(a joint stock company incorporated in the People’s Republic of China with limited liability)
Stock Code: 1812
2025
A N N U A L R E P O R T
2025 ANNUAL REPORTI Important Notice Table of Contents and Definitions
The board of directors (the “Board”) the directors (the “Directors”) and senior management (the “Senior Management”) of the
Company hereby warrant the truthfulness accuracy and completeness of the contents of the annual report guarantee that
there are no false representations misleading statements or material omissions contained in this annual report and are jointly
and severally responsible for the liabilities of the Company.Jiang Yanshan head of the Company Zhu Yanli head in charge of accounting and Zhang Bo head of the accounting
department (Accounting Officer) declare that they warrant the truthfulness accuracy and completeness of the financial report
in the annual report.All Directors have attended the board meeting to review this report.Notice of non-standard audit opinions
? Applicable □ Not applicable
Grant Thornton (Special General Partnership) has issued an unqualified audit report with an emphasis of matter paragraph
on the Company’s 2025 financial statements. The Board of the Company has provided a detailed explanation of the relevant
matter. Investors are advised to review it carefully.Reminder of material deficiencies in internal control
□ Applicable ? Not applicable
Forward-looking statements such as future plans contained in this annual report do not represent earnings forecasts of
the Company nor constitute substantive commitments to investors by the Company. Investors and relevant persons shall
maintain a sufficient risk awareness hereto and understand the differences among plans forecasts and commitments.The Company is exposed to various risk factors such as macro-economic fluctuation state policies and regulations and
competition in the industry. Investors should be aware of investment risks. For further details please refer to the risk factors
likely to be faced and the measures to be taken to address them as set out in the outlook on the future development of the
Company in section VI Management Discussion and Analysis.The Company does not propose distribution of cash dividends or bonus shares and there will be no increase in share capital
from reserves.As of the end of the reporting period the Company had uncovered losses.□ Applicable ? Not applicable
2025 ANNUAL REPORT 1I Important Notice Table of Contents and Definitions
Table of Contents
I Important Notice Table of Contents and Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II Company Profile and Key Financial Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
III Chairman’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
IV Management Discussion and Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
V Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
VI Corporate Governance Environment and Society. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
VII Material Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
VIII Changes in Share Capital and Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
IX Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
X Financial Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
2 SHANDONG CHENMING PAPER HOLDINGS LIMITEDI Important Notice Table of Contents and Definitions
Documents Available for Inspection
I. The financial statements signed and sealed by the legal representative the head in charge of accounting and the head of
the accounting department of the Company;
II. The original copy of the auditor’s report which is sealed by the accounting firm and signed and sealed by the certified
public accountants;
III. The original copies of the documents and announcements of the Company disclosed in the designated newspaper and on
the website as approved by the CSRC during the reporting period;
IV. The annual report disclosed on the website of The Stock Exchange of Hong Kong Limited;
V. Other related information.
2025 ANNUAL REPORT 3I Important Notice Table of Contents and Definitions
Definitions
Item Definition
Company Group Chenming Group Chenming means Shandong Chenming Paper Holdings Limited and its subsidiaries
Paper or Chenming Paper Company
Parent Company or Shouguang Headquarters means Shandong Chenming Paper Holdings Limited
Chenming Holdings means Chenming Holdings Company Limited
Shenzhen Stock Exchange means Shenzhen Stock Exchange
Stock Exchange means The Stock Exchange of Hong Kong Limited
CSRC means China Securities Regulatory Commission
Shandong CSRC means Shandong branch of China Securities Regulatory Commission
Zhanjiang Chenming means Zhanjiang Chenming Pulp & Paper Co. Ltd.Jiangxi Chenming means Jiangxi Chenming Paper Co. Ltd.Huanggang Chenming means Huanggang Chenming Pulp & Paper Co. Ltd.Jilin Chenming means Jilin Chenming Paper Co. Ltd.Shanghai Chenming means Shanghai Chenming Industry Co. Ltd.Chenming (HK) means Chenming (HK) Limited
Shouguang Meilun means Shouguang Meilun Paper Co. Ltd.Shouguang Art Paper means Shouguang Chenming Art Paper Co. Ltd.Finance Company means Shandong Chenming Group Finance Co. Ltd.Zhanjiang Chenming Paper means Zhanjiang Chenming Paper Co. Ltd.Shandong Chenming Leasing means Shandong Shengming Corporate Management Co. Ltd.* (山東晟
鳴企業管理有限公司) (previously known as Shandong Chenming
Financial Leasing Co. Ltd.* (山東晨鳴融資租賃有限公司))
4 SHANDONG CHENMING PAPER HOLDINGS LIMITEDI Important Notice Table of Contents and Definitions
Item Definition
Qingdao Chenming Leasing means Qingdao Chenming Paper Products Sales Co. Ltd.* (青島晨鳴
紙製品銷售有限公司) (previously known as Qingdao Chenming
Nonghai Financial Leasing Co. Ltd.)
Shanghai Chenming Leasing means Shanghai Chenxinming Industrial Development Co. Ltd.* (上海晨
新鳴實業發展有限公司) (previously known as Shanghai Chenming
Financial Leasing Co. Ltd.)
Chenming Leasing means Shandong Shengming Corporate Management Co. Ltd.* (山東晟
鳴企業管理有限公司) and its subsidiaries
Jiangxi Port means Jiangxi Chenming Port Co. Ltd.Yujing Hotel means Shandong Yujing Grand Hotel Co. Ltd.Changjiang Industrial Investment Fund means Hubei Changjiang (Huanggang) Industrial Investment Fund
Partnership (Limited Partnership)* (湖北長江(黃岡)產業投資基金合
夥企業(有限合夥))
Chenming Huanggang Fund means Hubei Changjiang Chenming Huanggang Equity Investment Fund
Partnership (Limited Partnership)* (湖北長江晨鳴黃岡股權投資基金
合夥企業(有限合夥))
Huanggang Technology means Huanggang Chenming Paper Technology Co. Ltd.Weifang Xingchen means Weifang Xingchen Trading Co. Ltd.the reporting period or the year means The period from 1 January 2025 to 31 December 2025
the beginning of the year or the period means 1 January 2025
the end of the year or the period means 31 December 2025
the prior year means The period from 1 January 2024 to 31 December 2024
2025 ANNUAL REPORT 5II Company Profile and Key Financial Indicators
I. Company profile
Stock abbreviation ST晨鳴 Stock code 000488
ST晨鳴 B 200488
Stock exchanges on which the shares are listed Shenzhen Stock Exchange
Stock abbreviation Chenming Paper Stock code 01812
Stock exchanges on which the shares are listed The Stock Exchange of Hong Kong Limited
Previous stock abbreviation (if any) N/A
Name in Chinese of the Company 山東晨鳴紙業集團股份有限公司
Short name in Chinese of the Company 晨鳴紙業
Name in English of the Company (if any) SHANDONG CHENMING PAPER HOLDINGS LIMITED
Short name in English of the Company (if any) SCPH
Legal representative of the Company Jiang Yanshan
Registered address No. 595 Shengcheng Road Shouguang City Shandong Province
Postal code of registered address 262700
Changes of the registered address of the Company Nil
Office address No. 2199 Nongsheng East Road Shouguang City Shandong Province
Postal code of office address 262705
Website of the Company http://www.chenmingpaper.com
Email address chenmmingpaper@163.com
II. Contact persons and contact methods
Secretary to the Board Securities affairs representatives Hong Kong Company Secretary
Name Yuan Xikun Chen Lin Chu Hon Leung
Correspondence No. 2199 Nongsheng East Road No. 2199 Nongsheng East Road 22nd Floor World-Wide House Central
address Shouguang City Shandong Shouguang City Shandong Province Hong Kong
Telephone 0536-2158008 0536-2158008 00852-21629600
Facsimile 0536-2158977 0536-2158977 00852-25010028
Email address chenmmingpaper@163.com chenmmingpaper@163.com liamchu@li-partners.com
III. Information disclosure and places for inspection
Websites of the stock exchanges where the Company Domestic: http://www.szse.cn; overseas: http://www.hkex.com.hk
discloses its annual report
Names and websites of the media where the Company China Securities Journal Shanghai Securities News Securities
discloses its annual report Times Securities Daily Hong Kong Commercial Daily and
CNINFO (http://www.cinifo.com.cn)
Places for inspection of the Company’s annual report Office of the Board of the Company
IV. Change in registration
Unified social credit code 913700006135889860
Change of principal activities since its listing (if any) Nil
Change of the controlling shareholder (if any) Nil
6 SHANDONG CHENMING PAPER HOLDINGS LIMITEDII Company Profile and Key Financial Indicators
V. Other relevant information
CPAs engaged by the Company
Name of CPAs Grant Thornton (Special General Partnership)
CPAs’ Office Address Floor 11 Building No. 4 HuaChuang GuanLi Center 219 Shunhai
Road Lixia District Jinan
Name of the Signing Certified Public Accountants Jiang Tao and Guo Dongmei
Sponsors engaged by the Company to continuously perform its supervisory function during the reporting period
□ Applicable √ Not applicable
Financial advisors engaged by the Company to continuously perform its supervisory function during the reporting period
□ Applicable √ Not applicable
VI. Major accounting data and financial indicators
Retrospective adjustment to or restatement of the accounting data for prior years by the Company
□ Yes √ No
Increase/decrease
for the year as
compared to the
2025 2024 prior year 2023
Revenue (RMB) 6186550243.97 22729474852.76 -72.78% 26608570228.20
Net profit attributable to shareholders of the Company
(RMB) -8295932402.88 -7410784491.65 -11.94% -1281289649.82
Net profit after extraordinary gains or losses
attributable to shareholders of the Company (RMB) -7669266539.27 -7202385457.32 -6.48% -1942120184.70
Net cash flows from operating activities (RMB) 243208407.71 2623191664.60 -90.73% 4389949308.82
Basic earnings per share (RMB per share) -2.83 -2.53 -11.86% -0.45
Diluted earnings per share (RMB per share) -2.83 -2.53 -11.86% -0.45
Decrease of 107.58
Weighted average return on net assets -164.83% -57.25% percentage points -7.65%
Increase/decrease
as at the end of
the year compared
to the end of the
As at the end of 2025 As at the end of 2024 prior year As at the end of 2023
Total assets (RMB) 50620148908.13 63509295142.08 -20.29% 79487052953.58
Net assets attributable to shareholders of the
Company (RMB) 903835592.13 9156104358.91 -90.13% 16692175196.53
2025 ANNUAL REPORT 7II Company Profile and Key Financial Indicators
The lower of the Company’s net profit before or after extraordinary gains or losses in the last three accounting years is
negative and the audit report for the last year shows that the Company’s ability to continue as a going concern is uncertain
□ Yes √ No
The lower of net profit before or after extraordinary gains or losses is negative
√ Yes □ No
Item 2025 2024 Remark
Revenue (RMB) 6186550243.97 22729474852.76 Revenue from sales of materials
of RMB29363912.91 and other
revenue of RMB39389683.95.Revenue from operations other than normal 68753596.86 159980820.39 Revenue unrelated to revenue
operation such as revenue realised from from principal operations
leasing fixed assets intangible assets
packaging materials sales of materials
exchanges for non-monetary assets
with materials engaging in entrusted
management business and revenue
included in revenue from principal
operations but generated from operations
other than normal operation of the
Company.Deduction to revenue (RMB) 68753596.86 159980820.39 Revenue from sales of materials
of RMB29363912.91 and other
Revenue after deduction (RMB) 6117796647.11 22569494032.37 revenue of RMB39389683.95.VII. 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
There was no difference between the net profit and net assets disclosed in accordance with international accounting
standards and China accounting standards in the financial report during the reporting period.
2. Differences between the net profit and net assets disclosed in accordance with overseas accounting
standards and China accounting standards in the financial report
□ Applicable √ Not applicable
There was no difference between the net profit and net assets disclosed in accordance with overseas accounting
standards and China accounting standards in the financial report during the reporting period.
8 SHANDONG CHENMING PAPER HOLDINGS LIMITEDII Company Profile and Key Financial Indicators
VIII. Key Financial Indicators by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Revenue 797157638.89 1309473313.41 1241229778.93 2838689512.74
Net profit attributable to shareholders of the Company -1451634120.47 -2406319070.09 -2149863362.61 -2288115849.71
Net profit after extraordinary gains or losses
attributable to shareholders of the Company -1461511392.25 -2183852223.56 -2164751046.01 -1859151877.45
Net cash flows from operating activities 530619916.12 254683358.07 -82713992.15 -459380874.33
Whether the above indicators or their aggregated amounts have any material difference with the respective amounts as
disclosed in the quarterly report or interim report
□ Yes √ No
IX. Five-year financial summary under paragraph 19 of Appendix D2 of the Hong Kong Listing
Rules
Unit: RMB’0000
For the year ended 31 December
20252024202320222021
Revenue 618655 2272947 2660857 3200437 3301981
Profit before tax -920021 -785319 -170970 18227 230618
Tax -23737 -6017 -38306 -13509 21650
Profit for the current period attributable to shareholders of the Company -829593 -741078 -128129 18929 206551
Minority interests -66691 -38223 -4535 12807 2417
Basic earnings per share (RMB/share) -2.83 -2.53 -0.45 0.03 0.56
Weighted average return on net assets (%) -164.83% -57.25% -7.65% 0.55% 9.56%
Unit: RMB’0000
For the year ended 31 December
20252024202320222021
Total assets 5062015 6350930 7948705 8430102 8286966
Total liabilities 4780697 5067352 5838920 6057276 6029463
Minority interests 190934 367967 440568 464369 345705
Equity attributable to shareholders of the Company 90384 915610 1669218 1908457 1911799
Net current assets (liabilities) -3322371 -2795136 -2121186 -1917930 -1766446
Total assets less current liabilities 1122789 1966696 2970931 3240227 3233471
2025 ANNUAL REPORT 9II Company Profile and Key Financial Indicators
X. Items and amounts of extraordinary gains or losses
√ Applicable □ Not applicable
Unit: RMB
Item Amount for 2025 Amount for 2024 Amount for 2023 Description
Profit or loss from disposal of non-current assets
(including write-off of provision for assets impairment) -602291481.76 35240228.34 431805592.54
Government grants (except for the government grants
closely related to the normal operation of the Company
granted in accordance with an established standard
and having an ongoing effect on the Company’s
profit or loss in compliance with national policies and
regulations) accounted for in profit or loss for the
current period 64188680.68 64412067.13 117211489.25
Except for effective hedging business conducted in the
ordinary course of business of the Company profit or
loss arising from the change in fair value of financial
assets and financial liabilities held by a non-financial
company as well as profit or loss arising from disposal
of its financial assets and financial liabilities -3174128.31 -181379218.46 58579398.48
Reversal of provision for impairment of receivables
individually tested for impairment 13201496.76 99483459.63
Profit or loss from debt restructuring -36001298.50 3519918.36 55297346.06
Profit or loss from changes in the fair value of consumable
biological assets subsequently measured at fair value -135025589.35 -153411759.17 6775808.38
Other non-operating income and expenses other than the
above items -50188172.61 -15275886.14 -11642079.10
Less: Effect of income tax 8296434.22 -18173051.07 89176973.22
Effect of minority interests (after tax) -130921063.70 -20322564.54 7503507.14
Total -626665863.61 -208399034.33 660830534.88 －
Details of other gain or loss items that fall within the definition of extraordinary gain or loss:
□ Applicable √ Not applicable
The Company did not have details of other gain or loss items that fall within the definition of extraordinary gain or loss.Explanation on the extraordinary gain or loss items as illustrated in the Explanatory Announcement on Information
Disclosure for Companies Offering Their Securities to the Public No.1 – Extraordinary Gains or Losses defined as its
recurring gain or loss items
√ Applicable □ Not applicable
Item Amount involved (RMB) Reason
Other income 54147545.32 Government grants related to assets that are closely related to the
Company’s normal operations are subsequently amortised to other
income which has a continuing effect on the Company’s profit or loss
and is therefore accounted for as recurring profit or loss.
10 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIII Chairman’s Report
Dear shareholders
On behalf of the Board of the Company I am pleased to present to all shareholders the annual report for the financial year ended
31 December 2025. I would like to express my sincere gratitude to all shareholders for their unwavering trust and steadfast
support in standing by the Company through challenges and embarking on a new journey together.The year 2025 marked an exceptionally challenging year in Chenming Group’s development history. Confronted with multiple
hurdles including a prolonged cyclical industry downturn suspended operations and production at its production bases
an urgent need to enhance internal controls and the imposition of other risk warnings the Company once fell into operating
difficulties and faced unprecedented challenges to its development. During the reporting period the Company produced 1.09
million tonnes of machine-made paper and sold 1.00 million tonnes of machine-made paper achieving revenue of RMB6187
million and net profit attributable to shareholders of the Company of a loss of RMB8296 million. During this critical time bolstered
by the robust support of Party committees governments at all levels and financial institutions the management team of the
Company led the entire workforce to tackle these challenges head-on and fight against the odds. Through steady progress
in executing a series of initiatives such as resuming operation and production capital coordination deepening reforms and
enhancing quality and efficiency the Company managed to secure its foundation for business development and open a new
chapter for the Company’s turnaround and recovery.(I) Enhancing the governance system and strengthening internal controls
During the reporting period the Company deepened Party-building guidance and management reforms. It successfully
concluded the leadership re-election and succession process for the Group’s Party committee and the Board and further
enhanced the mechanism for “two-way entry and cross-appointment” between the Party committee and the Board to
ensure that the Party committee could consider major matters in advance including core areas such as strategic planning
investment and financing. This approach ensured the Party committee fulfilled its role in steering the direction overseeing
the big picture and ensuring execution thereby facilitating scientific efficient and prudent decision-making by the Board
and comprehensively elevating the Company’s corporate governance. Meanwhile the Company thoroughly revised its
corporate governance rules and policies and optimised its internal management structure. A dedicated supervision team
was established and the Group’s Discipline Inspection Commission Office was formed creating a full-process multi-tiered
and comprehensive internal control and supervision system to strengthen risk management capabilities. The Company
made concerted efforts to rectify the non-standard issues identified in the 2024 Internal Control Audit Report continuously
improving its standardised operations and establishing a solid institutional safeguard for the Company’s healthy
development.(II) Making every effort to resume operation and production and solidifying the foundation for production and
operations
During the reporting period the Company consistently regarded the resumption of production as its top priority for
overcoming its operational difficulties. Under the meticulous guidance of Party committees and governments at all levels
and with strong support from financial institutions the Company actively secured the new syndicated loan disbursement
diversified its raw material supply channels aggressively advanced equipment maintenance and pushed for the orderly
resumption of operation and production across its production bases. In 2025 thanks to the relentless efforts of all the
management and staff the Huanggang production base maintained stable production while the three major production
bases in Shouguang Jiangxi and Jilin successfully resumed operation one after another. As of the date of this report the
Zhanjiang production base has resumed full operation. The Company’s ability to generate its own working capital gradually
recovers laying a robust foundation for securing market share upholding its brand reputation and driving a return to
profitability.
2025 ANNUAL REPORT 11III Chairman’s Report
(III) Vigorously seizing improvement in operational quality and comprehensively implementing cost reduction
and efficiency enhancement measures
In the face of severe challenges of industry supply-demand imbalance and intensifying market competition the Company
remained committed to efficiency during the reporting period. It held regular operational analysis meetings to evaluate
business conditions and scientifically deploy its operations. Through systematic advancements in end-to-end cost controls
supply chain optimisations and production process upgrades the equipment operation rate and capacity utilisation rate of
its restarted production lines improved significantly as compared to the prior years. Also the Company vigorously pursued
debt restructuring by actively negotiating with financial institutions to secure interest rate reductions and loan extensions. 90
of 109 partner banks and financial leasing companies consented to interest rate reductions or loan extensions effectively
alleviating liquidity pressure. Furthermore the Company strictly enforced comprehensive capital planning management and
strengthened centralised fund control to continuously reduce finance costs. During the reporting period finance expenses
decreased significantly as compared to the corresponding period of the prior year.(IV) Focusing on the principal activities revitalising assets and optimising structure
During the reporting period the Company focused on its principal activities of pulp production and papermaking. An asset
management centre was established to spearhead key initiatives such as the disposal of non-core assets as well as debt
settlement and resolution. By orderly divesting non-core operations and disposing of and revitalising underperforming or
idle assets the Company sought to improve its asset efficiency. On 31 December 2025 the Company convened its 2025
second extraordinary general meeting where shareholders considered and approved the thorough divestiture of assets
related to the financial leasing business. Since then the Company has fully exited the financial leasing segment and ceased
all financial leasing activities which further optimised the Company’s asset-liability structure and lessened the burden of
non-core operations on its overall profitability laying a solid foundation for the Company to operate with greater agility and
achieve healthy and sustainable development.Riding the momentum of the long journey ahead the Company presses forward to shoulder the challenges that await. The year
2026 marks the beginning year of China’s 15th Five-Year Plan. It is a year of both opportunities and challenges and a critical
year for Chenming Group to turn the tide and embark on a path of high-quality development. In the coming year the Company
will closely align with the “One-Two-Five” strategic development plan. It will boost efficiency across five areas: management
team building industrial ecosystem chain enhancement smart technology and digitalisation development reform and innovation
deepening and brand credibility building. It will strictly enforce flexible mechanisms that allow for upward and downward
mobility in management roles performance-based compensation adjustments and dynamic staff adjustments. It is committed to
fostering a sense of vigilance a pragmatic work ethic and problem-solving capabilities among all employees. With an unwavering
spirit and a forward-moving determination the Company will tackle challenges head-on and take concrete actions to steer the
Company towards sustained stability continuous improvement and high-quality development rewarding the trust and support of
shareholders with outstanding performance.On behalf of the Board of the Company I would like to extend my most sincere gratitude to the Party committees and
governments at all levels financial institutions partners and friends from all sectors for their robust support and invaluable
guidance. I also wish to pay the highest tribute to all the management and staff for their dedication hard work and unwavering
commitment to the Company during these challenging times!
Jiang Yanshan
Chairman
30 March 2026
12 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
I. Principal activities of the Company during the reporting period
1. Business overview of the Company
The Company is a large modern conglomerate principally engaged in pulp production and papermaking and
steadfastly committed itself to implementing a pulp and paper integration strategy with production bases in
Shandong Guangdong Hubei Jiangxi Jilin and other regions. It is the first paper manufacturer in China to achieve
a balance between pulp production and papermaking capacity. The Company offers a rich and extensive portfolio
of machine-made paper products covering more than 200 types in seven series including cultural paper coated
paper white cardboard copy paper industrial paper special paper and household paper. It is the enterprise with the
most diverse and comprehensive product range within the domestic paper industry. During the reporting period the
machine-made paper business was the major source of revenue and profit of the Company.During the reporting period the Company’s Huanggang production base was in normal operation while the
production bases in Shouguang Jiangxi and Jilin were largely inactive during the first three quarters of 2025 and the
Zhanjiang production base remained idle throughout the year. Shutdown losses and maintenance expenses incurred
for the period increased year-on-year and the production and sales of machine-made paper experienced a significant
year-on-year decrease which affected both revenue and profit. Meanwhile due to the operational halts the Company
made impairment provisions for certain assets which further affected profit for the current period. Furthermore to
focus on its principal activities of pulp production and papermaking the Company divested all assets related to
its financial leasing business in the fourth quarter of 2025 and had since ceased all financial leasing activities. In
accordance with the relevant requirements of the Accounting Standards for Business Enterprises the Company
conducted impairment tests on the credit profiles of its financial leasing customers during the reporting period and
made bad debt provisions for certain financial leasing activities. In 2025 the Company recorded revenue of RMB6187
million and net profit attributable to shareholders of the Company of a loss of RMB8296 million.During the reporting period with robust support from Party committees and governments at all levels and financial
institutions the Company proactively implemented multiple measures to enhance operational efficiency and
management level centred around end-to-end cost reduction and efficiency enhancement as well as all-round new
product development. Firstly the steady progress in resuming full operation and production led to a significant
increase in equipment operation rate and capacity utilisation rate of its restarted production lines as compared to the
prior year. Secondly optimised procurement procedures and enhanced workflow management significantly lowered
raw material sourcing and logistics costs. Thirdly the Company enhanced regular communication with financial
institutions to secure interest rate reductions and loan extensions resulting in a decrease of 16.87% in finance
expenses as compared to the corresponding period of the prior year.
2025 ANNUAL REPORT 13IV Management Discussion and Analysis
I. Principal activities of the Company during the reporting period (Continued)
2. Major products and their application
Major brands of machine-made paper products of the Company and their applications are set out below:
Category Major brands and types Major manufacturing companies Range of application
Culture paper series 1. “BIYUNTIAN” “CLOUDY MIRROR” “CLOUDY LEOPARD” Shouguang Headquarters Printing publications textbooks magazines covers illustrations
and “YUNJIN” all-wood pulp offset paper and electrostatic Shouguang Meilun notebooks test papers teaching materials reference books
base paper Zhanjiang Chenming etc.
2. “CLOUDY LION” and “CLOUDY CRANE” original white Jiangxi Chenming
offset paper Jilin Chenming
3. “CLOUDY PINE” and “GREEN PINE” light weight paper
4. Blueprint paper colour offset paper pure texture paper
non-fluorescent offset paper PE offset paper
5. Beige and high white book paper
6. Light weight coated paper
Coated paper series 1. “SNOW SHARK” and “EAGLE” one-sided coated paper Shouguang Headquarters Double-sided coated paper is suitable for high quality printing
2. “SNOW SHARK” “EAGLE” and “RABBIT” double-sided Shouguang Meilun such as high-grade picture albums pictures magazines and
coated paper so on promotional materials such as interior pages of high-end
3. “EAGLE” and “RABBIT” matte coated paper books wall calendars posters and so on and suitable for high-
speed sheet printing and high-speed rotary printing;
One-sided coated paper is suitable for upscale tobacco package
paper adhesive sticker shopping bags slipcases envelopes
gift wrapping and so on and suitable for large format printing
and commercial printing.White cardboard series 1. White cardboard of “LIYA” series white cardboard and Shouguang Headquarters High-end gift boxes cosmetics boxes tags shopping bags
ivory cardboard of “LIPIN” and “POPLAR” series high bulk Jiangxi Chenming publicity pamphlets high-end postcards; cigarette package
cardboard and ivory cardboard of “LIZZY” and “BAIYU” Zhanjiang Chenming printing of medium and high quality; milk package beverage
series and super high bulk cardboard of “LIYING” and package disposable paper cups milk tea cups and noodle
“BAIYU” series bowls.
2. Food package board of “LIYA” and “LIZZY” series
3. Coated cattle card and LIYA book card
4. Playcard paper board
5. Chenming cigarette cardboard
Copy paper series “GOLDEN MINGYANG” and “GOLDEN CHENMING” copy paper Shouguang Headquarters Printing and copying business documents training materials and
“BOYA” and “BIYUNTIAN” copy paper “MINGYANG” Shouguang Meilun writing.“LUCKY CLOUDS” “BOYANG” and “SHANYIN” copy Zhanjiang Chenming
paper and “GONGHAO” and “TIANJIAN” copy paper
Industrial paper series High-grade yellow anti-sticking base paper ordinary yellow/ Shouguang Headquarters Anti-stick base paper is mainly used for producing the paper base
white anti-sticking base paper and PE paper Jiangxi Chenming of stripping paper or anti-sticking base paper;
Zhanjiang Chenming Cast coated base paper is suitable for producing adhesive paper
or playcard compound paper after coating.Special paper series Thermal paper and glassine paper Shouguang Art Paper High-grade adhesive backing paper for electronics medicine food
washing supplies supermarket labels double-sided tapes etc.Household paper series Toilet paper facial tissue pocket tissue napkin paper towels Shouguang Meilun Daily toilet supplies; used in restaurants and other catering
and “XINGZHILIAN” industries and used in public toilets in hotels guesthouses
and office buildings and also suitable for home and other
scenarios.
14 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
I. Principal activities of the Company during the reporting period (Continued)
3. Operation model
(1) Procurement modelBuilding upon its supply chain management model characterised by “centralised group procurement priorityon sourcing extended bidding and open transparency” the Company has comprehensively advanced the
digitisation standardisation and refinement of its procurement operations to continuously enhance procurement
efficiency cost control and fairness. The Company develops and launches an online bidding platform to enable
online bidding throughout the entire procurement lifecycle leveraging digital tools to boost procurement
transparency and operational efficiency. Using the “Chenming Procurement Management Platform” official
account as its core publication channel the Company broadcasts key information in real time such as tender
announcements qualification requirements and evaluation criteria ensuring full disclosure and transparency
in procurement information. Tender packages for procurement are managed through refined categorisation.Over 95% of tenders utilises a mechanism where “a new low bid automatically triggers a 5-minute biddingextension” which minimises human interference and secures the most optimal procurement pricing. The
Company systematically improves its supplier database through dynamic updates and optimisation of its
supplier portfolio which strengthens the competitive mechanism among suppliers and effectively improves both
product quality and cost control level.
(2) Production model
Guided by the Group’s “One-Two-Five” development concept the Company is committed to its goal of “buildinga top-tier management team and delivering outstanding business performance”. With a focus on cost reduction
efficiency enhancement and new product research and development (R&D) the Company strengthens its
production foundation through five key initiatives to create an efficient green and intelligently coordinated
production model. On the production side the Company deepens its pulp and paper integration strategy by
establishing fully equipped chemical pulp production lines at its core bases in Shouguang Zhanjiang and
Huanggang. This enables raw material self-sufficiency mitigates the impact of wood pulp price fluctuations and
lowers production costs. Meanwhile by coordinating with surrounding and company-owned forest lands the
Company has enhanced the “forest-pulp-paper” closed-loop industrial chain thereby improving the stability
and sustainability of raw materials supply and ensuring uninterrupted production. Dedicated to environmental
stewardship the Company has practiced green production throughout the year by increasing environmental
investments upgrading facilities and optimising production processes to establish itself as a resource-efficient
and environmentally friendly enterprise achieving a win-win for both production and environmental protection.While strengthening its physical production infrastructure the Company also optimises production management
and boosted operational efficiency. With planning management at its core production management featuresa four-tier coordinated control system. The Company strictly adheres to a “produce-to-order and sales-production balance” approach dynamically scheduling production based on market demand and tightly
controlling inventory to prevent capacity waste and overstocking. Furthermore the Company accelerates the
digital transformation of production by rolling out the MES system and deeply integrating it with ERP and DCS.This enables data synchronisation driving greater precision and intelligence in management.
(3) Marketing model
The Company has a relatively mature sales network and has set up specialised sales companies responsible
for the development of domestic and overseas markets product sales and formulation of sales policies. The
sales companies’ management systems are divided into product lines product companies and branches
to achieve matrix management. The sales companies are divided into culture paper series coated paper
series electrostatic paper series special paper series and household paper series according to product line.Each product company has branches each headed by a chief representative with full authority to manage its
operations.
2025 ANNUAL REPORT 15IV Management Discussion and Analysis
I. Principal activities of the Company during the reporting period (Continued)
3. Operation model (Continued)
(3) Marketing model (Continued)
The Company has implemented a three-level scheduling mechanism with daily task assignments disseminated
to branch companies product companies and sales companies to ensure effective plan execution. Meanwhile
by leveraging its comprehensive information systems the Company has realised IT-based management. It has
also established and improved the complaint handling system and customer satisfaction system to enhance the
Company’s marketing management level.
(4) R&D model
Guided by the market and driven by innovation the Company places a strong emphasis on technological
R&D. It has formed a variety of R&D models such as independent R&D technology introduction and industry-
academia-research collaboration. At present the Company has a number of domestically leading innovative
R&D platforms including a national enterprise technology centre a post-doctoral research working station
a collaborative innovation centre for cleaner production and refinery of light industry bio-based products and
Shandong Pulp and Papermaking Engineering Lab which continuously enhance the Company’s capacity
for independent innovation. Meanwhile the Company focuses on its existing production systems and
manufacturing processes to implement technical transformations process optimisations and equipment
upgrades. By iterating its core production technologies the Company enhances both product quality and
production efficiency building a core technology system that combines Chenming’s unique characteristics
with industry competitiveness. Furthermore the Company actively engages in industry-academia-research
collaborations with universities and research institutes including Qilu University of Technology and Shandong
Paper Industry Research and Design Institute to introduce assimilate and absorb scientific and technological
innovations through which the Company continuously optimises its product structure and further boosts the
market competitiveness of its products.II. Industry overview of the Company during the reporting period
The Company operates within the paper and paper products industry. As a large pulp and paper manufacturer in China
featuring a complete industrial chain leading scale and a high degree of pulp and paper integration the Company operates
multiple production bases across Shandong Guangdong Hubei Jiangxi Jilin and other regions. It offers a diverse range
of machine-made paper products with core products including cultural paper coated paper and white cardboard. The
Company ranks at the forefront of the industry in terms of production capacity product quality technical equipment and
brand influence.The paper industry is a crucial foundational sector of the national economy and is essential for sustaining daily livelihoods. It
is distinctly characterised as a technology-capital-resource intensive industry. Its product applications penetrate all aspects
of social and economic activities. They are deeply integrated into the defence and military industry (special functional
materials) cultural communication (publishing and printing) industrial and agricultural production (supporting materials)
modern logistics (packaging products) and other key areas of the national economy and are closely related to everyday
consumer spending. As a typical cyclical industry the prosperity of the paper industry is closely tied to the broader
economic trend. The consumption level of paper and paperboard has become one of the important indicators to measure
a country’s level of modernisation and civilised development and is widely recognised by the international community as a
“social and economic barometer”.
16 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
II. Industry overview of the Company during the reporting period (Continued)
Currently China’s paper industry has entered a phase of high-quality transformation and development with its primary
focus shifting entirely from scale expansion to structural upgrading. Green and low-carbon practices have become the core
guiding principles for the industry’s growth while energy efficiency environmental protection and carbon footprint are now
key prerequisites for market entry and competitiveness. Meanwhile the trend toward industrial chain integration is becoming
increasingly prominent and outdated production capacity is continuously being phased out. The industry as a whole
has transitioned from rapid growth to a new stage of high-quality sustainable eco-friendly and intensive development
gradually establishing a policy landscape that supports superior enterprises while restricting inferior ones. Since 2025 a
series of industry-related policies have been rapidly introduced and implemented to further regulate industry development
and guide industrial upgrading. On 1 May the Norm of Energy Consumption per Unit Product of Pulp and Paper (GB31825-
2024) officially took effect which further tightened energy consumption limits and broadened the scope of energy
consumption accounting. In August the Shandong Provincial Department of Industry and Information Technology issued
the Guidelines for the Cultivation and Development of New Quality Productive Forces in the Paper and Biomass Refining
Industrial Chain in Shandong (2025 Edition) which covered the entire upstream and downstream industrial chain including
pulping biomass refining papermaking and paper products and provided development guidelines on independent
innovation digital and intelligent transformation brand marketing and green safety to help enterprises foster new quality
productive forces. In November the Ministry of Emergency Management issued the industry standard of AQ7022-2025
Specification for Pulp and Paper Safety. In addition to outlining the general requirements for safety protection and safety
signage it also provided detailed provisions for critical areas such as specialised equipment and confined spaces as well
as safety management protocols spanning from raw material storage to wastewater treatment. This standard will officially
come into effect on 1 November 2026.Official data from the National Bureau of Statistics indicates that in 2025 China’s paper and paper products industry
generated a revenue of RMB1418.67 billion representing a year-on-year decrease of 2.6%. Operating costs amounted
to RMB1246.37 billion representing a year-on-year decrease of 2.8% while total profits amounted to RMB44.30 billion
representing a year-on-year decrease of 13.6%. The export delivery value was RMB80.72 billion surpassing the RMB80
billion mark for the first time. Overall the paper industry is currently in a development phase of cyclical bottoming and
marginal recovery and the imbalance between supply and demand has yet to be fundamentally resolved. On the supply
side as new production capacity was gradually put into operation the total supply continued to grow. In 2025 the national
output of machine-made paper and paperboard reached 164.054 million tonnes representing a year-on-year increase
of 2.9%. On the demand side the industry is highly correlated with the wider economy retail sales of consumer goods
packaging and printing as well as publishing and education. Influenced by the trends in these related sectors the overall
demand for cultural paper white cardboard and coated paper remained weak keeping product prices under pressure. On
the cost side the price of wood pulp the primary raw material for the paper industry was impacted by multiple factors
including supply and demand fundamentals and tariff policy conflicts. In the first half of 2025 prices experienced a brief
surge followed by a rapid decline. In the second half of the year the price trends for softwood and hardwood pulp diverged
where softwood pulp continued to fluctuate at low levels while hardwood pulp stopped falling and rebounded from low
to high. Overall wood pulp prices in 2025 saw a year-on-year decrease which partially alleviated the cost pressure on
enterprises and restored profit margins.
2025 ANNUAL REPORT 17IV Management Discussion and Analysis
II. Industry overview of the Company during the reporting period (Continued)
Looking ahead as supply-side structural reforms deepen the domestic circulation system improves and domestic demand
gradually recovers coupled with the ongoing impact of policies aimed at curbing “involution” and standardising orderly
competition the supply and demand dynamics in the paper industry will continue to improve and the industry’s overallbusiness atmosphere is expected to gradually rebound. Against the backdrop of the deepening implementation of the “dualcarbon” strategic goals the industry’s green and low-carbon transition is becoming more profound and concrete. Low-
carbon practices energy conservation and recycling will become standard requirements for industry development. Outdated
production capacity from small and medium-sized enterprises will be orderly phased out further increasing industry
concentration. Competitive advantages will increasingly shift toward leading enterprises equipped with complete industrial
chains outstanding technological capabilities and top-tier environmental standards. Meanwhile as China accelerates the
cultivation and development of new quality productive forces the pace of digital and intelligent transformation within the
paper industry will continue to speed up. The construction of smart factories and the level of digitalisation and intelligence
across the entire value chain will steadily improve. Technological empowerment will inject new momentum into the industrydriving cost reductions efficiency gains and quality upgrades. Going forward the Company will closely align with the “One-Two-Five” strategic development plan focusing on its principal activities of pulp production and papermaking. It will also
continuously strengthen its core competitiveness actively seize structural development opportunities within the industry and
adhere to a steady business philosophy in a bid to drive the enterprise towards high-quality and sustainable development.III. Analysis of core competitiveness
After more than 60 years of innovative development the Company has created a strong brand influence and cultivated
a solid comprehensive competitiveness. It promotes product upgrades enhances R&D strength and improves core
competitiveness by creating competitive advantages in an industry chain featuring pulp and paper integration. The details of
the core competitiveness of the Company are as follows:
1. Advantages of pulp and paper integration
The Company has unwaveringly implemented a pulp and paper integration strategy. At present its major production
bases located in Shouguang Zhanjiang and Huanggang are equipped with chemical pulp production lines. It is the
first modern large-scale papermaking company that basically realises wood pulp self-sufficiency in China. A complete
supply chain not only creates cost advantage for the Company but also safeguards the safety stability and quality of
upstream raw materials and renders strong support for the Company to maintain its long-term competitiveness.
2. Scale advantages
The paper industry is a typical capital-intensive and technology-intensive industry that follows the laws of economies
of scale. The Company’s large-scale production bases can be found in the major markets in Southern Central
Northern and Northeast China where reasonable production scale creates the marginal cost advantage. Meanwhile
by leveraging the scale advantages the Company has built an international logistics centre and railway dedicated
lines and docks and constructed a comprehensive logistics service platform covering container shipping bonded
warehousing transfer and storage at stations and terminals realising the improvement of logistics efficiency and the
stability of logistics costs.
3. Product advantages
The Company is an enterprise that offers the widest and most complete product range in the paper industry in China.The product series includes culture paper white cardboard coated paper copy paper household paper thermal
paper etc. The Company has attached great importance to technology R&D. By introducing the most advanced
pulping and papermaking technology and equipment in the world it persists in technological innovation and work
process optimisation so as to help improve product quality and structure upgrade continuously improve the brand
value of Chenming and enhance brand benefits.
18 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
III. Analysis of core competitiveness (Continued)
4. Industry layout advantages
Closely centring on the pulp and paper integration strategy the Company has integrated resources and established
its production bases in the core target market to promote the coordinated development of all regions. Currently the
Company adopts the market-oriented approach and has production bases in Shandong Guangdong Hubei Jiangxi
Jilin and other places. With all products sold at close distances the Company substantially reduces transportation
costs while improving service efficiency achieving a “win-win” between the Company and its users.
5. Advantages of technical equipment
The Company highly values the introduction and upgrades of technical equipment actively pushes equipment and
technology upgrades forward and boasts the largest and most advanced pulping and papermaking production
line in the world. The Company’s major production equipment has been imported from internationally renowned
manufacturers including Metso and Valmet of Finland Voith of Germany Andritz of Austria etc. and reached the
advanced international level thus ensuring production efficiency and product quality.
6. Advantages in research and innovation
The Company has scientific research institutions including a national enterprise technology centre a post-doctoral
working station a collaborative innovation centre for cleaner production and refinery of light industry bio-based
products and Shandong Pulp and Papermaking Engineering Lab. At the same time the Company actively carries
out in-depth industry-university-research cooperation with prestigious domestic universities and research institutes
continuously improves technical innovation capabilities and scientific R&D levels and develops a series of new
products with high technology contents and high added value as well as proprietary technologies. As at the end of
the reporting period the Company had obtained over 490 national patents including 45 invention patents 7 national
new products 16 scientific and technological progress awards above the provincial level 5 national scientific and
technological projects and 76 Shandong provincial technological innovation projects. The Company took the lead in
obtaining the ISO9001 quality system certification the ISO14001 environmental protection system certification and
the FSC-COC international forest system certification among domestic peers.
7. Advantages in environmental governance capacity
The Company has actively upheld the concept of “lucid waters and lush mountains are invaluable assets” adhered to
the development idea of “placing green development and environmental protection as its priority” always regarded
environmental protection as the “life project” clung to the green development model of clean production and resource
recycling and earnestly shouldered the corporate responsibility for environmental protection. In recent years the
Company and its subsidiaries have invested more than RMB8 billion in total in environmental protection and have
constructed the pollution treatment facilities including the alkali recovery system reclaimed water treatment system
reclaimed water reuse system white water recovery system and black liquor comprehensive utilisation system. The
Company adopts the world’s most advanced “ultrafiltration membrane + reverse osmosis membrane” technology
to complete the reclaimed water recycling membrane treatment project which is the largest reclaimed water reuse
project in the domestic paper industry. The reclaimed water recycle rate attains the industry-leading level. Meanwhile
in response to the “dual carbon” policy the Company actively introduces photovoltaic power generation and biomass
power generation continuously optimises the energy structure and improves the level of low-carbon production.
2025 ANNUAL REPORT 19IV Management Discussion and Analysis
IV. Analysis of principal operations
1. Overview
In 2025 the Company’s Huanggang production base was in normal operation while the production bases in
Shouguang Jiangxi and Jilin were largely inactive during the first three quarters and the Zhanjiang production base
remained idle throughout the year. Shutdown losses and maintenance expenses incurred for the period increased
year-on-year and the production and sales of machine-made paper experienced a significant year-on-year decrease
which affected both revenue and profit. Meanwhile due to the operational halts the Company made impairment
provisions for certain assets which further affected profit for the current period. Furthermore to focus on its principal
activities of pulp production and papermaking the Company divested all assets related to its financial leasing
business in the fourth quarter of 2025 and had since ceased all financial leasing activities. In accordance with the
relevant requirements of Accounting Standards for Business Enterprises the Company conducted impairment tests
on the credit profiles of its financial leasing customers during the reporting period and made bad debt provisions
for certain financial leasing activities. During the reporting period the Company completed machine-made paper
production of 1.09 million tonnes and sales volume of 1.00 million tonnes and realised revenue of RMB6187 million
and net profit attributable to shareholders of the Company of a loss of RMB8296 million. With robust support from
Party committees and governments at all levels and financial institutions the Company proactively implemented
multiple measures to enhance operational efficiency and management level centred around end-to-end cost
reduction and efficiency enhancement as well as all-round new product development. Firstly the steady progress
in resuming full operation and production led to a significant increase in equipment operation rate and capacity
utilisation rate of its restarted production lines as compared to the prior year. Secondly optimised procurement
procedures and enhanced workflow management significantly lowered raw material sourcing and logistics costs.Thirdly the Company enhanced regular communication with financial institutions to secure interest rate reductions
and loan extensions resulting in a decrease of 16.87% in finance expenses as compared to the corresponding period
of the prior year.
