. Ltd. Jinan Jinan Financial leasing 100.00% Establishment
Qingdao Chenming Nonghai Financial Leasing Co. Qingdao Qingdao Financial leasing 100.00% Establishment
Ltd
Chenming (HK) Limited Hong Kong Hong Kong Paper product Trading 100.00% Establishment
Shouguang Hongyi Decorative Packaging Co. Ltd. Shouguang Shouguang Packaging 100.00% Merger and
acquisition
Shouguang Xinyuan Coal Co. Ltd. Shouguang Shouguang Coal 100.00% Merger and
acquisition
Shouguang City Run Sheng Wasted Paper Recycle Shouguang Shouguang Purchase and sale of 100.00% Merger and
Co. Ltd. waste acquisition
106 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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I Financial Report
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(1) Constitution of the Group (Cont’d)
Shareholding
Principle place of Place of Nature of
Name of subsidiary business incorporation business Direct Indirect Acquisition
Shouguang Wei Yuan Logistics Company Limited Shouguang Shouguang Logistics 100.00% Merger and
acquisition
Shandong Chenming Panels Co. Ltd. S Shouguang Shouguang Panels 100.00% Merger and
acquisition
Shouguang Chenming Floor Board Co. Ltd. Shouguang Shouguang Floor Board 100.00% Merger and
acquisition
Shouguang Chenming Cement Co. Limited Shouguang Shouguang Cement 100.00% Establishment
Wuhan Chenming Qianneng Electric Power Co. Ltd. Wuhan Wuhan Thermal power 51.00% Establishment
Shandong Chenming Investment Limited Jinan Jinan Investment 100.00% Establishment
Japan Chenming Paper Co. Ltd. Japan Japan Paper product Trading 100.00% Establishment
Chenming International Co. Ltd. the United States the United States Paper product Trading 100.00% Establishment
Zhanjiang Chenming Arboriculture Development Co. Zhanjiang Zhanjiang Arboriculture 100.00% Establishment
Ltd.Yangjiang Chenming Arboriculture Development Co. Yangjiang Yangjiang Arboriculture 100.00% Establishment
Ltd.Nanchang Chenming Arboriculture Development Nanchang Nanchang Arboriculture 100.00% Establishment
Co. Ltd.Guangdong Huirui Investment Co. Ltd. Zhanjiang Zhanjiang Investment 100.00% Establishment
Weifang Chendu Equity Investment Partnership Weifang Weifang Investment 79.75% Establishment
(Limited Partnership)
Jilin Chenming New-style Wall Materials Co. Ltd Jilin Jilin Wall materials 100.00% Establishment
Jilin Chenming Logistics Co. Ltd. Jilin Jilin Logistics 100.00% Establishment
Jiangxi Chenming Logistics Co. Ltd. Nanchang Nanchang Logistics 100.00% Establishment
Fuyu Chenming Paper Co. Ltd. Fuyu Fuyu Paper making 100.00% Establishment
Zhanjiang Meilun Pulp & Paper Co. Ltd. Zhanjiang Zhanjiang Paper making 100.00% Establishment
Shanghai Chenming Financial Leasing Co. Ltd. Shanghai Shanghai Financial leasing 100.00% Establishment
Guangzhou Chenming Financial Leasing Co. Ltd. Guangzhou Guangzhou Financial leasing 100.00% Establishment
Shanghai Hongtai Real Estate Co. Ltd. Shanghai Shanghai Real estate 100.00% Merger and
acquisition
Shanghai Hongtai Property Management Co. Ltd. Shanghai Shanghai Property 100.00% Merger and
acquisition
Shandong Chenming Commercial Factoring Co. Ltd Jinan Jinan Business factoring 100.00% Establishment
Guangzhou Chenming Commercial Factoring Co. Guangzhou Guangzhou Business factoring 51.00% Establishment
Ltd.Qingdao Chenming Pulp & Paper Electronic Qingdao Qingdao Trading 30.00% 70.00% Establishment
Commodity Spot Trading Co. Ltd.Shandong Chenming Coated Paper Sales Co. Ltd Shouguang Shouguang Paper product Trading 100.00% Establishment
Zhanjiang Chenming Port Co. Ltd. Zhanjiang Zhanjiang Port 100.00% Establishment
Beijing Chenming Financial Leasing Co. Ltd. Beijing Beijing Financial leasing 100.00% Establishment
Chenming Paper United States Co. Ltd. the United States the United States Paper product Trading 100.00% Establishment
Guangdong Chenming Panels Co. Ltd. Guangdong Guangdong Panels 100.00% Establishment
Shanghai Chenming Pulp & Paper Sales Co. Ltd. Shanghai Shanghai Paper product Trading 100.00% Establishment
Meilun (BVI) Limited Cayman Cayman Commerce 100.00% Establishment
Weifang Chenming Growth Driver Replacement Weifang Weifang Fund 79.00% Establishment
Equity Investment Fund Partnership (Limited
Partnership)
SHANDONG CHENMING PAPER HOLDINGS LIMITED 107
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IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(1) Constitution of the Group (Cont’d)
Shareholding
Principle place of Place of Nature of
Name of subsidiary business incorporation business Direct Indirect Acquisition
Nanjing Chenming Culture Communication Co. Ltd. Nanjing Nanjing Marketing 100.00% Establishment
Chenming (Overseas) Co. Ltd. Hong Kong Hong Kong Paper product Trading 100.00% Establishment
Chenming (Singapore) Co. Ltd. Singapore Singapore Paper product Trading 100.00% Establishment
Kunshan Tuoan Plastic Products Co. Ltd. Kunshan Kunshan Rubber and plastic 100.00% Merger and
acquisition
Hubei Changjiang Chenming Huanggang Equity Huanggang Huanggang Fund 59.97% Establishment
Investment Fund Partnership (Limited Partnership)
Hainan Chenming Technology Co. Ltd. Haikou Haikou Wholesale and retail 100.00% Establishment
Qingdao Chenming Import and Export Trade Co. Qingdao Qingdao Trading 100.00% Establishment
Ltd.Shanghai Herui Investment Co. Ltd. Shanghai Shanghai Business services 100.00% Merger and
acquisition
Hubei Huanggang Chenming Equity Investment Huanggang Huanggang Capital market services 60.00% Establishment
Fund Management Co. Ltd.Shandong Dingkun Asset Management Partnership Shouguang Shouguang Business services 99.9001% Establishment
(Limited Partnership)
Huanggang Chenming Paper Technology Co. Ltd. Huanggang Huanggang Paper making 100.00% Establishment
Huanggang Chenming Port Co. Ltd. Huanggang Huanggang Port services 51.00% Establishment
(2) Major non-wholly owned subsidiaries
Unit: RMB
Gain or loss Dividend to
attributable to minority interest Closing
Minority minority interest declared during balance of
Name of subsidiary interest during the period the period minority interest
Wuhan Chenming Hanyang Paper Holdings Co. Ltd. 0.15% -50546.40 1045973.30
Shouguang Chenming Art Paper Co. Ltd. 25.00% 3051292.80 101801479.58
Shouguang Meilun Paper Co. Ltd. 37.5136% 26857174.06 3142626187.55
Jiangxi Chenming Paper Co. Ltd. 10.05% 19612578.62 367067860.45
108 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
SHANDONG CHENMING PAPER HOLDINGS LIMITED 109
FINANCIAL REPORT 2021
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(3) Key financial information of major non-wholly owned subsidiaries
Unit: RMB
Closing 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
Wuhan Chenming
Hanyang Paper
Holdings Co. Ltd. 317761628.04 1326690900.87 1644452528.91 910834069.16 41955213.72 952789282.88 734208419.79 1351736457.46 2085944877.25 1314519046.29 43365094.68 1357884140.97
Shouguang Chenming
Art Paper Co. Ltd. 321762933.01 511398748.40 833161681.41 425955763.13 425955763.13 210008389.30 531396869.27 741405258.57 346404511.49 346404511.49
Shouguang Meilun
Paper Co. Ltd. 6062424932.05 10689940221.24 16752365153.29 7222587601.90 1234676452.05 8457264053.95 3954358701.82 10971104092.03 14925462793.85 7816696759.19 1228430785.12 9045127544.31
Jiangxi Chenming
Paper Co. Ltd. 2744681275.79 5333029928.19 8077711203.98 3217985657.78 1320107639.57 4538093297.35 2898786538.59 4742116901.13 7640903439.72 2918424625.58 1377979879.82 4296404505.40
Unit: RMB
Amount for the period Amount for the prior period
Total Cash flows Total Cash flows
comprehensive from operating comprehensive from operating
Name of subsidiary Revenue Net profit income activities Revenue Net profit income activities
Wuhan Chenming Hanyang Paper Holdings Co. Ltd. 475535684.94 -32610581.77 -32610581.77 58992793.36 314596358.81 376379784.80 376379784.80 135298517.97
Shouguang Chenming Art Paper Co. Ltd. 344898772.34 12205171.20 12205171.20 3726791.43 266150140.99 2768997.54 2768997.54 -189493760.12
Shouguang Meilun Paper Co. Ltd. 4447905629.92 232335249.64 232335249.64 542602634.96 4080372638.25 52895635.68 52895635.68 -1346914591.72
Jiangxi Chenming Paper Co. Ltd. 1845943724.17 195118972.31 195118972.31 1469444173.38 1417546892.85 97773827.53 97773827.53 2193376169.72
I Financial Report
IX. Interest in other entities (Cont’d)
2. Transaction changing shareholding in but not causing to loss of control over subsidiaries
(1) Changing in shareholding in subsidiaries
In March 2021 Weifang Chenchuang Equity Investment Partnership (Limited Partnership) made a unilateral capital
injection into Shouguang Meilun Paper Co. Ltd. Upon completion of the capital increase 13.04% equity interest
in Shouguang Meilun Paper Co. Ltd. was acquired by Weifang Chenchuang Equity Investment Partnership
(Limited Partnership) and the transaction did not result in the loss of our control of Shouguang Meilun Paper Co.Ltd. As of 30 June 2021 the transaction resulted in an increase in minority interest of RMB914.08 million; In June
2021 a capital increase of Shouguang Meilun Paper Co. Ltd. was contributed on the part of CCB Investment –
Shandong Development Debt-to-Equity Swap Investment Scheme and SWSC Innovation Investment Co. Ltd.Upon completion of the capital increase the companies respectively acquired 15.56% and 2.22% equity interest
in Shouguang Meilun Paper Co. Ltd. and the transaction did not result in the loss of the Group’s control over
Shouguang Meilun Paper Co. Ltd. As of 30 June 2021 the transaction resulted in an increase in minority interest
of RMB1475.38 million.