20 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
2. Revenue and cost
(1) Components of revenue
Unit: RMB
20252024
Amount % of revenue Amount % of revenue Increase/decrease
Total revenue 6186550243.97 100% 22729474852.76 100% -72.78%
By industry
Machine-made paper 4209486448.14 68.04% 20179848508.57 88.79% -79.14%
Chemical pulp 1539769602.57 24.89% 1519262130.75 6.68% 1.35%
Electricity and steam 173515289.61 2.80% 216763239.54 0.95% -19.95%
Hotel and property rentals 146618394.97 2.37% 193494961.95 0.85% -24.23%
Construction materials 2695946.74 0.04% 127783427.12 0.56% -97.89%
Chemicals 104714.23 0.00% 88627247.45 0.39% -99.88%
Others 114359847.71 1.86% 403695337.38 1.78% -71.67%
By product
Coated paper 1377624572.84 22.27% 3758928113.95 16.54% -63.35%
Duplex press paper 943510985.22 15.25% 6117888314.70 26.92% -84.58%
Electrostatic paper 557850204.85 9.02% 3547162310.53 15.61% -84.27%
White cardboard 514738628.42 8.32% 4553056974.25 20.03% -88.69%
Anti-sticking raw paper 468615431.58 7.57% 909489122.98 4.00% -48.47%
Thermal paper 111375090.91 1.80% 432929902.58 1.90% -74.27%
Other machine-made paper 235771534.32 3.81% 860393769.58 3.79% -72.60%
Chemical pulp 1539769602.57 24.89% 1519262130.75 6.68% 1.35%
Electricity and steam 173515289.61 2.80% 216763239.54 0.95% -19.95%
Hotel and property rentals 146618394.97 2.37% 193494961.95 0.85% -24.23%
Construction materials 2695946.74 0.04% 127783427.12 0.56% -97.89%
Chemicals 104714.23 0.00% 88627247.45 0.39% -99.88%
Others 114359847.71 1.86% 403695337.38 1.78% -71.67%
By geographical segment
Mainland China 5794691698.31 93.67% 18082061604.77 79.55% -67.95%
Other countries and regions 391858545.66 6.33% 4647413247.99 20.45% -91.57%
By sales model
Distribution 4250770191.32 68.71% 16965016680.69 74.64% -74.94%
Direct sales 1935780052.65 31.29% 5764458172.07 25.36% -66.42%
2025 ANNUAL REPORT 21IV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
2. Revenue and cost (Continued)
(2) Industries products regions and sales model accounting for over 10% of revenue or operating profit of the
Company
√ Applicable □Not applicable
Unit: RMB
Increase/ Increase/
Increase/ decrease of decrease of
decrease of operating gross profit
revenue as costs as margin as
compared compared compared
to the to the to the
corresponding corresponding corresponding
Gross period of the period of the period of
Revenue Operating costs profit margin prior year prior year the prior year
By industry
Machine-made paper 4209486448.14 6476422202.79 -53.85% -79.14% -67.41% 55.38%
Chemical pulp 1539769602.57 1529284223.52 0.68% 1.35% 11.61% -9.13%
By product
Coated paper 1377624572.84 1352622852.37 1.81% -63.35% -58.55% -11.37%
Duplex press paper 943510985.22 1029636395.75 -9.13% -84.58% -82.15% -14.87%
By geographical segment
Mainland China 5794691698.31 8145540277.91 -40.57% -67.95% -53.49% -43.72%
By sales model
Distribution 4250770191.32 5919099434.30 -39.25% -74.94% -64.50% -40.96%
Direct sales 1935780052.65 2683258653.11 -38.61% -66.42% -50.94% -43.73%
Under the circumstances that the statistics specification for the Company’s principal operations data
experienced adjustment in the reporting period the principal activity data upon adjustment of the statistics
specification as at the end of the reporting period in the latest year
□ Applicable √ Not applicable
22 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
2. Revenue and cost (Continued)
(3) Whether revenue from sales in kind is higher than revenue from services
√ Yes □ No
Increase/
By industry Item Unit 2024 2023 decrease
Sales ’0000 tonnes 100 447 -77.63%
Machine-made paper Production ’0000 tonnes 109 427 -74.47%
Inventories ’0000 tonnes 25 16 56.25%
Explanation of why the related data varied by more than 30%
√ Applicable □ Not applicable
* Sales decreased by 77.63% as compared to the corresponding period of the prior year and production
decreased by 74.47% as compared to the corresponding period of the prior year mainly due to a year-on-
year decline in the production and sales of machine-made paper with the production bases in Shouguang
Jiangxi and Jilin being largely inactive during the first three quarters and the Zhanjiang production base
remaining idle throughout the year.* Inventories increased by 56.25% as compared to the corresponding period of the prior year mainly due to
an increase of inventories as at the end of the reporting period as compared to the beginning of the period
as a result of the production bases of machine-made paper remaining idle since November 2024 and the
gradual resumption of operation and production of the major production bases since September 2025.
(4) Performance of material sales contracts and material procurement contracts of the Company during the
reporting period
□ Applicable √ Not applicable
2025 ANNUAL REPORT 23IV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
2. Revenue and cost (Continued)
(5) Composition of operating costs
By industry
Unit: RMB
20252024
% of % of
operating operating Increase/
By industry Item Amount costs Amount costs decrease
Machine-made paper Raw materials 3823682305.29 59.04% 11828109710.98 59.53% -67.67%
Chemicals 867160505.36 13.39% 2583423761.59 13.00% -66.43%
Energy and power 761130656.78 11.75% 2386038849.39 12.01% -68.10%
Depreciation 210635470.35 3.25% 960184014.41 4.83% -78.06%
Freight 188144736.90 2.91% 686460621.13 3.55% -72.59%
Labour costs 83085016.02 1.28% 291717645.90 1.47% -71.52%
Other production costs 542583512.09 8.38% 1134578787.95 5.61% -52.18%
Subtotal 6476422202.79 100.00% 19870513391.35 100.00% -67.41%
Chemical pulp Raw materials 955058213.61 62.45% 958370750.86 69.94% -0.35%
Chemicals 339322966.98 22.19% 241722332.15 17.64% 40.38%
Accumulated depreciation 68699128.67 4.49% 52876991.99 3.86% 29.92%
Energy and power 45125773.62 2.95% 38763133.20 2.83% 16.41%
Labour costs 13002400.35 0.85% 9468190.03 0.69% 37.33%
Freight 1089395.18 0.07%
Other production costs 106986345.11 7.00% 68993613.36 5.04% 55.07%
Subtotal 1529284223.52 100.00% 1370195011.59 100.00% 11.61%
Electricity and steam Raw materials 146063346.79 63.64% 157175024.00 60.54% -7.07%
Depreciation 31027890.09 13.52% 34156605.23 13.16% -9.16%
Labour costs 11982832.74 5.22% 15489066.88 5.97% -22.64%
Energy and power 5002814.87 2.18% 4724477.71 1.82% 5.89%
Chemicals 307715.40 0.13% 2636036.76 1.02% -88.33%
Other production costs 35146830.18 15.31% 45419675.79 17.49% -22.62%
Subtotal 229531430.07 100.00% 259600886.37 100.00% -11.58%
24 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
2. Revenue and cost (Continued)
(6) Change of scope of consolidation during the reporting period
√ Yes □ No
During the year 3 subsidiaries were newly established namely Zhanjiang Chenming Paper Co. Ltd. Chenming
International Trade Import and Export Co. Limited and Shanghai Hongtai Tengda Industrial Development Co.Ltd. A company was included in the scope of consolidation namely Weifang Chenchuang Equity Investment
Fund Partnership (Limited Partnership). 7 subsidiaries were disposed of namely Shouguang Wei Yuan Logistics
Company Limited Shandong Shengming Corporate Management Co. Ltd. Qingdao Chenming Paper
Products Sales Co. Ltd. Shanghai Chenxinming Industrial Development Co. Ltd. Chenming Management and
Consulting (Shandong) Co. Ltd. Shandong Dingkun Asset Management Partnership (Limited Partnership) and
Nanjing Chenming Culture Communication Co. Ltd. 2 subsidiaries were deregistered namely Zhanjiang Meilun
Pulp & Paper Co. Ltd. and Chenming Paper United States Co. Ltd.
(7) Significant change in or adjustment of the businesses products or services of the Company during the
reporting period
□ Applicable √ Not applicable
(8) Sales to major customers and major suppliers
Sales to major customers of the Company
Total sales to the top 5 customers (RMB) 1731623559.35
Total sales to the top 5 customers as a percentage of the total sales for the year 27.98%
Sales to the top 5 customers who are related parties as a percentage of
the total sales for the year 0
Information on the top 5 customers of the Company
As a percentage of the
No. Name of customer Sales (RMB) total sales for the year
1 Customer 1 478343519.44 7.73%
2 Customer 2 447595367.98 7.23%
3 Customer 3 339490943.58 5.49%
4 Customer 4 280420691.98 4.53%
5 Customer 5 185773036.37 3.00%
Total － 1731623559.35 27.98%
Other explanations of the major customers
□ Applicable √ Not applicable
2025 ANNUAL REPORT 25IV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
2. Revenue and cost (Continued)
(8) Sales to major customers and major suppliers (Continued)
Major suppliers of the Company
Total purchases from the top 5 suppliers (RMB) 3470871006.33
Total purchases from the top 5 suppliers as a percentage of the total purchases for
the year 40.35%
Total purchases from the top 5 suppliers who are related parties as a percentage of
the total purchases for the year 0
Information on top 5 suppliers of the Company
As a percentage of the total
No. Name of supplier Purchases (RMB) purchases for the year
1 Customer 1 2576893498.80 29.96%
2 Customer 2 272400654.79 3.17%
3 Customer 3 240293358.49 2.79%
4 Customer 4 218581777.53 2.54%
5 Customer 5 162701716.72 1.89%
Total － 3470871006.33 40.35%
Other explanations of the major suppliers
□ Applicable √ Not applicable
Income from the trading business of the Company accounted for more than 10% of revenue during the
reporting period
□ Applicable √ Not applicable
26 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
3. Expenses
Unit: RMB
Increase/
2025 2024 decrease Reasons for material changes
Selling and distribution expenses 104321369.48 241171109.12 -56.74% Wages travel expenses and
business entertainment expenses
of sales personnel decreased
year on year during the reporting
period.General and administrative expenses 515067347.17 751168974.00 -31.43% Business entertainment expenses
and legal costs decreased year on
year during the reporting period.Finance expenses 1635994864.67 1967982467.34 -16.87% Interest expenses and service
fees of the Company decreased
year on year during the reporting
period.Research and development expenses 93261011.49 1080331754.42 -91.37% Research and development
expenses decreased year on
year during the reporting period
due to the shutdown of the major
production bases of the Company
during the first three quarters.
2025 ANNUAL REPORT 27IV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
4. R&D expenditure
√ Applicable □ Not applicable
Objectives to be Expected impact on the future
Name of major R&D project Project purpose Project progress achieved development of the Company
Development of double sizing technology Enhancing product Pilot testing phase To become Improving product quality lowering
for anti-sticking raw paper functionality or domestically leading production costs and improving
improving performance the Company’s economic
benefits.Development of natural white matte coated Enhancing product Trial production To become Improving customer satisfaction with
paper for art books functionality or phase domestically leading products and increasing market
improving performance share.Development of special coated paper for Enhancing product Trial production To become Improving customer satisfaction with
packaging boxes functionality or phase domestically leading products and increasing market
improving performance share.Research on silica sol retention technology Enhancing product Small testing stage To become Improving product quality lowering
in the wet-end system of cultural paper functionality or domestically leading production costs and improving
improving performance the Company’s economic
benefits.Development of 100-micron thick thermal Enhancing product Pilot testing phase To become Improving customer satisfaction with
paper functionality or domestically leading products and increasing market
improving performance share.Development of die-cut embossed paper Developing new products Pilot testing phase To become Improving customer satisfaction with
domestically leading products and increasing market
share.Development of technology for high-end Developing new products Pilot testing phase To become Improving customer satisfaction with
kitchen paper domestically leading products and increasing market
share.Research on paper technology using high- Enhancing product Trial production To become Improving product quality lowering
substitution cationic starch functionality or phase domestically leading production costs and improving
improving performance the Company’s economic
benefits.Research on the strengthening effect of Enhancing product Trial production To become Improving product quality lowering
amphoteric dry-strength agents on functionality or phase domestically leading production costs and improving
electrostatic copy paper improving performance the Company’s economic
benefits.Redevelopment of ECF bleaching Enhancing product Pilot testing phase To become Improving product quality lowering
technology for hardwood kraft pulp functionality or domestically leading production costs and improving
improving performance the Company’s economic
benefits.
28 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
4. R&D expenditure (Continued)
R&D personnel of the Company
Percentage
2025 2024 of change
R&D headcount 885 1310 -32.44%
Ratio of R&D personnel 9.84% 13.65% -3.81%
Academic background of R&D personnel
Bachelor’s degree 106 143 -25.87%
Master’s degree 4 3 33.33%
Age composition of R&D personnel
Under 30 148 230 -35.65%
30~40 years old 450 824 -45.39%
R&D expenditure of the Company
Percentage
2025 2024 of change
R&D expenditure (RMB) 93261011.49 1080331754.42 -91.37%
R&D expenditure to revenue 1.51% 4.75% -3.24%
Amount of R&D expenditure capitalised (RMB) 0.00 0.00 0.00
Capitalised R&D expenditure to R&D expenditure 0.00% 0.00% 0.00%
Reasons for and effects of significant changes in the composition of the Company’s R&D personnel
√ Applicable □ Not applicable
In 2025 certain machines were shut down for maintenance and gradually resumed operation in September resulting
in a relatively short operating period. During this period the Company prioritised its fund allocation towards ensuring
resumed production and stable operation which consequently scaled back R&D activities. As a result the number
of personnel involved in R&D temporarily decreased leading to a corresponding shift in the composition of the R&D
team. As the Company’s production bases resume full operation and production and production and operation
resume in an orderly manner the Company will continue to focus on its principal activities by steadily increasing its
R&D expenditure and efforts to strengthen its technological innovation capabilities. The temporary change in the R&D
team’s composition was due to the short-term arrangement in production and operation and will not have any material
adverse impact on the Company’s overall business development technological R&D or long-term strategic goals.Reasons for the significant change in total R&D expenditure to revenue
□ Applicable √ Not applicable
Reasons for and reasonableness of the significant change in the capitalisation rate of R&D expenditure
□ Applicable √ Not applicable
2025 ANNUAL REPORT 29IV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
5. Cash flows
Unit: RMB
Increase/
Item 2025 2024 decrease
Subtotal of cash inflows from operating activities 6798057998.59 23774221275.09 -71.41%
Subtotal of cash outflows from operating activities 6554849590.88 21151029610.49 -69.01%
Net cash flows from operating activities 243208407.71 2623191664.60 -90.73%
Subtotal of cash inflows from investing activities 378271456.18 535245822.29 -29.33%
Subtotal of cash outflows from investing activities 512169806.58 69444183.34 637.53%
Net cash flows from investing activities -133898350.40 465801638.95 -128.75%
Subtotal of cash inflows from financing activities 24833885112.43 34062925816.76 -27.09%
Subtotal of cash outflows from financing activities 24955949742.99 37787846793.19 -33.96%
Net cash flows from financing activities -122064630.56 -3724920976.43 96.72%
Net increase in cash and cash equivalents -14646363.97 -612290496.30 97.61%
Explanation of the main effects of material changes in the relevant data year on year
√ Applicable □ Not applicable
(1) Net cash flows from operating activities decreased by 90.73% as compared to the corresponding period of
the prior year mainly due to the decrease in sales revenue as a result of the decrease in sales volume of the
machine-made paper as some production based were shut down during the reporting period.
(2) Net cash flows from investing activities decreased by 128.75% as compared to the corresponding period of the
prior year mainly due to the repurchase of a portion of equity interest in a subsidiary from a minority shareholder
during the reporting period.
(3) Net cash flows from financing activities increased by 96.72% as compared to the corresponding period of
the prior year mainly due to interest rate reductions or loan extensions provided by major financial institutions
various measures taken through multiple channels to mitigate debt risks during the reporting period.Explanation on reasons leading to the material difference between net cash flows from operating activities during the
reporting period and net profit for the year
√ Applicable □ Not applicable
Net profit decreased significantly mainly due to credit impairment losses loss on impairment of assets and investment
loss during the year. At the same time receipts from sales of the Company during the year were higher than raw
material costs and various expenses leading to a material difference between the cash flow from operating activities
and the net profit during the year.
30 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
V. Analysis of non-principal operations
? Applicable □ Not applicable
Unit: RMB
As a percentage
Amount of total profit Reason Sustainable or not
Other income 97846053.94 -1.06% Receipt of government grants Including RMB103 million the annual
related to daily business activities amortisation amount of government
and profit or loss from debt grants received in prior periods and
restructuring sustainable in nature.Investment income -1548823477.26 16.83% Recognition of external investment No
income and dividends as well as
income from equity disposal and
derecognition of financial assets
during the reporting period
Gain on change in fair value -148726915.03 1.62% Fluctuations of fair values of the No
shares of China Bohai Bank as
well as forestry assets and other
non-current financial assets
Credit impairment loss -2095453978.40 22.78% Bad debt provisions for receivables No
Impairment of assets -556179803.08 6.05% Bad debt provisions for non-current No
assets
Non-operating expenses 60465612.20 -0.66% Various expenses not directly related No
to the Company’s day-to-day
production and operation
VI. Analysis of assets and liabilities
1. Material changes of asset items
Unit: RMB
As at the end of 2025 As at the beginning of 2025
As a percentage As a percentage Percentage
Amount of total assets Amount of total assets change Description
Monetary funds 210398721.95 0.42% 5909879812.18 9.31% -8.89% Mainly due to a decrease in deposits as at the
end of the reporting period.Accounts 742744136.20 1.47% 1384290313.70 2.18% -0.71% Mainly due to a decrease in receivables from
receivable customers and the divestment of the leasing
company as at the end of the reporting period.Other receivables 302065195.40 0.60% 1084651870.94 1.71% -1.11% Mainly due to a decrease in payments with
external entities and the divestment of the
leasing company as at the end of the reporting
period.Inventories 3316198760.70 6.55% 2835388802.15 4.46% 2.09% Mainly due to an increase of goods in stock and
raw materials as at the end of the reporting
period.
2025 ANNUAL REPORT 31IV Management Discussion and Analysis
VI. Analysis of assets and liabilities (Continued)
1. Material changes of asset items (Continued)
As at the end of 2025 As at the beginning of 2025
As a percentage As a percentage Percentage
Amount of total assets Amount of total assets change Description
Non-current assets 194204719.66 0.38% 2840365519.48 4.47% -4.09% Mainly due to the divestment of the leasing
due within one company as at the end of the reporting period.year
Long-term 2338612032.26 4.62% 280291802.55 0.44% 4.18% Mainly due to an increase of the amount related
receivables to the equity and debt transfer of the leasing
company as at the end of the reporting period.Bills payable 1423918112.99 2.24% -2.24% Mainly due to the reclassification of all overdue
bills to accounts payable other payables and
short-term borrowings as at the end of the
reporting period.Accounts payable 8608727052.92 17.01% 7708967406.47 12.14% 4.87% Mainly due to an increase of accounts payable
to suppliers and the reclassification of some
overdue bills to accounts payable as at the end
of the reporting period.Other payables 4772023040.44 9.43% 2896409953.94 4.56% 4.87% Mainly due to an increase in payments with
external entities as at the end of the reporting
period.Non-current 2313171903.83 4.57% 1577936964.14 2.48% 2.09% Mainly due to an increase of financial lease
liabilities due payments due within one year as at the end of
within one year the reporting period.Other current 1539511608.24 3.04% 2680562600.58 4.22% -1.18% Mainly due to extensions of overdue financial
liabilities leasing borrowing as at the end of the reporting
period.Long-term 5576510739.72 11.02% 4763662194.24 7.50% 3.52% Mainly due to extensions of long-term borrowings
borrowings as at the end of the reporting period.Long-term 1685368809.50 3.33% 774965008.29 1.22% 2.11% Mainly due to extensions of overdue financial
payables leasing borrowing as at the end of the reporting
period.A higher proportion of overseas assets
□ Applicable √ Not applicable
32 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
VI. Analysis of assets and liabilities (Continued)
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB
Profit or loss Cumulative
from change fair value Impairment Amount Amount
in fair value change provided acquired disposed
during the charged to during the during the of during
Item Opening balance period equity period period the period Other changes Closing balance
Financial assets
1. Held-for-trading financial assets
(excluding derivative financial assets) 37259325.70 2419619.63 -157054799.71 -887823.59 38791121.74
2. Other non-current financial assets 751030454.68 -16120945.31 14100780.55 211417.43 -406763465.62 327934626.32
3. Biological assets measured at fair value 1256379773.85 -135025589.35 -251676543.49 49226395.50 107499084.97 1063081495.03
Total 2044669554.23 -148726915.03 -394630562.65 49226395.50 107710502.40 -407651289.21 1429807243.09
Whether there were any material changes in the measurement attributes of major assets of the Company during the
reporting period
□ Yes √ No
3. Restriction on asset rights as at the end of the reporting period
Unit: RMB
As at the end of the period As at the beginning of the period
Type of Type of
Item Book balance Book value restriction Restriction Book balance Book value restriction Restriction
Fixed assets 39673397581.16 21032970345.50 Mortgage As collateral for bank borrowings 34375256421.29 20001586415.43 Mortgage As collateral for bank borrowings
and long-term payables and long-term payables
Investment properties 6897297786.90 5357575638.82 Mortgage As collateral for bank borrowings 6742657317.44 5433525500.09 Mortgage As collateral for bank borrowings
Intangible assets 1842713402.02 1308852997.82 Mortgage As collateral for bank borrowings 1789243785.12 1312981381.52 Mortgage As collateral for bank borrowings
and long-term payables and long-term payables
Long-term equity investments 1584342692.88 1578247974.28 Freeze Pledge and freeze of guarantee 1549103158.31 1549103158.31 Freeze Freeze due to being sued for
for debts arrears
Inventories 764268342.37 741627115.10 Mortgage and As collateral for contract 120195864.99 103566055.40 Seizure by Seizure due to being sued for
seizure by performance and seizure due court arrears
court to being sued for arrears
Monetary funds 63728850.28 63728850.28 Pledge and As deposits for bank acceptance 5728747806.12 5728747806.12 Pledge and As deposits for bank acceptance
freeze bills letter of credit and freeze bills letter of credit and
loans deposit reserves or loans deposit reserves or
frozen accounts and frozen frozen accounts and frozen
by litigation etc. by litigation etc.Accounts receivable 207017962.56 206147426.74 Pledge As collateral for borrowings
Total 50825748655.67 30083002921.80 50512222315.83 34335657743.61
2025 ANNUAL REPORT 33IV Management Discussion and Analysis
VII. Analysis of investments
1. Overview
√ Applicable □ Not applicable
Investments during the
corresponding period of
Investments during the reporting period (RMB) the prior year (RMB) Change
646248442.8083000000.00678.61%
2. Material equity investments acquired during the reporting period
√ Applicable □ Not applicable
Unit: RMB
Profit or
Progress as loss from Date of
Form of Investment Source of Period of at the date of Estimated investment for Involvement disclosure Disclosure
Name of investee Principal activities investment amount Shareholding fund Partner(s) investment Product type balance sheet return the period in lawsuit if any Index if any
Weifang Chenchuang Investment activities Merger and 512000000.00 99.67% Self-owned Subsidiary Long-term Investment Completed N/A -123907.54 No N/A N/A
Equity Investment using self-own acquisition funds
Fund Partnership funds
(Limited Partnership)
Shandong Chenming Sale of paper and Capital 98500000.00 100.00% Self-owned Subsidiary Long-term Trading Completed N/A -61891406.17 No N/A N/A
Paper Sales Co. Ltd. pulp increase funds
Shouguang Chenming Production of Merger and 35748442.80 100.00% Self-owned Subsidiary Long-term Manufacturing Completed N/A -79859825.92 No N/A N/A
Art Paper Co. Ltd. machine-made acquisition funds
paper
Total － － 646248442.80 － － － － － － -141875139.63 － － －
34 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
VII. Analysis of investments (Continued)
3. Material non-equity investments in progress during the reporting period
□ Applicable √ Not applicable
4. Financial asset investment
(1) Security investments
√ Applicable □ Not applicable
Unit: RMB
Book value
Profit or loss Accumulated Amount Amount as at the
Accounting Book value at from changes changes in fair acquired disposed of Profit or loss end of the
Abbreviation of Initial investment measurement the beginning in fair value value included during the during the during the reporting Source of
Type of security Stock code stock name cost model of the period for the period in equity period period reporting period period Accounting item fund
Domestic and 09668 China Bohai Bank 195684817.15 Measured at 37259325.70 2419619.63 -157054799.71 1531796.04 38791121.74 Held-for-trading Self-owned
foreign shares fair value financial funds
assets
Total 195684817.15 － 37259325.70 2419619.63 -157054799.71 1531796.04 38791121.74 － －
Disclosure date of announcement in relation to the 20 June 2020
consideration and approval of securities investments
by the Board
Disclosure date of announcement in relation to the N/A
consideration and approval of securities investments
by the general meeting (if any)
(2) Derivative investments
□ Applicable √ Not applicable
The Company did not have any derivative investments during the reporting period.
2025 ANNUAL REPORT 35IV Management Discussion and Analysis
VIII. Disposal of material assets and equity interest
1. Disposal of material assets
√ Applicable □ Not applicable
Net profit
contribution to Net profit
the Company contribution Carried out
from the to the Relevant on schedule
beginning of Company Relationship with Relevant creditors’ or not if not
the period up on asset Pricing counterparty(ies) asset rights and the reasons
Transaction to the asset Effect of disposal as a basis of Related party (applicable to title fully debts fully and measures
Disposal consideration disposal date disposal on percentage of disposal transaction related party transferred transferred taken by the Disclosure Disclosure
Counterparty(ies) Assets disposed of date (RMB’0000) (RMB’0000) the Company total net profit of assets or not transactions) or not or not Company date index
Zhejiang Exheng 22 properties in June 2025 8591.60 -6514.33 Facilitating the Company 0.73% Market No N/A Yes Yes Yes N/A N/A
Real Estate Fatum Apartment to integrate resources price
Co. Ltd. optimising its asset
structure concentrating
its strengths focusing
on core business and
improving quality and
efficiency.
2. Disposal of material equity interest
√ Applicable □ Not applicable
Net profit
contribution
to the Net profit
Company contribution
from the to the Carried out
beginning of Company on schedule
the period on equity Pricing Relevant or not if not
up to the disposal as a basis of Related Relationship equity title the reasons
Transaction equity interest Effect of percentage disposal party with fully and measures
Equity interest Disposal consideration disposal date disposal on of total net of equity transaction counterparty transferred taken by the Disclosure
Counterparty(ies) disposed of date (RMB’0000) (RMB’0000) the Company profit interest or not (ies) or not Company date Disclosure index
Shouguang Shengjia Shandong December 107339.69 -290434.53 Facilitating the Company 0.43% Appraised No N/A No Yes 13 December http://www.cninfo.com.cn
Investment Co. Shengming 2025 to integrate resources value 2025
Ltd. Corporate optimising its asset
Management structure concentrating
Co. Ltd. and its strengths focusing
subsidiaries on core business and
improving quality and
efficiency.
3. Material non-equity investments during the reporting period
□ Applicable √ Not applicable
36 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
IX. Analysis of major subsidiaries and investees
√ Applicable □ Not applicable
Major subsidiaries and investees accounting for over 10% of the net profit of the Company
Unit: RMB
Name of company Type of company Principal activities Registered capital Total assets Net assets Revenue Operating profit Net profit
Zhanjiang Chenming Subsidiary Production and sale of duplex 6913572423.00 18897690900.81 5477587143.80 166846503.02 -2308273067.37 -2122557877.02
Pulp & Paper Co. press paper electrostatic
Ltd. paper and white cardboard
etc.Shouguang Meilun Subsidiary Production and sale of coated 4801045519.00 14904551168.47 6636211615.95 3431543810.39 -1443537781.03 -1093225282.26
Paper Co. Ltd. paper culture paper
household paper and
chemical pulp
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable □ Not applicable
Methods to acquire and dispose
of subsidiaries during the Impact on overall production and
Name of company reporting period operations and results
Zhanjiang Chenming Paper Co. Ltd. Newly established Net profit decreased by RMB509 million
Chenming International Trade Import and Export Newly established Effect on net profit was nil
Co. Limited
Shanghai Hongtai Tengda Industrial Development Newly established Effect on net profit was nil
Co. Ltd.Weifang Chenchuang Equity Investment Fund Merger and acquisition Net profit decreased by RMB123900
Partnership (Limited Partnership)
Zhanjiang Meilun Pulp & Paper Co. Ltd. Deregistration Net profit decreased by RMB98.7536
million
Chenming Paper United States Co. Ltd. Deregistration Net profit decreased by RMB40.1269
million
Shouguang Wei Yuan Logistics Company Limited Disposal Net profit decreased by RMB3.7833
million
Shandong Shengming Corporate Management Co. Ltd. Disposal Net profit decreased by RMB2904 million
and subsidiaries
Particulars of major subsidiaries and investees
During the reporting period the production base of Shouguang Meilun was shut down during the first three quarters and the
Zhanjiang base remained idle throughout the year which adversely affected the Company’s overall revenue and profitability.To date all production bases have resumed full operation and production. Moving forward the Company will implement
comprehensive cost reduction and efficiency enhancement optimise its product portfolio improve product quality and step
up market development efforts to further boost corporate profitability.
2025 ANNUAL REPORT 37IV Management Discussion and Analysis
X. Structured entities controlled by the Company
□ Applicable √ Not applicable
XI. Outlook on the future development of the Company
The year 2025 marked the final year of China’s “14th Five-Year Plan” and a year in which Chenming Group fought its
way forward through industry headwinds. Over the past year a combination of industry downturn suspended operations
at production bases and the imposition of other risk warnings left the Company in a severe operational distress. During
this critical time under the strong support from Party committees and governments at all levels and financial institutions
the Company comprehensively strengthened corporate management adjusted the product mix in response to market
conditions and pushed for the resumption of operation and production across its production bases. Meanwhile the
Company also actively engaged with financial institutions to implement interest rate reductions and loan extensions and
stepped up efforts to dispose of non-core assets for the thorough divestiture of assets related to its financial leasing
business to mitigate operational risks. Standing at a new starting point and guided by the leadership of the newly elected
Party committee and the Board the Company has established the “One-Two-Five” strategic development plan. This
plan set one overarching goal of building a top-tier management team and delivering outstanding business performance
pursued through two main strategies of end-to-end cost reduction and efficiency enhancement as well as all-round new
product development together with five areas of focus: strengthening the development of the leadership and management
teams to boost efficiency through managerial excellence; enhancing production capacity and support capabilities to boost
efficiency by optimising and expanding the industrial ecosystem chain; advancing smart technology and digitalisation to
boost efficiency by restructuring the production management system; strengthening reform and innovation capabilities to
boost efficiency by refining and optimising institutional mechanisms; and strengthening brand building and credibility to
boost efficiency through the capital market.(I) Business Plan for 2026
The year 2026 marks the inaugural year of China’s “15th Five-Year Plan” and serves as a pivotal year for the full
execution of Chenming Group’s “One-Two-Five” strategy. Standing at this new starting point the Company will
resolutely implement the “One-Two-Five” strategic development plan. Taking the “Year of Management Innovation”as a key driver the Company will anchor itself to the goal of “building a top-tier management team and deliveringoutstanding business performance” by strengthening team building deepening management reform and innovation
optimising the industrial ecosystem chain restructuring the production management system and cultivating brand
credibility. The Company will go all out to stabilise operations enhance quality and efficiency and secure a decisive
victory in its pursuit of high-quality development.
1. Strengthening the development of the leadership and management teams to boost efficiency through
managerial excellence
Treating employees as the foremost element of management the Company will focus on enhancing the
professional operational and execution capabilities of its leadership and management teams to facilitate
the optimisation of its management team structure. It will establish benchmarks of excellence and organise
management and staff to learn from exceptional teams across its bases and frontline market leaders to elevate
the overall management level. It will also clearly define managerial responsibilities and enforce accountability
to ensure all initiatives are effectively executed. A dynamic management framework has been establishedcharacterised by “merit-based promotion or demotion of executives performance-linked compensation andflexible workforce adjustments”. This includes tenure-based and contract-based management for executives
optimised job rotation policies and grassroots-level assignments for executives to gain hands-on experience.Cross-training and rotation between different bases and departments will be promoted with a last-place
elimination system in place regardless of seniority or personal connections to elevate the comprehensive
competence of the entire workforce. Management leaders are expected to set a positive example through their
actions and open-mindedness fostering a work environment that is cohesive and highly efficient.
38 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
XI. Outlook on the future development of the Company (Continued)
(I) Business Plan for 2026 (Continued)
2. Enhancing production capacity and support capabilities to boost efficiency by optimising and expanding the
industrial ecosystem chainIn 2026 with a focus on “end-to-end cost reduction full-chain efficiency enhancement and all-aroundinnovation” the Company will address support deficiencies stimulate production momentum and drive the
transition of production operations from being “scale-oriented” to “efficiency-oriented” providing core support
for restoring profitability. Firstly the Company will optimise the production support system. Addressing the
support issues at various production bases the Company will prioritise resolving pain points such as the
mismatch between shared auxiliary facilities and single production lines at the Jilin base as well as shortages
in forest resources and softwood pulp. By reinforcing staffing at the technical centre and systematically
advancing industrial support development the Company can ensure support capabilities meet the demands of
new product development and capacity optimisation thus improving the quality of production and operations.Secondly the Company will deepen end-to-end cost reduction. Drawing on the advanced management
experiences of top-tier enterprises the Company will deeply tap into potential and enforce strict controls across
all production stages by rigorously managing energy and material consumption to minimise ineffective usage.It will also foster a deep integration between production and sales to ensure that production staff understands
market demands paper machine performance and product changeover costs. This will align production with
market dynamics improving both production efficiency and product adaptability.
3. Advancing smart technology and digitalisation to boost efficiency by restructuring the production
management system
In 2026 the Company will directly address the gap in IT capabilities compared to competitors by accelerating
its digital and intelligent transformation. It will restructure the production management system through
upgrades in data statistics and sample analysis to significantly enhance production automation and operational
efficiency. While ensuring the stable operation of SAP MES BPM and core network systems the Company
will comprehensively review business workflows to integrate core business areas outside system coverage
and leverage IT to strictly control risks and close loopholes. It will steadily roll out and deeply optimise the
unattended weighbridge and raw material management systems at the Zhanjiang and Jiangxi bases to
accelerate the development and deployment of a production data collection system advance the creation of
a digital platform for full-process cost control and refine the monitoring of costs related to auxiliary materials
energy and maintenance. By establishing a normalised mechanism for deep cost analysis the Company will
drive management upgrades through standardisation and digitisation. This digital and intelligent transformation
will empower production to improve quality and efficiency effectively generating returns from the restructured
production management system.
2025 ANNUAL REPORT 39IV Management Discussion and Analysis
XI. Outlook on the future development of the Company (Continued)
(I) Business Plan for 2026 (Continued)
4. Strengthening reform and innovation capabilities to boost efficiency by refining and optimising institutional
mechanisms
In 2026 taking the “Year of Management Innovation” as a key driver the Company will adhere to the principle
of keeping operations “simple practical and efficient” and target institutional shortcomings to comprehensively
deepen internal reforms. Spearheaded by the Enterprise Management Department it will streamline and
optimise mechanisms across the entire supply-production-sales chain. This will fully ignite the entrepreneurial
spirit across all levels and continuously boost the Company’s internal drive. On the procurement front guided
by the goals of “resource optimisation transparency enhancement and targeted cost reduction” the Company
will standardise oversight of the entire procurement process. It will improve supplier tiering and dynamic
management mechanisms enhance supply-demand coordination with production and sales and unlock further
potential for cost reduction and efficiency enhancement. On the production front the Company will optimise
capacity allocation and production workflows strengthen full-process quality control with refined energy
management and advance smart manufacturing upgrades to boost both production efficiency and product
quality. On the sales front the Company will enhance its market layout and customer segmentation system
optimise sales incentives and step up efforts in market research and channel expansion. This will allow the
Company to accurately meet market demands and increase customer stickiness. By refining and optimising
these institutional mechanisms the Company will comprehensively elevate management and operational
efficiency providing a solid foundation for the Company’s sustained healthy and high-quality development.
5. Strengthening brand building and credibility to boost efficiency through the capital market
In 2026 as the only company in China listed with A B and H shares the Company will continue to treat its
brand and credibility as fundamental to its success. It will remain committed to operating under public oversight
and work to comprehensively increase its recognition in the capital market. In terms of products the Company
will enhance its end-to-end quality control system to strictly prevent any quality issues from tarnishing its
brand image. It will accelerate the optimisation and upgrading of its product portfolio actively developing
high-value-added products such as waterproof paper and cigarette cardboard to precisely meet market
needs. By strengthening after-sales service and building a good market reputation it aims to earn market trust
through reliable products and exceptional services. In terms of corporate credit the Company will enhance
communication with creditors and implement debt repayment solutions such as loan maturity extensions and
repayment cycle adjustments. It will continuously optimise its debt structure strictly control debt risks and
safeguard its credit standing in the capital market. In terms of information disclosure the Company will strictly
adhere to regulatory requirements in Hong Kong and mainland China ensuring that all disclosures are truthful
accurate complete timely and fair to increase information transparency. In terms of investor relations the
Company will proactively strengthen regular communication with investors through results briefing hotlines and
the EasyIR platform of the Shenzhen Stock Exchange to convey the Company’s value. This will continuously
enhance the brand reputation market credibility and capital market recognition striving to maximise the
Company’s value realisation.The year 2026 is a decisive year carrying a critical mission and heavy responsibilities. The Company’s
management team will strictly follow the “One-Two-Five” strategic development plan and focus on the principal
business. With unwavering confidence and a determination to tackle challenges head-on the team will pursue
growth with a vigilant mind drive execution through pragmatic efforts and overcome obstacles with innovative
approaches in all their might to usher in a new chapter of high-quality and sustainable development for the
Company!
40 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
XI. Outlook on the future development of the Company (Continued)
(II) Future capital requirements and source of funds
Future capital requirements of the Company will mainly focus on the continuous investment in existing production
facilities for technological upgrades or capacity expansion and capital requirements for business expansion and
daily operations. In addition to part of the Company’s own funds the Company will also make full use of government
guidance funds policy support funds and syndicated loans as its sources of funds.While focusing on the development of its principal activities of pulp production and papermaking improving its
business performance and increasing its operating cash flow the Company will expand its financing channels and
optimise financing structure through well planned long and short-term bank loans introduction of third-party strategic
investors equipment financing and other means thus providing stable financial support for the operation and
development of the Company.(III) Potential risks and measures to be taken
1. Macroeconomic policy risk
As a crucial basic raw materials industry within the national economy the paper industry’s development is
closely tied to national macroeconomic policies. In recent years relevant competent authorities have issued
a series of policies and regulations including the Policy on the Development of the Paper Industry aiming
to improve the industrial structure elevate product technology promote energy conservation and emission
reduction and phase out outdated capacity. These have provided strong policy support for the industry’s
high-quality development. However as China continues to transform and upgrade its economic structure and
deepens the implementation of strategies such as the “dual-carbon” goals and environmental governance
future policies of the paper industry may undergo further adjustments. For instance stricter requirements
regarding environmental standards raw material supplies and capacity controls could be introduced potentially
impacting the Company’s production and operations as well as technological upgrades. Furthermore shifts in
macroeconomic policies such as fiscal and financial policies bank interest rates and import/export regulations
will also affect the Company’s operations and development.In response to the aforesaid risks the Company will strengthen its policy analysis and closely monitor dynamic
shifts in national industrial fiscal and financial policies. It will remain anchored to its core direction of developing
its principal business of pulp production and papermaking adhere to an innovation-driven strategy and align
with policy directives to optimise its industrial structure and regional footprint. By building a highly collaborative
and efficient industrial system it aims to address the risks associated with industrial policy adjustments.Meanwhile the Company will continue to strengthen lean management control costs and expenses broaden
financing channels optimise its capital structure and improve overall operational quality to counter any risks
arising from macroeconomic policy adjustments including those in fiscal and financial domains.
2. Environmental risk
The transition towards green and low-carbon practices has become the core strategic direction for high-
quality development in the paper industry. In recent years the government has continuously intensified
environmental governance leading to increasingly stringent environmental requirements. Relevant competent
authorities successively issued a series of policy documents including the White Paper on the Sustainable
Development of the Paper Industry in China the Guiding Opinions on Accelerating the Establishment and
Improvement of a Green Low-Carbon and Circular Economic System and the Opinions on Accelerating the
High-Quality Development of Manufacturing Service Industry. These policies explicitly require the industry to
embrace the circular economy promote energy conservation and emission reduction and achieve green low-
carbon development. As national environmental standards rise companies in the industry further increase their
investments in pollution control which will raise the Company’s operating costs in the short term.
2025 ANNUAL REPORT 41IV Management Discussion and Analysis
XI. Outlook on the future development of the Company (Continued)
(V) Potential risks and measures to be taken (Continued)
2. Environmental risk (Continued)
In response to the aforesaid risks the Company firmly implements the national “dual carbon” policy and adheres
to the development philosophy of “placing green development and environmental protection as its priority”. The
Company integrates environmental requirements throughout its entire production and operational processes
widely adopting new technologies for energy conservation and emission reduction to ensure clean productionand compliant waste discharge. At present the Company adopts advanced “ultrafiltration membrane + reverseosmosis membrane” technology in the world and has completed a reclaimed water recycling membrane
treatment project. The reclaimed water recycle rate exceeds 75% with the treated water quality meeting
drinking water standards. Meanwhile the Company actively explores innovative models for comprehensiveresource utilisation and circular industrial development by building a circular economy ecosystem of “resource– product – renewable resource”. It continuously refines its internal environmental management system and
strengthens full-process environmental monitoring and dynamic control to prevent compliance risks.
3. Risk of price fluctuation of raw materials
The major raw materials of the paper industry are wood pulp and wood chips. Given China’s relative shortage
of wood resources the industry relies heavily on imported wood pulp and wood chips making its development
susceptible to fluctuations in international prices of wood pulp and wood chips. If the price of raw materials
fluctuates sharply in the future it will bring uncertainty to the control of production costs of papermaking
enterprises which will affect the business performance of these enterprises.In response to the aforesaid risks the Company remains committed to its strategic layout of a fully integrated
pulp and paper industrial chain. By operating its own wood pulp production lines at its production bases
in Shouguang Zhanjiang Huanggang and other regions the Company ensures the stability and autonomy
of its upstream raw material supply thereby reducing reliance on external procurement. Furthermore the
Company has established a more comprehensive supply chain management mechanism. By implementing
source procurement closely monitoring the price trends of the raw materials market and enhancing its market
forecasting capabilities the Company aims to minimise the impact of fluctuations in raw material prices on its
production and operations.
4. Risk of intensified market competition
Although the paper industry has seen an accelerated phase-out of outdated production capacity after several
rounds of environmental policy enforcement this has continuously optimised the overall industry landscape
and further improved market concentration. However there remains the phenomenon of a large number of
enterprises within the industry structural and cyclical overcapacity for certain products a predominance of
mid-to-low-end products and product homogeneity. In recent years affected by factors such as supply shocks
and weak downstream demand the market prices of machine-made paper especially white cardboard have
exhibited a fluctuating downward trend. This has intensified market competition within the industry posing
potential pressure on the Company’s profit margins.
42 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
XI. Outlook on the future development of the Company (Continued)
(V) Potential risks and measures to be taken (Continued)
4. Risk of intensified market competition (Continued)
In response to the aforesaid risks the Company will focus on technological innovation and product upgrading
as its core drivers continuously improve its production equipment processing design and manufacturing
techniques and deepen its lean production management system to comprehensively enhance product quality
stability and generate brand value. Meanwhile the Company remains market-oriented accurately identifying
changes in downstream consumer demand to optimise its product portfolio. By manufacturing highly
marketable products that meet diverse customer needs the Company strives to develop a product structure
characterised by high quality precision specialty differentiation and personalisation. This approach will
increase product added value and profitability thereby strengthening the Company’s ability to withstand market
competition risks.