(2) Effect of transactions on minority interest and equity attributable to the owners of the parent company
Unit: RMB
Capital injection
from CCB
Investment
– Shandong
Development
Capital injection Debt-to-Equity
from Weifang Swap Investment
Chenchuang Scheme and
Equity Investment SWSC Innovation
Partnership (Limited Investment Co.Partnership) to Ltd. to Shouguang
Shouguang Meilun Meilun Paper
Paper Co. Ltd. Co. Ltd.Amount of capital increase 900000000.00 1600000000.00
Share of net assets of the Group after the capital increase 5325833586.12 5185746328.76
Share of net assets of the Group before the capital increase 5338136620.06 5091039021.20
Difference -12303033.94 94707307.56
Of which: capital reserve adjustment -12303033.94 94707307.56
110 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates
(1) Major joint ventures and associates
Shareholding
Principle place Place of Nature of Accounting
Name of joint venture and associate of business incorporation business Direct Indirect method
Weifang Senda Meixi Port Co. Ltd. Weifang Weifang Port construction 50.00% Equity method
Ningbo Kaichen Huamei Equity Investment Fund Ningbo Ningbo Investment 40.00% Equity method
Partnership (Limited Partnership) management
Weifang Xingxing United Chemical Co. Ltd. Weifang Weifang Chemical 50.00% Equity method
Zhuhai Dechen New Third Board Equity Zhuhai Zhuhai Investment 50.00% Equity method
Investment Fund Company (Limited Partnership) management
Goldtrust Futures Co. Ltd. Changsha Changsha Futures 35.43% Equity method
Weifang Chenrong Growth Driver Replacement Weifang Weifang Investment 44.44% Equity method
Equity Investment Fund Partnership (Limited management
Partnership)
Guangdong Nanyue Bank Co. Ltd. Guangdong Guangdong Bank 16.62% Equity method
(2) Key financial information of major joint ventures
Unit: RMB
Closing balance/ Opening balance/
Amount for Amount for
Weifang Senda Meixi Port Co. Ltd. the period the prior period
Current assets 21067416.92 11717494.06
Of which: Cash and cash equivalents 6320558.73 5739139.97
Non-current assets 517498148.33 526006172.67
Total assets 538565565.25 537723666.73
Current liabilities 23673313.64 17876446.30
Non-current liabilities 365662252.47 370515018.03
Total liabilities 389335566.11 388391464.33
Equity interest attributable to shareholders of the parent company 149229999.14 149332202.40
Share of net assets based on shareholding 74614999.57 74666101.20
Adjusting events
– Unrealised profit arising from intra-group transactions 7237736.13 7277405.72
Carrying amount of investment in joint ventures 81852735.70 81943506.92
Revenue 37344708.25 31672998.02
Finance expenses 10648523.23 10889263.03
Net profit -181542.45 -5760422.34
Total comprehensive income -181542.45 -5760422.34
SHANDONG CHENMING PAPER HOLDINGS LIMITED 111
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I Financial Report
IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont’d)
(2) Key financial information of major joint ventures (Cont’d)
Closing balance/ Opening balance/
Amount for Amount for
Weifang Xingxing United Chemical Co. Ltd. the period the prior period
Current assets 114252508.29 118868385.80
Of which: Cash and cash equivalents 31215037.20 37588664.71
Non-current assets 22351329.70 24644081.09
Total assets 136603837.99 143512466.89
Current liabilities 26444484.12 26318294.93
Non-current liabilities 17085537.65 22662556.59
Total liabilities 43530021.77 48980851.52
Equity interest attributable to shareholders of the parent company 93073816.22 94531615.37
Share of net assets based on shareholding 46536908.11 47265807.69
Adjusting events
– Unrealised profit arising from intra-group transactions 44612417.60 44608577.43
Carrying amount of investment in joint ventures 91149325.71 91874385.12
Revenue 404300.88 25838.06
Finance expenses -121109.94 -289698.53
Net profit -1450118.81 -2919579.59
Total comprehensive income -1450118.81 -2919579.59
(3) Key financial information of major associates
Unit: RMB
Closing balance/ Opening balance/
Ningbo Kaichen Huamei Equity Investment Fund Partnership Amount for Amount for
(Limited Partnership) the period the prior period
Current assets 5384295.10 24928544.79
Non-current assets 192276706.00 171877206.00
Total assets 197661001.10 196805750.79
Current liabilities 15225.42 19749.95
Total liabilities 15225.42 19749.95
Equity interest attributable to shareholders of the parent company 197645775.68 196786000.84
Share of net assets based on shareholding 79058310.27 78714400.34
Adjusting events
– Others 119835177.57 119835525.93
Carrying amount of investment in associate 198893487.84 198549926.27
Net profit 858903.93 1290560.77
Total comprehensive income 858903.93 1290560.77
112 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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I Financial Report
IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont’d)
(3) Key financial information of major associates (Cont’d)
Closing balance/ Opening balance/
Zhuhai Dechen New Third Board Equity Investment Fund Amount for Amount for
Company (Limited Partnership) the period the prior period
Current assets 30336819.04 5788211.20
Non-current assets 62260108.00 99020108.00
Total assets 92596927.04 104808319.20
Current liabilities 5000.00 5000.00
Total liabilities 5000.00 5000.00
Equity interest attributable to shareholders of the parent company 92591927.04 104803319.20
Share of net assets based on shareholding 46295963.52 52401659.62
Carrying amount of investment in associate 46295963.54 52401659.62
Net profit -12211392.16 -60941.72
Total comprehensive income -12211392.16 -60941.72
Closing balance/ Opening balance/
Amount for Amount for
Goldtrust Futures Co. Ltd. the period the prior period
Current assets 529485420.97 764236547.83
Non-current assets 23842620.20 18545737.98
Total assets 553328041.17 782782285.81
Current liabilities 332962582.62 544534428.24
Non-current liabilities 33221917.81 32169041.10
Total liabilities 366184500.43 576703469.34
Equity interest attributable to shareholders of the parent company 187143540.74 206078816.47
Share of net assets based on shareholding 66311319.36 73013724.68
Adjusting events
– Goodwill 104073292.25 104073292.25
– Others 12927099.73 12279914.66
Carrying amount of investment in associate 183311711.34 189366931.59
Revenue 9407419.49 28397850.32
Net profit -17089018.40 1437175.40
Total comprehensive income -17089018.40 1437175.40
SHANDONG CHENMING PAPER HOLDINGS LIMITED 113
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IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont’d)
(3) Key financial information of major associates (Cont’d)
Closing balance/ Opening balance/
Weifang Chenrong Growth Driver Replacement Equity Amount for Amount for
Investment Fund Partnership (Limited Partnership) the period the prior period
Current assets 1307636.81 281.95
Non-current assets 450000000.00 450000000.00
Total assets 451307636.81 450000281.95
Current liabilities 15000.00 15000.00
Total liabilities 15000.00 15000.00
Equity interest attributable to shareholders of the parent company 451292636.81 449985281.95
Share of net assets based on shareholding 200554447.80 199973459.30
Adjusting events
– Others -307203.78 -267823.02
Carrying amount of investment in associate 200247244.02 199705636.28
Net profit 39382203.34 -1245446.38
Total comprehensive income 39382203.34 -1245446.38
Closing balance/ Opening balance/
Amount for Amount for
Guangdong Nanyue Bank Co. Ltd. the period the prior period
Current assets 44183321267.53 70627194227.70
Non-current assets 174380381424.19 169970138147.42
Total assets 218563702691.72 240597332375.12
Current liabilities 179422366670.13 197253124440.72
Non-current liabilities 22193008432.14 24930860850.46
Total liabilities 201615375102.27 222183985291.18
Equity interest attributable to shareholders of the parent company 16948327589.45 18413347083.94
Share of net assets based on shareholding 2816812045.37 3060298285.35
Carrying amount of investment in associate 3123766611.94 3060298285.35
Revenue 2009057538.56 2372383445.87
Net profit 734646824.76 746448582.48
Total comprehensive income 21000000.00
114 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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IX. 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 period the prior period
Joint ventures: – –
Total carrying amount of investment 22324311.63 22032934.47
Total amount of the following items based on shareholding – –
– Net profit 791377.16 482644.77
Associates: – –
Total carrying amount of investment 9761299.97 9985136.83
Total amount of the following items based on shareholding – –
– Net profit -223836.86 -528399.77