5. Capital risk
The paper industry is capital-intensive. In recent years the industry has seen concentrated capacity expansion
insufficient downstream demand and prominent supply-demand imbalances. This has caused a continuous
decline in the prices of major paper products especially white cardboard resulting in lower profitability for paper
enterprises. Against this backdrop enterprises with high debt levels face increased operational pressure during
industry downturns. If they encounter situations such as loan delays by financial institutions or the withdrawal
of strategic investors it could trigger temporary liquidity shortages. This in turn may lead to risks such as debt
defaults frozen accounts litigations and other issues that could impact the Company’s operations.In response to the aforesaid risks the Company will focus on its principal responsibilities and operations by
stepping up efforts to dispose of non-core and inefficient assets to optimise its asset structure and increase
cash inflows. It will actively communicate with financial institutions broaden its financing channels through
multiple avenues and negotiate repayment solutions such as loan extensions interest rate reductions
and extended interest settlement cycles to alleviate debt repayment pressures and operational burdens
on the Company. Furthermore the Company will comprehensively deepen internal management reforms
and innovation promoting lean operations cost reduction and efficiency enhancement. By leveraging its
foundational strengths the Company aims to boost its core profitability and risk-resistance capabilities for
sustained and stable operations.
2025 ANNUAL REPORT 43IV Management Discussion and Analysis
XII. Reception of surveys communications and interviews during the reporting period
√ Applicable □ Not applicable
Major discussion
points and information Index of the basic
Date of reception Site of reception Way of reception Type of recipient Recipient provided particulars of the survey
7 April 2025 Panorama * Interactive Online platform Individuals and Investors attending the The Company’s 2024 For details please refer to
Platform for Investors communication institutions 2024 annual results financial position operating the Investor Relations
Relationship briefing of the results resumption of Activity Record Sheet
Company online operation and production on CNINFO
at production bases future (www.cninfo.com.cn)
prospects etc.
15 May 2025 Panorama * Interactive Online platform Individuals and Investors attending the The Company’s financial For details please refer to
Platform for Investors communication institutions 2025 online collective position for 2024 and Q1 the Investor Relations
Relationship reception day for listed 2025 the approval status Activity Record Sheet
companies in the of the syndicated loan on CNINFO
Shandong jurisdiction and the resumption of (www.cninfo.com.cn)
operation and production
at production bases.
15 September 2025 Conference room of the On-site visit Institutions Sealand Securities Progress on the resumption of For details please refer to
Company Minsheng Royal Fund operation and production at the Investor Relations
and Huatai-PineBridge the Company’s production Activity Record Sheet
Investments bases measures to resolve on CNINFO
debt issues progress on (www.cninfo.com.cn)
the disposal of non-core
assets future industry
prospects etc.XIII. Development and implementation of a market capitalisation management system and a
valuation enhancement plan
Whether the Company has developed a market capitalisation management system
√ Yes □ No
To effectively strengthen the market capitalisation management as a listed company further standardise market
capitalisation management practices fully safeguard the legitimate rights and interests of the Company investors and other
stakeholders and response to the encouragement under the Guidelines No. 10 for the Regulation of Listed Companies
– Market Capitalisation Management for listed companies to establish a market capitalisation management system the
Company has formulated the Market Capitalisation Management System of Shandong Chenming Paper Holdings Limited in
accordance with the Company Law of the People’s Republic of China the Securities Law of the People’s Republic of China
the Rules Governing the Listing of Stocks on Shenzhen Stock Exchange and other relevant laws and regulations which was
considered and approved at the twelfth meeting of the tenth session of the Board held on 31 March 2025.For details please refer to the Market Capitalisation Management System of Shandong Chenming Paper Holdings Limited
disclosed on CNINFO on 1 April 2025 and the overseas regulatory announcement disclosed on the website of the Hong
Kong Stock Exchange on 31 March 2025.
44 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
XIII. Development and implementation of a market capitalisation management system and a
valuation enhancement plan (Continued)
Whether the Company has disclosed a valuation enhancement plan
√ Yes □ No
To enhance the Company’s investment value and shareholder returns promote a reasonable reflection of the Company’s
intrinsic value in investment value boost investor confidence safeguard the interests of all shareholders and facilitate high-
quality development of the Company the Valuation Enhancement Plan of Shandong Chenming Paper Holdings Limited was
considered and approved at the twelfth meeting of the tenth session of the Board held by the Company on 31 March 2025.The specific measures under the Valuation Enhancement Plan are as follows:
(I) Financial optimisation
1. Debt restructuring: The Company will take the initiative to communicate with its creditors for extension of
loan terms and reduction of interest rates so as to alleviate the pressure on loan repayment in the short term.Provincial debt committees were established to agree on “no loan cancellations or delays” and further negotiate
new credit facilities in the form of a syndicated loan specifically for resumption of operation and production
and interest rate reductions and extensions of debts to ensure sufficient liquidity for operations and production
resumption of the Company.
2. Asset disposal: The Company will make every effort to revitalise and dispose of its existing assets. The
Company will strengthen the disposal of assets in its non-principal business establish an asset management
centre adjust and optimise internal management divide asset disposal management areas by region and
assign responsibilities to individuals to improve the efficiency of asset disposal. The Company will also step
up efforts to recover outstanding debts and pursue debtors with realisable assets through negotiation or legal
means. For accounts receivable that are difficult to recover the Company will resort to judicial channels to
resolve the issues and strive to improve its liquidity.
3. Cost control: The Company will strengthen internal management streamline production processes and reduce
costs in raw material procurement energy consumption and labour. For example the Company will secure
favourable procurement prices via long-term and stable cooperation with suppliers and adopt advanced
production equipment and technology to boost productivity and lower per-unit production costs.(II) Business optimisation
1. Productivity recovery and adjustment: The Company will accelerate the resumption of production at Shouguang
Zhanjiang Jilin and other key production bases striving to achieve resumption of work and production as soon
as possible to improve operating cash flow. The Company will adjust its product mix according to changes in
market demand by reducing excess production capacity and increasing production focus on high-value-added
products such as special paper to improve profitability.
2. Technological innovation and R&D: The Company will increase investment in the R&D of green paper products
and special paper production technologies to develop new products with strong market competitiveness.Leveraging its advantages of “pulp and paper integration” the Company will develop pulp and paper products
with greater environmental benefits and high performance so as to meet the market demand for green and
environmentally friendly paper products and enhance the added value and market competitiveness of products.
2025 ANNUAL REPORT 45IV Management Discussion and Analysis
XIII. Development and implementation of a market capitalisation management system and a
valuation enhancement plan (Continued)
(III) Market and brand development
1. Market expansion: The Company will strengthen market research to gain deeper insights into domestic and
international market demands while expanding into emerging markets. Leveraging its advantages in scale and
product quality the Company will intensify promotional efforts in global markets to increase export share and
enhance its international market influence.
2. Brand building: The Company will build a good corporate brand image by improving product quality enhancing
after-sales service and participating in public welfare initiatives. The Company will actively promote its green
and sustainable philosophy as well as technological innovation achievements to enhance its brand awareness
and reputation thereby increasing consumer recognition and loyalty toward its products.
3. Investor relations management: The Company will regularly disclose updates on information including
operational performance and development strategies while strengthening communication and engagement with
investors. Through investor roadshows industry seminars and other events the Company will showcase its
growth potential and investment value to bolster investor confidence and attract more long-term investors.
4. Information disclosure optimisation: The Company will ensure the timeliness accuracy and completeness
of information disclosure by releasing operational data updates on major projects strategic plans and
other information on a regular basis to meet investors’ needs to know. Through periodic reports interim
announcements investor briefings and other channels the Company will demonstrate its core competitiveness
and growth prospects to the market.(IV) Strategic investment and cooperation
1. Strategic investor introduction: The Company will actively engage with domestic and international strategic
investors to introduce capital technology and management expertise and optimise its shareholding structure
and corporate governance. The introduction of strategic investors will provide additional resource support for
the Company thereby facilitating business development and valuation enhancement of the Company.
2. Industry consolidation and collaboration: The Company will pay attention to high-quality enterprises within
the industry and pursue mergers acquisitions and restructuring as and when appropriate to achieve resource
integration and scale expansion thereby strengthening its competitive position in the industry. The Company
will also enhance collaboration with upstream and downstream partners to establish long-term stable
relationships jointly navigate market changes and realise mutual benefits.In conclusion the Company will firmly uphold an investor-centric philosophy diligently implement its valuation
enhancement plan and remain committed to long-term sustainable healthy and high-quality development. By
reinforcing accountability the Company will effectively safeguard the interests of its investors.XIV. Implementation of the “Quality and Return Enhancement” action plan
Whether the Company has disclosed its “Quality and Return Enhancement” action plan
□ Yes √ No
46 SHANDONG CHENMING PAPER HOLDINGS LIMITEDV Directors’ Report
The directors (the “Directors”) of the Company hereby present the annual report and the audited consolidated financial statements
of the Company and the Group for the year ended 31 December 2025.I. Principal activities
Please refer to “I. Principal operations of the Company during the Reporting Period” and “IV. Analysis of principaloperations” under section IV “Management Discussion and Analysis” for details of principal activities of the Company.II. Results and profit distribution
Please refer to section X “Financial Report” for the results of the Group for the year ended 31 December 2025.III. Dividends
During the reporting period as affected by shutdowns at some of the production bases the Company recorded a year-
on-year increase in shutdown losses and maintenance expenses with a significant year-on-year decline in sales volume
of machine-made paper. The Company made impairment provisions for certain assets which impacted revenue and profit
for the current period. Besides the Company conducted impairment tests on the creditworthiness of its financial leasing
customers out of prudence and in accordance with the relevant requirements of the Accounting Standards for Business
Enterprises and made provisions for bad debts of certain financial leasing activities which further affected the profit for
the current period. The net profit attributable to shareholders of the Company for 2025 was RMB-8296 million. To focus on
the development of its principal pulp production and paper making business the Company divested all assets related to its
financial leasing business in the fourth quarter of 2025. Since then the Company no longer engaged in any financial leasing
activities. Based on the operations in 2025 and taking into account the development plan for 2026 the Board proposed not
to pay cash dividend issue bonus shares and increase share capital from reserves in 2025 to satisfy the capital needs for
day-to-day production and operation and enhance the risk resistance of the Company thereby realising the sustainable
steady and healthy development of the pulp production and paper making the principal activities of the Company and
better safeguarding the interests of all shareholders in the long run subject to approval of shareholders at the forthcoming
annual general meeting of the Company to be held on 15 May 2026 (the “AGM”).IV. Closure of register of members
The register of members of the Company will be closed from Tuesday 12 May 2026 to Friday 15 May 2026 (both days
inclusive) during which no transfer of shares of the Company will be registered. In order to be eligible to attend and vote
at the AGM to be held on Friday 15 May 2026 all share transfer documents accompanied by the corresponding share
certificates must be lodged with the Company’s share registrar and transfer office Computershare Hong Kong Investor
Services Limited at Shops 1712-1716 17th Floor Hopewell Centre 183 Queen’s Road East Wan Chai Hong Kong for
registration not later than 4:30 p.m. on Monday 11 May 2026.V. Five-year financial summary
Please refer to “IX. Five-year financial summary under paragraph 19 of appendix D2 of the Hong Kong Listing Rules”
under section II “Company Profile and Key Financial Indicators” for the financial summary of the Company for the past five
financial years.VI. Donations
During the year the Company donated RMB0.00 (2024: RMB300000.00) to non-profit making organisations.
2025 ANNUAL REPORT 47V Directors’ Report
VII. Subsidiaries
Please refer to “IX. Analysis of major subsidiaries and investees” under section IV “Management Discussion and Analysis”
and “XVIII. Matters of significant of subsidiaries of the Company” under section VII “Material Matters” for the details of
acquisition and disposal of subsidiaries by the Company during the year.VIII. Property plant and equipment
Please refer to “II. Financial Statements 1. Consolidated Balance Sheet” under section X “Financial Report” for the details of
changes in property plant and equipment of the Group for the year ended 31 December 2025.IX. Share capital
Please refer to “I. Changes in shares” under section VIII “Changes in Share Capital and Shareholders” for details of changes
in share capital of the Company for the year ended 31 December 2025.X. Pre-emptive rights
In accordance with the Articles of Association and the PRC laws there are no rules requiring the Company to grant existing
shareholders pre-emptive rights on newly issued shares of the Company in proportion to their shareholdings.XI. Transfer into reserves
The Company’s contributed surplus is distributable to shareholders in accordance with the Company Law. As at 31
December 2025 the Company’s reserves available for cash distribution and/or distribution in specie including contributedsurplus of the Company amounted to RMB0.00 (2024: RMB1086188080.67) as set out in “II. Financial Statements 1.Consolidated Balance Sheet” under section X “Financial Report”.XII. Directors
As at 31 December 2025 the Directors of the Company were:
1. Executive Directors
Mr. Jiang Yanshan
Mr. Meng Feng (Employee representative Director)
Mr. Liu Peiji
Mr. Li Weixian
Ms. Zhu Yanli
2. Non-executive Directors
Mr. Song Yuchen
Ms. Wang Ying
48 SHANDONG CHENMING PAPER HOLDINGS LIMITEDV Directors’ Report
XII. Directors (Continued)
3. Independent Non-executive Directors
Mr. Zhang Zhiyuan
Mr. Luo Xinhua
Mr. Wan Gang
Mr. Kong Pengzhi
According to the Articles of Association Directors including non-executive Directors shall be elected at the general
meetings and the employee representative on the Board shall be democratically elected by the employees of the
Company through the employee representative assembly and there is no need to submit to the general meeting for
deliberation. Their term of office of the Directors shall be three years from October 2025 to October 2028. They may
be re-elected for another term upon expiry of tenure. The term of office of independent non-executive Directors is the
same as that of other Directors. They may be re-elected for consecutive terms but the consecutive terms shall not be
more than six years.XIII. Directors’ service contracts
All Directors have entered into service contracts with the Company for a term from 28 October 2025 to 28 October 2028.None of the Directors have entered into any service contract with the Company or any of its subsidiaries which cannot be
terminated by the Group within one year without payment of compensation other than statutory compensation.XIV. Directors and Senior Management’s remuneration and the five highest paid individuals
Details of Directors and the Senior Management’s remuneration and the five highest paid individuals of the Company or/and
its subsidiaries are set out in “IV. Directors and Senior Management” under section VI “Corporate Governance Environmentand Society” and “XIV. Related parties and related party transactions” under section X “Financial Report”.In 2025 the Company had 27 Directors and Senior Management members in total which included those who resigned
during the reporting period. Their remuneration falls within the following ranges:
Range of remuneration (RMB) Person
3.6 million to 4.0 million
3.2 million to 3.6 million
2.8 million to 3.2 million
2.4 million to 2.8 million 1
2.0 million to 2.4 million
1.6 million to 2.0 million 1
1.2 million to 1.6 million 1
0.8 million to 1.2 million 1
Below 0.8 million 23
XV. Independent non-executive Directors
The Company has received from each of the independent non-executive Directors a confirmation of independence for the
year pursuant to Rule 3.13 of the Hong Kong Listing Rules and considered all of the independent non-executive Directors to
be independent.
2025 ANNUAL REPORT 49V Directors’ Report
XVI. Securities interests held by Directors and chief executives
As at 31 December 2025 the interests and short positions held by each of the Directors and chief executives of the
Company in the shares underlying shares and debentures of the Company or its associated corporations (within the
meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong) (the “SFO”)) as
recorded in the register required to be kept under section 352 of the SFO are set out as follows:
The Company
Number of shares
(A shares) held
as at the end of As a percentage
the reporting of the total shares
Name Position period (shares) of the Company
Directors
Jiang Yanshan Chairman acting general manager – –
Meng Feng Executive Director deputy general manager – –
Liu Peiji Executive Director deputy general manager – –
Li Weixian Executive Director deputy general manager 362100 0.01%
Zhu Yanli Executive Director deputy general manager – –
financial controller
Song Yuchen Non-executive Director – –
Wang Ying Non-executive Director – –
Zhang Zhiyuan Independent non-executive Director – –
Luo Xinhua Independent non-executive Director – –
Wan Gang Independent non-executive Director – –
Kong Pengzhi Independent non-executive Director – –
As at 31 December 2025 none of the Directors or chief executives of the Company had any interests or short positions in
the shares underlying shares or debentures of the Company or any of its associated corporations which were required to
be filed in the register of the Company required to be maintained pursuant to section 352 of the SFO or which were required
to be notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions
by Directors of Listed Issuers as contained in Appendix C3 to the Rules Governing the Listing of Securities on Hong Kong
Stock Exchange.As at 31 December 2025 none of the Directors or chief executives or their respective spouses or children under the
age of 18 held or exercised any rights to subscribe for the share capital or debentures of the Company or its associated
corporations.
50 SHANDONG CHENMING PAPER HOLDINGS LIMITEDV Directors’ Report
XVII. Interests and short position of substantial shareholders in shares and underlying shares
As at 31 December 2025 the following shareholders (other than the Directors or chief executives of the Company) had
interests or short positions in the Company’s shares and underlying shares as shown in the share register maintained by the
Company in accordance with Section 336 of the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong)
(the “SFO”):
Approximate shareholding as
a percentage of
Number of shares Total share Class of
Name held (shares) capital (%) shares (%)
Chenming Holdings Co. Ltd. 455781319 A shares (L) 15.50 26.70
Chenming Holdings (Hong Kong) Limited 210717563 B shares (L) 7.16 29.83
Chenming Holdings (Hong Kong) Limited 153414000 H shares (L) 5.22 29.04
(L) – Long position (S) – Short position (P) – Lending pool
Save as disclosed above as at 31 December 2025 no other person had interests or short positions in the Company’s
shares or underlying shares as recorded in the register maintained under section 336 of the SFO.XVIII. Relationship with employees customers and suppliers
Please refer to “VIII. Personnel of the Company” under section VI “Corporate Governance Environment and Society” and
“2. (8) Sales to major customers and major suppliers” of “IV. Analysis of principal operations” under section IV “ManagementDiscussion and Analysis” for details of the relationship between the Company and its employees customers and suppliers.None of the Directors of the Company or their close associates or shareholders who are interested in more than 5% of the
number of issued shares of the Company had any interest in major customers and major suppliers mentioned above.XIX. Directors’ interests in material contracts and indemnity provision
None of the Company or any of its subsidiaries entered into any material contracts in which Directors had significant
interests (either directly or indirectly) that subsisted at the end of the financial year or at any time during the reporting
period. The Company did not have any indemnity provision in favour of any Director
XX. Interests in competing business
None of the Directors or controlling shareholders of the Company was interested in any business which competes or is
likely to compete with the businesses of the Company and any of its subsidiaries.
2025 ANNUAL REPORT 51V Directors’ Report
XXI. Directors’ rights to purchase shares or debentures
Neither was the Company nor any of its subsidiaries a party to any arrangements to enable any Director to acquire benefits
by means of the acquisition of shares in or debentures of the Company or any other body corporate.XXII. Management contracts
No contracts concerning the management and administration of the whole or any substantial part of the business of the
Company were entered into or existed in 2025.XXIII. Major risk factors
Please refer to “(III) Risk factors likely to be faced and the measures to be taken” of “XI. Outlook on the future developmentof the Company” under section IV “Management Discussion and Analysis” for details of major risk factors of the Company.XXIV. Material matters
Please refer to section VII “Material Matters” for details of material matters of the Company.XXV. Future development
Please refer to the industry outlook in “II. Industry overview of the Company during the reporting period” and (I) Operatingplan for 2026 and (II) Future capital requirements and source of funds of “XI. Outlook on the future development of theCompany” under section IV “Management Discussion and Analysis” for details of future development of the Company.XXVI. Environment social and governance report and social responsibility
Please refer to “XV. Disclosure of environmental information” “XVI. Social responsibility” and “XVII. Consolidating andexpanding the achievements of poverty alleviation and rural revitalisation” under section VI “Corporate GovernanceEnvironment and Society” for details of fulfilment of social responsibility. The Company will publish the environment social
and governance report as required by the Hong Kong Listing Rules on the website of CNINFO and the website of the Hong
Kong Stock Exchange on the same date as the 2025 annual report.XXVII. Purchase sale and redemption of shares
The Company and any of its subsidiaries did not purchase sell or redeem any listed securities of the Company during the
reporting period.XXVIII. Sufficiency of public float
During the reporting period based on the information that is publicly available to the Company and within the knowledge
of the Directors the Company maintained a sufficient prescribed amount of public float as required under the Hong Kong
Listing Rules.XXIX. Review of the Audit Committee
The audited consolidated financial statements of the Company for the year ended 31 December 2025 have been reviewed
by the Audit Committee of the Company.
52 SHANDONG CHENMING PAPER HOLDINGS LIMITEDV Directors’ Report
XXX. Gearing ratio
As at 31 December 2025 the Company’s gearing ratio (including minority interest) was 63.89% representing a decrease of
4.06 percentage points from 59.83% for 2024.
The ratio was calculated as: total borrowings/total assets (whereas total borrowings represent borrowings due within one
year borrowings due after one year short-term commercial paper and medium and long-term notes and others).XXXI. Going concern basis
In compiling the accounts for the year ended 31 December 2025 the Directors have chosen and thoroughly applied the
appropriate accounting policies with due and reasonable judgement and estimates having been made and prepared
the accounts on a going concern basis. The auditor has issued an unqualified audit opinion with an emphasis of matterparagraph on the Company’s 2025 annual financial report which is prepared on a going concern basis. Please refer to “I.Auditors’ Report” and “IV. Basis of Preparation of the Financial Statements” under section X “Financial Report” for details.XXXII. Connected Transaction
1. Acquisition of fund units in Chenming Huanggang Fund by Huanggang Technology
On 25 April 2025 the Company convened the twentieth extraordinary meeting of the tenth session of the Board
at which the Resolution on the Acquisition of 39.98% of the Units in Chenming Huanggang Fund by Huanggang
Technology was considered and approved. Huanggang Technology a majority-owned subsidiary of the Company
proposed to acquire 39.98% of the fund units in Chenming Huanggang Fund held by Changjiang Industrial Investment
Fund at a consideration of RMB439157698.63. Changjiang Industrial Investment Fund Huanggang Technology and
Huanggang Chenming entered into the Fund Units Transfer Agreement. At the same time Huanggang Chenming
provided guarantee for the Huanggang Technology’s obligation to pay in this transaction and entered into the
Guarantee Agreement and the Accounts Receivable Pledge Agreement with Huanggang Technology and Changjiang
Industrial Investment Fund respectively. Huanggang Chenming shall provide joint and several liability guarantee for
Huanggang Technology’s obligation to pay and shall provide guarantee for Huanggang Technology’s obligation to
pay the transfer consideration under the Fund Units Transfer Agreement by pledging the entrusted processing fee
due from Huanggang Technology under the Entrusted Processing Agreement entered into between it and Huanggang
Technology. The amount under guarantee was RMB439157698.63 and the guarantee period was 3 years. Upon
completion of the transaction the Company will in aggregate hold 99.95% of the fund units of Chenming Huanggang
Fund and the financial results of Chenming Huanggang Fund will continue to be consolidated in the Group’s
consolidated financial statements.Chenming Huanggang Fund is a specialised investment fund established for the construction of Phase II project of
Huanggang Chenming a majority-owned subsidiary of the Company. The Company through Zhanjiang Chenming
(as a limited partner) a non-wholly-owned subsidiary held 59.97% of the fund units of Chenming Huanggang Fund.Changjiang Industrial Investment Fund as a limited partner held 39.98% of the fund units of Chenming Huanggang
Fund. Changjiang Industrial Investment Fund is a connected person of the Company at the subsidiary level and the
acquisition constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.Save as disclosed above the Group did not enter into other connected transaction required under the Listing Rules of
the Stock Exchange during the reporting period. The related party transactions entered into by the Group during the
year ended 31 December 2025 are set out in “5. Related party transactions” of “XIV. Related parties and related partytransactions” under section X “Financial Report”. Save as disclosed above the related party transactions did not
constitute connected transactions or continuing connected transactions (as defined in the Listing Rules of the Stock
Exchange) of the Group.For details please refer to the announcement of the Company dated 25 April 2025.
2025 ANNUAL REPORT 53V Directors’ Report
XXXIII. Major investment acquisition and disposal
1. Divestment of assets related to the financial leasing business
(1) Summary of the disposal
On 12 December 2025 the Company convened the first extraordinary meeting of the eleventh session of the
Board at which the Resolution in relation to the Divestment of Assets Related to the Financial Leasing Business
was considered and approved. In order to further focus on the development strategy of pulp production and
papermaking its principal activities and to facilitate its high-quality development the Company divested all
assets related to the financial leasing business. It transferred by way of agreement 100% equity interest in
Shandong Chenming Leasing 25% equity interest in Qingdao Chenming Leasing and 25% equity interest in
Shanghai Chenming Leasing held by Chenming (HK) together with debts of RMB2262.9561 million owed to its
majority-owned subsidiary Zhanjiang Chenming Paper by Shandong Chenming Leasing to Shouguang Shengjia
Investment Co. Ltd. (“Shengjia Investment”) a wholly state-owned enterprise under the Finance Bureau of
Shouguang City. The machinery and equipment assets of the net carrying amount of RMB47.6275 million held
under Shandong Chenming Leasing and located at Xuchang City Henan Province were not included in the
scope of the disposal. The total consideration for the transfer was RMB3336.3530 million including the equity
transaction consideration of RMB1073.3969 million and the debt transaction consideration of RMB2262.9561
million.On 15 December 2025 Zhanjiang Chenming Paper (as vendor of the target debts) Chenming (HK) (as vendor
of the target equity interest) and Shengjia Investment (as purchaser) entered into the Equity and Debt Transfer
Agreement. On 31 December 2025 the Company convened the 2025 second extraordinary general meeting
at which the Resolution in relation to the Divestment of Assets Related to the Financial Leasing Business
was considered and approved. As at the end of the reporting period the divestment of assets related to the
financial leasing business had been approved by State-owned Assets Supervision and Administration Office of
Shouguang City.
(2) Basis for determining the consideration
The consideration of the disposal was determined on normal commercial terms after arm’s length negotiations
between Zhanjiang Chenming Paper Chenming (HK) and Shengjia Investment with reference to the following
factors: (i) 100% of the appraised value of Shandong Chenming Leasing as at the valuation benchmark date
(30 September 2025) of RMB785.1593 million based on valuation; (ii) 25% of the appraised value of Qingdao
Chenming Leasing as at the valuation benchmark date (30 September 2025) of RMB1152.9504 million based
on valuation whereas the remaining 75% of the appraised value of Qingdao Chenming Leasing was reflected
in the appraised value of Shandong Chenming Leasing; (iii) 25% of the appraised value of Shanghai Chenming
Leasing as at the valuation benchmark date (30 September 2025) of RMB-402.0298 million based on valuation
whereas the remaining 75% of the appraised value of Shanghai Chenming Leasing was reflected in the
appraised value of Qingdao Chenming Leasing; (iv) 25% equity interest in Shanghai Chenming Leasing to be
transferred at nil consideration because the corresponding registered capital of Shanghai Chenming Leasing
was not been paid up by the then shareholder (i.e. Chenming (HK)); and (v) the carrying amount of the target
debts of RMB2262.9561 million.The appraised value of the entire equity interest of Shandong Chenming Leasing Qingdao Chenming Leasing
and Shanghai Chenming Leasing were arrived at by an independent valuer using the asset-based approach. The
scope of the valuation covered all the audited assets and liabilities reported by Shandong Chenming Leasing
Qingdao Chenming Leasing and Shanghai Chenming Leasing but excluded the machinery and equipment of
Shandong Chenming Leasing of the net carrying amount of approximately RMB47.6275 million as such assets
did not form part of the subject matter of the disposal and continued to be owned by the Company after the
disposal. There was no limitation on the scope of work performed by the independent valuer.
54 SHANDONG CHENMING PAPER HOLDINGS LIMITEDV Directors’ Report
XXXIII. Major investment acquisition and disposal (Continued)
1. Divestment of assets related to the financial leasing business (Continued)
(3) Consideration and payment terms
The total consideration of the disposal shall be RMB3336.3530 million which comprises of (i) RMB785.1593
million for 100% equity interest in Shandong Chenming Leasing; (ii) RMB288.2376 million for 25% equity
interest in Qingdao Chenming Leasing; (iii) RMB0 for 25% equity interest in Shanghai Chenming Leasing; and
(iv) RMB2262.9561 million for the target debts. Shengjia Investment shall pay the consideration in cash in
accordance with the following payment schedule:
Amount
No. Payee Nature Date (RMB’0000)
1 Chenming (HK) Limited Equity transfer payment Effective date of 33000
the agreement
2 Chenming (HK) Limited Equity transfer payment 2026/12/25 20000
3 Chenming (HK) Limited Equity transfer payment 2027/12/25 20000
4 Chenming (HK) Limited Equity transfer payment 2028/12/25 25000
Chenming (HK) Limited Equity transfer payment 2029/12/25 9339.69
5 Zhanjiang Chenming Paper Co. Ltd. Debt transfer payment 2029/12/25 15660.31
6 Zhanjiang Chenming Paper Co. Ltd. Debt transfer payment 2030/12/25 30000
7 Zhanjiang Chenming Paper Co. Ltd. Debt transfer payment 2031/12/25 30000
8 Zhanjiang Chenming Paper Co. Ltd. Debt transfer payment 2032/12/25 30000
9 Zhanjiang Chenming Paper Co. Ltd. Debt transfer payment 2033/12/25 40000
10 Zhanjiang Chenming Paper Co. Ltd. Debt transfer payment 2034/12/25 40000
11 Zhanjiang Chenming Paper Co. Ltd. Debt transfer payment 2035/12/25 40635.30
Total 333635.30
(4) Summary of the reasons for and effects of the disposal
In order to focus on its core responsibilities and principal activities the Company proposed to divest all assets
in relation to its financial leasing business. The disposal aligned with the Company’s overall development
strategy and would improve its asset-liability structure revitalise existing assets and allowed the Company to
focus resources on developing its principal activities. This would in turn enhance the Company’s profitability
and improve core competitiveness therefore driving high-quality sustainable development. Shengjia Investment
had good credibility and high ability of obligation performance. The terms of the Equity and Debt Transfer
Agreement were determined on normal commercial terms after arm’s length negotiations between the parties
were fair and reasonable and in the interest of the Company and its shareholders as a whole.After completion of the disposal the daily business operation of the Group will remain substantially unchanged
prior to and after completion. The Group will continue to focus on its principal activities of production and sale
of paper products. Upon completion of the disposal the Company will cease to have any interest in Shandong
Chenming Leasing Qingdao Chenming Leasing and Shanghai Chenming Leasing. The financial results of
Shandong Chenming Leasing Qingdao Chenming Leasing and Shanghai Chenming Leasing will cease to
be included in the consolidated financial statements of the Group. The net proceeds from the disposal are
proposed to be used for the repayment of loan(s) of the Group in instalments in accordance with the payment
schedule of the consideration of the disposal.For details please refer to the announcements of the Company dated 15 December 2025 and 23 December 2025.
2025 ANNUAL REPORT 55V Directors’ Report
XXXIII. Major investment acquisition and disposal (Continued)
2. Acquisition of fund units in Chenming Huanggang Fund by Huanggang Technology
During the reporting period the Company convened the twentieth extraordinary meeting of the tenth session of
the Board at which the Resolution on the Acquisition of 39.98% of the Units in Chenming Huanggang Fund by
Huanggang Technology was considered and approved. Huanggang Technology proposed to acquire 39.98% of
the fund units in Chenming Huanggang Fund held by Changjiang Industrial Investment Fund at a consideration of
RMB439157698.63. Please refer to the matter mentioned in “XXXII. Connected Transaction” in this section “Directors’Report” for details.XXXIV. Tax relief
The Company is not aware of any tax relief available to shareholders as a result of holding securities of the Company.
56 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
I. Corporate governance
During the reporting period in order to fully implement the requirements of the newly amended Company Law of the
People’s Republic of China and its supporting rules further enhance the Company’s standardised operations and improve
its governance structure the Company revised its corporate governance structure in strict compliance with the Company
Law of the People’s Republic of China the Transitional Arrangements for the Implementation of the Supporting Rules of
the New Company Law of the China Securities Regulatory Commission the Guidelines for the Articles of Association of
Listed Companies and other laws regulations and normative documents by abolishing the supervisory committee of the
Company the functions and powers of which as stipulated under the Company Law of the People’s Republic of China
being exercised by the Audit Committee of the Board. In addition 1 employee representative Director was appointed
among the members of the Board. At the same time the Company amended more than 30 systems including the Articles
of Association the Procedural Rules of the Board Meeting and the Procedural Rules of the General Meeting to ensure that
the Company’s regulatory system was fully aligned with and effectively converged with the latest regulatory requirements.As at the end of the reporting period the Company’s corporate governance practices were in compliance with the relevant
normative documents on corporate governance issued by the China Securities Regulatory Commission the Shenzhen
Stock Exchange and the Stock Exchange.(i) Independence of the Controlling Shareholder and the Company
During the reporting period the Company strictly complied with the laws and regulations including the Company Law
of the People’s Republic of China the Code of Corporate Governance for Listed Companies the Rules Governing
the Listing of Stocks on the Shenzhen Stock Exchange the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited and the requirements of the Articles of Association. The Company maintained
complete independence from its controlling shareholder beneficial controllers and related parties in respect of
business personnel assets organisations and finance. The Board and all internal functional departments operated
independently and fully complied with the relevant provisions of the CSRC on the independence of listed companies.The controlling shareholder and the beneficial controllers strictly regulated their behaviour exercised shareholders’
rights and performed shareholders’ obligations in accordance with the law and did not interfere with the Company’s
independent operate decisions nor did they misappropriate the Company’s funds or assets in violation of regulations
or otherwise act in a manner detrimental to the interests of the Company and minority shareholders.(ii) Shareholders and Operation of General Meetings
The Company convened and held general meetings in strict compliance with the requirements of the Rules Governing
Shareholders’ General Meetings of Listed Companies the Articles of Association and the Procedural Rules of the
General Meeting. During the reporting period the Board of the Company convened and held 1 annual general
meeting and 2 extraordinary general meetings and both on-site voting and online voting were provided as channels
to participate in each general meeting to fully safeguard the rights of all shareholders especially minority shareholders
to participate in and make decisions on important matters of the Company. The meetings also conducted separate
vote counting of the votes on the resolutions of minority shareholders and disclosed them in a timely and public
manner to enable minority shareholders to enjoy equal status with other shareholders thereby ensuring that all
shareholders enjoyed equal legal status and effectively safeguard the legitimate rights and interests of minority
shareholders.
2025 ANNUAL REPORT 57VI Corporate Governance Environment and Society
I. Corporate governance (Continued)
(iii) Directors and Operation of the Board
During the reporting period the Company successfully concluded the leadership re-election of the eleventh session
of the Board in line with the needs of governance structure adjustments simultaneously revised the Procedural Rules
of the Board Meeting and the implementation rules of each special committee. The eleventh session of the Board
comprised 11 Directors with a reasonable and compliant composition which consisted of 5 executive Directors
(including 1 employee representative Director) 2 non-executive Directors and 4 independent Directors (including
one accounting professional). There are four special committees namely the Strategic and Sustainable Development
Committee the Audit Committee the Nomination Committee and the Remuneration and Assessment Committee
under the Board of the Company. In particular the Audit Committee assumed the supervisory functions stipulated
under the Company Law and duly performed its supervisory duties. During the reporting period the Company held
a total of 8 Board meetings and 11 meetings of the special committees of the Board. The Board convened Board
meetings in strict compliance with the Articles of Association and the Procedural Rules of the Board Meeting and
other relevant regulations and the implementation rules of each special committee. All directors discharged their
duties diligently attended meetings of the Board and the special committees under the Board on time and faithfully
and diligently perform their duties actively participated in operational and management decisions and faithfully
safeguarded the legitimate rights and interests of the Company and all shareholders.(iv) Operation of the independent director system
During the reporting period the independent Directors of the Company were accountable to all shareholders and
performed their duties independently impartially and prudently in strict compliance with the relevant requirements
of the Articles of Association the Administrative Rules for Independent Directors the Guidelines of Self-Regulatory
Regulations for Listed Companies on the Shenzhen Stock Exchange No. 1 – Standardised Operation of the
Companies Listed on the Main Board. There was no absence or attendance by proxy at Board meetings during
the reporting period. During the year the independent Directors of the Company convened two special meetings
of independent Directors at which they conducted prior review of matters including the proposed annual caps for
routine related party transactions for 2025 and the transfer of fund units in Chenming Huanggang Fund to Huanggang
Technology. Upon obtaining the consent of more than half of the independent Directors such matters were then
submitted to the Board for consideration thereby effectively ensuring the compliance and fairness of the relevant
transactions.(v) Information disclosure and prevention and control of inside information
The Company earnestly fulfils its information disclosure obligation effectively strengthens the confidentiality of
inside information and improve the registration and management of personnel with inside information to improve the
quality of information disclosure in accordance with the relevant requirements of the Articles of Association the Rules
Governing the Listing of Stocks on Shenzhen Stock Exchange and the Listing Rules of Hong Kong Stock Exchange.During the reporting period the Company issued periodic reports interim announcements and related documents
through the information disclosure media designated by the CSRC and the website of the Hong Kong Stock
Exchange to ensure that information disclosure was true accurate complete timely and fair. At the same time the
Company strictly complied with the Registration Management System of Insider Information and the Regulations on
Suspension and Exemption of Information Disclosure by Listed Companies. For matters involving periodic reports and
exemption circumstances the Company duly completed the registration and filing of personnel with inside information
as required. The Directors Senior Management and other personnel with inside information of the Company strictly
complied with the relevant requirements there was no case where they used inside information to buy and/or sell the
shares of the Company during the reporting period.
58 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
I. Corporate governance (Continued)
(v) Information disclosure and prevention and control of inside information (Continued)
Any material non-compliance of the laws administrative regulations and the regulatory documents on the governance
of listed companies issued by the CSRC in respect of actual governance of the Company
□ Yes √ No
There was no material non-compliance of the laws administrative regulations and the regulatory documents on the
governance of listed companies issued by the CSRC in respect of the actual governance of the Company.II. Particulars about the independence in terms of assets personnel finance organisations
and business from the controlling shareholder and beneficial controllers
The Company was completely separated from the controlling shareholder in terms of business personnel assets
organisations and finance. The Company had a comprehensive internal structure independent and complete businesses as
well as the capability of self-operation.
1. In terms of business: the Company had its own R&D production procurement and sales system and was completely
independent of controlling shareholder in terms of business. The controlling shareholder and its other subsidiaries
were not competitors of the Company in the same industry.
2. In terms of personnel: the Company had an independent workforce and had established independent departments
including the procurement department production department sales department finance department administration
department and research and development department. The Company had also established a comprehensive
management system with respect to labour personnel and salary. Personnel of the Company were independent
of the controlling shareholder. The Company’s Chairman was elected at the general meeting while deputy general
managers secretary to the Board financial controller and other Senior Management members of the Company all
worked at and received remuneration from the Company. They did not receive remuneration from related companies
of the controlling shareholder nor did they serve at any position therein other than a director or supervisor. The
appointment of the Company’s Directors and Senior Management was conducted through legal procedures and
in strict compliance with the relevant requirements of Company Law and the Articles of Association. None of the
controlling shareholders interfered with the Company’s Board or the appointment and dismissal decisions at general
meetings.
3. In terms of assets: the title relationship between the Company and the controlling shareholder was clear and the
Company’s funds assets and other resources were not illegally occupied or dominated by the controlling shareholder.The Company’s assets were complete and possessed production equipment auxiliary production equipment
patents and other assets that were in line with its production and operation scope. The Company had complete
control and dominance over all assets.
4. In terms of organisations: the Board management and other internal organisations of the Company operated
independently. Each functional department was completely separated from the controlling shareholder in terms of
authority personnel etc. There was no subordinate relationship between the controlling shareholder and its functional
departments and the Company and its functional departments. The Company’s independence in terms of its
production operation and management was not affected by the controlling shareholder.
5. In terms of finance: the Company had its own finance department accounting and auditing system and financial
management system and was able to make independent financial decisions with a standardised financial accounting
system and financial management system for subsidiaries. None of the controlling shareholders interfered with the
Company’s finance and accounting activities. The Company had a separate account in a commercial bank and there
was no sharing of bank accounts with the controlling shareholder. The Company reported on tax return and fulfilled its
tax obligations independently in accordance with the law.
2025 ANNUAL REPORT 59VI Corporate Governance Environment and Society
III. Competition in the industry
□ Applicable √ Not Applicable
IV. Directors and Senior Management
1. General information
Decrease
Increase in in the
Shareholding the number number
at the of shares of shares Shareholding
Date of the beginning of held during held during Other at the end
Status of beginning of Date of the the period the period the period changes of the period Reason for
Name Gender Age Position Office the term end of the term (shares) (shares) (shares) (shares) (shares) changes
Jiang Yanshan M 52 Chairman In office 28 October 2025 28 October 2028 0 0 0 0 0 N/A
Meng Feng M 54 Director deputy In office 28 October 2025 28 October 2028 0 0 0 0 0 N/A
general manager
Liu Peiji M 42 Director deputy In office 28 October 2025 28 October 2028 0 0 0 0 0 N/A
general manager
Li Weixian M 44 Director In office 15 June 2022 28 October 2028 362100 0 0 0 362100 N/A
Deputy general In office 28 October 2025 28 October 2028
manager
General manager Resigned 08 October 2023 28 October 2028
Zhu Yanli F 48 Director deputy In office 28 October 2025 28 October 2028 0 0 0 0 0 N/A
general manager
financial controller
Song Yuchen M 61 Director In office 28 October 2025 28 October 2028 0 0 0 0 0 N/A
Wang Ying F 51 Director In office 28 October 2025 28 October 2028 0 0 0 0 0 N/A
Zhang Zhiyuan M 63 Independent director In office 28 October 2025 28 October 2028 0 0 0 0 0 N/A
Luo Xinhua M 61 Independent director In office 28 October 2025 28 October 2028 0 0 0 0 0 N/A
Wan Gang M 53 Independent director In office 28 October 2025 28 October 2028 0 0 0 0 0 N/A
Kong Pengzhi M 44 Independent director In office 28 October 2025 28 October 2028 0 0 0 0 0 N/A
Dong Lianming M 51 Deputy general In office 28 October 2025 28 October 2028 219600 0 0 0 219600 N/A
manager
Financial controller Resigned 12 October 2018 28 October 2028
Ge Guangming M 55 Deputy general In office 15 June 2022 28 October 2028 0 0 0 0 0 N/A
manager
Yuan Xikun M 40 Deputy general In office 28 October 2025 28 October 2028 89700 0 0 0 89700 N/A
manager
Secretary to the Board In office 16 May 2018 28 October 2028
Guo Qinyan M 48 Deputy general In office 28 October 2025 28 October 2028 0 0 0 0 0 N/A
manager
60 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
IV. Directors and Senior Management (Continued)
1. General information (Continued)
Decrease
Increase in in the
Shareholding the number number
at the of shares of shares Shareholding
Date of the beginning of held during held during Other at the end
Status of beginning of Date of the the period the period the period changes of the period Reason for
Name Gender Age Position Office the term end of the term (shares) (shares) (shares) (shares) (shares) changes
Chu Hon Leung M 43 Company secretary In office 11 June 2019 28 October 2028 0 0 0 0 0 N/A
(Hong Kong)
Hu Changqing M 60 Chairman Resigned 08 November 2024 28 October 2025 792857 0 0 0 792857 N/A
Li Xingchun M 60 Vice Chairman Resigned 11 June 2019 28 October 2025 2000000 0 0 0 2000000 N/A
Li Feng M 52 Director Resigned 19 June 2020 28 October 2025 1356027 0 0 0 1356027 N/A
Deputy general Resigned 15 June 2022 28 October 2025
manager
Han Tingde M 57 Director Resigned 11 June 2019 28 October 2025 0 0 0 0 0 N/A
Li Chuanxuan M 48 Director Resigned 11 June 2019 28 October 2025 0 0 0 0 0 N/A
Li Zhihui F 67 Independent director Resigned 15 June 2022 28 October 2025 0 0 0 0 0 N/A
Sun Jianfei M 53 Independent director Resigned 11 June 2019 28 October 2025 0 0 0 0 0 N/A
Yin Meiqun F 55 Independent director Resigned 11 June 2019 28 October 2025 0 0 0 0 0 N/A
Yang Biao M 46 Independent director Resigned 11 June 2019 28 October 2025 0 0 0 0 0 N/A
Li Zhenzhong M 52 Deputy general Resigned 20 March 2011 28 October 2025 746400 0 0 0 746400 N/A
manager
Li Mingtang M 58 Deputy general Resigned 15 June 2022 28 October 2025 150000 0 0 0 150000 N/A
manager
Total － － － － － － 5716684 0 0 0 5716684 －
Other explanations: The Company is currently in a transitional stage of risk resolution; the Company has decided not to appoint the general
manager for the time being upon prudent assessment. To ensure the normal conduct of the Company’s operations Mr.Jiang Yanshan the Chairman of the Board will perform the duties of the general manager during the vacancy period until
the general manager is appointed in accordance with the prescribed procedures. The commencement date of his acting
as general manager is 28 October 2025.