(5) Excess loss of joint ventures or associates
Unit: RMB
Unaccumulated
Accumulated Unrecognised and
unrecognised loss (or share of unrecognised
loss incurred net profit) for loss for
Name of joint ventures or associates for prior periods the period the period
Arjo Wiggins Chenming Specialty Paper Co. Ltd. 7308869.16 7308869.16
Xuchang Chenming Paper Co. Ltd. 35911505.00 11152964.00 47064469.00
X. Risk relating to financial instruments
Main financial instruments of the Group include monetary funds bills receivable accounts receivable other receivables non-
current assets due within one year other current assets other non-current financial assets long-term receivables short-
term borrowings accounts payable other payables short-term borrowings non-current liabilities due within one year long-
term borrowings bonds payable and long-term payables. Details of financial instruments refer to related notes. The risks
associated with these financial instruments and the risk management policies adopted by the Group to mitigate these risks
are described below. The management of the Group manages and monitors these exposures to ensure that the above risks
are controlled in a limited extent.1. Risk management goals and policies
The Group aims to seek the appropriate balance between the risks and benefits in order to mitigate the adverse effects
on the Group’s financial performance from financial risk. Based on such objectives the Group’s risk management
policies are established to identify and analyse the risks faced by the Group to set appropriate risk limits and devise
corresponding internal control procedures and to monitor risks faced by the Group. Such risk management policies and
internal control systems are reviewed regularly to adapt to changes in market conditions and the Group’s activities. The
internal audit department of the Group undertakes both regular and ad-hoc reviews of risk management controls and
procedures.SHANDONG CHENMING PAPER HOLDINGS LIMITED 115
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X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont’d)
Risks associated with the financial instrument of the Group 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 Group’s risk management structure make risk
management policies and related guidelines and supervise the implementation of risk management. The Group has
already made risk management risks to identify and analyse risks exposed to the Group. These policies mentioned
specific risks covering market credit risk and liquidity risk etc. The Group regularly assesses market environment and
the operation of the Group changes to determine if to make alteration to risk management policy and systems. The
Group’s operation of the Group changes to determine if to make alteration to risk management policy and systems.The Group’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 Group to identify
evaluating and avoiding certain risks. The Group’s internal audit department will audit the risk management control and
procedures regularly and report the result to audit committee of the Group.The Group spreads risks through diverse investment and business lines and through making risk management policy to
reduce risks of single industry specific area and counterpart.
(1) Credit risks
Credit risk refers to risk associated with the default of contract obligation of a transaction counterparty.The Group manages credit risk based category. Credit risks mainly arose from bank deposit bills receivable
accounts receivable other receivables and long-term receivables etc.The Group’s bank deposit mainly deposits in state-owned banks and other large and medium-sized listed banks.The Group anticipated that the bank deposit does not have significant credit risk.For bill receivable accounts receivables other receivables and long-term receivables the Group set related
policies to control exposure of credit risks. The Group 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
Group keeps monitor the client’s credit record and for client with deteriorate credit records the Group will ensure
the credit risk is under control in whole by means of written notice of payment collection shorten or cancel credit
period.The Group’s debtor spread over different industry and area. The Group continued to assess the credit evaluation
to receivables and purchase credit guarantee insurance if necessary.The biggest credit risk exposure of the Group is the carrying amount of each financial asset in the balance sheet.The Group did not provide financial guarantee which resulted in credit risks.The amount of top 5 accounts receivable of the Group accounted for 22.33% (2020: 21.47%) of the Group’s total
accounts receivables. The amount of top 5 other receivable of the Group accounted for 73.41% (2020: 81.22%) of
the Group’s total other receivables.116 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont’d)
(2) Liquidity risks
Liquidity risk refers to the risks that the Group 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 Group monitors and maintains a level of cash and cash equivalents to finance the
Group’s operations and mitigate the effects of fluctuations in cash flows. The management of the Group monitors
the usage of bank borrowings and ensures compliance with the borrowing agreements. In the meantime we
obtain commitments from major financial institutions to provide sufficient standby funds to meet short-term and
long-term funding needs.Operating cash was generated from capital and bank and other borrowings. As of 30 June 2021 the Group’s
unused bank loan credit is RMB41077.6910 million (31 December 2020: 38894.7823 million).As at the end of the period the financial assets and financial liabilities of the Group are analysed by their maturity
date as below at their undiscounted contractual cash flows (unit: in ten thousand RMB):
30 June 2021
Item Within 1 year 1-2 years 2-3 years 3-4 years Over 4 years Total
Financial assets:
Monetary funds 1639351.48 1639351.48
Accounts receivable 151776.74 19539.07 24831.81 37539.57 233687.19
Accounts receivable financing 92120.12 92120.12
Other receivables 153841.88 94909.15 11920.67 8937.35 9448.92 279057.97
Long-term receivables 47113.76 403793.60 3420.00 454327.36
Non-current assets due within one year 426158.54 426158.54
Other current assets 317493.31 317493.31
Total financial assets 2780742.07 161561.98 440546.08 49896.92 9448.92 3442195.97
Financial liabilities:
Short-term borrowings 3316727.77 3316727.77
Bills payable 363292.90 363292.90
Accounts payable 354043.90 354043.90
Other payables 176728.66 176728.66
Non-current liabilities due within one year 525253.20 525253.20
Long-term borrowings 227191.29 220623.70 172918.70 76626.75 697360.44
Lease liabilities 455.46 1312.99 5907.12 7675.57
Long-term payables 112863.46 52477.66 1043.45 72750.00 239134.57
Total financial liabilities and contingent
liabilities 4736046.43 340510.21 274414.35 179869.27 149376.75 5680217.01
SHANDONG CHENMING PAPER HOLDINGS LIMITED 117
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X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont’d)
(2) Liquidity risks (Cont’d)
As at the beginning of the period the financial assets and financial liabilities of the Group at the reporting date are
analysed by their maturity date as below at their undiscounted contractual cash flows (in ten thousand RMB):
31 December 2020
Item Within 1 year 1-2 years 2-3 years 3-4 years Over 4 years Total
Financial assets:
Monetary funds 1775953.76 1775953.76
Accounts receivable 182258.45 37981.21 8742.64 18433.76 247416.06
Accounts receivable financing 48838.57 48838.57
Other receivables 135645.73 81331.10 63404.24 15673.57 296054.64
Long-term receivables 452285.93 61971.92 3420.00 517677.85
Other current assets 271691.87 271691.87
Non-current assets due within one year 422274.42 422274.42
Total financial assets 2836662.80 571598.24 134118.80 37527.33 3579907.17
Financial liabilities:
Short-term borrowings 3279399.30 3279399.30
Bills payable 299893.67 299893.67
Accounts payable 404243.07 404243.07
Other payables 177772.24 177772.24
Non-current liabilities due within one year 716094.96 716094.96
Other current liabilities 15703.78 15703.78
Long-term borrowings 258446.95 203956.69 10909.00 334402.46 807715.10
Bonds payable 122712.06 35000.00 157712.06
Lease liabilities 439.69 472.83 1312.99 5907.12 8132.63
Long-term payables 151420.09 66617.10 16778.59 234815.78
Total financial liabilities and contingent
liabilities 4893107.02 533018.79 271046.62 29000.58 375309.58 6101482.59
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. Financial guarantees issued do not represent the amount
to be paid.