2025 ANNUAL REPORT 61VI Corporate Governance Environment and Society
IV. Directors and Senior Management (Continued)
1. General information (Continued)
During the reporting period did any Director resign and was any member of the Senior Management dismissed during
their term of office
□ Yes √ No
Changes of Directors and Senior Management of the Company
√ Applicable □ Not Applicable
Name Position Type Date Reason
Jiang Yanshan Chairman Elected 28 October 2025 The new session
Meng Feng Director Elected 28 October 2025 The new session
Deputy general manager Appointed 28 October 2025 The new session
Liu Peiji Director Elected 28 October 2025 The new session
Deputy general manager Appointed 28 October 2025 The new session
Li Weixian Deputy general manager Appointed 28 October 2025 The new session
General manager Resigned upon expiry of the term 28 October 2025 The new session
Zhu Yanli Director Elected 28 October 2025 The new session
Deputy general manager Appointed 28 October 2025 The new session
financial controller
Song Yuchen Director Elected 28 October 2025 The new session
Wang Ying Director Elected 28 October 2025 The new session
Zhang Zhiyuan Independent director Elected 28 October 2025 The new session
Luo Xinhua Independent director Elected 28 October 2025 The new session
Wan Gang Independent director Elected 28 October 2025 The new session
Kong Pengzhi Independent director Elected 28 October 2025 The new session
Dong Lianming Deputy general manager Appointed 28 October 2025 The new session
Financial controller Resigned upon expiry of the term 28 October 2025 The new session
Yuan Xikun Deputy general manager Appointed 28 October 2025 The new session
Guo Qinyan Deputy general manager Appointed 28 October 2025 The new session
Hu Changqing Chairman Resigned upon expiry of the term 28 October 2025 The new session
Li Xingchun Vice Chairman Resigned upon expiry of the term 28 October 2025 The new session
Li Feng Director deputy general Resigned upon expiry of the term 28 October 2025 The new session
manager
Han Tingde Director Resigned upon expiry of the term 28 October 2025 The new session
Li Chuanxuan Director Resigned upon expiry of the term 28 October 2025 The new session
Li Zhihui Independent Director Resigned upon expiry of the term 28 October 2025 The new session
Sun Jianfei Independent Director Resigned upon expiry of the term 28 October 2025 The new session
Yin Meiqun Independent Director Resigned upon expiry of the term 28 October 2025 The new session
Yang Biao Independent Director Resigned upon expiry of the term 28 October 2025 The new session
Li Zhenzhong Deputy general manager Resigned upon expiry of the term 28 October 2025 The new session
Li Mingtang Deputy general manager Resigned upon expiry of the term 28 October 2025 The new session
62 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
IV. Directors and Senior Management (Continued)
2. Employment
Professional background major working experiences and current duties at the Company of Directors and the Senior
Management
1. Brief biographies of Directors
(1) Brief biographies of executive Directors
Mr. Jiang Yanshan is a PRC national without permanent right of abode outside the PRC. He is a member
of the Communist Party of China and holds a bachelor’s degree. Previously he served as the deputy
director and director of the general office of the Finance Bureau of Shouguang City the director of the Tax
and Fiscal Policy Research Center of Shouguang City a Party Group member of the Finance Bureau of
Shouguang City and the chief of the promotion section of the National Vegetable Standard Quality Center
(全國蔬菜標準質量中心推廣科科長). Currently he is the chairman and a deputy secretary of the Party
branch of Chenming Holdings and the Chairman of the Company.Mr. Meng Feng is a PRC national without permanent right of abode outside the PRC. He is a member of
the Communist Party of China and graduated with a diploma. Previously he served as a deputy general
manager and general the manager of Wuhan Chenming the general manager of Jiangxi Chenming a
deputy general manager of the Company the general manager of Taicang Nine Dragons Co. Ltd.(太倉
玖龍有限公司) and the general manager of Dongguan Nine Dragons Co. Ltd.(東莞玖龍有限公司). He has
received a number of honours such as the Nanchang May Day Labour Medal (南昌市五一勞動獎章) the
Weifang May Day Labour Medal for Enriching the People and Prospering Weifang (濰坊市富民興濰五一
勞動獎章) and the Suzhou May Day Labour Medal (蘇州市五一勞動獎章). Currently he is a director of
Chenming Holdings and an executive Director (employee representative Director) and a deputy general
manager of the Company.Mr. Liu Peiji is a PRC national without permanent right of abode outside the PRC. He is a member of the
Communist Party of China and holds a master’s degree. Previously he served as the deputy director
and chief of the legal section of the general office of the Comprehensive Law Enforcement Bureau of the
Cultural Market of Shouguang City (壽光市文化市場綜合執法局) deputy director of the Shouguang City
Sewage Treatment Fees Collection Office (壽光市污水處理費徵收辦公室) member of the Party Working
Committee of Shuangwangcheng Ecological Economic Zone (雙王城生態經濟園區) in Shouguang City
director of the general office of the Mechanized Forest Farm (機械林場辦公室) member of the Party
Committee secretary of the Disciplinary Committee and director of the dispatched supervision office of
Hou Town Shouguang City secretary of the Party Committee and director of the Marine and Chemical
Industry Service Center of Shouguang City (壽光市海洋化工產業服務中心) and the chairman of the
People’s Congress of Yingli Town Shouguang City. Currently he is a director and a deputy secretary of
the Party branch of Chenming Holdings and an executive Director and a deputy general manager of the
Company.
2025 ANNUAL REPORT 63VI Corporate Governance Environment and Society
IV. Directors and Senior Management (Continued)
2. Employment (Continued)
1. Brief biographies of Directors (Continued)
(1) Brief biographies of executive Directors (Continued)
Mr. Li Weixian is a PRC national without permanent right of abode outside the PRC. He holds a master’s
degree. He joined the Company in 2002 and had held positions including deputy manager of a sales
company of the Company manager of a sales company general manager of the Jiangsu region of a
sales company Chairman of a household paper company product general manager of a sales company
deputy marketing director marketing director deputy general manager of the Group chairman of the
financial division of the Group and the general manager of the Company. Currently he is a director of
Chenming Holdings and an executive Director and a deputy general manager of the Company.Ms. Zhu Yanli is a PRC national without permanent right of abode outside the PRC. She is a member
of the Communist Party of China and holds a bachelor’s degree. Previously she served as the cashier
and accountant of Shouguang Branch of China United Network Communications Corporation Limited
financial controller of Shandong Dongbao Steel Pipe Co. Ltd.* (山東東寶鋼管有限公司) assistant to the
president of Shouguang Sub-branch and general manager of the Wealth Management Department of
Weifang Branch of China Minsheng Bank president of Shouguang Sub-branch of Ping An Bank general
manager of the Retail Department and Operations Department of Weihai City Commercial Bank Weifang
Branch and deputy general manager and financial controller of Shandong Molong Petroleum Machinery
Co. Ltd. Currently she is a director of Chenming Holdings and an executive Director a deputy general
manager and the financial controller of the Company.
(2) Brief biographies of non-executive Directors
Mr. Song Yuchen is a PRC national without permanent right of abode outside the PRC. He is a member of
the Communist Party of China and holds a doctoral degree. Currently he is a professor at the School of
Business and Management of Jilin University a doctoral advisor and a leading professor Kuang Yaming
Scholar Awards at Jilin University. He has published over 100 academic papers in various CSSCI and
SSCI publications such as Financial Research (金融研究) Economist (經濟學家) Reform (改革) Finance
and Economics (財經科學) Finance Research Letters and Pacific-Basin Finance Journal and authored
Construction Empirical Research and Application of Market Effective Cycle Theory (市場有效周期理論的
構建、實證及應用) (selected into the National Achievements Library of Philosophy and Social Sciences).He proposed the renowned “Market Effective Cycle Theory” and received multiple awards. Currently he
is a non-executive Director of the Company.Ms. Wang Ying is a PRC national without permanent right of abode outside the PRC. She holds a
bachelor’s degree. Previously she served as the financial controller of Qingzhou Hulinggu Cultural
Tourism Development Co. Ltd (青州胡林古文化旅遊發展有限公司). Currently she is an auditor at
Shandong Shiji Yuanfei Accounting Firm Co. Ltd. (山東世紀鳶飛會計師事務所有限公司) and financial
controller of Shandong Shiji Yuanfei Credit Rating Co. Ltd. (山東世紀鳶飛信用評估有限公司) Weifang
Puhui Assets Appraisal Firm (General Partnership) (濰坊普惠資產評估事務所(普通合夥)) the Shandong
Branch of Zhongshuiwang (Beijing) Certified Public Accountants (Special General Partnership) (中稅網(北
京)會計師事務所(特殊普通合夥)山東分所) and a non-executive Director of the Company.
64 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
IV. Directors and Senior Management (Continued)
2. Employment (Continued)
1. Brief biographies of Directors (Continued)
(3) Brief biographies of independent non-executive Directors
Mr. Zhang Zhiyuan is a PRC national without permanent right of abode outside the PRC. He is a member
of the Communist Party of China and holds a doctoral degree. He is a Level-2 Professor (二級教授) and
a doctoral advisor an expert enjoying special government allowance from the State Council an expert of
the Shandong Provincial Decision-Making Advisory Committee (2023-2026) an expert consultant for the
Standing Committee of the People’s Congress of Shandong Province (2023-2027) and the chief expert
at the Key Discipline of Finance recognised by Shandong Province. He has been selected as a High-
end Financial Talent of Shandong Province and a High-end Think Tank Talent of Shandong Province.Currently he is the dean of the Industrial Development Research Institute of Shandong University of
Finance and Economics the dean of the Shandong Fiscal Strategy Research Institute (a Key New Think
Tank of Shandong Province) and the dean of the China Art Finance Research Institute (中國藝術金融
研究院) and the president of the Shandong Regional Economics Society. He concurrently serves as an
independent director of Shandong Wit Dyne Health Co. Ltd. (000915. SZ) and an independent Director of
the Company.Mr. Luo Xinhua is a PRC national without permanent right of abode outside the PRC. He is a member of
the Communist Party of China and holds a postgraduate degree. Previously he served as assistant dean
of the School of Management of Shandong University deputy director of the MBA Education Center
of Shandong University deputy director of the Professional Master Education Center of the School
of Management (管理學院專業碩士教育中心) director of the EDP Center and head of the Accounting
Research Institute. Currently he is the director of the Professional Manager Research Center of Shandong
University holds a Ph.D. in Management and is a Professor of Accounting and a master’s advisor.He concurrently serves as an independent director of Sansec Technology Co. Ltd. (688489.SH) Jinlei
Technology Co. Ltd. (300443.SZ) and ZHONGTAI FUTURES Company Limited (01461.HK) and an
independent Director of the Company.Mr. Wan Gang is a PRC national and a member of the Communist Party of China without permanent
right of abode outside the PRC. He holds a master’s degree. Previously he served as the deputy general
manager of the Accounting Department and Operations Management Department of China Construction
Bank Qingdao Branch general manager of the Accounting Department and Business Department of
China CITIC Bank Qingdao Branch assistant to the president of Chang’an International Trust Co. Ltd.(長安國際信託股份有限公司) and vice president of Zhongtai Trust Co. Ltd. Currently he is the chairman
of Zhongcai Longma (Beijing) Management Consulting Co. Ltd. (中財龍馬(北京)管理諮詢有限公司).He concurrently serves as an independent director of Tanac Automation Co. Ltd. (300461.SZ) and an
independent Director of the Company.Mr. Kong Pengzhi is a PRC national without permanent right of abode outside the PRC. He is a member
of the Communist Party of China and holds a doctoral degree. Previously he served as the deputy dean
of the MBA School of Shandong University of Finance and Economics. Currently he is a master’s advisor
at Shandong University of Finance and Economics deputy dean of the Yellow River College of Business
director of the Low Carbon Strategy and Policy Research Center of International School of Low Carbon
Studies industrial economic consultant for Taihua Intelligence Industry Group Co. Ltd (泰華智慧產業集團
股份有限公司) and an independent Director of the Company.
2025 ANNUAL REPORT 65VI Corporate Governance Environment and Society
IV. Directors and Senior Management (Continued)
2. Employment (Continued)
2. Brief biographies of Senior Management
The profiles of Mr. Li Weixian Mr. Liu Peiji Mr. Meng Feng deputy general managers of the Company and Ms.Zhu Yanli a deputy general manager and the financial controller of the Company are set out in their respective
biographies as executive Directors.Mr. Dong Lianming is a PRC national without permanent right of abode outside the PRC. He is a member of the
Communist Party of the PRC and an accountant. He holds a bachelor’s degree. He joined the Company in 1997
and had held positions as the chief of accounting and auditing section under the financial department of the
Company the deputy chief and chief of the financial department chief accountant of Jiangxi Chenming chief
accountant of Shandong Chenming Panels and financial controller and deputy general manager of Zhanjiang
Chenming and the financial controller of the Company. He is currently a deputy general manager of the
Company.Mr. Ge Guangming is a PRC national without permanent right of abode outside the PRC. He is a member of
the Communist Party of the PRC. He joined the Company in 1995 and had held positions as deputy general
project manager of the Company deputy general manager of Jilin Chenming assistant to general manager of
the Company and deputy general manager responsible for the Zhanjiang Chenming project and the Huanggang
Chenming Pulp & Paper project. He is currently a deputy general manager of the Company.Mr. Yuan Xikun is a PRC national without permanent right of abode outside the PRC. He is a member of the
Communist Party of the PRC. He holds a bachelor’s degree in management. He joined the Company in 2010
and had held positions as the accountant for consolidated financial statements in the financial department of
the Group the manager of the information disclosure section the security affairs representative and a deputy
chief of the securities investment department. He is currently a deputy general manager and the secretary to the
Board of the Company.Mr. Guo Qinyan is a PRC national without permanent right of abode outside the PRC. He holds a bachelor’s
degree. He joined the Company in 1995 and had held positions as the director in the production department
of the Group chief of the production department and deputy general manager of Jilin Chenming the general
manager of the forestry company the general manager of the financial leasing company assistant to the
president and vice president of the Group. He is currently a deputy general manager of the Company.
66 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
IV. Directors and Senior Management (Continued)
2. Employment (Continued)
2. Brief biographies of Senior Management (Continued)
Mr. Chu Hon Leung is a PRC national and resident of Hong Kong China. He is a lawyer. He obtained a
bachelor’s degree in business from Macquarie University Sydney Australia and a postgraduate diploma in law
from The College of Law London England. He graduated from the City University of Hong Kong and obtained
a diploma in Hong Kong law. He had been a lawyer in local and international law firms in Hong Kong and
served and an internal consultant for leading Chinese asset management companies. In addition to Shandong
Chenming Paper Holdings Limited he also served as joint company secretary of three other listed companies in
Hong Kong. He has been a practicing lawyer in Hong Kong since 2009 and currently works for Li & Partners.Controlling shareholder and beneficial controller concurrently serving as Chairman and general manager of the
Company
□ Applicable √ Not applicable
Employment at the shareholder of the Company
√ Applicable □ Not applicable
Receipt of any
remuneration or
Position at the allowance from the
Name of shareholder of shareholder of the Date of the Date of the end shareholder of the
Name of employee the Company Company beginning of the term of the term Company or not
Jiang Yanshan Chenming Holdings Company Limited Chairman 5 November 2025 19 November 2027 No
Li Weixian Chenming Holdings Company Limited Director 19 November 2024 19 November 2027 No
Liu Peiji Chenming Holdings Company Limited Director 5 November 2025 19 November 2027 No
Zhu Yanli Chenming Holdings Company Limited Director 5 November 2025 19 November 2027 No
Meng Feng Chenming Holdings Company Limited Director 27 January 2026 19 November 2027 No
Explanation of the employment at theN il
shareholder of the Company
2025 ANNUAL REPORT 67VI Corporate Governance Environment and Society
IV. Directors and Senior Management (Continued)
2. Employment (Continued)
2. Brief biographies of Senior Management (Continued)
Employment at other units
√ Applicable □ Not applicable
Receipt of any
remuneration or
Date of the Date of the end allowance from
Name of employee Name of other unit(s) Position at other unit(s) beginning of the term of the term other units or not
Wang Ying Shandong Shiji Yuanfei Accounting Firm Co. Ltd. Auditor May 2018 No
Wang Ying Shandong Shiji Yuanfei Credit Rating Co. Ltd. Financial controller May 2025 Yes
Wang Ying Weifang Puhui Assets Appraisal Firm (General Partnership) Financial controller May 2025 No
Shandong Branch of Zhongshuiwang (Beijing) Certified
Wang Ying Public Accountants (Special General Partnership) Financial controller December 2024 No
Zhang Zhiyuan Shandong Wit Dyne Health Co. Ltd. Independent director 17 August 2021 30 December 2027 Yes
Luo Xinhua Sansec Technology Co. Ltd. Independent director 13 October 2023 12 October 2026 Yes
Luo Xinhua Jinlei Technology Co. Ltd. Independent director 27 October 2021 Yes
Luo Xinhua ZHONGTAI FUTURES Company Limited Independent director 22 June 2022 Yes
Luo Xinhua Shandong Pengda Ecological Technology Co. Ltd. Independent director July 2022 Yes
Zhongcai Longma (Beijing) Education Consulting Co. Ltd.Wan Gang (中財龍馬(北京)教育諮詢有限公司) Director manager 10 August 2018 Yes
Longma Changlian (Beijing) Management Consulting Co. Ltd.Wan Gang (龍馬暢聯(北京)管理諮詢有限公司) Director manager 11 July 2022 No
Wan Gang Zhongcai Longma (Beijing) Management Consulting Co. Ltd. Director manager 10 August 2018 No
Beijing Boying Management Consulting Co. Ltd. Director manager financial
Wan Gang (北京博瀛管理諮詢有限公司) controller 20 January 2025 No
Dong Lianming Hebei Chenming Zhongjin Real Estate Development Co. Ltd. Director 20 October 2014 No
Explanation of the employment at other units of the Company Nil
Sanctions against current Directors and Senior Management of the Company and those who resigned during
the reporting period by securities regulatory authorities in the past three years
□ Applicable √ Not applicable
68 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
IV. Directors and Senior Management (Continued)
3. Remuneration of Directors and Senior Management
Decision process basis for determining the remuneration and actual payment for the remuneration of Directors
and the Senior Management
(1) Determination basis for remuneration of Directors and the Senior Management: The annual remuneration of
each of the executive Directors and the Senior Management of the Company was in the band of RMB0.20
million to RMB5.00 million and the specific amount for each of them was determined by the remuneration
committee based on the main financial indicators and operation target completed by the Company the scope of
work and main responsibilities of the Directors and Senior Management of the Company the target completion
of the Directors and Senior Management as assessed by the duty and performance appraisal system as well
as business innovation capability and profit generation ability of the Directors and the Senior Management. As
approved at the 2022 first extraordinary general meeting and the 2025 first extraordinary general meeting of the
Company the Company paid each of the independent non-executive Directors and non-executive Directors
of the Company allowance of RMB200000 (before tax). The travel expenses for attending board meetings
supervisory meetings and general meetings of the Company and fees reasonably incurred in the performance
of their duties under the Articles of Association by independent non-executive Directors and non-executive
Directors are reimbursed as expensed.
(2) Decision process for remuneration of Directors and Senior Management: In accordance with the relevant
policies and regulations such as the Implementation Rules of the Remuneration and Assessment Committee
under the Board any remuneration plan for the Company’s executive Directors proposed by the remuneration
and assessment committee shall be agreed on by the Board and then submitted to the general meeting for
consideration and approval prior to implementation. Any proposal of remuneration distribution plan for the
Senior Management officers of the Company shall be submitted to the Board for approval. The remuneration of
independent non-executive Directors and non-executive Directors of the Company shall be agreed on by the
Board and then submitted to the general meeting for consideration and approval prior to implementation.
(3) The remuneration and assessment committee which was set up by the Board according to the resolution of the
general meeting is mainly responsible to formulate the standards of carry out appraisal in respect of the non-
independent Directors and Senior Management of the Company; formulate and examine the remuneration policy
and scheme of the non-independent Directors and Senior Management of the Company and accountable to
the Board.
2025 ANNUAL REPORT 69VI Corporate Governance Environment and Society
IV. Directors and Senior Management (Continued)
3. Remuneration of Directors and Senior Management (Continued)
Remuneration of Directors and Senior Management of the Company during the reporting period
Unit: RMB’0000
Total Receipt of
remuneration Total remuneration
before tax deferred from related
received from remuneration parties of the
Name Gender Age Position Status the Company amount Company or not
Jiang Yanshan M 52 Chairman In office 5.60 2.07 No
Meng Feng M 54 Director and deputy general manager In office 14.85 0.29 No
Liu Peiji M 42 Director and deputy general manager In office 5.57 2.06 No
Li Weixian M 44 Director and deputy general manager In office 79.63 91.31 No
Zhu Yanli F 48 Director and deputy general manager In office 6.14 2.30 No
financial controller
Song Yuchen M 61 Director In office 3.33 0.00 No
Wang Ying F 51 Director In office 3.33 0.00 No
Zhang Zhiyuan M 63 Independent Director In office 3.33 0.00 No
Luo Xinhua M 61 Independent Director In office 3.33 0.00 No
Wan Gang M 53 Independent Director In office 3.33 0.00 No
Kong Pengzhi M 44 Independent Director In office 3.33 0.00 No
Dong Lianming M 51 Deputy general manager In office 36.93 41.28 No
Ge Guangming M 55 Deputy general manager In office 54.26 71.95 No
Yuan Xikun M 40 Deputy general manager and In office 34.30 26.69 No
secretary to the Board
Guo Qinyan M 48 Deputy general manager In office 12.52 2.05 No
Chu Hon Leung M 43 Company secretary (Hong Kong In office 0.00 0.00 No
Hu Changqing M 60 Chairman Resigned 145.49 103.45 No
Li Xingchun M 60 Vice Chairman Resigned 6.00 0.00 Yes
Li Feng M 52 Director and deputy general manager Resigned 13.23 2.12 No
Han Tingde M 57 Director Resigned 8.34 8.33 No
Li Chuanxuan M 48 Director Resigned 8.34 8.33 No
Li Zhihui M 67 Independent Director Resigned 8.34 8.33 No
Sun Jianfei M 53 Independent Director Resigned 8.34 8.33 No
Yin Meiqun F 55 Independent Director Resigned 8.34 8.33 No
Yang Biao M 46 Independent Director Resigned 8.34 8.33 No
Li Zhenzhong M 52 Deputy general manager Resigned 36.05 48.79 No
Li Mingtang M 58 Deputy general manager Resigned 9.51 1.65 No
Total － － － － 530.10 445.99 －
Note: The above income represents the income of Directors and Senior Management during their tenure.
70 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
IV. Directors and Senior Management (Continued)
3. Remuneration of Directors and Senior Management (Continued)
Assessment basis for actual remuneration of all Directors Determined based on the Company’s operating results
and Senior Management as at the end of the reporting completion of performance indicators and individual
period performance.Assessment completion status for actual remuneration of Completed
all Directors and Senior Management as at the end of
the reporting period
Deferred payment arrangement for actual remuneration In view of the fact that during the reporting period the
of all Directors and Senior Management as at the end Company was in a critical stage of resumption of
of the reporting period operation and production and mitigation of debt risks
and having taken into account the actual operation and
results of the Company the remuneration of certain
Directors and senior management was deferred.Clawback or forfeiture arrangement for actual Nil
remuneration of all Directors and senior management at
the end of the reporting period
Other explanation
□ Applicable √ Not applicable
2025 ANNUAL REPORT 71VI Corporate Governance Environment and Society
V. Performance of Directors during the reporting period
1. Attendance of Directors at Board meetings and general meetings
Attendance of Directors at Board meetings and general meetings
Number of
attendance
required for Attendance Attendance Absent from
Board meetings at Board at Board Attendance at Absence Board meetings Attendance
during the meetings in meetings by Board meetings from Board twice in a row at general
Name of Directors reporting period person communication by proxy meetings (in person) meetings
Jiang Yanshan 3 1 2 0 0 No 2
Meng Feng 3 1 2 0 0 No 1
Liu Peiji 3 1 2 0 0 No 2
Li Weixian 8 1 7 0 0 No 3
Zhu Yanli 3 1 2 0 0 No 2
Song Yuchen 3 1 2 0 0 No 2
Wang Ying 3 1 2 0 0 No 2
Zhang Zhiyuan 3 1 2 0 0 No 2
Luo Xinhua 3 1 2 0 0 No 2
Wan Gang 3 1 2 0 0 No 2
Kong Pengzhi 3 1 2 0 0 No 2
Hu Changqing 5 0 5 0 0 No 2
Li Xingchun 5 0 5 0 0 No 1
Li Feng 5 0 5 0 0 No 0
Han Tingde 5 0 5 0 0 No 2
Li Chuanxuan 5 0 5 0 0 No 2
Li Zhihui 5 0 5 0 0 No 2
Sun Jianfei 5 0 5 0 0 No 2
Yin Meiqun 5 0 5 0 0 No 0
Yang Biao 5 0 5 0 0 No 2
Explanation for absent from Board meetings twice in a row (in person)
During the reporting period none of the Directors was absent from Board meetings twice in a row (in person).
2. Objections from Directors on related issues of the Company
Were there any objections on related issues of the Company from Directors
□ Yes √ No
There was no objection on related issues of the Company from Directors during the reporting period.
72 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
V. Performance of Directors during the reporting period (Continued)
3. Other details about the performance of duties by Directors
Were there any suggestions from Directors adopted by the Company
√ Yes □ No
Explanation on the adoption or non-adoption of suggestions related to the Company from the Directors
During the reporting period all Directors of the Company devoted to their duties diligently in strict compliance with
the requirements of the laws and regulations regulatory documents and the systems of the Company such as the
Company Law of the People’s Republic of China the Securities Law of the People’s Republic of China the Rules
Governing the Listing of Stocks on Shenzhen Stock Exchange the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited the Articles of Association and the Procedural Rules of the Board Meeting.They actively attended Board meetings meetings of special committees under the Board and general meetings at
which they carefully considered various resolutions and prudently made scientific decisions and expressed clear
opinions on all matters under consideration with no dissenting or abstaining votes. They closely monitored matters
such as the resumption of operation and production at the Company’s production bases the provision for impairment
of assets corporate governance and internal control management conducted on-site inspections of production
bases understood the operation of restarted production lines and the status of product production and sales and
provided constructive suggestions for the Company’s operation and development by leveraging their professional
expertise. The members of the Audit Committee had fully communicated with Grant Thornton (Special General
Partnership) the auditor of the Company on the timetable key concerns and audit scope of the annual report raised
requirements on the independence of the audit work and the staffing of the audit team so as to effectively safeguard
the legitimate rights and interests of the Company and all shareholders.
2025 ANNUAL REPORT 73VI Corporate Governance Environment and Society
VI. Special committees under the Board during the reporting period
Number of
Name of the meeting Important opinion Details of
committee Member convened Convening date Details of the meeting and advice Other duties performed objection
Audit Committee Yin Meiqun Li Zhihui 3 31 March 2025 Consideration of the 2024 Annual Consent to submission to the Reporting to the Board on the Audit Nil
and Sun Jianfei Report Full Text and Summary Board for consideration Committee’s performance of its
of the Company the 2024 Self- supervisory responsibilities for and
assessment Report on Internal communication with Grant Thornton
Control of the Company the (Special General Partnership)
2024 Financial Final Accounts before during and after the audit
Report of the Company the of the annual report for 2024
Report on the Assessment of the endorsed the audit opinion issued
Accounting Firm’s Performance for by the auditor on the Company’s
2024 and the Audit Committee’s internal control and financial
Performance of Supervisory reporting assessment of its
Responsibilities the Resolution performance for 2024; in addition
on Re – appointment of Auditor review of the independence and
for 2025 and the Resolution on qualifications of the auditor consent
Provision for Impairment of Assets to re-appointing Grant Thornton
in the Second Half of 2024 (Special General Partnership) as the
Company’s auditor for 2025.
29 April 2025 Consideration of the 2025 First Consent to submission to the Review of the 2025 First Quarterly Nil
Quarterly Report of the Company Board for consideration Report of the Company.
8 August 2025 Consideration of the 2025 Interim Consent to submission to the Review of the 2025 Interim Financial Nil
Report Full Text and Summary of Board for consideration Report of the Company with a
the Company particular focus on the Company’s
external guarantees and financial
transactions with related parties in
the first half of 2025.Luo Xinhua Zhang 2 28 October 2025 Consideration of the Resolution in Consent to submission to the Qualification review of the proposed Nil
Zhiyuan and Wang Relation to the Appointment of Board for consideration financial controller including her
Ying the Financial Controller of the professional background work
Company experience and relationship with the
Company. Upon review Ms. Zhu
Yanli was qualified to serve as the
financial controller.
30 October 2025 Consideration of the 2025 Third Consent to submission to the Review of the 2025 Third Quarterly Nil
Quarterly Report of the Company Board for consideration Report of the Company and paying
and the Resolution on Provision attention to the provision for
for Impairment of Assets in the impairment of assets for the first
First Nine Months of 2025 three quarters
74 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
VI. Special committees under the Board during the reporting period (Continued)
Number of
Name of the meeting Important opinion Details of
committee Member convened Convening date Details of the meeting and advice Other duties performed objection
Nomination Li Zhihui Hu Changqing 1 10 October 2025 Consideration of the Resolution Consent to submission to the Qualification review of the candidates Nil
Committee and Yin Meiqun in Relation to the Election of Board for consideration for the eleventh session of the
Candidates for Non-Independent Board and none of the candidates
Directors of the Eleventh Session were found to be in circumstances
of the Board and the Resolution as stipulated by laws regulations
in Relation to the Election of or other normative documents that
Candidates for Independent Non- would disqualify them from serving
Executive Directors of the Eleventh as Directors.Session of the Board
Wan Gang Jiang Yanshan1 28 October 2025 Consideration of the Resolution in Consent to submission to the Review of the appointment materials Nil
and Kong Pengzhi Relation to the Appointment of Board for consideration of the proposed deputy general
Deputy General Managers of managers financial controller
the Company the Resolution board secretary and company
in Relation to the Appointment secretary and securities
of the Financial Controller of affairs representatives and no
the Company The Resolution circumstances were found that
in Relation to the Appointment would render the candidates
of the Secretary to the Board of unsuitable to serve as Senior
the Company and the Company Management company secretary or
Secretary the Resolution in securities affairs representatives.Relation to the Appointment of the
Securities Affairs Representatives
of the Company
Remuneration and Yang Biao Li Xingchun 2 31 March 2025 Consideration of the Resolution on Consent to submission to the Review of the performance assessment Nil
Assessment and Sun Jianfei 2024 Remuneration Distribution Board for consideration on executive Directors and senior
Committee of the Directors Supervisors and management and Supervisors
Senior Management who assume specific management
positions in the Company and
determination of the remuneration
of Directors Supervisors and the
Senior Management based on the
operations of the Company in 2024.
10 October 2025 Consideration of the Resolution Consent to submission to the With reference to the remuneration of Nil
in relation to Allowances for Board for consideration directors of other listed companies
Non-Executive Directors and of similar scale and taking into
Independent Non-Executive account the Company’s actual
Directors of the Eleventh Session operating conditions and duties
of the Board performed the allowances for
non-executive Directors and
independent non-executive
Directors were confirmed.
2025 ANNUAL REPORT 75VI Corporate Governance Environment and Society
VI. Special committees under the Board during the reporting period (Continued)
Number of
Name of the meeting Important opinion Details of
committee Member convened Convening date Details of the meeting and advice Other duties performed objection
Strategic and Hu Changqing Yang Biao 1 31 March 2025 Consideration of the 2024 Consent to submission to the Review of the 2024 Environmental Nil
Sustainable and Li Weixian Environmental Social and Board for consideration Social and Governance Report of
Development Governance Report of the the Company
Committee Company
Jiang Yanshan Meng 1 12 December Consideration of the Resolution in Consent to submission to the Review of the audit report and Nil
Feng and Kong 2025 Relation to the Divestment of Board for consideration valuation report related to the assets
Pengzhi Assets Related to the Financial under this transaction verification
Leasing Business. of the basic information of the
counterparty and its relationship
with the Company examination
of the contents of the agreement
to be signed and analysis of the
necessity reasonableness and
fairness of the transaction.VII. Performance of duties by the Audit Committee
Were there any risks of the Company identified by the Audit Committee when performing its duties during the reporting
period
□ Yes √ No
None of those issues under the supervision was objected by the Audit Committee during the reporting period.
76 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
VIII. Personnel of the Company
1. Number of staff specialty composition and education level
Number of staff at the Company (person) as at the end of the reporting period 1987
Number of staff at major subsidiaries (person) as at the end of the reporting period 7005
Total number of staff (person) as at the end of the reporting period 8992
Total number of staff receiving remuneration during the period (person) 8992
Number of retired/resigned staff the Company and its major subsidiaries are required to
compensate (person) 0
Specialty composition
Number of people
Category of specialty composition (person)
Production staff 5926
Sales staff 349
Technical staff 359
Financial staff 127
Administrative staff 1086
Other staff 1145
Total 8992
Education level
Number of people
Category of education level (person)
Postgraduate and above 18
Undergraduate 774
Post-secondary 2121
Technical secondary and below 6079
Total 8992
2025 ANNUAL REPORT 77VI Corporate Governance Environment and Society
VIII. Personnel of the Company (Continued)
2. Remuneration policies
The remuneration of the employees of the Company includes their salaries bonuses and other fringe benefits. Subject
to the relevant laws and regulations the Company adopts different standards of remuneration for different employees
which are determined based on their position skill variety performance etc. with reference to the remuneration level
in the labour market the average level of salary in the society and the corporate reference line set by the government.The Company provides various benefits to the employees including social insurance housing allowance and paid
leaves etc.
3. Training programmes
The Company has established comprehensive staff promotion and incentive mechanisms to enhance the enthusiasm
and creativity of employees. The Company focuses on the cooperation with quality training institutions to introduce
quality training programmes especially focusing on improving the capability of middle-level and senior management
in respect of learning management and action. The Company deep dives into front-line of production to understand
the true needs of employees for trainings improve the operational skills of employees and enhance our core
competitiveness.
4. Labour outsourcing
□ Applicable √ Not applicable
IX. Profit distribution of the Company and conversion of capital reserves into share capital
Formulation implementation or adjustment of profit distribution policy especially the cash dividend during the reporting
period
□ Applicable √ Not applicable
The Company was profitable during the reporting period and the Parent Company’s profit available for distribution to
shareholders was positive but no cash dividend distribution plan was proposed
□ Applicable √ Not applicable
Was the profit distribution plan (including no dividend and no capitalisation of reserves) considered by the Board during the
Reporting Period
√ Yes □ No
Profit distribution and conversion of capital reserves into share capital during the reporting period
□ Applicable √ Not applicable
The Company does not propose distribution of cash dividends or bonus shares for the year and there will be no increase of
share capital from reserves.
78 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
X. Implementation of the equity incentive plan employee shareholding plan or other employee
incentive measure of the Company
√ Applicable □ Not applicable
1. Equity incentive
(1) Overview of the 2020 Restricted A Share Incentive Scheme
* Purpose of the Share Incentive Scheme
In order to further improve the corporate governance structure of the Company promote the
establishment and improvement of long-term incentive and restraint mechanisms fully mobilise the
enthusiasm responsibility and mission of the directors core technology and business key personnel and
bond the interests of Shareholders the Company and individual operators together effectively making
all parties to attend to the long-term development of the Company and work together for it; at the same
time in order to further promote the long-term behaviour of decision-makers and operators promote
the sustainable and steady development of the Company and maximise the value of the Company and
shareholders the 2020 Restricted A Share Incentive Scheme was formulated on the premise of fully
protecting the interests of Shareholders and on the principle of income equivalent to contribution and
in compliance with the relevant requirements under the laws and regulations such as the Company Law
and the Securities Law regulatory documents and the Articles of Association combined with the existing
management systems of the Company including the remuneration mechanism and performance appraisal
system.* Participants under the Share Incentive Scheme
The number of the participants under the 2020 Restricted A Share Incentive Scheme shall be 111
specifically including:
(i) Directors senior management members of the Company (ii) key technical (business) employees of
the Company and (iii) the persons who in the opinion of the Board are qualified. The participants
under the 2020 Restricted A Share Incentive Scheme exclude independent non-executive Directors
Supervisors and Shareholders individually or in aggregate holding 5% or more of the shares of
the Company or the de facto controllers and their spouses parents or children. Among the above
participants a director or senior management member must have been elected at a general meeting
or engaged by the Board. All participants should be engaged employed or hired by the Company
or any of the branch or subsidiary of the Company at the time of granting under the Share Incentive
Scheme and during the appraisal period. All of the participants under the Incentive Scheme shall
not participate in an incentive scheme of any other listed company concurrently and any of the
participants who has participated in an incentive scheme of any other listed company shall not
participate in the Incentive Scheme. No other persons who are not Directors nor employees of the
Company are qualified as participants.* Number of shares granted and the grant price
The Company issued and granted 79.6 million restricted A shares to 111 participants on 29 May 2020
under the 2020 Restricted A Share Incentive Scheme (Draft) of the Company. This grant shall be one-off
in nature without reserved portion. The grant price of the restricted shares shall be RMB2.85 per share. A
participant may purchase the restricted shares of the Company issued by the Company to the Participants
at RMB2.85 per share. During the reporting period the total shares to be issued under the Scheme
represented approximately 0% of the shares in issue (excluding the treasury shares) of the Company.
2025 ANNUAL REPORT 79VI Corporate Governance Environment and Society
X. Implementation of the equity incentive plan employee shareholding plan or other employee
incentive measure of the Company (Continued)
1. Equity incentive (Continued)
(1) Overview of the 2020 Restricted A Share Incentive Scheme (Continued)
* Basis of determination of the grant price
The grant price of the restricted shares granted by the Company via means of issuing additional shares
under the Incentive Scheme shall be determined according to principle of fair market price and shall be
the higher of the followings:
(i) 60% of the closing price of the shares of the Company on the last trading day before the date of the
announcement of the Incentive Scheme;
(ii) 60% of the average closing prices of the shares of the Company on the last 30 trading days before
the date of the announcement of the Incentive Scheme;
(iii) 60% of the average trading prices (the total transaction value for the last trading days divided by the
total transaction volume for the last trading days) of the shares of the Company on the last trading
day before the date of the announcement of the Incentive Scheme;
(iv) 60% of the average trading price (the total transaction value for the last 20 trading days divided by
the total transaction volume for the last 20 trading days) of the shares of the Company on the last
20 trading days before the date of the announcement of the Incentive Scheme; or
(v) the nominal value of the shares of Company being RMB1 per share.Based on the above pricing principles the grant price of the restricted shares to be granted under the
Incentive Scheme shall be RMB2.85 per share.The restricted shares granted to the participants shall be funded by themselves. The Company shall
undertake not to provide loans loan guarantee and any other form of financial assistance to the
participants for the acquisition of the restricted shares under the Incentive Scheme.* Validity period and lock-up periods of the Share Incentive Scheme
The validity period of the Incentive Scheme shall commence on the date on which the registration of the
grant of the restricted shares is completed and end on the date on which all the restricted shares granted
to the participants are unlocked or repurchased and cancelled which shall not exceed 60 months.On 14 July 2020 the Company completed the registration of the restricted shares granted under the
Scheme with the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited. The
Incentive Scheme is valid until 14 July 2025. The lock-up periods of the restricted shares granted under
the Incentive Scheme shall be 24 months 36 months and 48 months from the date of registration of the
restricted shares under the grant.
80 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
X. Implementation of the equity incentive plan employee shareholding plan or other employee
incentive measure of the Company (Continued)
1. Equity incentive (Continued)
(1) Overview of the 2020 Restricted A Share Incentive Scheme (Continued)
* Validity period and lock-up periods of the Share Incentive Scheme (Continued)
The share awards granted under the Scheme do not have a vesting period. After 24 months from the
date of completion of the registration of the grant of restricted shares granted under the Scheme if the
unlocking conditions of the restricted shares are satisfied the participants will unlock in three phases
within the next 36 months. Upon expiry of each lock-up period the Company shall proceed with the
unlocking for the participants who satisfy the unlocking conditions and the restricted shares held by
participants who do not satisfy the unlocking conditions shall be repurchased and cancelled by the
Company. The table below sets out the unlocking period and unlocking schedule for the restricted shares
under each grant:
Percentage of the
restricted shares
to be unlocked
of total number
of the restricted
shares
Unlocking period Description of the unlocking period granted
First unlocking Commencing from the first trading day after expiry of the 24-month period 40%
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
Second unlocking Commencing from the first trading day after expiry of the 36-month period 30%
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
Third unlocking Commencing from the first trading day after expiry of the 48-month period 30%
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
Note: The completion date of registration of the grant of the restricted A shares is 14 July 2020.The participants correspond to the restricted shares that cannot be unlocked during the unlocking period
and cannot be deferred to the future years to unlock the restricted shares. These restricted shares shall be
repurchased and cancelled by the Company. The repurchase price is the price granted for the restricted
shares plus the bank loan interest rate for the same period.
2025 ANNUAL REPORT 81VI Corporate Governance Environment and Society
X. Implementation of the equity incentive plan employee shareholding plan or other employee
incentive measure of the Company (Continued)
1. Equity incentive (Continued)
(1) Overview of the 2020 Restricted A Share Incentive Scheme (Continued)
* The maximum number of the shares to be granted to a participant
The total number of shares to be issued and granted under the Incentive Scheme during the validity
period shall not exceed 10% of the total issued share capital of the Company and the total number of the
restricted shares to be granted under the Incentive Scheme during the validity period to the participant
shall not exceed 1% of the total issued share capital of the Company.* The period for the exercise of the share options by a participant under the scheme
Not applicable
* The amount if any payable on application for or acceptance of an award and the period within which
payment or notification of payment is to be made or the loan on application for an award is to be repaid
No payment is to be made on acceptance of an award.
(2) Relevant procedures performed under the 2020 Restricted A Share Incentive Scheme
* On 30 March 2020 the Company convened the ninth extraordinary meeting of the ninth session of the
Board at which the Company considered and approved the Resolution in Relation to the 2020 Restricted
Share Incentive Scheme of Shandong Chenming Paper Holdings Limited (Draft) and Its Summary
and other resolutions. On the same date the fourth extraordinary meeting of the ninth session of the
Supervisory Committee of the Company considered and approved the above resolutions and verified
the list of proposed participants of the incentive scheme. Independent Directors of the Company issued
independent opinions on the incentive scheme.* On 3 April 2020 the Company announced the list of participants through the Company’s internal website
for a period from 3 April 2020 to 12 April 2020. During the period the Supervisory Committee of the
Company and relevant departments did not receive any objection against the proposed participants. The
Supervisory Committee verified the list of participants under the grant of the incentive scheme.* On 15 May 2020 the Company convened the 2020 second extraordinary general meeting the 2020
first class meeting for holders of domestic-listed shares and the 2020 first class meeting for holders of
overseas – listed shares at which the Company considered and approved the Resolution in Relation to
the 2020 Restricted Share Incentive Scheme of Shandong Chenming Paper Holdings Limited (Draft) and
Its Summary and other resolutions. On 16 May 2020 the Company disclosed the Self-Examination Report
for the Trading of Shares of the Company by Insiders and Participants of the 2020 Restricted A Share
Incentive Scheme.
82 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
X. Implementation of the equity incentive plan employee shareholding plan or other employee
incentive measure of the Company (Continued)
1. Equity incentive (Continued)
(2) Relevant procedures performed under the 2020 Restricted A Share Incentive Scheme (Continued)
* On 29 May 2020 the Company convened the tenth extraordinary meeting of ninth session of the Board
and the fifth extraordinary meeting of the ninth session of the Supervisory Committee at which the
Company considered and approved the Resolution on the Matters Relating to Adjustments to the 2020
Restricted A Share Incentive Scheme of the Company and the Resolution in Relation to the Grant of
Restricted Shares to the Participants approving the issue of 79600000 restricted A shares to 111
participants at the price of RMB2.85 per share on 29 May 2020.* On 15 July 2020 the 79600000 restricted A shares granted to the participants were listed.* On 18 July 2022 the Company convened the second extraordinary meeting of the tenth session of the
Board and the first extraordinary meeting of the tenth session of the Supervisory Committee at which
the Company considered and approved the Resolution on the Fulfilment of the Unlocking Conditions
of the Restricted Shares Granted under the 2020 Restricted A Share Incentive Scheme during the First
Unlocking Period and the Resolution on the Adjustment to the Repurchase Price of the 2020 Restricted A
Share Incentive Scheme and Repurchase and Cancellation of Certain Restricted Shares. The independent
Directors of the Company issued independent opinions to agree with such resolutions.