(3) Market risk
Market 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 including interest rate risk exchange rate risk and other price risk.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).118 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont’d)
(3) Market risk (Cont’d)
Interest rate risk (Cont’d)
The Group’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 Group to cash flow interest rate risk. Financial
liabilities issued at fixed rate expose the Group to fair value interest rate risk. The Group 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 Group’s finance department continuously monitors the interest rate position of the Group. At present the
Group did not enter into any interest rate hedging arrangements. However 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 Group’s outstanding
floating rate interest-bearing borrowings and therefore could have a material adverse effect on the Group’s
financial result. The management will make adjustments with reference to the latest market conditions. These
adjustments may include enter into interest swap agreement to mitigate its exposure to the interest rate risk.Interest bearing financial instrument held by the Group are as follows (in ten thousand RMB):
Balance for Balance for
Item the period the prior year
Financial instrument with fixed interest rate
Financial liabilities
Of which: Short-term borrowings 3316727.77 3279399.30
Long-term borrowings 697360.44 807715.10
Bonds payable 153687.74
Total 4014088.21 4240802.14
Financial instrument with float interest rate
Financial assets
Of which: Monetary funds 549061.69 438772.55
Total 549061.69 438772.55
The financial instruments held by the Group at the reporting date expose the Group to fair value interest rate risk.This sensitivity analysis as above has been determined assuming that the change in interest rates had occurred 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 Group at the reporting date expose the Group
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.SHANDONG CHENMING PAPER HOLDINGS LIMITED 119
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X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont’d)
(3) Market risk (Cont’d)
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 Group 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 Group (assets and liabilities in foreign currencies and foreign currency transactions are
mainly denominated in US dollar Japanese yen South Korean Won and Euro).The following table details the financial assets and liabilities held by the Group which denominated in foreign
currencies and amounted to RMB as at 30 June 2021 are as follows (in RMB ten thousands):
Liabilities denominated in foreign Asset denominated in foreign
currency currency
As at As at the As at As at the
the end of beginning of the end of beginning of
Item the period the period the period the period
USD 453839.28 589167.11 66251.62 36393.34
EUR 1039.10 2692.09 182.41 4547.15
HKD 8561.10 9131.73 83.26 294.97
KRW
JPY 0.05 0.05 880.88 880.88
GBP 7.33 4.64
Total 463439.53 600990.98 67405.50 42120.98
The Group closely monitors the impact of exchange rate changes on the Group’s foreign exchange risk. At
present the Group has not taken any measures to avoid foreign exchange risks. However the management is
responsible for monitoring exchange rate risks and will consider hedging significant exchange rate risks when
necessary.With other variables unchanged the after-tax effect of the possible reasonable changes in the exchange rate of
foreign currency to RMB on the current profit and loss of the Group is as follows (in RMB ten thousands):
Increase (decrease) in after-tax profits Balance for the period Balance for the period
Increase in exchange rate of USD 5% -19379.38 5% -27638.69
Decrease in exchange rate of USD -5% 19379.38 -5% 27638.69
Increase in exchange rate of Euro 5% -42.83 5% 92.75
Decrease in exchange rate of Euro -5% 42.83 -5% -92.75
120 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
XI. Fair value
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
Item Level 1 Level 2 Level 3 Total
I. Continuous measurement of fair value – – – –
(I) Financial liabilities held for trading 101188881.03 101188881.03
(1) Equity instrument investments 101188881.03 101188881.03
(II) Other non-current financial assets 1221910000.00 1221910000.00
(III) Biological assets 1515249721.49 1515249721.49
1. Consumable biological assets 1515249721.49 1515249721.49
Total assets continuously measured at fair value 101188881.03 2737159721.49 2838348602.52
2. Valuation techniques and qualitative and quantitative information for level 3 items measured on and not
on a recurring basis
Unit: RMB
Fair value as at
the end of Valuation
Item the period techniques Unobservable inputs Range
Consumable biological assets:
Forestry 1515249721.49 Replacement cost Cost per mu for the first 806 (ton/RMB)
method year of Eucalyptus
Cost per mu for the first 592 (ton/RMB)
year of Pines
Roll back method of Unit price per ton of 595 (ton/RMB)
market price Eucalyptus wood
Unit price per ton of wet 435 (ton/RMB)
pine
Unit price per ton of 800 (ton/RMB)
Chinese fir
SHANDONG CHENMING PAPER HOLDINGS LIMITED 121
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XI. Fair value (Cont’d)
3. Level 3 continuous measurement adjustment between opening and closing value and sensitivity of
unobservable inputs
The Company adopts sensitivity analysis techniques to analyse the possible effects of reasonable and probable changes
in risk variables to profit or loss for the period or to the shareholders’ equity. Since risk variables seldom change on a
stand-alone basis while the correlation between variables may have significant effect on the ultimate amount of change
effected by the change in a single risk variable the analysis below is based on the assumption that the changes in each
variable occurred separately.For the year For the prior year
Impact on Impact on
Change in investment Impact on shareholders’ Impact on shareholders’
Item yield or discount rate profit equity. profit equity
Consumable biological assets Increases by 1% -37734399.41 -37734399.41 -32178275.96 -32178275.96
Consumable biological assets Decreases by 1% 42800784.61 42800784.61 36713253.94 36713253.94
XII. Related parties and related party transactions
1. Parent company of the Company
Shareholding Voting right
of the parent of the parent
Place of Registered company in the company in
Name of parent company incorporation Business nature capital Company the Company
Investment in manufacture of
paper electricity steam and
Chenming Holdings Co. Ltd. Shouguang arboriculture 1238787700 27.53% 27.53%
The ultimate controller of the Company is Shouguang State-owned Assets Supervision and Administration Office.2. Subsidiaries of the Company
Please refer to Note IX. 1. Interest in subsidiaries for details.3. Joint ventures and associates of the Company
Please refer to Note IX. 2. Interest in joint ventures or associates for details.Balance of related party transaction between the Company and its joint ventures or associates during the period or prior
periods are as follows:
Name of joint ventures or associates Relation
Shouguang Meite Environmental Technology Co. Ltd. A joint venture of the Group
Weifang Xingxing United Chemical Co. Ltd. A joint venture of the Group
Shouguang Chenming Huisen New-style Construction Materials
Co. Ltd. A joint venture of the Group
Jiangxi Jiangbao Media Colour Printing Co. Ltd. An associate of the Group
Chenming (Qingdao) Asset Management Co. Ltd. An associate of the Group
Jiangxi Chenming Port Co. Ltd. An associate of the Group
Weifang Sime Darby West Port Co. Ltd. A joint venture of the Group
Guangdong Nanyue Bank Co. Ltd. An associate of the Group
122 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
XII. Related parties and related party transactions (Cont’d)
4. Other related parties
Name of other related parties Relation
Shandong Shouguang Jinxin Investment Development Shareholder of the Company’s largest shareholder
Holdings Group Co. Ltd.Shouguang Henglian Enterprise Investment Limited Shareholder of the Company’s largest shareholder
Shouguang Ruifeng Enterprise Investment Limited Shareholder of the Company’s largest shareholder
Chenming Holdings (Hong Kong) Limited Subsidiary of the Company’s largest shareholder
Zhanjiang Chenming Real Estate Co. Ltd. Subsidiary of the Company’s largest shareholder
Qingdao Hongji Weiye Investment Co. Ltd. Subsidiary of the Company’s largest shareholder
Shouguang Hengying Real Estate Co. Ltd. Subsidiary of the Company’s largest shareholder
Shouguang Hengtai Enterprise Investment Co. Ltd. A company invested by the Directors and senior
management of the Company
Shouguang Huixin Construction Materials Co. Ltd. A company invested by the Directors and senior
management of the Company
Shouguang Chenming Guangyuan Real Property Co. Ltd. A company invested by the Directors and senior
and its subsidiaries management of the Company
Qingdao Chenming Nonghai Investment Co. Ltd. and its A company invested by the Directors and senior
subsidiaries management of the Company
Nanchang Chenjian New-style Wall Materials Co. Ltd. A company invested by the Directors and senior
management of the Company
Shouguang Hengde Real Estate Co. Ltd. A company invested by the Directors and senior
management of the Company
Zhejiang Huaming Investment Management Co. Ltd. and its Directors served by the Company’s Directors
subsidiaries
Hebei Chenming Zhongjin Real Estate Development Co. Ltd. Directors served by the Company’s senior
and its subsidiaries management
Wuhan Chenming Zhongjin Real Estate Co. Ltd. Directors served by the Company’s Supervisors in
and its subsidiaries the past 12 months
Wuhan Rongsheng Zhongjin Development and Directors served by the Company’s Supervisors
Investment Co. Ltd. and its subsidiaries in the past 12 months
Qingzhou Chenming Denaturation Amylum Co. Ltd. Investee of the Company
Lide Technology Co. Ltd. Investee of the Company
Chen Hongguo Hu Changqing Li Xingchun Li Feng Li Xueqin Li Key management personnel
Weixian Li Zhenzhong Dong Lianming and Yuan Xikun
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
Amount for
Details of related the reporting Amount for