96 participants fulfilled the unlocking conditions for the first unlocking period under the 2020 Restricted A
Share Incentive Scheme with 29948000 restricted shares being eligible for unlocking. 15 participants had
resigned had changed duty and had been removed from office which failed to comply with the unlocking
conditions. The total number of restricted shares granted to and held by the participants and not yet been
unlocked was 4466000 with a repurchase price of RMB2.5184172 per share (excluding the bank loan
interest rate for the same term). On 27 July 2022 29948000 restricted A shares that were unlocked were
listed for trading.On 9 October 2022 Grant Thornton (Special General Partnership) issued a Capital Verification Report (Zhi
Tong Yan Zi (2022) No. 371C000576) in which they verified the change in the registered capital and paid –
in capital (share capital) of the Company as of 30 September 2022. Verification result: As of 30 September
2022 the registered capital and paid-in capital (share capital) of the Company upon the change amounted
to RMB2979742200.00 and RMB2979742200.00 respectively.On 18 October 2022 the Company completed the procedures for the repurchase and cancellation of
4466000 restricted A shares with the Shenzhen Branch of China Securities Depository and Clearing
Corporation Limited.
2025 ANNUAL REPORT 83VI Corporate Governance Environment and Society
X. Implementation of the equity incentive plan employee shareholding plan or other employee
incentive measure of the Company (Continued)
1. Equity incentive (Continued)
(2) Relevant procedures performed under the 2020 Restricted A Share Incentive Scheme (Continued)
* On 17 July 2023 the Company convened the ninth extraordinary meeting of the tenth session of the
Board and the fifth extraordinary meeting of the tenth session of the Supervisory Committee at which
the Resolution on the Failure Fulfilment of the Unlocking Conditions for the Second Unlocking Period
under the 2020 Restricted A Share Incentive Scheme and Repurchase and Cancellation of Certain
Restricted Shares was considered and approved. The independent Directors of the Company issued
independent opinions to agree with such resolutions. The results for 2022 of the Company failed to pass
the performance appraisal targets at company level set for the second unlocking period. Meanwhile
5 participants lost their incentive qualification due to their resignation. The Board of the Company
repurchased and cancelled 22929000 restricted A shares which had been granted to participants but not
yet unlocked for the second unlocking period at a repurchase price of RMB2.5184172 per share (excluding
the bank loan interest rate for the same term).On 10 November 2023 Grant Thornton (Special General Partnership) issued a Capital Verification Report
(Zhi Tong Yan Zi (2023) No. 371C000518) in which they verified the change in the registered capital and
paid-in capital (share capital) of the Company as of 18 October 2023. Verification result: As of 18 October
2023 the registered capital and paid-in capital (share capital) of the Company upon the change amounted
to RMB2956813200.00 and RMB2956813200.00 respectively.On 20 November 2023 the Company completed the procedures for the repurchase and cancellation of
22929000 restricted A shares with the Shenzhen Branch of China Securities Depository and Clearing
Corporation Limited.* On 31 July 2024 the Company convened the first special meeting of independent Directors of the tenth
session of the Board the fifteenth extraordinary meeting of the tenth session of the Board and the sixth
extraordinary meeting of the tenth session of the Supervisory Committee at which the Resolution on the
Failure Fulfilment of the Unlocking Conditions for the Third Unlocking Period under the 2020 Restricted
A Share Incentive Scheme and Repurchase and Cancellation of Restricted Shares was considered and
approved. The results for 2023 of the Company failed to pass the performance appraisal targets at
company level set for the third unlocking period. The Board of the Company repurchased and cancelled
22257000 restricted A shares that had been granted to 93 participants but not yet unlocked at a
repurchase price of RMB2.5184172 per share (excluding the bank loan interest rate for the same term).On 15 November 2024 Grant Thornton (Special General Partnership) issued a Capital Verification Report
(Zhi Tong Yan Zi (2024) No. 371C000421) in which they verified the change in the registered capital
and paid-in capital (share capital) of the Company as of 6 November 2024. Verification result: As of 6
November 2024 the registered capital and paid-in capital (share capital) of the Company upon the change
amounted to RMB2934556200.00 and RMB2934556200.00 respectively.On 18 December 2024 the Company completed the procedures for the repurchase and cancellation of
the 15357000 restricted A shares held by 91 participants with the Shenzhen Branch of China Securities
Depository and Clearing Corporation Limited. The procedures for the share repurchase transfer and
cancellation of the 6900000 restricted A shares held by 2 participants (both of whom had resigned) were
still not completed as they were subject to judicial freeze.
84 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
X. Implementation of the equity incentive plan employee shareholding plan or other employee
incentive measure of the Company (Continued)
1. Equity incentive (Continued)
(3) Implementation of the equity incentive plan during the reporting period
As at the beginning and the end of the reporting period the number of awards to be granted under authority
of the Scheme was 0. During the reporting period the Company did not grant any awards and accordingly
the number of shares that may be issued in respect of awards granted under all schemes during the reporting
period divided by the weighted average number of shares of the relevant class in issue (excluding treasury
shares) for the reporting period is not applicable.In November 2024 pursuant to the 2020 Restricted A Share Incentive Scheme (Draft) the Company made
payments to all participants for the repurchase of restricted shares not yet unlocked for the third unlocking
period under the 2020 Restricted A Share Incentive Scheme and handled the share repurchase and cancellation
procedures in accordance with the procedures. As at the end of the reporting period the procedures for the
share repurchase transfer and cancellation of the 6900000 restricted A shares held by 2 participants (both of
whom had resigned) with the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited
were still not completed as they were subject to judicial freeze. Save as disclosed above during the reporting
period no other participants held any options or awards under the scheme.Equity incentives granted to Directors and the Senior Management of the Company
□ Applicable √ Not applicable
Assessment and incentive mechanism for the Senior Management
The Senior Management of the Company is assessed on monthly and annually basis. Monthly assessments
were conducted in line with the direction of the annual major tasks and were focused on appraisals of two fixed
indicators namely the completion status of each month and the evaluation on important performance indicators.It was carried out monthly by way of cross assessment and supervision among the related departments. The
annual assessments were carried out by the Remuneration and Assessment Committee with reference to the
results of monthly assessments and overall performances during the year including the integrated quality of
Senior Management and internal training of talents.
2. Implementation of the employee shareholding plan
□ Applicable √ Not applicable
3. Other employee incentive measure
□ Applicable √ Not applicable
2025 ANNUAL REPORT 85VI Corporate Governance Environment and Society
XI. Construction and implementation of internal control system during the reporting period
1. Construction and implementation of internal control system
During the reporting period in accordance with the Basic Internal Control Norms for Enterprises and its supporting
guidelines taking changes in internal and external environment internal organisation and management requirements
into account the Company updated and improved its internal control system in a timely manner comprehensively
reviewed and revised the daily work and business flows and internal control systems of each department and business
segment of the Company supplemented and revised the relevant content of the Internal Control Management Manual
and established a scientifically designed concise and applicable internal control system with effective operation.The internal control of the Company was able to cover the main aspects of the Company’s operation and
management. The units businesses and events included in the evaluation scope and high-risk areas covered the main
aspects of the Company’s operation and management and there were no major omissions. The design of the internal
control system of the Company was sound and reasonable. The implementation of internal controls was effective.Through the operation analysis and evaluation of the internal control system the Company effectively prevented
operation and management risks and promoted the realisation of internal control objectives.
2. Particulars of material deficiencies in internal control detected during the reporting period
□ Yes √ No
XII. The Company’s management and control of subsidiaries during the reporting period
In accordance with relevant requirements of the Company Law the Rules Governing Listing of Stocks on Shenzhen Stock
Exchange the Basic Internal Control Norms for Enterprises and other laws and regulations and the Articles of Association
based on the actual situation of the Company the Company had formulated a comprehensive internal system. It had timely
amended and optimised its internal system based on the stricter management requirements and changes in internal control
condition. The complete set of internal control system and information management procedures of the Company also
applied to subsidiaries so as to ensure the operation and development of subsidiaries were in line with and contributing to
the development strategies and overall plans of the Company.Abnormalities in management and control of subsidiaries
□ Yes √ No
XIII. Assessment report on internal control or auditor’s report on internal control
1. Assessment report on internal controls
Date of disclosure of assessment report on internal controls 31 March 2026
Index of assessment report on internal controls disclosure http://www.cninfo.com.cn
Percentage of total assets included in assessment to total assets in consolidated
financial statements of the Company 98%
Percentage of revenue included in assessment to revenue in consolidated financial
statements of the Company 99.9%
86 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
XIII. Assessment report on internal control or auditor’s report on internal control (Continued)
1. Assessment report on internal controls (Continued)
Basis for identifying deficiencies
Type Financial reporting Non-financial reporting
Qualitative criteria * Indicators of material deficiencies * Indicators of material
in the internal control of financial deficiencies in the internal control
reporting include: ineffective control of non-financial reporting include:
environment; material loss to and major failure as a result of the
adverse impact on the Company as decision making process; lack
a result of misconduct by Directors of control system or occurrence
and Senior Management; material of systematic failure in principal
misstatement of non-exceptional activities and lack of effective
incidents; ineffectiveness in compensation control; high
supervision of internal control of turnover rate of mid to senior level
the Company by the Board or management and senior technical
its delegated authorities and the staff; failure to address the findings
internal audit department. of internal control assessment in
* Indicators of major deficiencies particular material deficiencies; and
in internal control of financial other factors which impose material
reporting include: failure in adverse impact on the Company.selecting and applying accounting * Indicators of major deficiencies
policies in accordance with in internal control of non-financial
generally accepted accounting reporting include: general failure
principles; failure to establish as a result of the decision-making
procedures and control measures process; deficiencies in major
to prevent corrupt practices; failure business procedure or system; high
to establish corresponding control turnover rate of key staff; failure
mechanism for the accounting of to address the findings of internal
unusual or special transactions control assessment in particular
or failure to implement or set up major deficiencies; and other
the corresponding compensation factors which impose great adverse
control; failure to reasonably ensure impact to the Company.the truthfulness and accuracy * Indicators of general deficiencies
in the preparation of financial in internal control of non-financial
statement as a result of one or reporting include: low efficiency
more deficiencies in the control of of decision-making process;
financial reporting as of the end of deficiencies in general business
the period. procedure or system; high turnover
* General deficiencies: other rate of employees; and failure to
deficiencies in internal control that rectify general deficiencies.do not constitute material or major
deficiencies.
2025 ANNUAL REPORT 87VI Corporate Governance Environment and Society
XIII. Assessment report on internal control or auditor’s report on internal control (Continued)
1. Assessment report on internal controls (Continued)
Basis for identifying deficiencies
Type Financial reporting Non-financial reporting
Quantitative criteria General deficiencies: deviation of General deficiencies: quantitative
less than or equal to 0.1% from criterion (financial loss) less than
the target of accounting error/the RMB5000000; major deficiencies:
total revenue; Major deficiencies: quantitative criterion (financial
deviation of 0.1% – 0.5% from loss) between RMB5000000
the target of accounting error/the and RMB20000000; material
total revenue; material deficiencies: deficiencies: over RMB20000000.deviation greater than 0.5%.Number of material deficiencies in 0
financial reporting
Number of material deficiencies in 0
non-financial reporting
Number of major deficiencies in 0
financial reporting
Number of major deficiencies in 0
non-financial reporting
2. Auditor’s report on internal control
√ Applicable □ Not applicable
Auditor’s opinion contained in the auditor’s report on internal control
In our opinion as of 31 December 2025 Chenming Paper maintained effective internal control over financial reporting
in all material respects in accordance with the Basic Internal Control Norms for Enterprises and relevant regulations.Disclosure of auditor’s report on internal control Disclosed
Date of disclosure of auditor’s report on internal control 31 March 2026
Index of auditor’s report on internal control disclosure http://www.cninfo.com.cn
Type of opinion in auditor’s report on internal control Standard and Standard and unqualified opinion
unqualified opinion
Material deficiencies in non-financial reporting No
Any non-standard opinions set out in the auditor’s report on internal control issued by accountants
□ Yes √ No
Auditor’s report on internal control issued by accountants was in line with Directors’ opinions contained in self-
assessment report
√ Yes □ No
Any non-standard audit opinions on internal control were issued during the reporting period or the prior year
√ Yes □ No
88 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
XIII. Assessment report on internal control or auditor’s report on internal control (Continued)
2. Auditor’s report on internal control (Continued)
Explanation of the causes of issues leading to non-standard audit opinions on internal control rectification progress
and related matters:
1. Explanation of the non-standard audit opinion on internal control issued by accountants in the prior year
A material weakness refers to a deficiency or a combination of deficiencies in internal control that may result in
failure to timely prevent or detect and correct a material misstatement in the financial statements.The management of Chenming Paper Company lacked adequate risk assessment or risk awareness and
failed to adopt effective and prudent measures in response to risks when they arose. As a result Chenming
Paper Company encountered liquidity difficulties in 2024 with overdue borrowings from financial institutions
and overdue payments to suppliers multiple bank accounts frozen and several lawsuits and arbitration cases
triggered by overdue debts. In addition operation and production of certain production lines were suspended
exposing the Company to significant operational and financial risks.The deficiencies in the management’s risk assessment and response indicate weaknesses in Chenming Paper
Company’s risk assessment or control environment.Effective internal control can provide reasonable assurance regarding the truthfulness and completeness of
financial reporting and related information whereas the above material weaknesses caused Chenming Paper
Company’s internal control to lose such function.The management of Chenming Paper Company has identified the above material weaknesses and included
them in the enterprise internal control evaluation report. The above weaknesses have been fairly reflected in all
material respects. In the audit of Chenming Paper Company’s 2024 financial statements we have taken into
account the impact of the above material weaknesses on the nature timing and extent of audit procedures.
2. Explanation of rectification progress:
(I) Risk assessment and control environment rectification
Core target: Improve the corporate governance structure establish a full-level standardised risk
assessment mechanism strengthen the risk awareness of all staff address defects in the control
environment through top-level design and reinforce the foundation of internal controls.
1. Improve the corporate governance and decision-making structure and establish a full-level risk
assessment mechanism
The Company amended systems and documents such as the Internal Control System the Decision
Making System to Substantial Transaction and the Decision Making System to External Guarantee.It has fully analysed its internal and external risk factors and established a multi-dimensional risk
identification system covering market risk credit risk financial risk operational risk etc. Centring
on core targets such as compliant operation asset security and truthful disclosure of data the
Company defined the Board’s overall role in the formulation and execution of internal controls
covering the four major dimensions consisting of core internal control framework critical control
activities disclosure inspection and accountability. The Company also formulated special control
rules for high-risk areas such as subsidiaries related party transactions and guarantees.
2025 ANNUAL REPORT 89VI Corporate Governance Environment and Society
XIII. Assessment report on internal control or auditor’s report on internal control (Continued)
2. Auditor’s report on internal control (Continued)
2. Explanation of rectification progress: (Continued)
(I) Risk assessment and control environment rectification (Continued)
2. Deepen Party-building guidance and management reforms to enhance governance efficiency
The Company concluded the leadership re-election and succession process for the Group’s
Party committee allocated sufficient competent members to the committee defined the Party
organization’s decision-making status in the corporate governance structure and enhanced the
policies for “two-way entry and cross-appointment” between the Party committee and the Board
so as to ensure that the Party committee could consider major matters in advance including core
areas such as strategic planning investment and financing thus achieving the organic integration of
political oversight and professional decision-making.The Company concluded the election of the new session of the Board and the appointment of the
management. For the eleventh session of the Board the total number of Directors concurrently
serving as senior management personnel of the Company and being served by employee
representatives is less the half of the total number of Directors while the number of independent
non-executive Directors is no less than one third of the total number of Board members which
ensures that the Board can conduct productive discussions and make scientific swift and prudent
decisions.
3. Strengthen the risk awareness of the management and enhance the risk awareness training for key
positions
The Company incorporated internal control effectiveness and risk control achievements into the
performance appraisal of the management and key positions linking them directly to remuneration
appointment and dismissal. It regularly organised compliance training on internal controls and risks
for Directors senior management and key personnel in finance treasury legal and procurement.Through case analysis expert lectures and other formats the training focuses on areas including
debt management fund allocation response to overdue debts and litigation handling.(II) Targeted resolution for liquidity and debt risksCore target: With “cost reduction capital revitalisation resolution of overdue debts and restoration of thecapital chain” as the core the Company addressed its liquidity difficulties and reduced its financial and
operational risks through organised debt restructuring and refined funding management.
1. Syndicated loan for supporting the resumption of operation and production
A syndicate was established by 8 banks including China Construction Bank Bank of
Communications and Industrial Bank to provide a new syndicated loan of RMB2.31 billion for
assisting the Company in resumption of operation and production. Bank of Jilin provided a special
credit of RMB217 million to assist Jilin Chenming in resumption of operation and production.
2. Formulate and implement the debt restructuring and cost reduction plan
The Company coordinated its financing plans and optimised its financing structure. It proactively
negotiated with banks and non-bank financial institutions for loan term extensions interest rate
reductions and adjustments to repayment cycles etc. Among 109 banks and financial leasing
companies 90 have agreed to reduce the interest rate or extend the loan terms accounting for
82.57% of the total. It is expected to reduce finance costs by approximately RMB600 million every
year.
90 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
XIII. Assessment report on internal control or auditor’s report on internal control (Continued)
2. Auditor’s report on internal control (Continued)
2. Explanation of rectification progress: (Continued)
(II) Targeted resolution for liquidity and debt risks (Continued)
3. Strengthen centralised fund control and cash flow forecasting mechanisms
The Company implemented comprehensive capital planning management enforced rigorous
capital approval and established monthly funding plans with weekly breakdowns on utilization
plan. It coordinated and planned the use of funds adjusted the monthly capital spending plans and
actual spending across production bases improving the accuracy of plan execution and effectively
securing the capital requirements for the production and operation of each production base.
4. Prudently address overdue debts litigation and arbitration cases and account freezes
The Company reviewed each overdue borrowing accounts payable and litigation case formulating
tailored disposal plans for each debt and case. It negotiated instalment payments debt-for-goods
swaps and extended credit terms with suppliers to stabilise its supply chain and minimise new
litigation and preservation actions. For frozen accounts and assets the Company sought releases
and lifting of preservation measures through the provision of security settlements instalment
performance and other means to restore normal settlement and operating activities. By the end of
2025 the total amount of overdue obligations remained essentially flat compared to the beginning
of 2025 with overdue amounts to banks finance leasing companies and supply chain entities
reduced by RMB330 million. The Company had reached settlements over most overdue debts to
financial institutions.The Company also strengthened account management performing a comprehensive review of its
accounts and closing redundant and dormant accounts. A tiered account management system
had been established standardising approval authorities and strengthening dynamic monitoring to
ensure that funds are used for designated purposes.(III) Resumption of production and operation and implementation of internal controls
Core target: Advance the resumption of operation and production across the production bases in an
orderly manner recover the Company’s ability to generate its own working capital while strengthening
internal controls through the core areas of sales and procurement in order to prevent operational risks
and improve operating cash flows.
1. Orderly resumption of production and core business operations
In 2025 the Huanggang production base was in normal operation while the Shouguang production
base the Jiangxi production base and the Jilin production base resumed full operation gradually.The Zhanjiang production base fully resumed operation and production on 13 March 2026. As
production bases have resumed operation and production the Company’s ability to generate its
own working capital gradually recovers. In the subsequent production and operations the Company
will give priority to allocating production resources to core production lines high-margin products
and orders with stable proceeds in order to gradually improve operating cash flows.
2. Strengthen internal controls in the area of sales
The Company enhanced its accounts receivable collection and customer credit management
strictly controlled the risks associated with new credit sales and improved collection efficiency and
the speed of capital recovery. The specific measures include:
2025 ANNUAL REPORT 91VI Corporate Governance Environment and Society
XIII. Assessment report on internal control or auditor’s report on internal control (Continued)
2. Auditor’s report on internal control (Continued)
2. Explanation of rectification progress: (Continued)
(III) Resumption of production and operation and implementation of internal controls (Continued)
2. Strengthen internal controls in the area of sales (Continued)
(1) Strict customer onboarding: The Company conducted credit investigations for all customers
and prioritise prepaid transactions to reduce credit risk.
(2) Enhanced risk guarantees: Except for state-owned and listed company customers other
customers on invoice basis are required to provide joint and several guarantees by their legal
representatives and de facto controllers. Real estate mortgage has been secured from 53
private customers with a total guaranteed amount of RMB140 million.
(3) Standardised agreement management: All orders must be executed under the Company’s
standard purchase and sales agreement to clarify jurisdiction and ensure legal enforceability.
(4) Dynamic monitoring of proceeds: Deliveries to overdue customers are immediately suspended
and such customers are placed under enhanced monitoring. Legal actions will be taken for
recovery if the payment remains outstanding for more than three months.
(5) Periodic reconciliation mechanism: Reconciliations are conducted with customers on a
quarterly basis to ensure consistency between records and actual balances and to identify
and address any abnormalities in time.
3. Strengthen internal controls in the area of procurement
The Company refined the supplier onboarding credit authorisation reconciliation and payment
approval processes to eliminate payments without contracts overdue payables and improper
credits. The specific measures include:
(1) Digitalisation of tender management. The procurement department has adopted digital
transformation for tenders to establish a full-process innovative tender management
system. It addresses pain points in the traditional procurement model such as geographical
constraints low efficiency and insufficient competition thus creating a fair impartial and open
procurement environment.
(2) Improvement of the supplier management system. The Company systematically advanced the
creation and optimisation of the supplier database and continuously updated the supplier list
laying a foundation for procurement quality enhancement and cost control. Multiple qualified
suppliers have been successfully introduced completely resolving the risks associated with
single-source supply and ensuring the stability of the production supply chain.
(3) Standardised agreement management. Agreements are executed strictly in accordance
with the standard templates required by the Company’s legal department. Any necessary
amendments to contract terms must be submitted to the legal department for approval in
accordance with established procedures. No changes may be made without approval.
(4) Periodic reconciliation management. A robust periodic reconciliation mechanism with
suppliers has been established with reconciliation conducted on a quarterly basis to ensure
clear accounts and accurate data and to mitigate operational risks.
92 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
XIII. Assessment report on internal control or auditor’s report on internal control (Continued)
2. Auditor’s report on internal control (Continued)
2. Explanation of rectification progress: (Continued)
(IV) Internal control supervision rectification verification and coordination with auditors
Core target: Create a full-process multi-tiered internal control and supervision system establish aclosed-loop management mechanism for rectification and achieve the virtuous cycle of “identification –rectification – verification – enhancement” for internal control issues while ensuring proper coordination
with auditors so that the results of internal control rectification are recognised by auditors.
1. Build a dedicated supervision system and strengthen effectiveness of discipline and supervision
The Company has further improved its internal control and supervision system by establishing a
dedicated supervision team to carry out special reviews across the entire business chain accurately
identifying management deficiencies and strictly investigating violations of rules and discipline.At the same time the Group’s Discipline Inspection Commission Office was formed full-process
supervision of policy implementation and the exercise of authority was enhanced increase efforts
were made in handling and verifying whistleblowing reports and the working mechanism integrating
supervision accountability and enforcement was improved reinforcing the defense line for
compliant operation.
2. Establish a full-process closed loop for rectification and rigorously supervise the implementation of
rectification
The Company has strengthened the closed-loop management of audit rectification by establishing acomprehensive process control mechanism covering “audit findings – implementation of rectification– application of results – follow-up verification”. Audit findings are fully incorporated into a tracking
system. Rectification plans are subject to strict review with full-process tracking and guidance
as well as advancement in stages. For major issues that remain unrectified after the deadline are
inadequately rectified or are repeatedly violated despite rectification efforts the Company will
initiate special supervision measures accountability interviews and performance-linked assessment
mechanisms to ensure thorough and effective resolution.
3. Systematically revise the internal control system and facilitate management improvement through
rectification
Adhering to a problem-oriented approach that addresses both symptoms and root causes the
Company has formulated special rectification measures for various management issues clearly
defining responsible parties rectification timelines and acceptance criteria. It promotes systematic
revisions of policies on the group level further regulating key business processes including
procurement approval raw materials and auxiliary materials acceptance and returns management.These measures effectively close management loopholes at both the policy and process levels and
continuously enhance corporate governance and operational management standards.
2025 ANNUAL REPORT 93VI Corporate Governance Environment and Society
XIV. Rectification of problems found in self-inspection under the special initiative on corporate
governance of the listed company
Not applicable
XV. Disclosure of environmental information
Whether the listed company and its major subsidiaries are included in the list of enterprises subject to mandatory
environmental information disclosure
√ Yes □ No
Number of enterprises included in the list of enterprises subject to mandatory environmental
information disclosure (entities) 7
No. Name of enterprise Index for mandatory disclosure reports on environmental information
1 Shandong Chenming Mandatory Corporate Environmental Information Disclosure System (Shandong)
Paper Holdings http://221.214.62.226:8090/EnvironmentDisclosure/enterpriseRoster/
Limited openEnterpriseDetails comDetailFrom=0&id=913700006135889860
2 Shouguang Meilun Mandatory Corporate Environmental Information Disclosure System (Shandong)
Paper Co. Ltd. http://221.214.62.226:8090/EnvironmentDisclosure/enterpriseRoster/
openEnterpriseDetails comDetailFrom=0&id=91370783690649340B
3 Shouguang Chenming Mandatory Corporate Environmental Information Disclosure System (Shandong)
Art Paper Co. Ltd. http://221.214.62.226:8090/EnvironmentDisclosure/enterpriseRoster/
openEnterpriseDetails comDetailFrom=0&id=91370783798676770K
4 Zhanjiang Chenming Mandatory Corporate Environmental Information Disclosure System (Guangdong)
Pulp & Paper Co. https://www-app.gdeei.cn/gdeepub/front/dal/report/list entName=%E6%99%A8
Ltd. %E9%B8%A3&reportType=&areaCode=440800&entType=zdpw&reportDateStartStr=
&reportDateEndStr=
5 Huanggang Chenming Mandatory Corporate Environmental Information Disclosure System (Hubei)
Pulp & Paper Co. http://219.140.164.18:8007/hbyfpl/frontal/index.html#/home/enterpriseInfo
Ltd. XTXH=142b6735-b868-4369-b7bc-30f0f5b5ac68&XH=1677749944758009244672
6 Jiangxi Chenming Mandatory Corporate Environmental Information Disclosure System (Jiangxi)
Paper Co. Ltd http://qyhjxxyfpl.sthjt.jiangxi.gov.cn:15004/pilouxiangqing
id=90205301bb6147c9ae47291303f803fe
7 Jilin Chenming Paper Mandatory Corporate Environmental Information Disclosure System (Jilin)
Co. Ltd. http://36.135.7.198:9015/index
XVI. Social responsibility
During the reporting period adhering to the corporate mission of “creating values and contributing to the society” the
Company stayed true to original aspiration and strived to its missions proactively assumed its social responsibilities
and paid attention to the creation of social value while pursuing economic benefits. For details please refer to the 2025
Environmental Social and Governance Report of Shandong Chenming Paper Holdings Limited published by the Company
on CNINFO on 31 March 2026.
94 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
XVII. Consolidating and expanding the achievements of poverty alleviation and rural revitalisation
Not applicable
XVIII. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited
(i) Compliance with the Corporate Governance Code
The Company maintained high standards of corporate governance through various internal controls. The Board
reviewed the corporate governance practices of the Company from time to time to enhance the corporate governance
standards of the Company.Save for the details set out in III Board IV Chairman and General Manager and XVII Communications with
shareholders in this section the Company had fully complied with all the principles and code provisions of the
Corporate Governance Code as set out in Appendix C1 to the Hong Kong Listing Rules during the reporting period.(ii) Securities transactions by Directors
The Directors of the Company confirmed that the Company had adopted the Model Code for Securities Transactions
by Directors of Listed Companies as set out in Appendix C3 to the Hong Kong Listing Rules. Having made adequate
enquiries with all Directors of the Company the Company was not aware of any information that reasonably
suggested that the Directors had not complied with the requirements as stipulated in this code during the reporting
period.(iii) Board
The members of the Board of the Company are elected at the general meeting and held accountable to the general
meeting and shall exercise the following functions and powers: (1) to be responsible for convening the general
meeting and to report on its work to the general meeting; (2) to carry out the resolutions of general meetings; (3)
to decide on the business plans and investment proposals of the Company; (4) to formulate the proposed annual
financial budget and final accounts of the Company; (5) to formulate the plan for profit distribution and the plan making
up losses of the Company; (6) to formulate plans for the increase or reduction in the registered capital of the Company
and for the issue and listing of Company’s debentures or other securities; (7) to draft plans for material acquisition
and repurchase of the Company’s shares; (8) to draft plans for the merger division or dissolution or the change of
formation of the Company; (9) to decide on external investment acquisition and disposal of assets pledge of assets
matter in relation to external guarantee entrusted wealth management connected transactions external donations
etc. within the scope of mandate of the general meeting; (10) to decide on the establishment of the Company’s
internal management organisation; (11) to make decisions on the appointment or dismissal of the Company’s
managers Secretary to the Board and other Senior Management members; and make decisions on issues related to
their remuneration award and penalty; and to appoint or dismiss deputy general managers and the Company’s other
senior management including the chief financial officer upon nomination by the general manager and make decisions
on issues related to their remuneration award and penalty; (12) to formulate the basic management system of the
Company; (13) to formulate proposals for amending the Articles of Association; (14) to administrate matter related to
information disclosure of the Company; (15) to propose to the general meeting for the engagement or replacement of
accounting firm performing audit for the Company; (16) to review work reports from managers of the Company and
to inspect on their work; (17) to exercise the functions and powers as conferred upon by the Articles of Association or
the general meeting.
2025 ANNUAL REPORT 95VI Corporate Governance Environment and Society
XVIII. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(iii) Board (Continued)
As regards its corporate governance functions the Board is responsible for: (1) formulating reviewing and making
recommendations on the Company’s corporate governance policies and practices; (2) reviewing and monitoring
the training and continuous professional development of the Directors and Senior Management of the Company; (3)
reviewing and monitoring the Company’s policies and practices on compliance with legal and regulatory requirements;
(4) formulating reviewing and monitoring the code of conduct and compliance manual applicable to employees and
Directors of the Company; and (5) reviewing the Company’s compliance with the Corporate Governance Code and
disclosure in the Corporate Governance Report. During the reporting period the Board had performed the above
duties.The Company convened the 2025 first extraordinary general meeting and the seventh meeting of the tenth session of
the employee representative meeting on 28 October 2025 and completed the re-election of the Board. The eleventh
session of the Board comprised 11 Directors including five executive Directors: Jiang Yanshan (Chairman) Li
Weixian Liu Peiji Meng Feng (employee representative Director) and Zhu Yanli; two non-executive Directors: Song
Yuchen and Wang Ying; and four independent non-executive Directors: Zhang Zhiyuan Luo Xinhua Wan Gang and
Kong Pengzhi. Please refer to part IV of this section for their brief biographies. Each of appointed Directors obtained
the legal advice referred to under Rule 3.09D of the Hong Kong Listing Rules on 28 October 2025 and confirmed that
he or she understood his or her obligations as a Director of a listed issuer.The management of the Company regularly report to the Board on the Company’s operations and material matters
based on the Company’s business situation. The Board of the Company is responsible for leading and monitoring the
Company and is wholly responsible for the administration and supervision of the Company’s businesses to facilitate
its success. The Executive Director or the Senior Management is authorised to be responsible for the various divisions
and functions and management of the processing. Directors of the Company shall act objectively and make decisions
in the interests of the Company. The management and the Senior Management of the Company held regular meetings
with the Board to discuss the ordinary business operations and performance of the Company and carried out the
relevant decisions of the Board. The management and the Senior Management of the Company have to get prior
approval from among others the Board before they make any decision or enter into any commitment on behalf
of the Company. The Company will arrange independent legal advice upon the request from the Directors or any
committees of the Board if the Board or any committees of the Board consider it necessary to seek for independent
professional advice.Pursuant to Code C.1.8 of the code provisions the Company should arrange appropriate insurance cover in respect
of legal action against its Directors. During the reporting period the Company arranged director liability insurance for
Directors to safeguard the rights and interests of Directors to perform their duties in compliance.
96 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
XVIII. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(iii) Board (Continued)
During the reporting period the Board held 8 meetings 5 of which were regular meetings and 6 were extraordinary
meetings. None of the Directors were absent from any Board meetings. The Company completed the re-election of
the Board during the reporting period. As at the end of the reporting period the attendance of the current Directors at
the relevant meetings is as follows:
Attendance at the relevant meetings (attendance required/attendance)
Remuneration Strategic and
and Sustainable
Audit Nomination Assessment Development
Board Committee Committee Committee Committee General
Name Position meetings meetings meetings meetings meetings meetings
I. Executive Directors
Jiang Yanshan Chairman 3/3 N/A 1/1 N/A 1/1 2/2
Li Weixian Executive Director 8/8 N/A N/A N/A N/A 3/3
Liu Peiji Executive Director 3/3 N/A N/A N/A N/A 2/2
Meng Feng Executive Director 3/3 N/A N/A N/A 1/1 1/1
Zhu Yanli Executive Director 3/3 N/A N/A N/A N/A 2/2
II. Non-executive Directors
Song Yuchen Director 3/3 N/A N/A 0/0 N/A 2/2
Wang Ying Director 3/3 2/2 N/A N/A N/A 2/2
III. Independent non-executive
Directors
Zhang Zhiyuan Independent Director 3/3 2/2 N/A 0/0 N/A 2/2
Luo Xinhua Independent Director 3/3 2/2 N/A 0/0 N/A 2/2
Wan Gang Independent Director 3/3 N/A 1/1 N/A N/A 2/2
Kong Pengzhi Independent Director 3/3 N/A 1/1 N/A 1/1 2/2
None of the members of the Board had any financial business family relations or material connections with each
other.
2025 ANNUAL REPORT 97VI Corporate Governance Environment and Society
XVIII. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(iii) Board (Continued)
According to Article 186 of the Articles of Association (as amended in July 2024) Board meetings shall be notified
to all the Directors in writing ten (10) days in prior and there was no objection from any Director to a shorter notice
period. During the reporting period the Company amended the Articles of Association. Pursuant to Article 133 of the
Articles of Association (as amended in October 2025) Board meetings shall be notified to all the Directors in writing
fourteen (14) days in prior and there was no objection from any Director to a shorter notice period. The Board held 5
regular meetings in the year among which the first meeting of the eleventh session of the Board held on 28 October
2025 and the second meeting of the eleventh session of the Board held on 30 October 2025 fell within the board re-
election period and could not meet the 14-day prior notice requirement. However all Directors unanimously agreed to
waive the notice period requirement for the above meetings and all attended the Board meetings in person. All other
Board meetings complied with Article 186 of the Articles of Association (as amended in July 2024) with written notice
given to all Directors at least 10 days in advance ensuring that all Directors had the opportunity to propose matters
for discussion to be included in the agenda and to make prompt decisions on transactions that were material to the
Group’s business in a timely manner. The Board will make its best efforts to comply with the provisions of the code in
the future.All Directors had access to opinions and services of the secretary to the Board to ensure the procedures governing
the Board and all applicable regulations and rules were complied with.Directors’ training and professional development
All newly appointed Directors are provided with necessary orientation information with an aim to ensure that they will
have a better understanding of operations and business of the Company as well as relevant laws and regulations and
obligations under the Listing Rules.During the reporting period the Company actively organised relevant training sessions for Directors to enhance
their performance of duties. Directors of the Company participated in the special training session on the 2024
annual reports of listed companies in Shandong Province online on 20 January 2025 thus further enhancing their
professional capabilities in annual report preparation and disclosure. They participated in the special training session
on administrative measures for information disclosure of listed companies and other latest regulatory requirements
organised by the Shandong CSRC online on 8 April 2025 to gain a deeper understanding of the latest regulatory
requirements. The Chairman of the Company participated in the special training session on corporate governance
and integrity standards for listed companies in person on 21 November 2025. Mr. Kong Pengzhi an independent
non-executive Director participated in the pre-appointment training for independent directors of listed companies
organised by the Shenzhen Stock Exchange online from 5 November 2025 to 2 December 2025 to study information
disclosure standardised operations corporate governance and cases of non-compliance thereby enhancing his
ability to perform his duties. At the same time the briefing paper in respect of the requirements of Hong Kong Listing
Rules prepared by the advisor to Hong Kong Law of the Company was distributed by the Company to all Directors
and further emphasised and drew the Directors’ attention to the provisions under the Hong Kong Listing Rules
applicable to Directors of the Company the above of which were to ensure all Directors to comply with relevant laws
and sound corporate governance practice and enhance their awareness of sound corporate governance practice.
98 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
XVIII. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(iv) Chairman and general manager
The Company convened the first extraordinary meeting of the eleventh session of the Board on 28 October 2025 to
elect Mr. Jiang Yanshan as the Chairman of the Company. At the same time as the Company was in a transitional
stage of resumption of operation and production and risk mitigation upon prudent assessment the Board resolved
not to appoint the general manager for the time being. In order to ensure the normal conduct of the Company’s
operations Mr. Jiang Yanshan Chairman of the Company shall perform the duties of the general manager during the
vacancy until the Company appoints the general manager in accordance with the relevant procedures. Please refer to
part IV of this section for Mr. Jiang Yanshan’s brief biographies.According to the Articles of Association the Chairman shall exercise the following powers: (1) presiding over general
meetings and convening and presiding over Board meetings; (2) supervising and inspecting the implementation of the
resolutions of the Board; and (3) exercising other powers authorised by the Board.The general manager of the Company exercises the duties of a chief executive officer. The general manager
shall exercise the following powers: (1) to lead the Company’s production operation and management carry out
the Board’s resolutions and to report work to the Board; (2) to implement the Company’s annual business and
investment plans; (3) to draft plans for the establishment of the Company’s internal management structure; (4) to draft
the Company’s basic management system; (5) to formulate the specific rules and regulations of the Company; (6) to
propose the appointment or dismissal of the Company’s deputy manager(s) chief financial officer; (7) to appoint or
dismiss management personnel other than those required to be appointed or dismissed by the Board; (8) to exercise
other powers conferred by the Articles of Association and the Board of Directors.The roles of chairman and general manager (who performs duties equivalent to those of a chief executive officer) of
the Company should be separate and should not be performed by the same individual under code provision C.2.1.However the roles of chairman and general manager of the Company is not separate in accordance with code
provision C.2.1. During the vacancy of the general manager position Mr. Jiang Yanshan shall perform the duties of
the general manager. The Board believes that Mr. Jiang Yanshan has a thorough understanding of the Company’s
culture and operational model. As the Chairman of the Company his assumption of the general manager’s duties
during the vacancy will facilitate the planning and implementation of the Group’s business strategies and will also be
conducive to enhancing the Group’s management and operational efficiency. The responsibilities of the Chairman and
the general manager are clearly delineated and the Company’s Board structure ensures a balance of power provides
adequate checks and balances and effectively safeguards the interests of the Company and its shareholders at large.(v) Independent non-executive Directors
There are four independent non-executive Directors in the Board which is in compliance with the minimum
requirement of the number of independent non-executive directors set out in the Hong Kong Listing Rules. Mr. Luo
Xinhua an independent non-executive Director of the Company have appropriate accounting or related financial
management expertise which is compliance with the requirement of Rule 3.10 of the Hong Kong Listing Rules. Please
refer to part IV of this section for their brief biographies. The Company has received from each of the independent
non-executive Directors a confirmation of independence for the year pursuant to Rule 3.13 of the Hong Kong Listing
Rules and considered all of the independent non-executive Directors to be independent during the year.
2025 ANNUAL REPORT 99VI Corporate Governance Environment and Society
XVIII. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(vi) Terms of Directors
According to the Articles of Association all Directors including non-executive Directors have been elected at the
general meetings with a term of three years from October 2025 to October 2028. They may be re-elected for another
term upon expiry of tenure. The term of office of independent non-executive Directors is the same as that of other
Directors. They may be re-elected for consecutive terms but the consecutive terms shall not be more than six years.(vii) Directors’ responsibility for the financial statements
The Directors acknowledged their responsibility to prepare financial statements for each financial year which give
a true and fair view of the state of affairs of the Company. The Directors believed that the Company had adopted
and applied consistently appropriate accounting policies in preparing the financial statements in compliance with all
related accounting standards.(viii) Board committees
Pursuant to the Corporate Governance Code the Board has established four committees namely Audit Committee
Remuneration and Assessment Committee Strategy and Sustainable Development Committee and Nomination
Committee for overseeing particular aspects of the Company’s affairs. Each Board Committee has its own defined
written terms of reference. The written terms of reference of each Board Committee are published on websites of
stock exchange and the Company.Save for requirements of the Corporate Governance Code the Company has set up the Strategy and Sustainable
Development Committee for overseeing and studying long-term strategic development plan of the Company and
making recommendations.(ix) Audit Committee
During the reporting period the Company completed the re-election of the Board. On 28 October 2025 the first
meeting of the eleventh session of the Board was convened to consider and approve the resolution regarding the
election of members of the special committees of the eleventh session of the Board and elected the new members of
the Audit Committee. The Audit Committee of the Company comprises three members including Mr. Luo Xinhua (as
the chairman) Mr. Zhang Zhiyuan and Ms. Wang Ying of whom two (including the Chairman) are independent non-
executive Directors and one is a non-executive Director. The Audit Committee is mainly responsible for reviewing the
Company’s financial information and its disclosure supervising and evaluating internal and external audit work and
internal control and exercising the functions of the supervisory committee as stipulated under the Company Law
being responsible for the supervision review communication and coordination of the Company’s internal and external
audit work. Mr. Luo Xinhua has appropriate professional qualifications or appropriate accounting or related financial
management expertise which is in compliance with the requirement of the Hong Kong Listing Rules.
100 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
XVIII. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(ix) Audit Committee (Continued)
The main functions of the Audit Committee of the Company are: (1) the functions and powers of the supervisory
committee as stipulated by the Company Law; (2) to supervise and evaluate the work of external audit and
propose the engagement or replacement of the external audit institution: * to be primarily responsible for making
recommendations to the Board on the appointment reappointment and removal of the external auditor and to
approve the remuneration and terms of engagement of the external auditor and any questions of its resignation or
dismissal; * to review and monitor the external auditor’s independence and objectivity and the effectiveness of the
audit process in accordance with applicable standards. The Committee should discuss with the auditor the nature
and scope of the audit and reporting obligations before the audit commences; and * to develop and implement a
policy on engaging an external auditor (including any entity that is under common control ownership or management
with the audit firm or any entity that a reasonable and informed third party knowing all relevant information would
reasonably conclude to be part of the audit firm nationally or internationally) to supply non-audit services. The
Audit Committee should report to the Board identifying and making recommendations on any matters where
action or improvement is needed; (3) to supervise and evaluate the work of internal audit and to be responsible for
the coordination between internal and external audits and to ensure that the internal audit function has adequate
resources to operate its duties and appropriate standing within the Company and to review and monitor its
effectiveness; (4) to review the Company’s financial information and its disclosures: * to monitor the integrity of the
Company’s financial statements and annual reports and accounts half-year reports and quarterly reports if prepared
for publication and to review significant financial reporting judgements contained in them. In reviewing these reports
before submission to the Board the Committee should focus particularly on: (i) any changes in accounting policies
and practices; (ii) major judgmental areas; (iii) significant adjustments resulting from audit; (iv) the going concern
assumptions and any qualifications; (v) compliance with accounting standards; and (vi) compliance with the Listing
Rules and legal requirements in relation to financial reporting; * regarding the above matters the Audit Committee
should liaise with the Board and the senior management and the Committee must meet at least twice a year with
the external auditor to consider any significant or unusual items that are or may need to be reflected in the reports
and accounts and it should give due consideration to any matters that have been raised by the Company’s staff
responsible for the accounting and financial reporting function compliance officer or the external auditor; (5) to
supervise and evaluate the Company’s internal control financial reporting system risk management and internal
control systems: * to review the Company’s financial control and review the Company’s risk management and
internal control systems; * to discuss the risk management and internal control systems with the management to
ensure that the management has performed its duty to have the effective systems. This discussion should include
the adequacy of resources staff qualifications and experience training programmes and budget of the issuer’s
accounting and financial reporting function; * to consider major investigation findings on risk management and
internal control matters as delegated by the Board or on its own initiative and management’s response to these
findings; * to review the Group’s financial and accounting policies and practices; * to review the external auditor’s
management letter any material queries raised by the auditor to the management about accounting records financial
accounts or systems of control and management’s response; * to ensure that the Board will provide a timely
response to the issues raised in the external auditor’s management letter; * to report to the board on the matters
in this article; and * to consider other topics as defined by the Board; (6) to review arrangements employees of the
Company can use in confidence to raise concerns about possible improprieties in financial reporting internal control
or other matters. The Audit Committee should ensure that proper arrangements are in place for fair and independent
investigation of these matters and for appropriate follow-up action; (7) to act as the key representative body for
overseeing the Company’s relations with the external auditor; and (8) to deal with other matters as authorised by the
Board and other matters involved in the relevant laws and regulations as well as the regulations of the Hong Kong
Stock Exchange and Shenzhen Stock Exchange.