Related party party transaction period the prior period
Shouguang Chenming Huisen Newstyle
Construction Materials Co. Ltd. Sales of electricity and steam 4489589.98 3186741.72
Shouguang Huixin Construction Materials
Co. Ltd. Sales of cement coal oil etc. 1183941.17 2422678.94
SHANDONG CHENMING PAPER HOLDINGS LIMITED 123
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XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Guarantee
The Company as guarantor
Unit: RMB
Whether
performance
Amount under Starting date Expiry date of guarantee
Guarantor Party being guaranteed guarantee of guarantee of Guarantee is completed
Shandong Chenming Paper Holdings Limited Weifang Sime Darby West Port Co. Ltd. 122400000.00 2017/12/20 2027/12/20 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 190572950.00 2021/3/11 2022/2/25 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 14231811.67 2021/2/4 2021/8/3 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 13549195.13 2021/3/5 2021/9/1 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 32269672.02 2021/3/24 2021/9/20 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 17962430.15 2021/3/26 2021/9/23 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 7439011.36 2021/3/8 2021/10/12 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 2552918.34 2021/3/8 2021/8/2 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 2428173.42 2021/3/15 2021/8/2 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 16724117.35 2021/3/17 2021/9/13 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 9774374.72 2021/3/19 2021/8/2 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 18839200.41 2021/4/15 2021/10/12 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 2231576.94 2021/4/21 2021/10/18 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 2231576.94 2021/4/21 2021/10/18 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 2231576.94 2021/4/21 2021/10/18 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 1115788.47 2021/4/21 2021/10/18 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 1673682.71 2021/4/28 2021/10/25 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 1952629.83 2021/4/29 2021/10/26 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 56023886.34 2021/5/4 2021/9/27 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 8341264.65 2021/5/12 2021/9/27 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 1673682.71 2021/6/15 2021/12/13 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 50085736.71 2021/6/16 2021/12/13 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 3900000.00 2017/1/5 2021/9/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 36260000.00 2017/2/3 2021/9/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 40160000.00 2017/2/3 2021/12/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 40160000.00 2017/2/3 2022/3/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 33420000.00 2017/2/3 2022/6/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 200000000.00 2020/10/22 2021/10/21 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 300000000.00 2020/12/23 2021/12/23 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 20000000.00 2021/4/20 2022/4/19 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 90000000.00 2021/5/12 2021/5/11 No
Shandong Chenming Paper Holdings Limited Jilin Chenming Paper Co. Ltd. 98580000.00 2021/1/20 2021/7/19 No
Shandong Chenming Paper Holdings Limited Jilin Chenming Paper Co. Ltd. 18000000.00 2021/3/31 2022/3/8 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 200000000.00 2019/6/28 2022/6/27 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 300000000.00 2019/7/1 2022/6/27 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 85000000.00 2019/10/23 2022/6/27 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 114750000.00 2019/11/22 2022/6/27 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 150000000.00 2021/2/25 2022/2/24 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 99000000.00 2021/3/31 2022/3/30 No
124 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Guarantee (Cont’d)
Whether
performance
Amount under Starting date Expiry date of guarantee
Guarantor Party being guaranteed guarantee of guarantee of Guarantee is completed
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 73000000.00 2021/5/28 2022/5/27 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 150000000.00 2020/12/18 2021/12/17 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 12920200.00 2021/6/16 2021/12/10 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 90000000.00 2021/3/19 2022/3/18 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 100000000.00 2021/5/27 2022/5/23 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 16473255.00 2021/3/17 2021/9/13 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 30140898.26 2021/3/3 2021/8/30 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 70000000.00 2021/6/10 2022/5/23 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 10000000.00 2021/6/15 2022/6/13 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 10000000.00 2021/6/23 2022/6/17 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 10000000.00 2021/6/24 2022/6/17 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 80000000.00 2021/6/18 2022/6/17 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 25000000.00 2021/6/21 2021/12/21 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 70000000.00 2021/4/16 2022/4/15 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 49500000.00 2021/3/31 2022/3/30 No
Shandong Chenming Paper Holdings Limited Shandong Chenming Paper Sales Co. Ltd. 253301644.84 2021/2/23 2021/8/23 No
Shandong Chenming Paper Holdings Limited Shandong Chenming Paper Sales Co. Ltd. 420452396.28 2021/5/7 2022/4/29 No
Shandong Chenming Paper Holdings Limited Shandong Chenming Paper Sales Co. Ltd. 100000000.00 2020/7/15 2021/7/12 No
Shandong Chenming Paper Holdings Limited Shanghai Chenming Pulp & Paper Sales Co. Ltd. 10000000.00 2020/12/23 2021/12/23 No
Shandong Chenming Paper Holdings Limited Shanghai Chenming Pulp & Paper Sales Co. Ltd. 10000000.00 2021/6/21 2022/6/21 No
Shandong Chenming Paper Holdings Limited Shanghai Chenming Pulp & Paper Sales Co. Ltd. 10000000.00 2021/6/22 2022/5/30 No
Shandong Chenming Paper Holdings Limited Shanghai Chenming Pulp & Paper Sales Co. Ltd. 80000000.00 2021/6/23 2022/5/30 No
Shandong Chenming Paper Holdings Limited Shouguang Meilun Paper Co. Ltd. 124976460.75 2020/7/9 2021/7/9 No
Shandong Chenming Paper Holdings Limited Shouguang Meilun Paper Co. Ltd. 112481429.12 2021/1/26 2021/7/26 No
Shandong Chenming Paper Holdings Limited Shouguang Meilun Paper Co. Ltd. 100000000.00 2020/9/29 2021/9/29 No
Shandong Chenming Paper Holdings Limited Shouguang Meilun Paper Co. Ltd. 132532591.40 2021/6/7 2021/12/4 No
Shandong Chenming Paper Holdings Limited Shouguang Meilun Paper Co. Ltd. 163597622.70 2021/6/16 2021/12/14 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 200000000.00 2019/7/12 2021/7/12 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 140000000.00 2019/12/4 2021/12/3 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 639549900.00 2019/12/27 2022/12/27 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2021/1/15 2022/1/14 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 125000000.00 2021/1/20 2022/1/19 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 49096760.00 2021/2/5 2021/11/24 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 49096760.00 2021/2/5 2022/1/24 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2021/1/5 2024/1/4 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 40000000.00 2021/2/9 2021/8/8 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2021/2/2 2022/2/1 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 70000000.00 2021/2/19 2022/2/18 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 25840400.00 2021/3/26 2022/2/25 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 99600000.00 2021/3/1 2021/8/28 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2021/3/2 2022/2/28 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 99000000.00 2021/2/5 2021/8/4 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 90000000.00 2021/2/5 2021/8/4 No
SHANDONG CHENMING PAPER HOLDINGS LIMITED 125
FINANCIAL REPORT 2021
I Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Guarantee (Cont’d)
Whether
performance
Amount under Starting date Expiry date of guarantee
Guarantor Party being guaranteed guarantee of guarantee of Guarantee is completed
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 200000000.00 2021/2/20 2022/2/19 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2020/8/18 2021/8/12 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 67000000.00 2020/9/15 2021/9/14 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 99600000.00 2021/3/16 2021/9/12 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 110000000.00 2020/10/16 2021/10/15 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 80000000.00 2020/10/16 2023/10/15 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 30000000.00 2020/11/4 2021/11/3 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 45220700.00 2020/11/5 2021/10/13 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 115000000.00 2020/11/11 2023/11/10 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 90000000.00 2020/11/12 2021/11/11 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 90000000.00 2020/11/16 2021/11/15 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 166668000.00 2020/11/18 2021/11/17 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 30000000.00 2020/12/1 2021/11/30 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 200000000.00 2020/12/4 2021/12/3 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2020/12/10 2023/12/9 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2020/12/18 2021/12/17 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2020/12/18 2021/12/17 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 32300500.00 2020/12/24 2021/12/17 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 30000000.00 2021/3/10 2022/3/9 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2021/4/8 2022/3/29 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2021/4/19 2022/4/18 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 29070450.00 2021/4/30 2022/4/26 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 43000000.00 2021/5/1 2022/4/26 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 85000000.00 2021/5/8 2022/5/8 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 80000000.00 2021/5/12 2021/11/8 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2021/5/28 2022/5/27 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 30362470.00 2021/6/16 2022/5/27 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 186372496.72 2021/6/20 2021/9/30 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 26000000.00 2021/6/18 2022/5/27 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 70000000.00 2021/6/18 2022/6/17 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 9000000.00 2021/6/23 2021/12/20 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. Chenming (HK) Limited 96901500.00 2019/3/28 2022/1/7 No
Jiangxi Chenming Paper Co. Ltd. Chenming (HK) Limited 94317460.00 2021/3/17 2022/3/17 No
Shandong Chenming Financial Leasing Co. Ltd. Zhanjiang Chenming Pulp & Paper Co. Ltd. 120000000.00 2020/8/5 2021/8/5 No
Shanghai Herui Investment Co. Ltd. Shouguang Meilun Paper Co. Ltd. 200000000.00 2020/12/4 2022/6/27 No
Shanghai Herui Investment Co. Ltd. Shouguang Meilun Paper Co. Ltd. 410000000.00 2020/12/4 2023/10/30 No
Shanghai Herui Investment Co. Ltd. Wuhan Chenming Hanyang Paper Holdings 25000000.00 2020/12/4 2023/10/30 No
Co. Ltd.Shanghai Herui Investment Co. Ltd. Huanggang Chenming Pulp & Paper Co. Ltd. 195000000.00 2020/12/4 2023/10/30 No
Shandong Chenming Group Finance Co. Ltd. Shandong Chenming Paper Holdings Limited 150000000.00 2021/6/23 2022/6/22 No
Total 10432909151.88
126 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(3) Related party lending and borrowing
Unit: RMB
Borrowing Starting
Related party amount date Expiry date Description
Borrowing
Chenming Holdings Co. Ltd. 210000000.00 1 January 2021 31 December 2021
Guangdong Nanyue Bank Co. Ltd. 700000000.00 1 January 2021 31 December 2021
6. Related party accounts receivable and accounts payable
(1) Accounts receivables
Unit: RMB
Closing balance Opening balance
Item Related party Book balance Bad debt Boot balance Bad debt
Accounts receivable Shouguang Chenming Huisen
New-style Construction Materials
Co. Ltd. 1199064.72 59811.28 2000017.96 87306.27
Other receivables Weifang Sime Darby West Port
Co. Ltd. 70271044.65 28373570.15 68476127.98 19038071.06
Other receivables Shouguang Meite Environmental
Technology Co. Ltd. 18860394.09 943019.70 16307200.00 70132.59
(2) Accounts payable
Unit: RMB
Item Related party Closing party Opening balance
Accounts payable Weifang Xingxing United Chemical Co. Ltd. 26905494.34 26905494.34
Other payables Weifang Xingxing United Chemical Co. Ltd. 16860000.00 16860000.00
Other payables Chenming Holdings Co. Ltd. 7000000.00 –
Accounts payable Weifang Sime Darby West Port Co. Ltd. 11276253.67 –
Accounts payable Shouguang Meite Environmental Technology
Co. Ltd. 6948106.71 –
Other non-current liabilities Guangdong Nanyue Bank Co. Ltd. 400000000.00
SHANDONG CHENMING PAPER HOLDINGS LIMITED 127
FINANCIAL REPORT 2021
I Financial Report
XIII. Share-based payment
1. General information of share-based payment
√ Applicable □ Not applicable
Unit: RMB
Total equity instruments of the Company granted during the period None
Total exercised equity instruments of the Company during the period None
Total invalid equity instruments of the Company during the period None
Range of strike price and remaining periods of contracts of stock options excluding of which the See explanation
Company issues at the end of the period for details
Range of strike price and remaining periods of contracts of other equity instruments excluding of None
which the Company issues at the end of the period
Other explanation: the strike price of restricted shares is RMB2.85 per share. The shares shall be unlocked in separate
batches 40% of the shares shall unlock at 2022 30% of the shares shall unlock at 2023 and 30% of the shares shall
unlock at 2024.2. Equity-settled share-based payment
√ Applicable □ Not applicable
Unit: RMB
The method of determining the fair value of equity instrument on the grant date Ex-right price of
grant of share
Basis for determining the quantity of exercisable equity instruments See explanation
for details
Reasons for significant difference between the current estimate and previous estimate None
Accumulated amount of equity-settled share-based payment included in the capital reserve 58816960.12
Total amount of equity-settled share-based payment recognised in the current period 26330034.89
Other explanation: On 29 May 2020 the Resolution on the Matters Relating to Adjustments to the 2020 Restricted
A Share Incentive Scheme of the Group and the Resolution in Relation to the Grant of Restricted Shares to the
Participants were considered and approved at the tenth extraordinary meeting of ninth session of the Board and the fifth
extraordinary meeting of the ninth session of the Supervisory Committee of the Company. It is determined that the grant
date would be 29 May 2020 and the fair value of the restricted shares was the ex-rights price of the shares on the grant
date. The Restricted Shares to be granted under the Incentive Scheme were “granted once and unlocked in batches”.For the period commencing from the first trading day after expiry of the 24-month period from the date on which the
registration of the grant of the Restricted Shares is completed and ending on the last trading day of the 36-month period
from the date on which the registration of the grant of the Restricted Shares is completed 40% of the Restricted Shares
will be unlocked; for the period commencing from the first trading day after expiry of the 36-month period from the date
on which the registration of the grant of the Restricted Shares is completed and ending on the last trading day of the
48-month period from the date on which the registration of the grant of the Restricted Shares is completed 30% of the
Restricted Shares will be unlocked; for the period commencing from the first trading day after expiry of the 48-month
period from the date on which the registration of the grant of the Restricted Shares is completed and ending on the
last trading day of the 60-month period from the date on which the registration of the grant of the Restricted Shares is
completed 30% of the Restricted Shares will be unlocked. Meanwhile during the three accounting years from 2021 to
2023 the Restricted Shares granted under the Incentive Scheme shall be subject to annual performance appraisal for
unlocking. (for details of specific performance evaluation conditions please refer to the announcement of the Company).At each balance sheet date during the vesting period the Group based on the latest information such as the latest
update on the change in the number of entitled employees will make best estimates to adjust the expected number
of equity instruments that can be vested. As at the exercise date the final estimated number of exercisable equity
instruments should equal the actual number of exercisable equity instruments.3. Cash-settled share-based payment
□ Applicable √ Not applicable
128 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
XIV. Undertaking and contingency
1. Significant commitments
Unit: RMB
Capital commitments contracted for but not yet
necessary to be recognised on the balance sheet Closing balance Opening balance
Commitments in relation to acquisition and construction of
long-term assets 269719611.42 236106766.83
2. Contingency
(1) Significant contingency as at the balance sheet date
In October 2005 the Company and Hong Kong Arjowiggins HKK2 Limited (“HKK2”) jointly established ArjoWiggins
Chenming Specialty Paper Co. Ltd. in Shouguang Shandong Province which is engaged in the production of
special paper decoration paper and draft paper. However such company experienced poor management due to
financial crisis. Hence such company was forced to dissolve in October 2008.In October 2012 HKK2 submitted for arbitration application to Hong Kong International Arbitration Centre Hong
Kong Special Administration of PRC on the ground of default of the joint venture agreement by the Company.In November 2015 Hong Kong International Arbitration Centre announced arbitration result stating that the
Company should compensate HKK2 with economic loss of RMB167 million arbitration fee of HK$3.30 million
and legal fee of USD3.54 million together with interest thereon calculated at 8% per annum. In October 2016 the
Company received a statutory demand stating that if the Company fails to perform the arbitration results within 21
days the liquidation application on H shares of the Company will be submitted. Subsequently HKK2 submitted H
shares liquidation application to the arbitration centre.In November 2016 the Company submitted application to the Court of First Instance of the High Court of theHKSAR and received an injunction stating that “the applicant is prohibited from applying for liquidation on theCompany”.In February 2017 HKK2 submitted an appeal to the court. In June 2017 the court dismissed the injunction
received by the Group. In the same month the Group received the liquidation application submitted by the
defendant to the High Court of Hong Kong which alleged that the Group should compensate the defendant with
economic loss of RMB167 million legal fee of USD3.54 million and arbitration fee of HK$3.30 million together
with interest thereon due to failure in compliance of the arbitration results.In 2017 the Group made provision of RMB325259082.28 for the pending litigation.Relevant appeal hearing of the Group on 15 July 2017 was completed in the Hong Kong High Court Appeal Court
on the morning of 11 May 2018. At the end of the hearing the court had instructed that another sentence be
adjudicated.On 5 August 2020 the Court of Appeal of the High Court of Hong Kong made a judgment and rejected our
Company’s appeal request. The Company is seeking ways to re-appeal to protect the legal rights and interests of
the Company and investors. However as of 30 June 2021 the estimated loss was still uncertain. Therefore the
estimated liability must still be listed in the balance sheet.