2025 ANNUAL REPORT 101VI Corporate Governance Environment and Society
XVIII. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(ix) Audit Committee (Continued)
The Audit Committee discussed with the management of the Company the accounting standards and practices
adopted by the Group and discussed and reviewed this report including the review of the financial statements of
the Group for the year ended 31 December 2025 prepared in accordance with the China Accounting Standards for
Business Enterprises.The Audit Committee has strictly reviewed the unqualified audit report with an emphasis of matter paragraph issued
by the accounting firm as well as the management’s position on the opinion and the corresponding measures taken
by the Group to address the emphasis of matter in the qualified opinion. For the reasons stated above the Audit
Committee has concurred with the management’s position. In addition the Audit Committee has requested the
management to take all necessary actions to eliminate the uncertainties about the emphasis of matter related to going
concern in order to address the going concern issue as soon as possible. The Audit Committee has also discussed
the financial position of the Group and the measures taken and to be taken by the Group with Grant Thornton (Special
General Partnership) and has taken into account Grant Thornton (Special General Partnership)’s rationale and
understood their consideration in arriving at their opinion.Particulars of the meetings held by the Audit Committee during the reporting period are detailed in part VI and part VII
of this section.Risk Management and Internal Control
The Board is responsible for the risk management and internal control systems and reviewing their effectiveness.Such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and can
only provide reasonable but not absolute assurance against material misstatement or loss.The Audit Committee (on behalf of the Board) oversees management in the design implementation and monitoring of
the risk management and internal control systems and the Audit Committee reviews the adequacy and effectiveness
of the risk management and internal control systems at least once a year. The management has provided confirmation
to the Audit Committee (and the Board) on the adequacy and effectiveness of these systems for the year ended 31
December 2024. The Audit Committee (as well as the Board) was satisfied with the adequacy and effectiveness of the
related systems.In respect of internal control system procedures have been designed for safeguarding assets against unauthorised
use or disposition ensuring the maintenance of proper accounting records for the provision of reliable financial
information for internal use or for publication and ensuring compliance of applicable laws rules and regulations.(x) Remuneration and Assessment Committee
During the reporting period the Company completed the re-election of the Board. On 28 October 2025 the first
meeting of the eleventh session of the Board was convened to consider and approve the resolution regarding the
election of members of the special committees of the eleventh session of the Board and elected the new members
of the Remuneration and Assessment Committee. The Remuneration and Assessment Committee of the Company
comprises three members including Mr. Zhang Zhiyuan as the chairman Mr. Luo Xinhua and Mr. Song Yuchen. Two
of them including the chairman are independent non-executive Directors and one is a non-executive Director which
is in compliance with Code on Corporate Governance Practices. The Remuneration and Assessment Committee
is primarily responsible for formulating the criteria of appraisal of the Directors and managers and conducting
the appraisal and studying and formulating the remuneration policy and package of the Directors and the Senior
Management of the Company. The Remuneration and Assessment Committee is accountable to the Board.
102 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
XVIII. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(x) Remuneration and Assessment Committee (Continued)
The Remuneration and Assessment Committee of the Board of the Company is responsible for formulating standards
for appraising Directors and senior management of the Company formulate and review the policies for and proposals
on the remuneration of Directors and senior management and make recommendations to the Board for the following
matters: (1) Remuneration of Directors and senior management including non-monetary income pension and
compensation etc.; (2) Formulation or changes of incentive option schemes and employee option schemes grant
of entitlements to scheme participants and fulfilment of exercise conditions; (3) Arrangement of option schemes
at subsidiaries proposed to be spin-off for Directors and senior management; (4) To make recommendations
to the Board on the policy and structure for all Directors’ and senior management’s remuneration and on the
establishment of a formal and transparent procedure for developing remuneration policy; (5) To review and approve
the management’s remuneration proposals with reference to the Board’s corporate goals and objectives; (6) To make
recommendations to the Board on the remuneration of non-executive Directors; (7) To consider salaries paid by
comparable companies time commitment and responsibilities and employment conditions elsewhere in the Group; (8)
To review compensation payable to executive Directors and senior management for any loss or termination of office
or appointment to ensure that it is consistent with contractual terms and is otherwise fair and not excessive; (9) To
review compensation arrangements relating to dismissal or removal of Directors for misconduct to ensure that they
are consistent with contractual terms and are otherwise reasonable and appropriate; (10) To ensure that no Director or
any of their associates is involved in deciding that Director’s own remuneration; (11) To review and/or approve matters
relating to share schemes under Chapter 17 of the Rules Governing the Listing of Securities on the Hong Kong Stock
Exchange; and (12) Other matters required by the laws regulations CSRC the Articles of Association and the Listing
Rules and authorised by the Board.Particulars of the meetings held by the Remuneration and Assessment Committee during the reporting period are
detailed in part VI of this section.(xi) Nomination Committee
During the reporting period the Company completed the re-election of the Board. On 28 October 2025 the first
meeting of the eleventh session of the Board was convened to consider and approve the resolution regarding
the election of members of the special committees of the eleventh session of the Board and elected the new
members of the Nomination Committee. The Nomination Committee of the Company comprises three members
including Wan Gang (as the chairman) Jiang Yanshan and Kong Pengzhi. Two of them including the chairman are
independent non-executive Directors which is in compliance with the Corporate Governance Code. The Nomination
Committee is primarily responsible for formulating the standards and procedures for the selection of Directors and
senior management and selecting and reviewing the selection of Directors and senior management as well as their
qualifications.
2025 ANNUAL REPORT 103VI Corporate Governance Environment and Society
XVIII. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xi) Nomination Committee (Continued)
The primary duties of the Nomination Committee of the Company: (1) to submit proposals to the Board regarding
its scale and constitution according to the Company’s business activities assets scale and shareholding structure;
(2) to study the standards and procedures for selecting Directors and senior management and submit proposals
to the Board; (3) to select qualified candidates for the Directors and senior management; (4) to examine and make
recommendations on the candidates for the Directors and senior management; (5) to make recommendations on the
nomination appointment and dismissal of Directors to the Board with regard to the skills knowledge experience
background gender and other qualities required for the Directors to perform their duties under the Board as well as
to strike a balance on the Board diversity in order to improve its efficiency and ensure the benefits to be derived from
the Board diversity; (6) to make recommendations on the appointment and dismissal of the senior management to
the Board; (7) to review and amend the Board diversity policy on a regular basis and make relevant disclosure in the
corporate governance report in the annual report; (8) to review the structure size and composition (including the skills
knowledge and experience) of the Board at least annually assist the Board in preparing the Board skills matrix and
make recommendations on any proposed changes to the Board to complement the Company’s corporate strategy;
(9) to identify individuals suitably qualified to become Board members and make recommendations to the Board; (10)
to assess the independence of independent non-executive Directors; (11) to make recommendations to the Board on
the appointment or reappointment of Directors and succession planning for Directors in particular the chairman and
the chief executive; (12) support the Company in conducting regular evaluations of the performance of the Board; and
(13) other matters required by the laws regulations the CSRC the Listing Rules and the Articles of Association and
authorised by the Board.Particulars of the meetings held by the Nomination Committee during the reporting period are detailed in part VI of
this section.(xii) Strategy and Sustainable Development Committee
During the reporting period the Company completed the re-election of the Board. On 28 October 2025 the first
meeting of the eleventh session of the Board was convened to consider and approve the resolution regarding the
election of members of the special committees of the eleventh session of the Board and elected the new members
of the Strategy and Sustainable Development Committee. The Strategy and Sustainable Development Committee
of the Company comprised three members including Jiang Yanshan (as the chairman) Meng Feng and Kong
Pengzhi. The Strategy and Sustainable Development Committee is primarily responsible for studying the long-term
strategic development major investments sustainable development and ESG works of the Company and making
recommendations.
104 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
XVIII. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xii) Strategy and Sustainable Development Committee (Continued)
The primary duties of the Strategy and Sustainable Development Committee are (1) conducting research and
submitting proposals regarding the long term development strategic plan; (2) conducting research and submitting
proposals regarding the financing plans for major investments which require approval from the Board as stipulated
in the Articles of Association; (3) conducting research and submitting proposals regarding major capital operations
and assets operation projects which require approval from the Board as stipulated in the Articles of Association; (4)
supervising the Company and its subsidiaries to operate in compliance with the national and local directions policies
laws and regulations in respect of sustainable development; (5) making recommendation to the Board in respect of
material matters on sustainable development and ESG of the Company; (6) guiding sustainable development and ESG
works studying ESG-related planning objectives systems and material matters of the Company reviewing ESG-
related reports and providing consultation recommendations to the Board; (7) conducting supervision and inspection
on the execution of ESG works and providing guidance and opinions in due course; (8) conducting research and
submitting proposals regarding other material matters that may affect the development of the Company; (9) carrying
out examination on the implementation of the above matters; (10) dealing with other matters as delegated by the
Board.Particulars of the meetings held by the Strategy and Sustainable Development Committee during the reporting period
are detailed in part VI of this section.(xiii) Auditor
On 12 May 2023 the Company convened the 2022 annual general meeting and considered and approved the
Resolution in relation to the Appointment of the Auditor for 2023 and continued to engage Grant Thornton (Special
General Partnership) as the domestic auditor of the Company for 2023 and be responsible for domestic auditing of
the Company for 2023.On 14 May 2024 the Company convened the 2023 annual general meeting and considered and approved the
Resolution in relation to the Appointment of the Auditor for 2024 and continued to engage Grant Thornton (Special
General Partnership) as the domestic auditor of the Company for 2024 and be responsible for domestic auditing of
the Company for 2024.On 15 May 2025 the Company convened the 2024 annual general meeting and considered and approved the
Resolution in relation to the Appointment of the Auditor for 2025 and continued to engage Grant Thornton (Special
General Partnership) as the domestic auditor of the Company for 2025 and be responsible for domestic auditing of
the Company for 2025.(xiv) Remuneration for the Auditor
The financial statements for 2025 prepared in accordance with Accounting Standards for Business Enterprises by the
Group were audited by Grant Thornton (Special General Partnership). In 2025 the Company paid the auditor a total
of RMB2.80 million (tax inclusive; tax exclusive amount: RMB2.6415 million) in respect of financial statements audit
for 2024 and a total of RMB1.10 million (tax inclusive; tax exclusive amount: RMB1.0377 million) in respect of audit
services in relation to internal control for 2024. The Company has not changed its auditor in any year during the past
three years.Grant Thornton (Special General Partnership) has stated their reporting responsibilities on the financial statements of
the Group in X. Financial Report of this annual report.
2025 ANNUAL REPORT 105VI Corporate Governance Environment and Society
XVIII. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xiv) Remuneration for the Auditor (Continued)
In addition to the aforesaid annual financial report and internal control audit fees paid to Grant Thornton (Special
General Partnership) totalling RMB3.6792 million (tax exclusive) other tax-exclusive audit expenses incurred due to
the audit of R&D expenses and the audit of income tax settlement and payment totalled RMB683000.(xv) Supervisors and Supervisory Committee
The tenth session of the Supervisory Committee comprises three shareholder representatives and two employee
representatives. The shareholder representative Supervisors shall be elected and removed at a general meeting
and the employee representative Supervisors shall be elected and removed democratically by the employees of the
Company. During the reporting period the tenth session of the Supervisory Committee of the Company convened
3 meetings and all Supervisors attended Supervisory Committee meetings convened during the year and carefully
reviewed the 2024 Annual Report 2025 First Quarterly Report and 2025 Interim Report and issued special opinions.In order to fully implement the requirements of the newly amended Company Law of the People’s Republic of China
and its supporting rules further enhance the Company’s standardised operations and improve its governance
structure and pursuant to the Company Law of the People’s Republic of China the Transitional Arrangements for theImplementation of the Supporting Rules of the New Company Law of the China Securities Regulatory Commission 《( 關於新<公司法>配套制度規則實施相關過渡期安排》) the Guidelines for the Articles of Association of Listed Companies
《( 上市公司章程指引》) and other laws regulations and normative documents the Company convened the twenty-
first extraordinary meeting of the tenth session of the Board on 10 October 2025 and the first extraordinary general
meeting on 28 October 2025 where the Resolution in relation to the Adjustment of the Company’s Governance
Structure and Amendments to the Articles of Association was considered and approved to revise its corporate
governance structure by abolishing the supervisory committee of the Company and its supervisors with the functions
and powers of the supervisory committee as stipulated under the Company Law of the People’s Republic of China
to be exercised by the Audit Committee of the Board of the Company and the Company’s systems related to the
Supervisory Committee being correspondingly repealed.(xvi) Company Secretary
During the year the company secretary confirmed that he has received relevant professional training for not less than
15 hours in accordance with Rule 3.29 of the Listing Rules.
(xvii) Communications with Shareholders
The Company considers effective communication with Shareholders is essential to enable them to have a clear
assessment of the Group’s performance as well as accountability of the Board. Principal means of communication
with Shareholders of the Company are as follows:
Information disclosure on the Company’s website
The Company endeavours to disclose all material information about the Group to all interested parties as widely and
timely as possible. The Company maintains its website at www.chenmingpaper.com where important information
about the Group’s activities and corporate matters such as annual reports and interim reports to Shareholders
announcements business development and operations corporate governance practices and other information are
available for review by Shareholders and other stakeholders.When announcements are made through the Stock Exchange the same information will be made available on the
Company’s website.
106 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
XVIII. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xvii) Communications with Shareholders (Continued)
General meetings
The Company’s annual general meeting provides a useful platform for direct communication between the Board and
Shareholders. Various resolutions are proposed on each substantially separate issue at the general meetings. Save for
the annual general meeting held on 15 May 2025 by the Company two extraordinary general meeting were convened
in 2025. The attendance record of Directors at each general meeting is set out below:
Name Directors attending general meetings in person
2024 annual general meeting Hu Changqing Li Xingchun Li Weixian Han Tingde
Li Chuanxuan Li Zhihui Sun Jianfei Yang Biao
2025 first extraordinary general meeting Hu Changqing Li Weixian Han Tingde Li Chuanxuan Li Zhihui
Sun Jianfei Yang Biao
2025 second extraordinary general meeting Jiang Yanshan Li Weixian Liu Peiji Meng Feng Zhu Yanli
Song Yuchen Wang Ying Zhang Zhiyuan Luo Xinhua
Wan Gang Kong Pengzhi
The Company’s external auditor also attended the Annual General Meeting and scrutinised voting.Code provision F.1.3 – This code provision requires the chairman to invite the chairmen of the audit remuneration and
nomination committees to attend the annual general meeting.Ms. Yin Meiquan a then member of the Audit Committee and the Nomination Committee was absent from the annual
general meeting due to business commitments.Code provision C.1.5 – This code provision requires independent non-executive directors and other non-executive
directors as equal board members should give the board of the directors and any committees on which they serve
the benefit of their skills expertise and varied backgrounds and qualifications through regular attendance and active
participation. They should also attend general meetings and develop a balanced understanding of the views of
shareholders.During the year Ms. Yin Meiqun an independent non-executive Director of the Company was absent from the 2024
annual general meeting and the 2025 first extraordinary general meeting; other independent non-executive Directors
and other non-executive Directors of the Company attended the general meetings without absence.During the year Mr. Li Feng an executive director of the Company was absent from the 2024 annual general meeting
and the 2025 first extraordinary general meeting; Mr. Li Xingchun an executive Director of the Company was absent
from the 2025 first extraordinary general meeting.Voting by poll
Resolutions put to vote at the general meetings of the Company are taken by poll. Procedures regarding the conduct
of the poll are explained to the shareholders at the commencement of each general meeting and questions from
shareholders regarding the voting procedures are answered. The poll results are posted on the websites of the Stock
Exchange and the Company respectively on the same day.
2025 ANNUAL REPORT 107VI Corporate Governance Environment and Society
XVIII. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xvii) Communications with Shareholders (Continued)
Shareholders’ right
1. Procedures for convening a general meeting by Shareholder
Pursuant to Article 63 of the Articles of Association Shareholder(s) alone or in aggregate holding 10% or
more of the Company’s voting shares shall be entitled to request the Board to convene extraordinary general
meetings provided that such request shall be made in writing. The Board shall in accordance with provisions of
the laws administrative regulations and the Articles of Association furnish a written reply stating its agreement
or disagreement to the convening of an extraordinary general meeting within ten days after receiving such
proposal of the same.In the event that the Board agrees to convene an extraordinary general meeting the notice of general meeting
shall be issued within five days after the passing of the relevant resolution of the Board. Any changes in the
original request made in the notice shall require prior approval of Shareholders concerned.In the event that the Board does not agree to convene an extraordinary general meeting or does not furnish any
reply within ten days after receiving such proposal Shareholder(s) alone or in aggregate holding 10% or more of
the Company’s voting shares shall be entitled to propose to the Audit Committee the convening of extraordinary
general meeting provided that such proposal shall be made in writing.In the event that the Audit Committee agrees to convene an extraordinary general meeting the notice of general
meeting shall be issued within five days after receiving such request. Any changes in the original request made
in the notice shall require prior approval of Shareholders concerned.Failure of the Audit Committee to issue a notice of general meeting within the stipulated period shall be deemed
as failure of the Audit Committee to convene and preside over a general meeting and Shareholder(s) alone or
in aggregate holding 10% or more of the Company’s voting shares for ninety consecutive days or more shall be
entitled to convene and preside over the meeting on a unilateral basis.Pursuant to Article 64 of the Articles of Association if the Audit Committee or Shareholders determine to
convene a general meeting on their own they shall give a written notice to the Board and file the same with the
stock exchange for records.The shareholding percentage of shareholders who convened shall not be lower than 10% prior to the
announcement of resolutions of the general meeting.The Audit Committee or Shareholders who convened shall submit relevant certifications to the stock exchange
upon the issuance of the notice of general meeting and the announcement of resolutions of the general meeting.Pursuant to Article 65 of the Articles of Association the Board and its secretary shall cooperate with respect to
matters relating to general meetings convened by the Audit Committee or Shareholders on their own. The Board
shall provide Shareholder registers as of the date of shareholding register.Pursuant to Article 66 of the Articles of Association if a general meeting is convened by the Audit Committee or
Shareholders on their own all necessary expenses incurred shall be borne by the Company.
108 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
XVIII. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xvii) Communications with Shareholders (Continued)
Shareholders’ right (Continued)
2. Procedures for sending shareholders’ enquiries to the Board
Shareholders may at any time send their enquiries and concerns to the Board of the Company in writing through
the Company Secretary/Secretary to the Board whose contact details are as follows:
Secretary to the Board Hong Kong Company Secretary
Name Yuan Xikun Chu Hon Leung
Address No. 2199 East Nongsheng Road 22/F Universal Building Central
Shouguang City Shandong Province Hong Kong
Telephone 0536-2158008 00852-21629600
Facsimile 0536-2158977 00852-25010028
Email chenmmingpaper@163.com liamchu@li-partners.com
The Company Secretary and the secretary to the Board shall forward shareholders’ enquiries and concerns
to the Board and/or relevant Board Committees of the Company where appropriate to answer shareholders’
questions.
3. Procedures for putting forward proposals of Shareholders at general meetings
Pursuant to Article 68 of the Articles of Association when the Company convenes a general meeting the Board
the Audit Committee and Shareholder(s) individually or jointly holding 1% or more of the shares of the Company
shall have the right to propose motions.Any Shareholders individually or aggregately holding more than 1% of the Company’s shares (including
preferred shares with restored voting rights etc.) may submit a temporary proposal in writing to the convener
ten days before the general meeting is convened. The convener shall issue a supplementary notice within two
(2) days of receiving such proposals announce the content of the extraordinary proposals and submit such
extraordinary proposals to the general meeting for consideration. However this shall not apply if the temporary
proposal violates the provisions of laws administrative regulations or the Company’s Articles of Association or
does not fall within the scope of the powers of the general meeting
Except for the circumstances specified in the preceding paragraph after the convener issues the announcement
of the notice of the general meeting it shall not amend the proposals already listed in the notice of the general
meeting or add new proposals.Proposals that are not listed in the notice of the general meeting or do not comply with the provisions of the
Articles of Association shall not be put to vote or resolved at the general meeting.The proposal on nomination of Directors shall be submitted notified and announced at least 10 (ten) (Hong
Kong) trading days before the date of convening the general meeting.
2025 ANNUAL REPORT 109VI Corporate Governance Environment and Society
XVIII. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xvii) Communications with Shareholders (Continued)
Relationships with investors
The Company recognises its responsibility to explain its activities to those with a legitimate interest and to respond to
their questions. Investors are received and visited at appropriate times to explain the Group’s business. In addition
questions received from the general public and individual shareholders are answered promptly. In all cases great care
is taken to ensure that no price-sensitive information is disclosed selectively.The Board has reviewed the interaction with Shareholders during the reporting period and is satisfied with the
implementation of the shareholder communications policy of the Company and its effectiveness.(xviii) Internal Control
For details of internal control of the Company please refer to XI. Internal control system development and
implementation during the reporting period and XIII. Assessment report on internal control or auditor’s report on
internal control of this section.(xix) Articles of Association
On 28 October 2025 the Company amended the new Articles of Association primarily to implement the requirements
of the newly amended Company Law of the People’s Republic of China and its supporting rules pursuant to the
Company Law of the People’s Republic of China the Transitional Arrangements for the Implementation of theSupporting Rules of the New Company Law of the China Securities Regulatory Commission 《( 關於新<公司法>配套制度規則實施相關過渡期安排》) the Guidelines for the Articles of Association of Listed Companies 《( 上市公司章程指引》) and other laws regulations and normative documents adjusting its corporate governance structure with the
functions and powers of the supervisory committee being exercised by the Audit Committee of the Board and certain
relevant provisions accordingly amended. The Memorandum of Association and the amended version of the new
Articles of Association of the Company are available on websites of the Company and Stock Exchange.(xx) Board Diversity
The Company has implemented a Board diversity policy. The implementation rules for the Nomination Committee was
amended on 10 October 2025. The Nomination Committee shall regularly review the Board diversity policy to improve
Board efficiency and ensure interest thereof.The Board diversity policy is summarised as follows:
The Company recognises and embraces the benefits of having a diverse Board and sees diversity at Board level as
an essential element in maintaining a competitive advantage. A truly diverse Board will include and make good use
of differences in the talents skills regional and industry experience backgrounds genders and other qualities of the
members of the Board. These differences will be considered in determining the optimum composition of the Board
and when possible should be balanced appropriately. All appointments of the members of the Board are made on
merit and in the context of the talents skills and experience of the Board as a whole.
110 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance Environment and Society
XVIII. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xx) Board Diversity (Continued)
The Nomination Committee of the Company reviews and assesses the composition of the Board and makes
recommendations to the Board on appointment of new directors of the Company. The Nomination Committee
also oversees the conduct of the annual review of the effectiveness of the Board. In reviewing and assessing the
composition of the Board the Nomination Committee will consider the benefits of all aspects of diversity including
without limitation those described above in order to maintain an appropriate range and balance of talents skills
experience and backgrounds on the Board. In recommending candidates for appointment to the Board the
Nomination Committee will consider candidates on merit against objective criteria and with due regard for the benefits
of diversity on the Board. As at the date of the report the Board is composed of 9 male Directors and 1 female
Director. The Nomination Committee and the Board will seize the opportunity to gradually increase the proportion of
female Directors in the Board when they select and recommend a suitable Director candidate.The composition of the Board of the Company is basically diversified. For details please refer to (iii) Board of this
section.(xxi) Employee diversity
The Company always adheres to the principles of fairness and impartiality in recruitment resolutely eliminates
any form of discrimination based on race gender religious belief etc. and is committed to building a diverse and
inclusive talent team. The Company takes “cultivating talents retaining talents and making good use of talents”
as its core concept and through the formulation and implementation of a series of policies such as the Measures
for the Implementation of the Seniority Allowance and Title Allowance and the Regulations on the Management of
Employees’ Early Retirement it effectively pays attention to the well-being of employees and continuously improves
their sense of belonging and happiness; At the same time the Company has established a clear career development
path for employees and provided abundant training resources and career development support to help them achieve
personal growth and self-worth. We always adhere to the principle of gender equality in terms of salary system
training opportunities and career prospects ensuring that all employees enjoy fair development opportunities and
treatment promoting gender equality in the workplace through practical actions and creating a harmonious and
inclusive working environment.As at 31 December 2025 the total number of employees in the Company was 8992 of which 2174 were female
employees accounting for 24.18% of the total. Due to the fact that the Company operates in the paper and paper
products industry in the manufacturing industry the production process requires high physical strength from frontline
technical staff and the nature of the work involves a shift system. Therefore in the actual recruitment process male
candidates are the main ones. This phenomenon is mainly due to industry characteristics and job demands rather
than restricting women from applying for frontline technical positions. The Company always adheres to the principles
of fairness and impartiality in recruitment and equal employment opportunities are offered regardless of gender.
2025 ANNUAL REPORT 111VI Corporate Governance Environment and Society
XVIII. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xxii) Dividend policy
During the reporting period due to the shutdown of certain production bases the Company’s shutdown losses and
maintenance expenses increased year on year leading to a significant year-on-year decline in sales of machine-
made paper. The Company made impairment provisions for certain assets which affected both revenue and profit for
the current period. At the same time the Company conducted impairment tests for the credit profiles of its financial
leasing customers and made bad debt provisions for certain financial leasing activities in accordance with relevant
requirements of the Accounting Standards for Business Enterprises out of prudence which further affected the profit
for the current period. The net profit attributable to shareholders of the Company for 2025 amounted to RMB-8226
million. Furthermore to focus on its principal activities of pulp production and papermaking the Company divested all
assets related to its financial leasing business in the fourth quarter of 2025 and had since ceased all financial leasing
activities. Based on the operations in 2025 and taking into account the Company’s development plan for 2026 the
Board proposed not to pay cash dividend issue bonus shares and increase share capital from reserves in 2025 to
satisfy the capital needs for day-to-day production and operation and enhance the risk resistance of the Company
thereby realising the sustainable steady and healthy development of the pulp production and papermaking the
principal activities of the Company and better safeguarding the interests of all shareholders in the long run.
112 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVII Material Matters
I. Performance of undertakings
1. Undertakings made by parties involved in undertakings including the Company’s beneficial controllers
shareholders related parties bidders and the Company during the reporting period or prior periods
but subsisting to the end of the reporting period
√ Applicable □ Not applicable
Party involved in Type of Undertaking Particulars on
Undertaking undertaking undertaking Details of undertaking date Term the performance
Undertaking made Chenming Holdings Non-competitive (1) Chenming Holdings Co. Ltd. (“Chenming Holdings”) shall not engage 22 May 2008 During the period Implementing as
on initial public Company Limited undertaking whether solely jointly or by representing itself or any other persons when Chenming normal
offering or or companies and shall not procure its associates (as defined in The Holdings was the
refinancing Listing Rules of Hong Kong Stock Exchange) to engage in any business major shareholder
which competes with the business of the Company and its subsidiaries of the Company
(“Chenming Group” or “we”) directly or indirectly in any country and
region which our business exists (or any part of the world if in any form
of electronics business) or in any business that directly or indirectly
competes with Chenming Group’s business which we operate from
time to time (including but not limited to any business in the form of sole
proprietorship joint ventures or acquisitions or holding interests directly
or indirectly in such enterprises or by any other means); (2) in the event
that Chenming Holdings is required by its business to whether solely
jointly or by representing itself or any other persons or companies engage
in business which directly or indirectly competes against the business
of Chenming Group or obtain any business opportunity which directly
or indirectly competes against the business of Chenming Group it shall
endeavour to procure that Chenming Group shall have priority to obtain
the right to operate such business or to obtain such business opportunity;
(3) if Chenming Holdings is in breach of the abovementioned undertakings
it shall indemnify the Company for any loss caused by such breach and
the Company shall have the right to acquire all businesses of Chenming
Holdings which directly or indirectly compete with the businesses of
our Group at market price or cost price (whichever price is lower); (4)
Chenming Holdings shall not make use of its position as the controlling
shareholder (as defined in The Listing Rules of Hong Kong Stock
Exchange) of our Group to jeopardise the legal interests of Chenming
Group and its shareholders with other persons or companies or on their
behalf.
2025 ANNUAL REPORT 113VII Material Matters
I. Performance of undertakings (Continued)
1. Undertakings made by parties involved in undertakings including the Company’s beneficial controllers
shareholders related parties bidders and the Company during the reporting period or prior periods
but subsisting to the end of the reporting period (Continued)
Party involved in Type of Undertaking Particulars on
Undertaking undertaking undertaking Details of undertaking date Term the performance
Chenming Holdings Defective (1) According to the plan on defective properties of the Company 16 January During the period Implementing as
Company Limited properties Chenming Holdings Co. Ltd. (“Chenming Holdings”) has guaranteed and 2008 when Chenming normal
undertaken that: according to the application of the Company for defective Holdings was the
property(ies) owned by the Company and its holding subsidiary company major shareholder
which situated in the administrative area of Shouguang city Chenming of the Company
Holdings will purchase it (them) and have it (them) being transferred to
itself pursuant to the law in accordance with the result of the related asset
valuation if the Company decides to transfer and dispose of it (them) and
there is no other transferee; (2) before the Company transfers and disposes
of the defective properties pursuant to the law if the Company suffers
any economic losses due to the defects of the title (including but not
limited to damages penalties and relocation costs) Chenming Holdings
will bear such economic losses; (3) during the regulatory process taken
to the defective properties of buildings and land of subsidiaries of the
Company situated outside the local areas (outside the administrative area
of Shouguang city) the economic losses such as penalties or relocation
costs imposed by competent administrative authorities to be borne by the
subsidiaries arising from defects of insufficient title documents shall be
paid pursuant to the law by Chenming Holdings after verification.Whether undertakings performed on time Yes
If the undertakings are not performed within specified period N/A
details of the specific reasons for the incomplete performance
and the next steps should be provided
2. Description on the Company’s assets and items in meeting original profit forecast and its explanation
as there is profit forecast for assets and items of the Company and the reporting period is still within
the profit forecast period
□ Applicable √ Not applicable
3. Company undertaking relating to business performance
□ Applicable √ Not applicable
114 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVII Material Matters
II. Appropriation of funds of the Company by the controlling shareholder and other related
parties for non-operating purposes
□ Applicable √ Not applicable
There was no appropriation of funds of the Company by the controlling shareholder and other related parties for non-
operating purposes during the reporting period.III. External guarantees against the rules and regulations
□ Applicable √ Not applicable
There was no external guarantee provided by the Company which was against the rules and regulations during the reporting
period.IV. Opinions of the Board regarding the “modified auditor’s report” for the latest period
√ Applicable □ Not applicable
Grant Thornton (Special General Partnership) issued an audit report with a qualified opinion on the 2024 financial report
of the Company. The Board of the Company had provided a special statement on the relevant matters. For details please
refer to the Special Statement of the Board of Directors on Matters Related to the 2024 Annual Audit Report disclosed
on CNINFO on 1 April 2025 and the overseas regulatory announcement disclosed on the website of Hong Kong Stock
Exchange on 31 March 2025 by the Company.During the reporting period the Company attached great important to the matters covered in the audit report with a
qualified opinion. With the support of Party committees and government authorities at all levels and financial institutions the
Company actively promoted the implementation of various tasks such as grant of syndicated loan resumption of operation
and production at production bases debt restructuring and asset disposal. It also took various measures to raise liquidity
and strove to improve its ability to continue as a going concern with a view to eliminating the relevant matters and their
effect as soon as possible and effectively safeguarding the interests of the Company and all its shareholders.For the grant of a syndicated loan the governments of Weifang and Shouguang established Weifang Xingchen Trading Co.Ltd. a wholly state-owned company through capital contribution. The company collaborated with financial institutions to
arrange a syndicated loan of RMB2.31 billion exclusively to support the Company’s resumption of operation and production.As of the end of the reporting period the approval process of the syndicated loan was completed with RMB1.652 billion
being successfully disbursed. Weifang Xingchen Trading Co. Ltd. had established a wholly-owned subsidiary Jilin
Xingchen Paper Co. Ltd. With the support of the Jilin City Government Bank of Jilin provided a special credit of RMB217
million to Jilin Xingchen Paper Co. Ltd. to assist Jilin Chenming in resumption of operation and production. As of the end of
the reporting period Bank of Jilin had disbursed RMB118 million.For the resumption of operation and production in 2025 the Huanggang production base was in normal operation while
the Shouguang production base the Jiangxi production base and the Jilin production base resumed fully operation
gradually. The Zhanjiang production base has resumed full operation in March 2026. As each production base has resumed
operation and production the Company’s ability to generate its own working capital gradually recovers. In the subsequent
production and operations the Company will strengthen end-to-end cost reduction and efficiency enhancement as well as
all-round new product development. Priority will be given to allocating production resources to core production lines high-
margin products and orders with stable proceeds in order to improve operating cash flows.
2025 ANNUAL REPORT 115VII Material Matters
IV. Opinions of the Board regarding the “modified auditor’s report” for the latest period
(Continued)
For debt restructuring the Company proactively coordinated its financing plans and optimised its financing structure and
actively initiated negotiations with banks and financial institutions to extend the maturity of loans reduce interest rates and
adjust repayment cycles. 90 or 82.57% of 109 banks and finance leasing companies consented to interest rate reductions
or loan extensions resulting in a saving of finance expenses of more than RMB600 million each year. At the same time
the Company prudently addressed overdue debts litigation and arbitration cases and account freezes by reviewing each
overdue borrowing accounts payable and litigation case and formulating tailored disposal plans for each debt and case.The Company negotiated instalment payments debt-for-goods swaps and extended credit terms with suppliers to restore
supply chain stability and minimise new litigation and preservation actions. For frozen accounts and assets the Company
sought releases and lifting of preservation measures through the provision of security settlements instalment performance
and other means to restore normal settlement and operating activities. By the end of 2025 the total amount of overdue
obligations remained essentially flat compared to the beginning of 2025 with overdue amounts to banks finance leasing
companies and supply chain entities reduced by RMB330 million. The Company had reached settlements over most
overdue debts to financial institutions. Moreover the Company had proceeded with account cleanup and consolidation
efforts performing a comprehensive review of bank accounts of the Company and its subsidiaries and advancing the
closure of redundant and dormant accounts to effectively reduce account maintenance fees and risks associated with
fund dispersion. A tiered account management system had been established clearly defining approval authorities and
usage norms for account opening changes and closures to ensure funds to be used for designated purposes. Dynamic
monitoring of accounts was strengthened with timely updates and real-time alerts.For asset disposal the Company made every effort to revitalise and dispose of existing assets including intensifying
the disposal of non-core business assets establishing an asset management centre optimising internal management
structures dividing asset disposal management zones by region assigning responsibilities to individuals and enhancing the
efficiency of asset disposal. The Company divested all assets related to its financial leasing business in the fourth quarter
of 2025 and had since ceased all financial leasing activities. The Company stepped up efforts to recover outstanding debts
including pursuing recovery from debtors with realisable assets through negotiation or legal means. For accounts receivable
that were difficult to recover judicial proceedings had been initiated to improve the Company’s liquidity.V. Opinions of the Board and independent directors (if any) regarding the “modified auditor’sreport” for the reporting period issued by the accountants
√ Applicable □ Not applicable
The Board is of the view that Grant Thornton (Special General Partnership)’s unqualified audit report with an emphasis of
matter paragraph has objectively and fairly reflected the financial position and operating results of the Company in 2025.The inclusion of an emphasis of matter paragraph in its audit report is intended to draw the attention of users of the audit
report to the relevant matters and does not affect the validity of the Company’s financial statements. The Board of the
Company agrees with the explanation provided by Grant Thornton (Special General Partnership) regarding the emphasis of
matter paragraph in the Company’s 2025 audit report. The Board attaches great importance to the effects of the matters
highlighted in the report on the Company and will urge the management of the Company to further strengthen corporate
management effectively implement specific measures to resolve the relevant matter and its effects ensure the Company’s
sustained stable and healthy development and earnestly safeguard the legitimate rights and interests of the Company and
all shareholders.The Directors of the Company has taken plans and measures to improve the operations of the Company. The relevant plans
and measures are set out in IV. Basis of Preparation of the Financial Statements of section X Financial Report.
116 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVII Material Matters
VI. Changes in accounting policies accounting estimates or correction of major accounting
errors as compared to the financial report for the prior year
□ Applicable √ Not applicable
There were no changes in accounting policies accounting estimates or correction of major accounting errors during the
reporting period.VII. Reason for changes in scope of the consolidated financial statements as compared to the
financial report for the prior year
√ Applicable □ Not applicable
During the year 3 subsidiaries were newly established namely Zhanjiang Chenming Paper Co. Ltd. Chenming
International Trade Import and Export Co. Limited and Shanghai Hongtai Tengda Industrial Development Co. Ltd. A
company was included in the scope of consolidation namely Weifang Chenchuang Equity Investment Fund Partnership
(Limited Partnership). 7 subsidiaries were disposed of namely Shouguang Wei Yuan Logistics Company Limited Shandong
Shengming Corporate Management Co. Ltd. Qingdao Chenming Paper Products Sales Co. Ltd. Shanghai Chenxinming
Industrial Development Co. Ltd. Chenming Management and Consulting (Shandong) Co. Ltd. Shandong Dingkun Asset
Management Partnership (Limited Partnership) and Nanjing Chenming Culture Communication Co. Ltd. 2 subsidiaries were
deregistered namely Zhanjiang Meilun Pulp & Paper Co. Ltd. and Chenming Paper United States Co. Ltd.VIII. Engagement or dismissal of accounting firms
Current accounting firm engaged
Name of the domestic accounting firm Grant Thornton
(Special General Partnership)
Remuneration of the domestic accounting firm (RMB’0000) 390
Continued term of service of the domestic accounting firm 7
Name of certified public accountants of the domestic accounting firm Jiang Tao and Guo Dongmei
Continued term of service of certified public accountants of the domestic accounting firm 3
Whether to appoint another accounting firm during the period
□ Yes √ No
Whether to appoint another accounting firm during the audit
□ Yes √ No
Particulars on recruitment of accounting firms financial consultants or sponsors for internal control and auditing purposes
√ Applicable □ Not applicable
During the year the Company engaged Grant Thornton (Special General Partnership) as the auditor for internal control of
the Company for 2025. The Company paid RMB1.10 million as internal control audit fees for prior year during the reporting
period.
2025 ANNUAL REPORT 117VII Material Matters
IX. Prospects of withdrawal from listing subsequent to the publication of the annual report
□ Applicable √ Not applicable
X. Matters related to bankruptcy and reorganisation
□ Applicable √ Not applicable
There was no matter related to bankruptcy and reorganisation during the reporting period.XI. Material litigation and arbitration
√ Applicable □ Not applicable
General information Whether
on the litigation Amount involved provisions are Enforcement of
(arbitration) (HK$/RMB’0000) made Progress Trial results and impact judgment Date of disclosure Disclosure index
Statutory demand and HK$38911.24 No On 15 May 2025 an application On 20 June 2025 the Company The judgment 28 June 2025 http://www.cninfo.com.cn
winding-up petition was made by Arjowiggins HKK2 received the order made by was enforced. (Announcement No.Limited (“HKK2”) to the court by the Court of First Instance 2025-046)way of a summon (the “Petitioner’s dismissing the Petitioner’s 27 June 2025 http://www.hkex.com.hkSummons”) for an order that the Summons and the winding –
stay of the winding-up petition be up petition.lifted and to restore the hearing
of the winding-up petition. On
13 June 2025 the Company and
HKK2 jointly applied to dismiss the
Petitioner’s Summons by way of
consent summons.Summary of matters RMB16800.63 No The amount involved in ongoing cases The cases had no significant The judgment 1 March 2025 http://www.cninfo.com.cn
subject to litigation was RMB79.4373 million; the impact on the operations is being 12 April 2025 (Announcements No.:
(arbitration) in which amount involved in resolved cases and financial position of the enforced. 24 May 2025 2025-003 2025-008
the Company and was RMB88.5690 million.f Company. and 30 August 2025-034 2025-044 and
its majority-owned 2025; and 23 2025-053) and
subsidiaries are the January 2025 http://www.hkex.com.hk
plaintiffs 28 February
2025 11 April
2025 23 May
2025 and 29
August 2025
Summary of matters RMB646400.05 Provision of The amount involved in ongoing cases The cases were properly resolved The judgment
subject to litigation RMB5.9350 was RMB2481.0657 million; the through communication and is being
(arbitration) in which million amount involved in resolved cases negotiation an active defence enforced.the Company and was RMB3982.9348 million. and reaching settlements with
its majority-owned creditors.subsidiaries are the
defendants
118 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVII Material Matters
XII. Punishment and rectification
√ Applicable □ Not applicable
Type of inspection Date of
Name Type Reason and punishment Conclusion (if any) disclosure Disclosure index
Huanggang Subsidiary On 21 April 21 2025 during an inspection of Huanggang Others In July 2025 Huanggang Ecological N/A N/A
Chenming Chenming Huanggang Ecological Environment Bureau Environment Bureau issued the
found that an overflow occurred at the DW004 rainwater Decision for Administrative Penalty
discharge outlet within the Huanggang Chenming plant (Huang Huan (01)) Penalty [2025]
premises. Initial rainwater flowed over the gate valve and No. 17) and imposed penalty
discharged into Changhe River. After third-party sampling of RMB262000 on Huanggang
and testing both the DW004 rainwater discharge outlet Chenming.within the northern part of the factory and the rainwater
discharge outlet outside the northern factory boundary
discharging into Changhe River exceeded water quality
standards. This constituted a violation involving the
discharge of water pollutants exceeding water pollution
emission standards.Huanggang Subsidiary On 2 May 2025 during an inspection of Huanggang Others In July 2025 Huanggang Ecological N/A N/A
Chenming Chenming Huanggang Ecological Environment Bureau Environment Bureau issued the
found that some equipment items in the tank farm area Decision for Administrative Penalty
of the workshop was outdated resulting in leaks spills (Huang Huan (01)) Penalty [2025]
drips and emissions. Unorganised exhaust emissions No. 16) and imposed penalty
were detected in the alkali recovery area and wastewater of RMB200000 on Huanggang
cooling tower constituting a violation of illegally Chenming.discharging pollutants in excess of the permitted emission
concentrations.Rectification
√ Applicable □ Not applicable
2025 ANNUAL REPORT 119VII Material Matters
XII. Punishment and rectification (Continued)
After the occurrence of environmental issues at Huanggang Chenming the Company and Huanggang Chenming
attached great importance to the matter conducted a profound self-reflection on their shortcomings promptly initiated
rectification measures paid the penalty in full and on time and earnestly implemented the main responsibility of enterprise
environmental protection. These environmental issues did not have a material adverse impact on the Company.To ensure the rectification work was scientific efficient and thorough Huanggang Chenming proactively took action under
the guidance and support of the municipal government and local ecological environment authorities. During the reporting
period relevant production equipment items were promptly shut down for inspection and maintenance. The Company also
organised three rounds of on-site visits by domestic and international environmental research institutions and authoritative
experts from the pulp and paper industry. These visits enabled comprehensive identification and collective diagnosis of
existing environmental issues. Based on the Company’s actual production conditions specific rectification engineering
plans were proposed. They primarily included odor control upgrading pollutant discharge performance and implementing
rainwater-sewage separation modifications to comprehensively address environmental shortcomings. To accelerate
the rectification process the Company invested over RMB43 million in 2025 and successfully completed multiple key
rectification tasks. The specific achievements are as follows:
Firstly the “air-cooling to water-cooling” conversion project was completed. On 27 August 2025 wastewater cooling towers
were completely decommissioned eliminating the primary odor source at its root. Secondly ultra-low emission upgrades
were completed for the electrostatic precipitators of the alkali boilers and lime kiln. After the upgrade particulate matter
emissions had been stably controlled below 10mg/m3 strictly complying with the Emission Standard of Air Pollutants for
Lime and Calcium Carbide Industry (GB 41618 – 2022) significantly improving the effectiveness of atmospheric pollution
control. Thirdly the “oil-to-gas conversion” project was completed with natural gas officially put into use on 16 September
2025. This further optimised the energy structure and reduced pollutant emissions. Fourthly the raw material management
was standardised by establishing separate storage yards for raw materials. The regulation requiring wood chips to be aged
for three months before entering the plant was strictly enforced reducing VOC emissions from fresh wood chips. Fifthly
the control of mobile source pollution was strengthened by installing environmental access control systems for mobile
sources and connecting them to the provincial environmental supervision platform strictly prohibiting entry of diesel trucks
of national emission standards of IV or below to the factory to reduce mobile source emissions. Sixthly the wastewater
collection system was improved by connecting all wastewater discharged from production workshops to the pipe gallery
uniformly pumping it to collection wells for centralised treatment and eliminating random discharge of wastewater.Seventhly comprehensive rectification of leakage issues was conducted by thoroughly inspecting and addressing all
leakage points in production and environmental facilities standardising operational management. Eighthly odor control for
alkali boilers was deepened by completing modifications to connect chute exhaust to boiler combustion chambers and fully
welding leaks in electro-filter flue ducts to further reduce unorganised exhaust emissions. Ninthly rainwater and wastewater
systems were further separated and transformed by constructing over 1200 metres of new open drainage channels
effectively enhancing the plant’s rainwater collection and treatment capacity to mitigate rainwater pollution risks.Looking ahead the Company will take this environmental rectification as an opportunity to further strengthen environmental
awareness improve environmental management systems enhance routine operation and maintenance as well as
normalised supervision of environmental facilities and regularly conduct self-inspections and self-corrections to resolutely
prevent any recurrence of environmental issues. At the same time the Company will continue to increase environmental
investment and promote projects such as low-temperature SCR denitration outside the alkali boiler construction of covered
wood chip storage sheds and expansion of initial rainwater collection ponds. These efforts will drive the green upgrading of
production processes earnestly fulfil the enterprise’s primary responsibility for environmental protection contribute to the
continuous improvement of regional ecological and environmental quality and achieve green and sustainable development
for the Company.