(2) To state that the company has no material contingency that needs to be disclosed
The Company had no material contingency that needs to be disclosed.SHANDONG CHENMING PAPER HOLDINGS LIMITED 129
FINANCIAL REPORT 2021
I Financial Report
XV. Post-balance sheet event
At 15 July 2021 the Company convened the twentieth extraordinary meeting of ninth session of the Board and considered
and approved the Resolution on the Matters Relating to redeeming the second and third tranches of the Preference shares
and agrees to redeem in full Chenming You 02 and Chenming You 03 the redeeming price being the par value of the priority
shares (RMB100 per share) plus current resolved payment of but unpaid fixed dividends (RMB5.17 per share) the redemption
dates being the respective fixed dividend distribution dates of Chenming You 02 and Chenming You 03 namely 16 August
2021 and 22 September 2021. As of the reporting date of this report the Company has completed the redemption and
delisting process of Chenming You 02.XVI. Other material matters
1. Segment information
(1) Basis for determination and accounting policies
According to the Group’s internal organisational structure management requirements and internal reporting
system the Group’s operating business is divided into 5 reporting segments. These report segments are
determined based on the financial information required by the company’s daily internal management. The
management of the Group regularly evaluates the operating results of these reporting segments to determine the
allocation of resources to them and evaluate their performance.The Group’s reporting segments include:
(1) Machine paper segment which is responsible for production and sales of machine paper;
(2) Financial services segment which provides financial services;
(3) Investment real estate segment which is responsible for real estate rental;
(4) Other segments which is responsible for the above segments otherwise.
Segment report information is disclosed in accordance with the accounting policies and measurement 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 Investment real estate Others Inter-segment offset Total
Revenue 15647880095.72 307483904.89 204218912.26 2050474074.05 1841119235.33 16368937751.59
Operating costs 12381044826.40 45872270.83 89108456.75 1566334523.18 2974828832.59 11107531244.57
Total assets 105777817055.34 19551306927.34 6340554629.61 10124440524.82 51193089992.76 90601029144.35
Total liabilities 56890777038.77 6565044164.94 3347151455.62 5355320541.34 8790740546.12 63367552654.55
130 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements
1. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Type Amount Percentage Amount ECL rate Carrying value Amount Percentage Amount ECL rate Carrying value
Accounts receivable assessed
collectively for impairment 892582074.57 100.00% 4546642.37 0.51% 888035432.20 698032192.53 100.00% 3195631.29 0.46% 694836561.24
Of which:
Accounts receivable from related
party customers 887202829.40 99.40% 887202829.40 692218139.26 99.17% 692218139.26
Accounts receivable from
non-related party customers 5379245.17 0.60% 4546642.37 84.52% 832602.80 5814053.27 0.83% 3195631.29 54.96% 2618421.98
Total 892582074.57 100.00% 4546642.37 0.51% 888035432.20 698032192.53 100.00 3195631.29 0.46% 694836561.24
Items assessed individually for impairment:
Accounts receivable with collective provision for bad debts based on receivables from related parties
Unit: RMB
Closing balance
Bad debt
Ageing Book balance provision ECL rate
Within 1 year 887202829.40 0.00%
Total 887202829.40 –
Accounts receivable with collective provision for bad debts based on receivables from non-related parties
Unit: RMB
Closing balance
Bad debt
Ageing Book balance provision ECL rate
Within 1 year 2376424.00 1543821.20 64.96%
1-2 years 0.00 0.00
2-3 years 0.00 0.00
Over 3 years 3002821.17 3002821.17 100.00%
Total 5379245.17 4546642.37 –
SHANDONG CHENMING PAPER HOLDINGS LIMITED 131
FINANCIAL REPORT 2021
I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
1. Accounts receivable (Cont’d)
(1) Disclosure of accounts receivable by category (Cont’d)
Accounts receivable with collective provision for bad debts based on receivables from non-related parties
(Cont’d)
If the bad debt provision of accounts receivable is made in accordance with the general model of ECLs please
disclose the information about bad debt provision with reference to the way of disclosure of other receivables:
□ Applicable √ Not applicable
By ageing
Closing balance
Bad debt
Ageing Book balance provision ECL rate
Within 1 year 889579253.40 1543821.20 0.17%
1-2 years 0.00 0.00 0.00%
2-3 years 0.00 0.00 0.00%
Over 3 years 3002821.17 3002821.17 100.00%
Total 892582074.57 4546642.37 –
(2) Provision recovery or reversal of 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 of accounts
receivables 3195631.29 1434777.93 83766.85 4546642.37
Total 3195631.29 1434777.93 83766.85 4546642.37
(3) Top five other receivables according to closing balance of debtors
The total amount of the Company’s top five accounts receivable based on closing balance of debtors for the
period was RMB892002690.31 which accounted for 99.79% of the closing balance of the total accounts
receivable. The closing balance of corresponding bad debt provision amounted to RMB4422600.00.132 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
2. Other receivables
Unit: RMB
Item Closing balance Opening balance
Dividend receivables 600000000.00 200000000.00
Other receivables 11978118025.08 10437425503.02
Total 12578118025.08 10637425503.02
(1) Dividends receivable
1) Classification of dividends receivable
Unit: RMB
Item (or investee) Closing balance Opening balance
Shandong Chenming Group Finance Co. Ltd. 200000000.00
Zhanjiang Chenming Pulp & Paper Co. Ltd. 600000000.00
Total 600000000.00 200000000.00
(2) Other receivables
1) Other payables by nature
Unit: RMB
Closing book Open book
Nature balance balance
Open credit 11932731117.52 10328819312.56
Guarantee deposit 7312361.03
Insurance premium 116093.50 287426.35
Reserve and borrowings 7077935.61 6869635.57
Others 38192878.45 94136767.51
Total 11978118025.08 10437425503.02
SHANDONG CHENMING PAPER HOLDINGS LIMITED 133
FINANCIAL REPORT 2021
I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
2. Other receivables (Cont’d)
(2) Other receivables (Cont’d)
2) Particulars of bad debt provision
Unit: RMB
Phase 1 Phase 2 Phase 3
ECLs over the ECLs over the
ECLs for the entire life (not entire life (credit-
Bad debt provision next 12 months credit-impaired) impaired) Total
Balance as at 1 January 2021 90410049.59 65082456.61 155492506.20
Balance as at 1 January 2021 during the period – – – –
Provision for the period 11024963.20 786420.82 11811384.02
Reversal for the period 25120610.61 17097798.68 42218409.29
Balance as at 30 June 2021 76314402.18 48771078.75 125085480.93
Changes in carrying book balances with significant changes in loss provision for the period
□ Applicable √ Not applicable
Disclosed by ageing
Unit: RMB
Ageing Closing balance
Within 1 year (including 1 year) 11701151788.88
1-2 years 253336897.72
2-3 years 62380662.41
Over 3 years 86334157.00
Total 12103203506.01
Less: Bad debt provision 125085480.93
Total 11978118025.08
134 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
2. Other receivables (Cont’d)
(2) Other receivables (Cont’d)
3) Provision recovery or reversal of bad debt provision for the period
Provision of bad debt provision for the period:
Unit: RMB
Changes in the period
Opening Recovery Closing
Category balance Provision or reversal Write-off Others balance
Bad debt provision for other
receivables 155492506.20 11811384.02 42218409.29 125085480.93
Total 155492506.20 11811384.02 42218409.29 125085480.93
4) Top five other receivables according to closing balance of debtors
Unit: RMB
Percentage to
closing balance Closing balance
of other of bad debt
Name of entity Nature Closing balance Maturity receivables provision
Shanghai Chenming Financial Leasing
Co. Ltd. Open credit 2608700000.00 Within 1 year 21.55% 0.00
Zhanjiang Chenming Pulp & Paper
Co. Ltd. Open credit 1903166425.75 Within 1 year 15.72% 0.00
Shandong Chenming Financial Leasing