120 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVII Material Matters
XIII. Credibility of the Company its controlling shareholders and beneficial controllers
√ Applicable □ Not applicable
According to information disclosed on the China Enforcement Information Online during the reporting period the Company
Zhanjiang Chenming Shouguang Meilun Jilin Chenming Jiangxi Chenming and Shouguang Chenming Import and Export
Trade Co. Ltd. were listed as dishonest persons subject to enforcement for failing to fulfil obligations as determined by
effective legal documents issued by the court violations of the asset reporting system or violations of orders restricting
high-consumption activities. Neither the Company’s controlling shareholder nor its actual controller is listed as a dishonest
person subject to enforcement.XIV. Significant related party transactions
1. Related party transactions associated with day-to-day operation
√ Applicable □ Not applicable
Percentage
Pricing basis of Related Amount of as the Amount of Whether Market price
Relationship Types of the Subject matter of the related party related party amount of transactions exceeding Settlement of of available
with the related party the related party party transaction transactions similar approved approved related party similar Disclosure
Related party Company transactions transactions transaction price (RMB’0000) transactions (RMB’0000 cap transactions transaction date Disclosure index
Weifang Port Wood Chip Joint venture Services Port miscellaneous Market price Market price 492.45 2.39% 11000.00 No Bank acceptance N/A 1 April http://www.cninfo.com.cn
Wharf Co. Ltd. fees and telegraphic 2025
transfer
Sunshine OJI (Shouguang) An entity in which the Goods Sale of steam Market price Market price 703.01 5.71% 5000.00 No Bank acceptance N/A 1 April http://www.cninfo.com.cn
Special Paper Co. Ltd. former chairman and telegraphic 2025
of the Company’s transfer
controlling
shareholder served
as a director within
the past twelve
months
Total － － 1195.46 － 16000.00 － － － － －
Particulars on refund of bulk sale Nil
Estimated total amount for day-to-day related party transactions to be conducted during N/A
the period (by types of transactions) and their actual implementing during the reporting
period (if any)
Reasons for large differences between transaction price and market reference price (if N/A
applicable)
2. Related party transaction in connection with purchase or sale of assets or equity interest
□ Applicable √ Not applicable
There was no related party transaction of the Company in connection with purchase or sale of assets or equity interest
during the reporting period.
3. Related party transaction connected to joint external investment
□ Applicable √ Not applicable
There was no related party transaction of the Company connected to joint external investment during the reporting
period.
2025 ANNUAL REPORT 121VII Material Matters
XIV. Significant related party transactions (Continued)
4. Related creditors’ rights and debts transactions
√ Applicable □ Not applicable
Was there any non-operating related creditors’ rights and debts transaction
√ Yes □ No
Creditor’s rights receivable from any related party
Amount Amount
Was there any increased recovered Interest for
Relationship non-operating Opening during the during the the current Closing
with the capital balance current period current period period balance
Related party Company Reason occupation (RMB’0000) (RMB’0000) (RMB’0000) Interest rate (RMB’0000) (RMB’0000)
Shouguang Meite Joint venture Financial support No 1106.33 6.00% 63.43 1169.76
Environmental Technology
Co. Ltd.Weifang Port Wood Chip Joint venture Financial support No 7939.77 6.00% 383.25 8323.02
Wharf Co. Ltd.Wuhan Chenming Hanyang Associate Financial support No 23809.34 8543.87 4.75% 902.72 16168.19
Paper Holdings Co. Ltd.Effect of related creditors’ rights on the The above creditors’ rights did not affect the ordinary operation of the Company. Moreover they catered to the needs for development of existing
operating results and financial position businesses of the above entities as well as lowered the finance costs.of the Company
122 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVII Material Matters
XIV. Significant related party transactions (Continued)
4. Related creditors’ rights and debts transactions (Continued)
Debts payable to any related party
Amount
increased Amount repaid Interest for
Opening during the during the the current Closing
Relationship balance current period current period period balance
Related party with the Company Reason (RMB’0000) (RMB’0000) (RMB’0000) Interest rate (RMB’0000) (RMB’0000)
Chenming Holdings Controlling Financial support 3850.00 381.98 Market interest rate 119.04 3587.07
Company Limited shareholder
Guangdong Nanyue Associate Borrowing 85789.00 9810.00 Market interest rate 5051.93 75979.00
Bank Co. Ltd.Effect of related debts on the operating results Financial support was provided by Chenming Holdings without requiring any pledge or guarantee which was a testament to its support and
and financial position of the Company confidence in the future development of the Company and helped the Company promote project construction and satisfy its needs for working
capital.
5. Deals with related financial companies
□ Applicable √ Not applicable
There were no deposits loans credits or other financial services between the Company its related financial
companies and the related parties.
6. Deals between financial companies controlled by the company and related parties
□ Applicable √ Not applicable
There were no deposits loans credits or other financial services between the financial companies controlled by the
Company and the related parties.
7. Other significant related party transactions
□ Applicable √ Not applicable
There was no other significant related party transaction of the Company during the reporting period.XIV. Significant related party transactions
1. Custody contracting and leasing
(1) Custody
□ Applicable √ Not applicable
There was no custody of the Company during the reporting period.
2025 ANNUAL REPORT 123VII Material Matters
XIV. Significant related party transactions (Continued)
1. Custody contracting and leasing (Continued)
(2) Contracting
√ Applicable □ Not applicable
In April 2023 Jiangxi Chenming a subsidiary acquired equity interest in Jiangxi Port which was included in
the scope of consolidation. The principal activities of Jiangxi Port is goods loading and transportation at wharf.In order to revitalise Jiangxi Port and enhance economic benefits to the Company Jiangxi Chenming has
contracted the businesses of Jiangxi Port to Jiangxi Yirong Investment Co. Ltd. for 5 years and receives fixed
contracting fees of RMB4.00 million per year on quarterly basis.A project which generates profit or loss for the Company representing more than 10% of the Company’s total
profit during the reporting period
□ Applicable √ Not applicable
(3) Leasing
√ Applicable □ Not applicable
Leasing description:
As a lessee
The Company has simplified the treatment of short-term leases and leases of low-value assets by not
recognising right-of-use assets and lease liabilities. The charges to expense for short-term leases low-value
assets and variable lease payments not included in the measurement of lease liabilities during the current period
are as follows:
Unit: RMB
Item 2025
Low-value leases 6165815.26
Total 6165815.26
124 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVII Material Matters
XIV. Significant related party transactions (Continued)
1. Custody contracting and leasing (Continued)
As a lessor
Where an operating lease is formed:
According to paragraph 58 of the new lease standard the lessor shall disclose in the notes the following
information related to operating leases:
* Lease income and make separate disclosure of income related to variable lease payments not included in
lease receipts;
Unit: RMB
Item 2025
Lease income 123162854.85
* The amount of undiscounted lease receipts to be received in each of the five consecutive fiscal years
after the balance sheet date and the total amount of undiscounted lease receipts to be received in the
remaining years.Unit: RMB
Year 31 December 2025
Within 1 year after the balance sheet date 140742027.37
1 to 2 years after the balance sheet date 148401301.62
2 to 3 years after the balance sheet date 151864581.72
3 to 4 years after the balance sheet date 148513224.23
4 to 5 years after the balance sheet date 154290681.50
More than 5 years after the balance sheet date 160281567.85
Total 904093384.29
Items that bring profit or loss of more than 10% of the total profit of the Company during the reporting
period
□ Applicable √ Not applicable
The Company did not have any leasing project that brought profit or loss to the Company amounting to
more than 10% of the total profit of the Company during the reporting period.
2025 ANNUAL REPORT 125VII Material Matters
XIV. Significant related party transactions (Continued)
2. Significant guarantees
√ Applicable □ Not applicable
(1) Guarantees
During the reporting period the Company provided guarantee to subsidiaries and the guarantee amount
incurred was RMB6812.4441 million. As at 31 December 2025 the balance of the external guarantee provided
by the Company (including the guarantee to its subsidiaries by the Company and the guarantee provided to
subsidiaries by subsidiaries) amounted to RMB21255.8303 million representing 2351.74% of the equity
attributable to shareholders of the Company as at the end of December 2025 of which overdue guarantees
amounted to RMB2182.3702 million.Unit: RMB’0000
External guarantees of the Company and its subsidiaries (excluding guarantees to subsidiaries)
Date of the related Guarantee
announcement to related
disclosing the Amount of Guarantee Fulfilled parties
Name of obligee guarantee amount guarantee Guarantee date provided Type of guarantee Collateral Counter-guarantee Term or not or not
Weifang Port Wood Chip 24 July 2017 17500.00 20 December 2017 7789.50 General guarantee Credit guarantee Nil 10 years No Yes
Wharf Co. Ltd.Zhanjiang Runbao Trading 28 March 2024 16000.00 25 April 2024 16000.00 Pledge 34.64% equity Equity transfer payment 2 years No No
Co. Ltd. interest in Wuhan of RMB160 million
Chenming
Zhanjiang Dingjin Trading 7 December 2022 13558.19 7 December 2022 13558.19 Mortgage Properties Remaining equity 3 years No No
Co. Ltd. transfer payment of
RMB136 million
Shanghai Shuilan Trading 7 December 2022 45700.00 21 June 2023 45000.00 Pledge 100% equity 80% equity interest in 3 years No No
Co. Ltd. interest in Taixing Port held by
Shanghai Shanghai Huahao
Chongmin
Weifang Xingchen Trading 25 April 2025 550000.00 29 August 2025 177347.78 Joint and several Kunhe’s properties Nil 6 years No No
Co. Ltd. liability guarantee and land
+Mortgage
Jilin Xingchen Paper Co. Ltd.10 October 2025 24000.00 7 November 2025 11850.79 Joint and several Jilin Chenming’s Nil 5 years No No
liability guarantee land and
+Mortgage properties
Total external guarantees approved during the 574000.00 Total actual external guarantees during the reporting period (A2) 189198.57
reporting period (A1)
Total external guarantees approved at the end 666758.19 Balance of total actual guarantees at the end of the reporting period (A4) 271546.26
of the reporting period (A3)
126 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVII Material Matters
XIV. Significant related party transactions (Continued)
2. Significant guarantees (Continued)
(1) Guarantees (Continued)
Guarantees between the Company and its subsidiaries
Date of the related Guarantee
announcement to related
disclosing the Amount of Guarantee Fulfilled parties
Name of obligee guarantee amount guarantee Guarantee date provided Type of guarantee Collateral Counter-guarantee Term or not or not
Zhanjiang Chenming Pulp 30 March 2016 27440.00 14 March 2016 27440.00 Joint and several Nil Nil 12 years No No
& Paper Co. Ltd. liability guarantee
Zhanjiang Chenming Pulp 27 October 2017 94000.00 26 March 2018 94000.00 Joint and several Nil Nil 11 years No No
& Paper Co. Ltd. liability guarantee
Zhanjiang Chenming Pulp 30 March 2022 24051.03 17 June 2022 24051.03 Joint and several Nil Nil 3 years No No
& Paper Co. Ltd. liability guarantee
Zhanjiang Chenming Pulp 30 March 2023 87947.23 2 June 2023 87947.23 Joint and several Nil Nil 3 years No No
& Paper Co. Ltd. liability guarantee
Zhanjiang Chenming Pulp 28 March 2024 307167.55 27 June 2024 307167.55 Joint and several Nil Nil 2 years No No
& Paper Co. Ltd. liability guarantee
Zhanjiang Chenming Pulp 31 March 2025 1070000.00 20 May 2025 53528.00 Joint and several Nil Nil 1 year No No
& Paper Co. Ltd. liability guarantee
Shouguang Meilun Paper 28 March 2020 45191.50 9 September 2021 45191.50 Joint and several Nil Nil 5 years No No
Co. Ltd. liability guarantee
Shouguang Meilun Paper 30 March 2022 42172.79 24 May 2022 42172.79 Joint and several Nil Nil 5 years No No
Co. Ltd. liability guarantee
Shouguang Meilun Paper 30 May 2023 84684.69 9 June 2023 84684.69 Joint and several Nil Nil 7 years No No
Co. Ltd. liability guarantee
Shouguang Meilun Paper 28 March 2024 21523.45 24 May 2024 21523.45 Joint and several Nil Nil 4 years No No
Co. Ltd. liability guarantee
Shouguang Meilun Paper 31 March 2025 470000.00 28 May 2025 111208.14 Joint and several Nil Nil 1 year No No
Co. Ltd. liability guarantee
Jiangxi Chenming Paper 27 March 2018 10697.57 28 February 2022 10697.57 Joint and several Nil Nil 5 years No No
Co. Ltd. liability guarantee
Jiangxi Chenming Paper 30 March 2022 7806.67 23 May 2023 7806.67 Joint and several Nil Nil 3 years No No
Co. Ltd. liability guarantee
Jiangxi Chenming Paper 30 March 2023 8533.46 8 September 2023 8533.46 Joint and several Nil Nil 3 years No No
Co. Ltd. liability guarantee
Jiangxi Chenming Paper 28 March 2024 44075.80 29 September 44075.80 Joint and several Nil Nil 1.5 years No No
Co. Ltd. 2024 liability guarantee
Jiangxi Chenming Paper 31 March 2025 300000.00 22 May 2025 141081.89 Joint and several Nil Nil 1 year No No
Co. Ltd. liability guarantee
Huanggang Chenming 30 March 2016 74164.00 16 December 2019 74164.00 Joint and several Nil Nil 12 years No No
Pulp & Paper Co. Ltd. liability guarantee
Huanggang Chenming 30 March 2022 23138.81 20 May 2022 23138.81 Joint and several Nil Nil 4 years No No
Pulp & Paper Co. Ltd. liability guarantee
2025 ANNUAL REPORT 127VII Material Matters
XIV. Significant related party transactions (Continued)
2. Significant guarantees (Continued)
(1) Guarantees (Continued)
Guarantees between the Company and its subsidiaries
Date of the related Guarantee
announcement to related
disclosing the Amount of Guarantee Fulfilled parties
Name of obligee guarantee amount guarantee Guarantee date provided Type of guarantee Collateral Counter-guarantee Term or not or not
Huanggang Chenming 30 March 2023 27709.48 18 July 2023 27709.48 Joint and several Nil Nil 4 years No No
Pulp & Paper Co. Ltd. liability guarantee
Huanggang Chenming 28 March 2024 29698.56 19 July 2024 29698.56 Joint and several Nil Nil 1 year No No
Pulp & Paper Co. Ltd. liability guarantee
Huanggang Chenming 31 March 2025 260000.00 20 May 2025 9000.00 Joint and several Nil Nil 1 year No No
Pulp & Paper Co. Ltd. liability guarantee
Huanggang Chenming 31 March 2025 20000.00 – – Joint and several Nil Nil 1 year No No
Paper Technology Co. liability guarantee
Ltd.Chenming (HK) Limited 30 March 2023 3329.54 4 January 2024 3329.54 Joint and several Nil Nil 6 years No No
liability guarantee
Chenming (HK) Limited 31 March 2025 250000.00 3 June 2025 6876.83 Joint and several Nil Nil 1 year No No
liability guarantee
Zhanjiang Chenming 30 March 2023 4416.00 29 March 2024 4416.00 Joint and several Nil Nil 2 years No No
Arboriculture liability guarantee
Development Co. Ltd.Zhanjiang Chenming 31 March 2025 10000.00 – – Joint and several Nil Nil 1 year No No
Arboriculture liability guarantee
Development Co. Ltd.Jilin Chenming Paper Co. 30 March 2023 18392.60 15 December 2023 18392.60 Joint and several Nil Nil 3 years No No
Ltd. liability guarantee
Jilin Chenming Paper Co. 28 March 2024 10599.81 19 June 2024 10599.81 Joint and several Nil Nil 2 years No No
Ltd. liability guarantee
Jilin Chenming Paper Co. 31 March 2025 100000.00 6 November 2025 26075.00 Joint and several Nil Nil 5 years No No
Ltd. liability guarantee
Shouguang Chenming Art 31 March 2025 5000.00 – – Joint and several Nil Nil 1 year No No
Paper Co. Ltd. liability guarantee
Chenming (Singapore) 31 March 2025 50000.00 – – Joint and several Nil Nil 1 year No No
Co. Ltd. liability guarantee
Shandong Chenming 30 March 2023 15000.00 8 February 2024 15000.00 Joint and several Nil Nil 1 year No No
Paper Sales Co. Ltd. liability guarantee
Shandong Chenming 28 March 2024 95995.19 24 September 95995.19 Joint and several Nil Nil 1 year No No
Paper Sales Co. Ltd. 2024 liability guarantee
Shandong Chenming 31 March 2025 185000.00 15 August 2025 48986.00 Joint and several Nil Nil 1 year No No
Paper Sales Co. Ltd. liability guarantee
128 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVII Material Matters
XIV. Significant related party transactions (Continued)
2. Significant guarantees (Continued)
(1) Guarantees (Continued)
Guarantees between the Company and its subsidiaries
Date of the related Guarantee
announcement to related
disclosing the Amount of Guarantee Fulfilled parties
Name of obligee guarantee amount guarantee Guarantee date provided Type of guarantee Collateral Counter-guarantee Term or not or not
Shanghai Hongtai Real 19 April 2023 199454.55 2 June 2023 199454.55 Joint and several Nil Nil 15 years No No
Estate Co. Ltd. liability guarantee
Shanghai Hongtai Real 31 March 2025 210000.00 – – Joint and several Nil Nil 1 year No No
Estate Co. Ltd. liability guarantee
Shanghai Chenming Pulp 30 March 2022 875.00 13 February 2023 875.00 Joint and several Nil Nil 3 years No No
& Paper Sales Co. Ltd. liability guarantee
Shanghai Chenming Pulp 28 March 2024 56780.00 4 June 2024 56780.00 Joint and several Nil Nil 1 year No No
& Paper Sales Co. Ltd. liability guarantee
Shanghai Chenming Pulp 31 March 2025 80000.00 – – Joint and several Nil Nil 1 year No No
& Paper Sales Co. Ltd. liability guarantee
Shanghai Heruiming 19 June 2024 7998.00 23 May 2024 7998.00 Joint and several Nil Nil 1 year No No
Property Management liability guarantee
Co. Ltd.Shanghai Heruiming 31 March 2025 10000.00 – – Joint and several Nil Nil 1 year No No
Property Management liability guarantee
Co. Ltd.Jilin Chenming Pulp & 28 March 2024 1000.00 24 September 1000.00 Joint and several Nil Nil 2 years No No
Fiber Trading Co. Ltd. 2024 liability guarantee
Jilin Chenming Pulp & 31 March 2025 5000.00 – – Joint and several Nil Nil 1 year No No
Fiber Trading Co. Ltd. liability guarantee
Shouguang Chenming 28 March 2024 23999.30 25 August 2024 23999.30 Joint and several Nil Nil 1 year No No
Import and Export liability guarantee
Trade Co. Ltd.Shouguang Chenming 31 March 2025 100000.00 27 June 2025 12000.00 Joint and several Nil Nil 1 year No No
Import and Export liability guarantee
Trade Co. Ltd.Hainan Chenming 28 March 2024 17600.00 16 January 2025 17600.00 Joint and several Nil Nil 1 year No No
Technology Co. Ltd. liability guarantee
Hainan Chenming 31 March 2025 80000.00 10 June 2025 27800.00 Joint and several Nil Nil 1 year No No
Technology Co. Ltd. liability guarantee
Shandong Chenming 31 March 2025 200000.00 – – Joint and several Nil Nil 1 year No No
Paper Sales Co. Ltd. liability guarantee
Shandong Chenming 31 March 2025 150000.00 – – Joint and several Nil Nil 1 year No No
Paper Co. Ltd. liability guarantee
Chenming (Overseas) Co. 31 March 2025 30000.00 – – Joint and several Nil Nil 1 year No No
Ltd. liability guarantee
2025 ANNUAL REPORT 129VII Material Matters
XIV. Significant related party transactions (Continued)
2. Significant guarantees (Continued)
(1) Guarantees (Continued)
Guarantees between the Company and its subsidiaries
Date of the related Guarantee
announcement to related
disclosing the Amount of Guarantee Fulfilled parties
Name of obligee guarantee amount guarantee Guarantee date provided Type of guarantee Collateral Counter-guarantee Term or not or not
Nanchang Chenming 31 March 2025 3000.00 – – Joint and several Nil Nil 1 year No No
Arboriculture liability guarantee
Development Co. Ltd.Jiangxi Chenming 31 March 2025 3000.00 – – Joint and several Nil Nil 1 year No No
Logistics Co. Ltd. liability guarantee
Shouguang Chenming 31 March 2025 3000.00 – – Joint and several Nil Nil 1 year No No
Papermaking Machine liability guarantee
Co. Ltd.Shouguang Hongxiang 31 March 2025 3000.00 – – Joint and several Nil Nil 1 year No No
Printing and Packaging liability guarantee
Co. Ltd.Shouguang Hongyi 31 March 2025 3000.00 – – Joint and several Nil Nil 1 year No No
Decorative Packaging liability guarantee
Co. Ltd.Shouguang Chenming 31 March 2025 3000.00 – – Joint and several Nil Nil 1 year No No
Modern Logistic Co. liability guarantee
Ltd.Shandong Grand View 31 March 2025 5000.00 – – Joint and several Nil Nil 1 year No No
Hotel Co. Ltd. liability guarantee
Foshan Chenming Import 31 March 2025 30000.00 – – Joint and several Nil Nil 1 year No No
and Export Trade Co. liability guarantee
Ltd.Shanghai Hongtai Property 31 March 2025 10000.00 – – Joint and several Nil Nil 1 year No No
Management Co. Ltd. liability guarantee
Zhanjiang Chenming 31 March 2025 20000.00 – – Joint and several Nil Nil 1 year No No
Technology liability guarantee
Development Co. Ltd.Total amount of guarantee provided for 3668000.00 Total amount of guarantee provided for subsidiaries during the reporting period (B2) 681244.41
subsidiaries approved during the reporting
period (B1)
Total amount of guarantee provided for 5083442.58 Total balance of guarantee provided for subsidiaries as at the end of the reporting 1851998.44
subsidiaries approved as at the end of the period (B4)
reporting period (B3)
130 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVII Material Matters
XIV. Significant related party transactions (Continued)
2. Significant guarantees (Continued)
(1) Guarantees (Continued)
Guarantees between subsidiaries
Date of the related Guarantee
announcement to related
disclosing the Amount of Guarantee Fulfilled parties
Name of obligee guarantee amount guarantee Guarantee date provided Type of guarantee Collateral Counter-guarantee Term or not or not
Shouguang Meilun Paper 31 March 2025 60000.00 – – Joint and several Nil Nil 1 year No No
Co. Ltd. liability guarantee
Shouguang Meilun Paper 31 March 2025 30000.00 – – Joint and several Nil Nil 1 year No No
Co. Ltd. liability guarantee
Shanghai Chenming Pulp 31 March 2025 70000.00 – – Joint and several Nil Nil 1 year No No
& Paper Sales Co. Ltd. liability guarantee
Huanggang Chenming 31 March 2025 20000.00 – – Joint and several Nil Nil 1 year No No
Pulp & Paper Co. Ltd. liability guarantee
Huanggang Chenming 31 March 2025 3000.00 29 December 2025 592.33 Joint and several Nil Nil 1 year No No
Port Service Co. Ltd. liability guarantee
Hubei Chenming 31 March 2025 50000.00 – – Joint and several Nil Nil 1 year No No
Technology Industrial liability guarantee
Co. Ltd.Jilin Chenming Pulp & 31 March 2025 3000.00 26 September 950.00 Joint and several Nil Nil 1 year No No
Fiber Trading Co. Ltd. 2025 liability guarantee
Jilin Chenming Pulp & 11 October 2025 1000.00 – – Joint and several Nil Nil 3 years No No
Fiber Trading Co. Ltd. liability guarantee
Zhanjiang Chenming 31 March 2025 5000.00 – – Joint and several Nil Nil 1 year No No
Arboriculture liability guarantee
Development Co. Ltd.Foshan Chenming Import 31 March 2025 3000.00 21 September 496.00 Joint and several Nil Nil 3 years No No
and Export Trade Co. 2025 liability guarantee
Ltd.Hainan Chenming 31 March 2025 10000.00 – – Joint and several Nil Nil 1 year No No
Technology Co. Ltd. liability guarantee
Jiangxi Chenming Paper 31 March 2025 1000.00 – – Joint and several Nil Nil 1 year No No
Co. Ltd. liability guarantee
Jiangxi Chenming Paper 31 March 2025 1000.00 – – Joint and several Nil Nil 1 year No No
Co. Ltd. liability guarantee
Jiangxi Chenming Paper 31 March 2025 1000.00 – – Joint and several Nil Nil 1 year No No
Co. Ltd. liability guarantee
Shandong Chenming 31 March 2025 5000.00 – – Joint and several Nil Nil 1 year No No
Paper Co. Ltd. liability guarantee
Shandong Chenming 31 March 2025 50000.00 – – Joint and several Nil Nil 1 year No No
Paper Co. Ltd. liability guarantee
Shandong Chenming 31 March 2025 20000.00 – – Joint and several Nil Nil 1 year No No
Paper Co. Ltd. liability guarantee
Shandong Chenming 31 March 2025 15000.00 – – Joint and several Nil Nil 1 year No No
Paper Co. Ltd. liability guarantee
Shandong Chenming 31 March 2025 20000.00 – – Joint and several Nil Nil 1 year No No
Paper Co. Ltd. liability guarantee
2025 ANNUAL REPORT 131VII Material Matters
XIV. Significant related party transactions (Continued)
2. Significant guarantees (Continued)
(1) Guarantees (Continued)
Guarantees between subsidiaries
Date of the related Guarantee
announcement to related
disclosing the Amount of Guarantee Fulfilled parties
Name of obligee guarantee amount guarantee Guarantee date provided Type of guarantee Collateral Counter-guarantee Term or not or not
Shandong Chenming 11 October 2025 200000.00 – – Joint and several Nil Nil 5 years No No
Paper Co. Ltd. liability guarantee
Zhanjiang Chenming 31 March 2025 120000.00 – – Joint and several Nil Nil 1 year No No
Technology liability guarantee
Development Co. Ltd.Zhanjiang Chenming 31 March 2025 20000.00 – – Joint and several Nil Nil 1 year No No
Technology liability guarantee
Development Co. Ltd.Nanchang Shengheng 31 March 2025 70000.00 – – Joint and several Nil Nil 1 year No No
Trading Co. Ltd. liability guarantee
Nanchang Shengheng 31 March 2025 20000.00 – – Joint and several Nil Nil 1 year No No
Trading Co. Ltd. liability guarantee
Jilin Chenming Paper Co. 31 March 2025 30000.00 – – Joint and several Nil Nil 1 year No No
Ltd. liability guarantee
Jilin Chenming Paper Co. 31 March 2025 10000.00 – – Joint and several Nil Nil 1 year No No
Ltd. liability guarantee
Huanggang Chenming 25 April 2025 43915.77 – – Joint and several Nil Nil 3 years No No
Paper Technology Co. liability guarantee
Ltd.Total amount of guarantee provided for 881915.77 Total amount of guarantee provided for subsidiaries during the reporting period (C2) 2038.33
subsidiaries approved during the reporting
period (C1)
Total amount of guarantee provided for 881915.77 Total balance of guarantee provided for subsidiaries as at the end of the reporting 2038.33
subsidiaries approved as at the end of the period (C4)
reporting period (C3)
Total amount of guarantee provided (i.e. sum of the above three guarantee amount)
Total amount of guarantee approved during the 5123915.77 Total amount of guarantee during the reporting period (A2+B2+C2) 872481.31
reporting period (A1+B1+C1)
Total amount of guarantee approved as at the end 6632116.54 Total balance of guarantee as at the end of the reporting period (A4+B4+C4) 2125583.03
of the reporting period (A3+B3+C3)
The percentage of total amount of guarantee (i.e. A4+B4+C4) to the net assets of the Company 2351.74%
Of which:
Balance of guarantee provided for shareholders beneficial controllers and its related parties (D) –
Balance of guarantee directly or indirectly provided for obligors with gearing ratio over 70% (E) 674283.42
Total amount of guarantee provided in excess of 50% of net assets (F) 2080391.25
Sum of the above three amount of guarantee (D+E+F) 2754674.66
For the unexpired guarantee contract the guarantee liability has occurred during the reporting period or there is evidence showing that it is possible to bear joint liability for Nil
repayment (if any)
Providing external guarantees in violation of prescribed procedures (if any) Nil
132 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVII Material Matters
XIV. Significant related party transactions (Continued)
2. Significant guarantees (Continued)
(1) Guarantees (Continued)
Details of composite guarantees
The Company and its subsidiaries jointly provided composite guarantees of RMB5076.6598 million for the
subsidiaries. To avoid duplicated calculation such amount was only listed and calculated in the guarantees
provided by the Company to its subsidiaries.
3. Entrusted cash and asset management
(1) Entrusted wealth management
□ Applicable √ Not applicable
The Company did not have any entrusted wealth management during the reporting period.
(2) Entrusted loans
□ Applicable √ Not applicable
The Company did not have any entrusted loans during the reporting period.
4. Other material contracts
□ Applicable √ Not applicable
The Company did not have any other material contracts during the reporting period.XVI. Use of proceeds
□ Applicable √ Not applicable
The Company did not use any proceeds during the reporting period.
2025 ANNUAL REPORT 133VII Material Matters
XVII. Other matters of significance
√ Applicable □ Not applicable
1. Resumption of operation and production of production bases
During the reporting period with the firm support and guidance of Party committees and governments at all levels
the Company fully leveraged the role of the Group’s Party Committee as the “backbone” and adhered to the
principles of “safety first efficiency first and profitability first”. Focusing on cost reduction efficiency improvement
and innovation-driven reform the Company prioritised the resumption of operation and production of its production
bases with overall planning in pursuit of syndicated loans as well as key aspects such as equipment maintenance
technological upgrades material supply and product sales. In 2025 the Huanggang production base maintained
stable production while the three major production bases in Shouguang Jiangxi and Jilin successfully resumed
operation one after another. As of the date of this report the Zhanjiang production base has resumed full operation.Going forward the Company will strengthen end-to-end cost reduction and efficiency enhancement as well as all-
round new product development adopt a benefit-centric approach to enhance market analysis continuously optimise
its product structure devote resources into developing competitive product offerings. With the measures including
strengthening budget control and revitalising existing assets the Company will enhance capital utilisation efficiency
strengthen the profitability and market competitiveness of the Company effectively mitigate debt risks and drive the
Company towards sustained stable and healthy development.
2. Thorough divestiture of assets related to financial leasing business
In order to further focus on the development strategy of pulp production and papermaking its principal activities
and to facilitate its high-quality development the Company transferred by way of agreement 100% equity interest in
Shandong Chenming Leasing 25% equity interest in Qingdao Chenming Leasing and 25% equity interest in Shanghai
Chenming Leasing held by its wholly owned subsidiary Chenming (HK) together with the debts of RMB2262956100
owed to its majority-owned subsidiary Zhanjiang Chenming Paper by Shandong Chenming Leasing to Shouguang
Shengjia Investment Co. Ltd. a wholly state-owned enterprise under the Finance Bureau of Shouguang City. The
machinery and equipment assets of the net carrying amount of RMB47.6275 million held under Shandong Chenming
Leasing and located in Xuchang City Henan Province were not included in the scope of the disposal. The total
consideration for the transfer amounted to RMB3336.3530 million including the equity transaction consideration
of RMB1073.3969 million and the debt transaction consideration of RMB2262.9561 million. The transaction was
approved at the Company’s first extraordinary meeting of the eleventh session of the Board held on 12 December
2025 and at the Company’s second extraordinary general meeting of 2025 held on 31 December 2025. Upon
completion of the transaction the Company ceased to engage in any financial leasing activities. As of the end of the
reporting period the Company had received the first instalment of the equity transfer payment of RMB330 million.For details please refer to the relevant announcements disclosed by the Company on CNINFO on 13 December
2025 16 December 2025 and 5 January 2026 (Announcement No.: 2025-076 2025-077 and 2025-078) and the
announcements disclosed on Hong Kong Stock Exchange website on 14 December 2025 15 December 2025 16
December 2025 23 December 2025 and 31 December 2025.
134 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVII Material Matters
XVII. Other matters of significance (Continued)
3. Information disclosure index for 2025 Annual Report
Announcement No. Subject matter Date of publication Publication website and index
2025-001 Announcement on Partial Release of Pledge of Shares and Re- 3 January 2025 http://www.cninfo.com.cn
Pledge of Shares of Shareholder
2025-002 Announcement on Partial Release of Pledge of Shares and 24 January 2025 http://www.cninfo.com.cn
Pledge and Freezing of Shares of Shareholder
2025-003 Announcement in Relation to Among Others the Progress in 24 January 2025 http://www.cninfo.com.cn
Temporary Shutdown and Maintenance of Certain Production
Bases and Cumulative Litigation
2025-004 2024 Annual Results Forecast 24 January 2025 http://www.cninfo.com.cn
2025-005 Announcement on Progress of Dissolution of Shandong 15 February 2025 http://www.cninfo.com.cn
Chenming Group Finance Co. Ltd.
2025-006 Announcement on Imposition of Other Risk Warnings in Respect 20 February 2025 http://www.cninfo.com.cn
of Shares of the Company and Suspension of Trading in
Shares of the Company
2025-007 Announcement on Unusual Price Movement of Shares of the 26 February 2025 http://www.cninfo.com.cn
Company
2025-008 Announcement on New Cumulative Litigation 1 March 2025 http://www.cninfo.com.cn
2025-009 Announcement on Progress of Equity Transfer of Subsidiary and 15 March 2025 http://www.cninfo.com.cn
Related Party Transaction
2025-010 Announcement on Judicial Freeze and Waiting Freeze of Shares 15 March 2025 http://www.cninfo.com.cn
Held by Shareholders
2025-011 2024 Annual Report Summary 1 April 2025 http://www.cninfo.com.cn
2025-012 Announcement on Resolutions of the Twelfth Meeting of the Ten 1 April 2025 http://www.cninfo.com.cn
Session of the Board of Directors
2025-013 Announcement on Resolutions of the Twelfth Meeting of the Ten 1 April 2025 http://www.cninfo.com.cn
Session of the Supervisory Committee
2025-014 Notice of 2024 Annual General Meeting 1 April 2025 http://www.cninfo.com.cn
2025-015 Announcement on the 2024 Annual Online Performance Briefing 1 April 2025 http://www.cninfo.com.cn
2025-016 Special Statement on Securities Investment in 2024 1 April 2025 http://www.cninfo.com.cn
2025-017 Announcement on Proposed Non-distribution of Profit for 2024 1 April 2025 http://www.cninfo.com.cn
2025-018 Announcement on Carrying out Factoring Business of Accounts 1 April 2025 http://www.cninfo.com.cn
Receivable
2025-019 Announcement on Development of Equipment Financing 1 April 2025 http://www.cninfo.com.cn
Business
2025-020 Announcement on Expected Provision of Guarantees to 1 April 2025 http://www.cninfo.com.cn
Subsidiaries for 2025
2025-021 Announcement on Re-appointment of Auditor for 2025 1 April 2025 http://www.cninfo.com.cn
2025-022 Announcement on Estimated Day-to-day Related Party 1 April 2025 http://www.cninfo.com.cn
Transactions for 2025
2025-023 Announcement on Changes in Accounting Policies 1 April 2025 http://www.cninfo.com.cn
2025-024 Special Statement of the Board of Directors on Matters Related 1 April 2025 http://www.cninfo.com.cn
to the 2024 Audit Report
2025-025 Special Statement of the Board of Directors on Matters Related 1 April 2025 http://www.cninfo.com.cn
to the 2024 Internal Control Audit Report
2025 ANNUAL REPORT 135VII Material Matters
XVII. Other matters of significance (Continued)
3. Information disclosure index for 2025 Annual Report (Continued)
Announcement No. Subject matter Date of publication Publication website and index
2025-026 The Opinion of the Supervisory Committee on the Special 1 April 2025 http://www.cninfo.com.cn
Statement of the Board of Directors on Matters Related to the
2024 Audit Report
2025-027 The Opinion of the Supervisory Committee on the Special 1 April 2025 http://www.cninfo.com.cn
Statement of the Board of Directors on Matters Related to the
2024 Internal Control Audit Report
2025-028 Announcement on Imposition of Other Risk Warnings in Respect 1 April 2025 http://www.cninfo.com.cn
of Shares of the Company
2025-029 Valuation Enhancement Plan 1 April 2025 http://www.cninfo.com.cn
2025-030 Announcement on the Waiting Freeze of Shares Held by 1 April 2025 http://www.cninfo.com.cn
Shareholders
2025-031 Announcement on Cumulative Newly Overdue Debts 1 April 2025 http://www.cninfo.com.cn
2025-032 Indicative Announcement on Change in Shareholding of 12 April 2025 http://www.cninfo.com.cn
Controlling Shareholder
2025-033 Announcement on the Partial Release of Pledge of Shares of 12 April 2025 http://www.cninfo.com.cn
Shareholder and the New Waiting Freeze
2025-034 Announcement on New Cumulated Litigation 12 April 2025 http://www.cninfo.com.cn
2025-035 Announcement on Resolutions of the Twentieth Extraordinary 26 April 2025 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Board of Directors
2025-036 Announcement on External Guarantees Provided by the 26 April 2025 http://www.cninfo.com.cn
Company and its Majority-owned Subsidiaries
2025-037 Announcement on the Termination of Construction of 26 April 2025 http://www.cninfo.com.cn
Huanggang Chenming Phase II Project
2025-038 Announcement on the Transfer of Non-Controlling Shareholding 26 April 2025 http://www.cninfo.com.cn
in a Subsidiary of the Company to Huanggang Technology
and the Provision of Guarantee by Huanggang Chenming
2025-039 Announcement on the Addition of Temporary Proposals to the 26 April 2025 http://www.cninfo.com.cn
2024 Annual General Meeting and Supplementary Notice of
the General Meeting
2025-040 2025 First Quarterly Report 30 April 2025 http://www.cninfo.com.cn
2025-041 Announcement on Participating in the 2025 Online Collective 14 May 2025 http://www.cninfo.com.cn
Reception Day for Investors of Listed Companies in
Shandong
2025-042 Results of the 2024 Annual General Meeting 16 May 2025 http://www.cninfo.com.cn
2025-043 Announcement on Progress of Provision of Guarantee to a 16 May 2025 http://www.cninfo.com.cn
Subsidiary
2025-044 Announcement on New Cumulated Litigation 24 May 2025 http://www.cninfo.com.cn
2025-045 Indicative Announcement on Postponement of Election of the 14 June 2025 http://www.cninfo.com.cn
Board of Directors and the Supervisory Committee
2025-046 Announcement on Progress of Litigation 28 June 2025 http://www.cninfo.com.cn
2025-047 Announcement on Estimated Interim Results for the Six Months 15 July 2025 http://www.cninfo.com.cn
Ended 30 June 2025
2025-048 Announcement on Unusual Price Movement of Shares of the 7 August 2025 http://www.cninfo.com.cn
Company
136 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVII Material Matters
XVII. Other matters of significance (Continued)
3. Information disclosure index for 2025 Annual Report (Continued)
Announcement No. Subject matter Date of publication Publication website and index
2025-049 Announcement on Unusual Price Movement of Shares of the 8 August 2025 http://www.cninfo.com.cn
Company
2025-050 Announcement in respect of Resolutions of the Fourteenth 30 August 2025 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Board of Directors
2025-051 Announcement in respect of Resolutions of the Fourteenth 30 August 2025 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Supervisory Committee
2025-052 2025 Interim Report Summary 30 August 2025 http://www.cninfo.com.cn
2025-053 Announcement on Resolutions of the Twenty-First Extraordinary 30 August 2025 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Board of Directors
2025-054 Notice of the 2025 First Extraordinary General Meeting 11 October 2025 http://www.cninfo.com.cn
2025-055 Announcement on Amendment to Related Governance Systems 11 October 2025 http://www.cninfo.com.cn
of the Company
2025-056 Announcement on External Guarantees Provided by the 11 October 2025 http://www.cninfo.com.cn
Company and its Majority-owned Subsidiaries
2025-057 Announcement on Provision of Guarantee to a majority-owned 11 October 2025 http://www.cninfo.com.cn
Subsidiary
2025-058 Announcement on the Election of the New Session of the Board 11 October 2025 http://www.cninfo.com.cn
2025-059 Declaration and Undertaking of Independent Director Candidate 11 October 2025 http://www.cninfo.com.cn
(Zhang Zhiyuan)
2025-060 Declaration and Undertaking of Independent Director Candidate 11 October 2025 http://www.cninfo.com.cn
(Luo Xinhua)
2025-061 Declaration and Undertaking of Independent Director Candidate 11 October 2025 http://www.cninfo.com.cn
(Wan Gang)
2025-062 Declaration and Undertaking of Independent Director Candidate 11 October 2025 http://www.cninfo.com.cn
(Kong Pengzhi)
2025-063 Declaration and Undertaking of Nominator for Independent 11 October 2025 http://www.cninfo.com.cn
Director (Zhang Zhiyuan)
2025-064 Declaration and Undertaking of Nominator for Independent 11 October 2025 http://www.cninfo.com.cn
Director (Luo Xinhua)
2025-065 Declaration and Undertaking of Nominator for Independent 11 October 2025 http://www.cninfo.com.cn
Director (Wan Gang)
2025-066 Declaration and Undertaking of Nominator for Independent 11 October 2025 http://www.cninfo.com.cn
Director (Kong Pengzhi)
2025-067 Announcement on Resolutions of the 2025 First Extraordinary 29 October 2025 http://www.cninfo.com.cn
General Meeting
2025-068 Announcement on the Election of Employee Director 29 October 2025 http://www.cninfo.com.cn
Representative for the Eleventh Session of the Board of
Directors
2025-069 Announcement in respect of Resolutions of the First Meeting of 29 October 2025 http://www.cninfo.com.cn
the Eleventh Session of the Board of Directors
2025-070 Announcement on the Completion of the Election of the New 29 October 2025 http://www.cninfo.com.cn
Session of Board of Directors and the Engagement of Senior
Management and Other Relevant Personnel
2025-071 Announcement in respect of Resolutions of the Second Meeting 31 October 2025 http://www.cninfo.com.cn
of the Eleventh Session of the Board of Directors
2025 ANNUAL REPORT 137VII Material Matters
XVII. Other matters of significance (Continued)
3. Information disclosure index for 2025 Annual Report (Continued)
Announcement No. Subject matter Date of publication Publication website and index
2025-072 2025 Third Quarterly Report 31 October 2025 http://www.cninfo.com.cn
2025-073 Announcement on Provision for Asset Impairment 31 October 2025 http://www.cninfo.com.cn
2025-074 Announcement on the Shares Held by Shareholders Subject to 29 November 2025 http://www.cninfo.com.cn
Subordinated Freezing Order
2025-075 Announcement on Resolutions of the First Extraordinary Meeting 13 December 2025 http://www.cninfo.com.cn
of the Eleventh Session of the Board of Directors
2025-076 Announcement on the Divestiture of Assets Related to the 13 December 2025 http://www.cninfo.com.cn
Financial Leasing Business
2025-077 Notice of the 2025 Second Extraordinary General Meeting 16 December 2025 http://www.cninfo.com.cn
2025-078 Announcement on Resolution of the 2025 Second Extraordinary 5 January 2026 http://www.cninfo.com.cn
General Meeting
XVIII. Matters of significant of subsidiaries of the Company
√ Applicable □ Not applicable
1. Dissolution of Shandong Chenming Group Finance Co. Ltd.
On 14 August 2024 the Resolution on Dissolution of Shandong Chenming Group Finance Co. Ltd. was considered
and approved at the tenth meeting of the tenth session of the Board convened by the Company pursuant to which
the Board of the Company agreed to authorise the management of the Company to deal with the matters relating to
the dissolution of the financial company. On 12 February 2025 the finance company received the Approval of the
National Financial Regulatory Administration on the Dissolution of Shandong Chenming Group Finance Co. Ltd. (Jin
Fu [2025] No. 86) which approved the dissolution of the finance company.For relevant details please refer to the relevant announcements disclosed by the Company on CNINFO on 15 August
2024 and 15 February 2025 (announcement number: 2024-047 and 2025-005) and the announcements disclosed by
the Company on the website of Hong Kong Stock Exchange on 14 August 2024 and 14 February 2025.