Co. Ltd. Open credit 1327343000.00 Within 1 year 10.97% 0.00
Shouguang Meilun Paper Co. Ltd. Open credit 1326759208.16 Within 1 year 10.96% 0.00
Shanghai Hongtai Real Estate Co. Ltd. Open credit 1097071450.89 Within 1 year 9.06% 0.00
Total – 8263040084.80 – 68.27% 0.00
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 22757302649.90 22757302649.90 21845592649.90 21845592649.90
Investment in associates and joint ventures 347421950.81 5994545.96 341427404.85 352509931.98 5994545.96 346515386.02
Total 23104724600.71 5994545.96 23098730054.75 22198102581.88 5994545.96 22192108035.92
SHANDONG CHENMING PAPER HOLDINGS LIMITED 135
FINANCIAL REPORT 2021
I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
3. Long-term equity investments (Cont’d)
(1) Investment in subsidiaries
Unit: RMB
Change for the period
Closing balance
Opening balance Additional Withdrawn Impairment Closing balance of impairment
Investee (Carrying amount) 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. 2300000000.00 2000000.00 2302000000.00
Huanggang Chenming Arboriculture Development Co. Ltd. 70000000.00 70000000.00
Jinan Chenming Investment Management Co. Ltd. 100000000.00 100000000.00
Jiangxi Chenming Paper Co. Ltd. 822867646.40 822867646.40
Shandong Chenming Power Supply Holdings Co. Ltd. 157810117.43 157810117.43
Wuhan Chenming Hanyang Paper Holdings Co. Ltd. 264493210.21 264493210.21
Shandong Grand View Hotel Co. Ltd. 80500000.00 80500000.00
Zhanjiang Chenming Pulp & Paper Co. Ltd. 5082500000.00 27500000.00 5110000000.00
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. 4449441979.31 4449441979.31
Shouguang Shun Da Customs Declaration Co Ltd. 1500000.00 1500000.00
Shandong Chenming Paper Sales Co. Ltd. 762641208.20 762641208.20
Shouguang Chenming Import and Export Trade Co. Ltd. 250000000.00 250000000.00
Shouguang Chenming Papermaking Machine Co. Ltd. 2000000.00 2000000.00
Shouguang Chenming Hongxin 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
Shanghai Chenming Industrial Co. Ltd. 3000000000.00 3000000000.00
Chenming (HK) Limited 118067989.55 118067989.55
Chenming Paper USA Co. Ltd. 6407800.00 6407800.00
Shandong Chenming Coated Paper Sales Co. Ltd. 20000000.00 20000000.00
Weifang Chenming Growth Driver Replacement Equity
Investment Fund Partnership (Limited Partnership) 162790000.00 627210000.00 790000000.00
Weifang Chendu Equity Investment Partnership
(Limited Partnership) 255000000.00 255000000.00
Total 21845592649.90 911710000.00 22757302649.90
136 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
3. Long-term equity investments (Cont’d)
(2) Investment in associates and joint ventures
Unit: RMB
Change for the period
Investment Distribution
Opening gain or loss Adjustment Other of cash Closing Closing
balance recognised of other change dividend balance balance of
(Carrying Additional Withdrawn under equity comprehensive in equity or profit Impairment (Carrying impairment
Investee amount) contribution contribution method income interest declared provision Others amount) provision
I. Associates
Jiangxi Jiangbao Media
Colour Printing Co. Ltd.Zhuhai Dechen New Third
Board Equity Investment
Fund Company (Limited
Partnership) 52401659.62 -6105696.08 46295963.54
Ningbo Kaichen Huamei
Equity Investment
Fund Partnership
(Limited Partnership) 198549926.27 343561.57 198893487.84
Chenming (Qingdao) Asset
Management Co. Ltd. 8674551.18 22349.05 8696900.23
Subtotal 259626137.07 -5739785.46 253886351.61
II. Joint ventures
Shouguang Chenming Huisen
New-style Construction
Materials Co. Ltd. 4945742.03 1242575.51 500000.00 5688317.54
Weifang Sime Darby West
Port Co. Ltd. 81943506.92 -90771.22 81852735.70
Subtotal 86889248.95 1151804.29 500000.00 87541053.24
Total 346515386.02 -4587981.17 500000.00 341427404.85
SHANDONG CHENMING PAPER HOLDINGS LIMITED 137
FINANCIAL REPORT 2021
I Financial Report
XVII. 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 4032722509.28 2973878062.69 3138096400.01 2554698324.61
Other activities 650730956.36 537196013.25 709097257.52 593307602.81
Total 4683453465.64 3511074075.94 3847193657.53 3148005927.42
Information related to revenue:
Unit: RMB
Machine-made
Category of contract paper segment Others Total
Type of goods
Including: Machine made paper 3894032851.16 3894032851.16
Material sales 409810971.82 409810971.82
Leasing 18846037.32 18846037.32
Others 138689658.12 222073947.22 360763605.34
Total 4032722509.28 650730956.36 4683453465.64
5. Investment gains
Unit: RMB
Amounts during Amounts during
Item the period the prior period
Income from long-term equity investments accounted for using
the cost method 2669260273.97 681230000.00
Income from long-term equity investments accounted for using
the equity method -4587981.17 -1660968.93
Investment gain on disposal of long-term equity investments 3100000.00
Investment gain from other non-current financial assets
during the holding period 15000000.00
Total 2679672292.80 682669031.07
138 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I Financial Report
XIIX. Supplementary information
1. Breakdown of extraordinary gains or losses for the current period
√ Applicable □ Not applicable
Unit: RMB
Item Amount Remark
Profit or loss from disposal of non-current assets (including write-off of
asset impairment provision) 48674753.15
Government grants (except for the government grants closely related to
the normal operation of the Company and granted constantly at a fixed
amount or quantity in accordance with a certain standard based on state
policies) accounted for in profit or loss for the current period 125144721.79
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 held for trading derivative financial assets
financial liabilities held for trading and derivative financial liabilities
as well as investment gains from disposal of financial assets held for
trading derivative financial assets financial liabilities held for trading
derivative financial liabilities and other debt investments -89980570.69
Consumable biological assets subsequently measured at fair value -9139121.20
Other gain or loss items within the definition of extraordinary gain or loss 15264970.71
Less: Effect of income tax 30517886.75
Effect of minority interest (after tax) 3069630.17
Total 56377236.84 –
The Company defines non-recurring profit and loss according to the definition in Explanatory Announcement No.1 on Information Disclosure of Companies Offering Their Securities to the Public – Non-recurring Profit and Loss
and classifies non-recurring profit and loss listed in Explanatory Announcement No. 1 on Information Disclosure of
Companies Offering Their Securities to the Public – Non-recurring Profit and Loss as nonrecurring profit and loss please
explain the reason.□ Applicable √ Not applicable
2. Return on net assets and earnings per share
Earnings per share
Rate of return
on net assets
on weighted Basic Diluted
Profit for the reporting period average basis (RMB per share) (RMB per share)
Net profit attributable to ordinary shareholders of the Company 8.94% 0.604 0.604
Net profit after extraordinary gains or losses attributable to
ordinary shareholders of the Company 8.65% 0.585 0.585
When calculating financial indicators such as earnings per share and rate of return on weighted average net assets the
interest on perpetual bonds of RMB44481369.86 from 1 January 2021 to 30 June 2021 and the dividends issued and
declared by preference shares of RMB207065968.66 in 2021 are deducted.SHANDONG CHENMING PAPER HOLDINGS LIMITED 139
FINANCIAL REPORT 2021
I Financial Report
XIIX. Supplementary information (Cont’d)
3. Differences in accounting data under domestic and overseas accounting standards
(1) Differences between the net profit and net assets disclosed in accordance with international accounting
standards and China accounting standards in the financial report
□ Applicable √ Not applicable
(2) Differences between the net profit and net assets disclosed in accordance with overseas accounting
standards and China accounting standards in the financial report
□ Applicable √ Not applicable
140 SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
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