2. Termination of construction of Huanggang Chenming Phase II Project
On 25 April 2025 and 15 May 2025 the Resolution on Termination of Construction of Huanggang Chenming Phase
II Project was considered and approved at the twentieth extraordinary meeting of the tenth session of the Board
and the 2024 annual general meeting respectively. In view of market changes and its current operations in order to
avoid further impact of capital expenditures on liquidity and to effectively safeguard the interests of the Company and
all shareholders based on the principle of prudence the Company terminated the construction of the Huanggang
Chenming Phase II Project.For relevant details please refer to the relevant announcements disclosed by the Company on CNINFO on 26 April
2025 and 16 May 2025 (announcement number: 2025-037 and 2025-042) and the announcements disclosed by the
Company on the website of Hong Kong Stock Exchange on 25 April 2025 and 15 May 2025.
138 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Changes in Share Capital and Shareholders
I. Changes in shares
1. Changes in shares
Unit: share
Opening balance Change during the reporting period (+/-) Closing balance
Shares
converted
Amount Percentage New issue Bonus issue from reserves Others Subtotal Amount Percentage
I. Restricted shares 30941154 1.05% -18395220 -18395220 12545934 0.43%
1. Shares held by other domestic
investors 30941154 1.05% -18395220 -18395220 12545934 0.43%
Including: Shares held by
domestic natural persons 30941154 1.05% -18395220 -18395220 12545934 0.43%
II. Non-restricted shares 2910515046 98.95% 18395220 18395220 2928910266 99.57%
1. RMB ordinary shares 1675824530 56.97% 18395220 18395220 1694219750 57.60%
2. Domestic listed foreign shares 706385266 24.01% 706385266 24.01%
3. Overseas listed foreign shares 528305250 17.96% 528305250 17.96%
III. Total number of shares 2941456200 100.00% 2941456200 100.00%
The reasons for such changes
√ Applicable □ Not applicable
The Shenzhen Branch of China Securities Depository and Clearing Corporation Limited recalculated the statutory
quota of transferable shares for the Directors and Senior Management of the Company this year at 25% on the first
trading day of this year based on the shares of the Company registered under the names of its Directors and Senior
Management on the last trading day of the previous year. Besides certain Directors and Senior Management of the
Company have resigned resulting in a change in the locked-up shares of Senior Management. Hence restricted
shares decreased by 18395220 RMB ordinary shares in aggregate while non-restricted shares increased by
18395220 RMB ordinary shares in aggregate.
Approval of changes in shareholding
□ Applicable √ Not applicable
Transfer of shares arising from changes in shareholding
□ Applicable √ Not applicable
The effects of changes in shareholding on financial indicators such as basic earnings per share diluted earnings per
share and net assets per share attributable to ordinary shareholders of the Company for the latest year and the latest
period
□ Applicable √ Not applicable
Other information considered necessary by the Company or required by the securities regulatory authorities to be
disclosed
□ Applicable √ Not applicable
2025 ANNUAL REPORT 139VIII Changes in Share Capital and Shareholders
I. Changes in shares (Continued)
2. Changes in restricted shares
√ Applicable □ Not applicable
Unit: share
Restricted
shares at the Restricted Restricted Restricted
beginning of shares increased shares released shares at the
Name of shareholder the period during the period during the period end of the period Reason for restriction Date of release from restriction
Hu Changqing 219643 573214 792857 Locked-up shares of Senior Management In accordance with relevant
requirements for shares held by
Directors and Senior Management
Li Xingchun 1125000 875000 2000000 Locked-up shares of Senior Management In accordance with relevant
requirements for shares held by
Directors and Senior Management
Li Weixian 121575 150000 271575 Locked-up shares of Senior Management In accordance with relevant
requirements for shares held by
Directors and Senior Management
Li Feng 792020 564007 1356027 Locked-up shares of Senior Management In accordance with relevant
requirements for shares held by
Directors and Senior Management
Li Kang 111975 37325 149300 Locked-up shares of Senior Management In accordance with relevant
requirements for shares held by
Directors and Senior Management
Li Zhenzhong 409800 336600 746400 Locked-up shares of Senior Management In accordance with relevant
requirements for shares held by
Directors and Senior Management
Li Mingtang 37500 112500 150000 Locked-up shares of Senior Management In accordance with relevant
requirements for shares held by
Directors and Senior Management
Dong Lianming 37500 75000 112500 Locked-up shares of Senior Management In accordance with relevant
requirements for shares held by
Directors and Senior Management
Yuan Xikun 44775 22500 67275 Locked-up shares of Senior Management In accordance with relevant
requirements for shares held by
Directors and Senior Management
Chen Hongguo 19080044 19080044 0 Locked-up shares of Senior Management December 12 2025
6000000 6000000 Restricted shares of the participants of The Company made payment for the
the Share Incentive Scheme repurchase of 6000000 restricted
shares under the Share Incentive
Scheme on 1 November 2024. The
share repurchase transfer and
cancellation of such restricted shares
with the Shenzhen Branch of China
Securities Depository and Clearing
Corporation Limited were not
completed by the Company as they
were subject to judicial freeze.
140 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Changes in Share Capital and Shareholders
I. Changes in shares (Continued)
2. Changes in restricted shares (Continued)
Restricted
shares at the Restricted Restricted Restricted
beginning of shares increased shares released shares at the
Name of shareholder the period during the period during the period end of the period Reason for restriction Date of release from restriction
Li Xueqin 2061322 2061322 0 Locked-up shares of Senior Management December 12 2025
900000 900000 Restricted shares of the participants of The Company made payment for the
the Share Incentive Scheme repurchase of 900000 restricted
shares under the Share Incentive
Scheme on 1 November 2024. The
share repurchase transfer and
cancellation of such restricted shares
with the Shenzhen Branch of China
Securities Depository and Clearing
Corporation Limited were not
completed by the Company as they
were subject to judicial freeze.Total 30941154 2746146 21141366 12545934 － －
II. Issuance and listing of securities
1. Issuance of securities (excluding preference shares) during the reporting period
□ Applicable √ Not applicable
2. Changes in the total number of shares and structure of shareholders and the structure of the assets
and liabilities of the Company
□ Applicable √ Not applicable
3. Existing staff shares
□ Applicable √ Not applicable
III. Shareholders and beneficial controllers
1. Total number of shareholders and shareholdings
Unit: share
Total number of 104539 of which Total number of 100846 of which Total number of 0 Total number of holders 0
ordinary 87742 were ordinary 84373 were holders of of preference shares
shareholders as holders of A shares shareholders as at holders of A shares preference shares with restored voting
at the end of the 16486 were holders the end of the 16162 were holders with restored voting right as at the end of
reporting period of B shares and month prior to the of B shares and right as at the end the month prior to the
311 were holders publication date of 311 were holders of the reporting disclosure date of the
of H shares this annual report of H shares period annual report
2025 ANNUAL REPORT 141VIII Changes in Share Capital and Shareholders
III. Shareholders and beneficial controllers (Continued)
1. Total number of shareholders and shareholdings (Continued)
Shareholdings of shareholders interested in more than 5% of the shares of the Company or Top 10 shareholders
(excluding the shares lent under refinancing business)
Changes
Number of (increase or
shares held decrease)
Percentage at the end of during the Number of Number of
Nature of of the reporting reporting restricted non-restricted Share pledged marked
Name of shareholder shareholder shareholding period period shares held shares held or locked-up
Status of
shares Number
CHENMING HOLDINGS COMPANY LIMITED State-owned legal 15.50% 455781319 0 0 455781319 Pledged 386811546
person Frozen 409956441
HKSCC NOMINEES LIMITED Overseas legal 12.70% 373423525 57500 0 373423525 N/A 0
person
CHENMING HOLDINGS (HONG KONG) LIMITED (Note 1) Overseas legal 12.38% 364131563 0 0 364131563 N/A 0
person
Jin Xing Domestic natural 1.29% 37885027 23847231 0 37885027 N/A 0
person
Chen Hongguo (Note 2) Domestic natural 0.65% 19080044 0 0 19080044 Frozen 19080044
person
Xu Hekun Domestic natural 0.28% 8380250 1590350 0 8380250 N/A 0
person
Ji Zhongqiu Domestic natural 0.27% 8008174 1800000 0 8008174 N/A 0
person
Pan Jiankai Domestic natural 0.26% 7779906 7779906 0 7779906 N/A 0
person
Zhang Xinge Domestic natural 0.21% 6180000 6180000 0 6180000 N/A 0
person
Xu Shaosen Domestic natural 0.18% 5403463 0 0 5403463 N/A 0
person
Strategic investors or general legal persons who Nil
become the top ten shareholders due to the
placement of new shares
Related party relationship or acting in concert A shareholder Chenming Holdings (Hong Kong) Limited which is an overseas legal person is a wholly – owned subsidiary of a
among the above shareholders shareholder Chenming Holdings Company Limited which is a state-owned legal person. Save for the above it is not aware that any
other shareholders of tradable shares are persons acting in concert. It is also not aware that any other shareholders of tradable shares
are related to each other.Explanation of the aforementioned shareholders’ Nil
entrusted/entrusted voting rights and waiver of
voting rights
Special explanation for designated repurchase In November 2024 pursuant to the 2020 Restricted A Share Incentive Scheme (Draft) the Company made payments for the repurchase
accounts among the top ten shareholders of restricted shares not yet unlocked for the third unlocking period under the 2020 Restricted A Share Incentive Scheme. In the process
of completing the procedures for the share transfer and cancellation the 6000000 restricted shares held by Mr. Chen Hongguo were
judicially frozen. Hence the procedures for the transfer and cancellation of such restricted shares were not yet completed with the
Shenzhen Branch of China Securities Depository and Clearing Corporation Limited.The 19080044 shares held by Mr. Chen Hongguo being a domestic natural person excludes the 6000000 restricted shares under the
share incentive scheme.
142 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Changes in Share Capital and Shareholders
III. Shareholders and beneficial controllers (Continued)
1. Total number of shareholders and shareholdings (Continued)
Shareholdings of the top ten non-restricted shareholders
(excluding the shares lent under refinancing business and the locked-up shares of the Senior Management)
Number of
non-restricted shares
held as at the end Class of shares
Name of shareholder of the reporting period Class of shares Number
CHENMING HOLDINGS COMPANY LIMITED 455781319 RMB ordinary shares 455781319
HKSCC NOMINEES LIMITED 373423525 Overseas listed foreign shares 373423525
CHENMING HOLDINGS (HONG KONG) LIMITED (Note 1) 364131563 Domestic listed foreign shares 210717563
Overseas listed foreign shares 153414000
Jin Xing 37885027 Domestic listed foreign shares 37885027
Chen Hongguo (Note 2) 19080044 RMB ordinary shares 19080044
Xu Hekun 8380250 Domestic listed foreign shares 8380250
Ji Zhongqiu 8008174 RMB ordinary shares 8008174
Pan Jiankai 7779906 Domestic listed foreign shares 7779906
Zhang Xinge 6180000 RMB ordinary shares 6180000
Xu Shaosen 5403463 Domestic listed foreign shares 5403463
Related party relationship or acting in concert among the A shareholder Chenming Holdings (Hong Kong) Limited which is an overseas legal person is a wholly –
top ten shareholders of non-restricted shares and owned subsidiary of a shareholder Chenming Holdings Company Limited which is a state-owned legal
between the top ten shareholders of non-restricted person. Save for the above it is not aware that any other shareholders of tradable shares are persons acting
shares and the top ten shareholders in concert. It is also not aware that any other shareholders of tradable shares are related to each other.Securities margin trading of top ten ordinary Chenming Holdings Company Limited held 455781319 RMB ordinary shares of which 409956441 shares
Shareholders were held through ordinary account and 45824878 shares were held through credit guarantee security
account
Note 1: In order to meet its own capital needs Chenming Holdings (Hong Kong) Limited conducted share financing business with overseas
institutions entrusting 210717563 B shares and 153414000 H shares of the Company held by it to the custody brokerage
designated by overseas institutions. The aforesaid shares were subject to the risk of not to be recovered which may lead to a
reduction in the Company’s shareholding but does not affect Chenming Holdings’ position as the largest shareholder and does not
affect the Company’s control. For details please refer to the announcement disclosed by the Company on CNINFO on 18 July 2023
(announcement no.: 2023-058) and the insider information disclosed by the Company on the website of Hong Kong Stock Exchange
on 18 July 2023.Note 2: On 1 November 2024 pursuant to the 2020 Restricted A Share Incentive Scheme (Draft) the Company made payments to the
participants for the repurchase of restricted shares not yet unlocked for the third unlocking period under the 2020 Restricted A Share
Incentive Scheme. In the process of completing the procedures for the share transfer and cancellation the 6000000 restricted shares
held by Mr. Chen Hongguo were judicially frozen. Hence the procedures for the transfer and cancellation of such restricted shares
were not yet completed with the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited. The 19080044
shares held by Mr. Chen Hongguo being a domestic natural person excludes the 6000000 restricted shares to be cancelled under
the share incentive scheme.Share lending by shareholders interested in more than 5% top 10 shareholders and top 10 shareholders of non-
restricted shares under refinancing business
□ Applicable √ Not applicable
Changes of top 10 shareholders and top 10 shareholders of non-restricted shares due to lending/returning of
shares under refinancing business as compared to prior period
□ Applicable √ Not applicable
Whether an agreed repurchase transaction was entered into during the reporting period by the top 10 ordinary
shareholders and top 10 non-restricted ordinary shareholders of the Company
□ Yes √ No
The top 10 ordinary shareholders and top 10 non-restricted ordinary shareholders of the Company did not enter into
any agreed repurchase transaction during the reporting period.
2025 ANNUAL REPORT 143VIII Changes in Share Capital and Shareholders
III. Shareholders and beneficial controllers (Continued)
2. Controlling shareholders of the Company
Nature of controlling shareholder: regional state-owned enterprise
Type of controlling shareholder: legal person
Legal
representative/
Name of controlling Person in charge
shareholders of the unit Date of establishment Enterprise code Principal business
CHENMING HOLDINGS Jiang Yanshan 30 December 2005 91370783783485189Q Investment in
COMPANY LIMITED papermaking electricity
heat and arboriculture by
its own capital.Shareholdings of controlling shareholders who have Save for the Company as of 31 December 2025 Chenming Holdings
control or hold shares in other domestic or Company Limited was indirectly interested in 8.20% equity interest in
overseas listed companies during the reporting Zhejiang Kingland Pipeline and Technologies Co. Ltd.period
Change of controlling shareholders during the reporting period
□ Applicable √ Not applicable
There was no change in the controlling shareholders of the Company during the reporting period.
3. Beneficial controller of the Company and persons acting in concert
Nature of the beneficial controller: regional state-owned assets administration authority
Type of the beneficial controller: legal person
Legal
representative/
Person in charge Date of
Name of beneficial controller of the unit establishment Enterprise code Principal business
State-owned Assets Supervision and N/A 1 August 1991 N/A Responsible for the management
Administration Bureau of Shouguang and capital operation of the state
City – owned assets of enterprises and
business units in Shouguang city.Shareholdings of beneficial controller Save for the Company State-owned Assets Supervision and Administration Office of Shouguang City is
who has control or holds shares in also the beneficial controller of Shandong Molong Petroleum Machinery Co. Ltd. and Zhejiang Kingland
other domestic or overseas listed Pipeline and Technologies Co. Ltd.companies during the reporting period
144 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Changes in Share Capital and Shareholders
III. Shareholders and beneficial controllers (Continued)
3. Beneficial controller of the Company and persons acting in concert (Continued)
Change of beneficial controller during the reporting period
□ Applicable √ Not applicable
There was no change in the beneficial owner of the Company during the reporting period.Chart illustrating the relationship between the Company and the beneficial controller
State-owned Assets Supervision and Administration
Commission of Shouguang City
100%
Shouguang Shengming Investment Co. Ltd.
45.21%
Chenming Holdings Company Limited
100%
Chenming Holdings
15.50%
(Hong Kong) Limited
12.38%
Shandong Chenming Paper Holdings Limited
Beneficial controller controlling the Company through trust or other asset management method
□ Applicable √ Not applicable
2025 ANNUAL REPORT 145VIII Changes in Share Capital and Shareholders
III. Shareholders and beneficial controllers (Continued)
4. The number of shares pledged by the controlling shareholder or the largest shareholder of the
Company and persons acting in concert with it reaches 80% of the number of shares held by them in
aggregate
□ Applicable √ Not applicable
5. Other legal person shareholders interested in over 10% of the shares of the Company
□ Applicable √ Not applicable
6. Restrictions on decrease in shareholding by controlling shareholders beneficial controller
reorganising party and other undertaking parties
□ Applicable √ Not applicable
IV. The implementation of share repurchase during the reporting period
Progress of share repurchase
□ Applicable √ Not applicable
Progress of decrease in the holding of repurchased shares by way of bidding
□ Applicable √ Not applicable
V. Preference Shares
□ Applicable √ Not applicable
The Company had no preference shares during the reporting period.
146 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIX Bonds
□ Applicable √ Not applicable
2025 ANNUAL REPORT 147X Financial Report
I. Auditors’ Report
Type of auditor’s opinion Unqualified opinion with an emphasis of matter paragraph
The date of the audit report signed 30 March 2026
Name of the auditor Grant Thornton (Special General Partnership)
Reference number of the auditor’s report Zhi Tong Shen Zi (2026) No. 371A006537
Name of certified public accountants Jiang Tao and Guo Dongmei
Text of the auditor’s report
To all shareholders of Shandong Chenming Paper Holdings Limited:
I. Audit opinion
We have audited the financial statements of Shandong Chenming Paper Holdings Limited (“Chenming Paper”)
which comprise the consolidated and the Company’s balance sheets as at 31 December 2025 the consolidated
and the Company’s profit and loss statements the consolidated and the Company’s cash flow statements and the
consolidated and the Company’s statements of changes in shareholders’ equity for 2025 and notes to the relevant
financial statements.In our opinion the accompanying financial statements are prepared in accordance with the Accounting Standards
for Business Enterprises in all material aspects and give a true and fair view of the consolidated and the Company’s
financial position of Chenming Paper as at 31 December 2025 and of its consolidated and the Company’s operating
results and cash flows for 2025.II. Basis for audit opinion
We have conducted our audit in accordance with the Chinese Auditing Standards issued by the Chinese Institute of
Certified Public Accountants. Our responsibilities under those standards are further described in the responsibilities
of certified public accountants for the audit of the financial statements section of the auditor’s report. We are
independent of Chenming Paper in accordance with the ethical codes of Chinese certified public accountants and the
independence requirements for audit of public interest entities under the Standards on the Independence of Chinese
Certified Public Accountants if applicable and we have fulfilled our other ethical responsibilities in accordance with
the codes. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.III. Emphasis of matter
We remind users of the financial statements that as described in note V. 25 26 and 34 and note XIV. 1 to the
financial statements as of 31 December 2025 certain overdue debts of Chenming Paper remained unpaid. Currently
Chenming Paper has reached agreements with a majority of financial institutions and creditors regarding debt
extensions interest rate reduction restructuring and settlements. As described in note V. 24 note XII. 2 and Note
XIII. 1 as of 31 December 2025 Chenming Paper was involved in pending litigation arbitration and enforcement
proceedings in which it was named as a defendant and some assets were frozen or seized. Currently some of them
have been settled and the remaining ones are under active negotiation.This matter does not affect the audit opinion already issued.
148 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
IV. Key audit matters
Key audit matters are those matters that in our professional judgment were of most significance in our audit of the
financial statements for the current period. These matters were addressed in the context of our audit of the financial
statements as a whole and in forming our opinion thereon we do not provide a separate opinion on these matters.Except for the matters as described in “Emphasis of matter” we determine that the following matters are key audit
matters that need to be communicated in the audit report.(i) Assessment of the ability to continue as going concern
For detailed disclosures of relevant information please see note II. 2 to the financial statements.
1. Details
Chenming Paper’s net profit attributable to shareholders of the Company for 2025 was RMB-8296 million.As of 31 December 2025 the equity attributable to shareholders of the Company was RMB904 million
and the current ratio was 0.16. Some of the borrowings from financial institutions and the payments for
goods to suppliers were overdue. A number of litigation and arbitration cases arose from overdue debts.The management has implemented a series of measures to improve Chenming Paper’s ability to continue
as a going concern and its operating performance. They primarily include strengthening team-building
comprehensively advancing the resumption of operation and production end-to-end cost reduction and
efficiency enhancement and all-round new product development disposal of and revitalization of available
assets and raising funds through multiple channels to mitigate existing liquidity risks.Based on the above measures the management believes that it is appropriate to prepare the 2025
financial statements on a going concern basis. We have identified the assessment of the ability to continue
as a going concern as a key audit matter due to the fact that the assessment of the ability to continue as
a going concern involves judgments made by the management and is subject to inherent uncertainty.
2. Application for auditing
(1) we have reviewed the resumption of operation and production at each of Chenming Paper’s
production bases and compared the findings with the production and sales statistics for 2025 and
January–February 2026 to verify consistency;
(2) we have supervised the stocktaking of inventories and fixed assets at each production bases of
Chenming Paper as at the balance sheet date to verify the operational status of production lines
and track inventory movements. During the audit we continuously monitored production at each
production base either on-site or remotely via the control centre to assess whether production was
sustainable;
(3) we have analysed Chenming Paper’s operating costs sales and distribution expenses and general
and administrative expenses and compared them with those of industry peers and historical data to
verify the authenticity of cost and expense reductions;
(4) we have reviewed and tested the design and operational effectiveness of Chenming Paper’s internal
controls related to procurement and production;
(5) we have obtained Chenming Paper’s 2026 asset disposal plan and analysed its feasibility;
2025 ANNUAL REPORT 149X Financial Report
(6) we have obtained the framework agreements or strategic agreements signed by Chenming Paper
with its suppliers to assess their effects on Chenming Paper’s future production and operations;
(7) we have obtained the loan extension or interest rate reduction agreements signed by Chenming
Paper with financial institutions to assess their effects on Chenming Paper’s efforts to mitigate debt
risks and reduce finance expenses; and
(8) we have obtained and reviewed the 2026 profit and cash flow forecasts prepared by the
management assessed the reasonableness of the underlying assumptions by comparing them
with Chenming Paper’s historical data and those of comparable companies in the industry and
conducted sensitivity analysis of the profit and cash flow forecasts prepared by the management.(ii) Impairment testing of machinery and equipment
For detailed disclosures of relevant information please see note III. 16 and 23 and note V. 15 and 57.
1. Details
As at 31 December 2025 the original carrying amount of the machinery and equipment of Chenming
Paper amounted to RMB43329.0170 million and impairment provision of fixed assets of RMB557.7508
million was made. In 2025 some production lines of Chenming Paper suspended operation and
production due to liquidity difficulties and impairment losses may be incurred on machinery and
equipment related to machine-made paper due to prolonged inactivity.We have identified the impairment testing of machinery and equipment as a key audit matter due to the
significance of the carrying amount of the machinery and equipment and the fact that the impairment
testing involves significant accounting estimates and judgments made by the management.
2. Application for auditing
(1) We have identified evaluated and tested the effectiveness of the design and operation of internal
controls related to impairment of fixed assets of Chenming Paper;
(2) we have evaluated whether the accounting policies and accounting estimates of Chenming Paper
for impairment of fixed assets comply with the Accounting Standards for Business Enterprises and
industry practices;
(3) we have supervised the stocktaking of fixed assets and monitored the status of the machinery and
equipment; and
(4) we have identified Chenming Paper’s plans of resumption of work and production and obtained
a copy of the calculation table of impairment of machinery and equipment so as to assess the
reasonableness of the significant estimates made by the management in determining the net
realisable value while taking into account the reasonable useful life and capacity of the equipment
estimated selling prices gross profit margins of the products and performed recalculations.
150 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
(iii) Revenue recognition and its alignment with operating costs
For detailed disclosures of relevant information please see note III. 27 and note V. 47.
1. Details
Revenue and operating costs of Chenming Paper for 2025 amounted to RMB6186.5502 million and
RMB8602.3581 million respectively. Revenue is one of the key performance indicators of Chenming
Paper. In 2025 some production bases were shut down. The accuracy and appropriateness of revenue
recognition as well as the alignment between revenue and operating costs could potentially result in
misstatements that would have a material effect on the financial statements. Therefore we have identified
revenue recognition and the alignment between revenue and operating costs as key audit matters.
2. Application for auditing
(1) We have identified evaluated and tested the effectiveness of the design and operation of internal
controls related to the revenue cycle and inventory cycle of Chenming Paper;
(2) we have conducted sampling inspections on sales contracts identified contract terms and
conditions related to the transfer of control of the goods assessed whether the timing of recognition
of sales revenue from Chenming Paper meets the requirements of the Accounting Standards for
Business Enterprises;
(3) we have analysed revenue and gross profit by taking into account product types and identified
whether the abnormal fluctuations in the amount of revenue are reasonable in the current period;
(4) we have inspected the occurrence of on-the-spot recognition of sales at the end of the inspection
period and inspected goods returns after the inspection period to determine the accuracy of
revenue recognition during the period;
(5) we have collected samples from sales revenue recorded around the balance sheet date for cut-off
tests; verified delivery orders and other supporting documents to assess whether sales revenue is
recorded in the appropriate accounting period;
(6) we have supervised the stocktaking of the closing balance of inventories and selected samples for
reconciliation with the accounting records of Chenming Paper in order to determine whether the
inventories matched with the recorded amounts;
(7) we have tested the measurement of inventories delivered and carry forward of their costs in order to
assess the accuracy of cost accounting of Chenming Paper and its alignment with revenue;
(8) we have carried out an analysis of the cost structure and unit costs of the major products; and
(9) we have performed confirmation procedures for customers with significant sales amounts during
the current period.
2025 ANNUAL REPORT 151X Financial Report
V. Other information
The management of Chenming Paper is responsible for other information. Other information includes the information
covered in the 2025 annual report of Chenming Paper but does not include the financial statements and our audit
report.Our audit opinions published in the financial statements do not cover other information and we do not publish any
form of assurance conclusion on other information.In conjunction with our audit of the financial statements our responsibility is to read other information during which
we consider whether there is significant inconsistency or other material misstatement of other information with the
financial statements or what we have learned during the audit.Based on the work we have performed if we determine that there is a material misstatement of other information we
should report that fact. In this regard we have nothing to report.VI. Responsibilities of the management and those charged with governance for the financial statements
The management of Chenming Paper is responsible for the preparation of financial statements in accordance with the
requirements of the Accounting Standards for Business Enterprises to enable them to achieve fair reflection and to
achieve the design implementation and maintenance of necessary internal controls so that the financial statements
are free of material misstatements due to fraud or errors.In the preparation of the financial statements the management is responsible for assessing the continuing operations
capabilities of Chenming Paper disclosing issues related to going concern (if applicable) and applying the going
concern assumption unless the management plans to liquidate Chenming Paper terminate operations or have no
other realistic options.Those charged with governance are responsible for supervising the financial reporting process of Chenming Paper.VII. Auditor’s responsibilities for the audit of the financial statements
Our objective is to obtain reasonable assurance as to whether the entire financial statements are free from material
misstatement due to fraud or errors and to issue an audit report containing audit opinions. Reasonable assurance is
a high level of assurance but it does not guarantee that an audit performed in accordance with auditing standards
can always discover a major misstatement when it exists. Misstatements may be caused by fraud or errors and are
generally considered to be material if it is reasonably expected that misstatements individually or in aggregate may
affect the economic decision made by users of financial statements based on the financial statements.In the process of conducting audit work in accordance with auditing standards we use professional judgment and
maintain professional suspicion. At the same time we also perform the following tasks:
(1) To identify and assess risks of material misstatement of financial statements due to fraud or errors design
and implement audit procedures to address these risks and obtain adequate and appropriate audit evidence
together perform as a basis for issuing audit opinions. Since fraud may involve collusion falsification intentional
omission misrepresentation or override of internal controls the risk of failing to detect a material misstatement
due to fraud is higher than the risk of failing to detect a material misstatement due to an error.
152 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
(2) To understand audit-related internal controls to design appropriate audit procedures.
(3) To evaluate the appropriateness of accounting policies adopted by the management and the reasonableness of
accounting estimates and related disclosures.
(4) To conclude on the appropriateness of management’s use of the continuing operation assumption. At the same
time according to the audit evidence obtained it may lead to conclusions as to whether there are significant
uncertainties in matters or circumstances that have significant doubts about the ability of Chenming Paper to
continue its operations. If we conclude that there are significant uncertainties the auditing standards require
us to request the users of the report to pay attention to the relevant disclosures in the financial statements in
the audit report; if the disclosure is not sufficient we should publish modified audit report. Our conclusions are
based on the information available as of the date of the audit report. However future events or conditions may
cause Chenming Paper to cease to continue as a going concern.
(5) Evaluate the overall presentation structure and content of the financial statements and evaluate whether the
financial statements fairly reflect the relevant transactions and matters.
(6) To obtain sufficient and appropriate audit evidence on the financial information of entities or business activities
in Chenming Paper to express opinions on the financial statements. We are responsible for guiding supervising
and executing group audits and take full responsibility for the audit opinion.We communicate with those charged with governance on planned audit scope time arrangements and major audit
findings including communication of the internal control deficiencies that we identified during the audit.We also provide statements to those charged with governance on compliance with ethical requirements related to
independence and communicate with those charged with governance on all relationships and other matters that may
reasonably be considered to affect our independence as well as related preventive measures (if applicable).From the matters we communicated with those charged with governance we determine which matters are most
important for the audit of the financial statements for the current period and thus constitute the key audit matters. We
describe these matters in our audit report unless laws and regulations prohibit the public disclosure of these matters
or in rare cases if it is reasonably expected that the negative consequences of disclosing something in the audit
report will outweigh the benefits to the public interest we determine that the matter should not be reported in the
audit report.Grant Thornton Chinese Certified Public Accountant
(Special General Partnership) Jiang Tao
(Project Partner)
Chinese Certified Public Accountant
Guo Dongmei
Beijing China 30 March 2026
2025 ANNUAL REPORT 153X Financial Report
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
31 December 2025
Unit: RMB
Item Closing balance Opening balance
CURRENT ASSETS:
Monetary funds 210398721.95 5909879812.18
Financial assets held for trading 38791121.74 37259325.70
Bills receivable 793939333.83 506605701.74
Accounts receivable 742744136.20 1384290313.70
Accounts receivable financing 35978138.45 100730797.32
Prepayments 281930888.07 631893495.14
Other receivables 302065195.40 1084651870.94
Including: Interest receivable – –
Dividend receivable – 22659149.81
Inventories 3316198760.70 2835388802.15
Including: Data resources – –
Non-current assets due within one year 194204719.66 2840365519.48
Other current assets 252296160.14 559911202.83
Total current assets 6168547176.14 15890976841.18
154 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
Item Closing balance Opening balance
NON-CURRENT ASSETS:
Long-term receivables 2338612032.26 280291802.55
Long-term equity investments 2095953345.27 3971035411.54
Other non-current financial assets 327934626.32 751030454.68
Investment properties 5402063721.57 5743235268.46
Fixed assets 29219679495.81 31855069324.04
Construction in progress 626640521.92 593838603.87
Bearer biological assets 1873537.13 9352071.80
Right-of-use assets 151298017.92 266024312.87
Intangible assets 1603982531.66 1652267783.57
Including: Data resources – –
Goodwill – –
Long-term prepaid expenses 232398577.62 289677546.87
Deferred income tax assets 2032088838.62 1790639019.23
Other non-current assets 419076485.89 415856701.42
Total non-current assets 44451601731.99 47618318300.90
Total assets 50620148908.13 63509295142.08
2025 ANNUAL REPORT 155X Financial Report
Item Closing balance Opening balance
CURRENT LIABILITIES:
Short-term borrowings 21227831812.02 26780358809.11
Bills payable – 1423918112.99
Accounts payable 8608727052.92 7708967406.47
Receipts in advance 61929311.57 54538940.24
Contract liabilities 296299701.36 274829824.35
Employee benefits payable 369594500.65 251387660.00
Taxes payable 203168557.15 193424339.67
Other payables 4772023040.44 2896409953.94
Including: Interest payable 428732780.80 63042283.31
Dividend payable 220493880.88 123000000.00
Non-current liabilities due within one year 2313171903.83 1577936964.14
Other current liabilities 1539511608.24 2680562600.58
Total current liabilities 39392257488.18 43842334611.49
156 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
Item Closing balance Opening balance
NON-CURRENT LIABILITIES:
Long-term borrowings 5576510739.72 4763662194.24
Lease liabilities 34350249.10 37092473.06
Long-term payables 1685368809.50 774965008.29
Provisions 28234945.73 5935000.00
Deferred income 1084582814.76 1240939485.52
Deferred income tax liabilities 5667037.66 8595744.33
Total non-current liabilities 8414714596.47 6831189905.44
Total liabilities 47806972084.65 50673524516.93
2025 ANNUAL REPORT 157X Financial Report
Item Closing balance Opening balance
OWNERS’ EQUITY:
Share capital 2934556200.00 2934556200.00
Capital reserves 5241279229.79 5207678622.75
Less: Treasury shares – –
Other comprehensive income -915388419.92 -913708670.15
Special reserves 38543270.36 26800491.53
Surplus reserves 1212009109.97 1212009109.97
General risk provisions 68048751.10 80950584.11
Retained profit -7675212549.17 607818020.70
Total equity attributable to owners of the Parent Company 903835592.13 9156104358.91
Minority interest 1909341231.35 3679666266.24
Total owners’ equity 2813176823.48 12835770625.15
Total liabilities and owners’ equity 50620148908.13 63509295142.08
Legal Representative: Head in charge of accounting: Head of the accounting department:
Jiang Yanshan Zhu Yanli Zhang Bo
2. Balance sheet of the Parent Company
Unit: RMB
Item Closing balance Opening balance
CURRENT ASSETS:
Monetary funds 20121939.63 1599326584.12
Bills receivable 7684717.68 275500130.56
Accounts receivable 1803060358.70 240787940.24
Prepayments 299434218.95 1221574612.38
Other receivables 5711975196.11 8459731199.92
Including: Interest receivable – –
Dividend receivable 142500000.00 –
Inventories 203763590.31 279754637.58
Including: Data resources – –
Non-current assets due within one year – –
Other current assets – 38776511.95
Total current assets 8046040021.38 12115451616.75
158 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
Item Closing balance Opening balance
NON-CURRENT ASSETS:
Long-term receivables 538722444.55 –
Long-term equity investments 16699360999.95 18587172933.97
Other non-current financial assets 85957311.39 101028728.82
Fixed assets 3054291530.80 3286823373.00
Construction in progress 6554327.41 6526025.52
Right-of-use assets 970833.66 103125000.00
Intangible assets 447824474.44 462060836.20
Including: Data resources – –
Deferred income tax assets 635383720.83 587532690.79
Other non-current assets 12021421.38 12030680.01
Total non-current assets 21481087064.41 23146300268.31
Total assets 29527127085.79 35261751885.06
2025 ANNUAL REPORT 159X Financial Report
Item Closing balance Opening balance
CURRENT LIABILITIES:
Short-term borrowings 10768516993.00 8760304513.03
Bills payable 1349394835.97 4776895581.73
Accounts payable – 1494669551.89
Contract liabilities 71378118.76 1795549425.10
Employee benefits payable 107424275.99 83931485.87
Taxes payable 27747939.41 40921701.99
Other payables 4015226171.54 3679222270.99
Including: Interest payable 181402282.74 22581097.56
Dividend payable – –
Non-current liabilities due within one year 1152644543.30 1329838949.85
Other current liabilities 58393191.82 59111611.53
Total current liabilities 17550726069.79 22020445091.98
160 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
Item Closing balance Opening balance
NON-CURRENT LIABILITIES:
Long-term borrowings 700604804.17 1548277044.45
Long-term payables 39009936.72 8106807.57
Provisions 8892127.36 5935000.00
Deferred income 31839852.52 34010344.36
Total non-current liabilities 780346720.77 1596329196.38
Total liabilities 18331072790.56 23616774288.36
2025 ANNUAL REPORT 161X Financial Report
Item Closing balance Opening balance
OWNERS’ EQUITY:
Share capital 2934556200.00 2934556200.00
Capital reserves 5005865917.53 5032163419.19
Less: Treasury shares – –
Special reserves 9034647.37 7405266.87
Surplus reserves 1199819528.06 1199819528.06
Retained profit 2046778002.27 2471033182.58
Total owners’ equity 11196054295.23 11644977596.70
Total liabilities and owners’ equity 29527127085.79 35261751885.06
162 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
3. Consolidated Income Statement
Unit: RMB
Item 2025 2024
I. Total revenue 6186550243.97 22729474852.76
Including: Revenue 6186550243.97 22729474852.76
II. Total operating costs 11085985754.61 26411444253.77
Including: Operating costs 8602358087.41 22144828668.43
Taxes and surcharges 134983074.39 225961280.46
Sales and distribution expenses 104321369.48 241171109.12
General and administrative expenses 515067347.17 751168974.00
Research and development expense 93261011.49 1080331754.42
Finance expenses 1635994864.67 1967982467.34
Including: Interest expenses 1603023405.76 1869661335.22
Interest income 88939981.38 182479117.53
Add: Other income 97846053.94 295803414.30
Investment income (“-” denotes loss) -1548823477.26 -766913269.23
Including: Investment income from associates and
joint ventures -941658122.36 -689387136.28
Gains on derecognition of financial assets
measured at amortised cost -594689754.74 -101812317.04
Gain on change in fair value (“-” denotes loss) -148726915.03 -192216967.50
Credit impairment loss (“-” denotes loss) -2095453978.40 -3198089208.46
Loss on impairment of assets (“-” denotes loss) -556179803.08 -332755406.25
Gain on disposal of assets (“-” denotes loss) 9606143.67 55406263.64
III. Operating profit (“-” denotes loss) -9141167486.80 -7820734574.51
Add: Non-operating income 1418880.43 5147637.71
Less: Non-operating expenses 60465612.20 37604177.94
IV. Total profit (“-” denotes total loss) -9200214218.57 -7853191114.74
Less: Income tax expenses -237371249.12 -60171697.45
2025 ANNUAL REPORT 163X Financial Report
Item 2025 2024
V. Net profit (“-” denotes net loss) -8962842969.45 -7793019417.29
(i) Classification according to the continuity of operation
1. Net profit from continuing operations
(“-” denotes net loss) -6058497700.17 -3978043037.28
2. Net profit from discontinued operations
(“-” denotes net loss) -2904345269.28 -3814976380.01
(ii) Classification according to ownership
1. Net profit attributable to owners of the
Parent Company -8295932402.88 -7410784491.65
2. Profit or loss of minority interest -666910566.57 -382234925.64
VI. Net other comprehensive income after tax -1679749.77 -48827181.07
Net other comprehensive income after tax attributable
to shareholders of the Parent Company -1679749.77 -48827181.07
(i) Other comprehensive income that cannot be reclassified
to profit and loss – –
(ii) Other comprehensive income that will be reclassified to
profit and loss -1679749.77 -48827181.07
1. Other comprehensive income that may be reclassified
to profit and loss under the equity method -7962815.66 6370472.83
2. Exchange differences arising from translation of
financial statements denominated in foreign currencies 6283065.89 -55197653.90
Other comprehensive income net of tax attributable to
minority interest – –
VII. Total comprehensive income -8964522719.22 -7841846598.36
Total comprehensive income attributable to owners of
the Parent Company -8297612152.65 -7459611672.72
Total comprehensive income attributable to minority interest -666910566.57 -382234925.64
VIII. Earnings per share
(i) Basic earnings per share -2.83 -2.53
(ii) Diluted earnings per share -2.83 -2.53
Legal Representative: Head in charge of accounting: Head of the accounting department:
Jiang Yanshan Zhu Yanli Zhang Bo
164 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
4. Income statement of the Parent Company
Unit: RMB
Item 2025 2024
I. Revenue 572819127.09 7475506782.76
Less: Operating costs 463480567.34 7120576791.83
Taxes and surcharges 19463640.92 47521328.42
Sales and distribution expenses 8311990.36 7981255.43
General and administrative expenses 106499420.58 231719632.20
Research and development expense 24773392.81 225257814.55
Finance expenses 455423969.14 444721496.25
Including: Interest expenses 531596826.55 553965331.86
Interest income 128908878.47 258695456.58
Add: Other income 33644632.92 42778699.89
Investment income (“-” denotes loss) 134092192.55 -102226395.52
Including: I nvestment income from associates and
oint ventures -3384681.22 -132754796.54
Gains on derecognition of financial
assets measured at amortised cost
(“-” denotes loss) – -17770062.57
Gain on change in fair value (“-” denotes loss) – -19950000.00
Credit impairment loss (“-” denotes loss) -48155501.57 -2353308.15
Loss on impairment of assets (“-” denotes loss) -62215524.11 -7210153.16
Gain on disposal of assets (“-” denotes loss) 12460730.07 28004223.70
II. Operating profit (“-” denotes loss) -435307324.20 -663228469.16
Add: Non-operating income 167803.73 1258032.61
Less: Non-operating expenses 22106689.88 22117596.59
III. Total profit (“-” denotes total loss) -457246210.35 -684088033.14
Less: Income tax expenses -47851030.04 -16337901.00
IV. Net profit (“-” denotes net loss) -409395180.31 -667750132.14
(i) Net profit from continuing operations
(“-” denotes net loss) -409395180.31 -667750132.14
(ii) Net profit from discontinued operations
(“-” denotes net loss) – –
V. Total comprehensive income -409395180.31 -667750132.14
2025 ANNUAL REPORT 165X Financial Report
5. Consolidated cash flow statement
Unit: RMB
Item 2025 2024
I. Cash flows from operating activities:
Cash received from sales of goods and rendering
of services 6367801857.35 23237707950.05
Tax rebates received 210826.50 11658499.79
Cash received relating to other operating activities 430045314.74 524854825.25
Subtotal of cash inflows from operating activities 6798057998.59 23774221275.09
Cash paid for goods and services 5153209683.83 18151509011.53
Cash paid to and for employees 864310684.63 1144326678.52
Payments of taxes and surcharges 188339153.27 429650083.60
Cash paid relating to other operating activities 348990069.15 1425543836.84
Subtotal of cash outflows from operating activities 6554849590.88 21151029610.49
Net cash flows from operating activities 243208407.71 2623191664.60
II. Cash flows from investing activities:
Cash received from investments 211417.43 7305395.37
Cash received from investment income 1384673.77 3574134.20
Net cash received from disposal of fixed assets
intangible assets and other long-term assets 46489157.63 20427346.14
Net cash received from disposal of subsidiaries and
other business units 330186207.35 503938946.58
Cash received relating to other investing activities – –
Subtotal of cash inflows from investing activities 378271456.18 535245822.29
Cash paid for purchase of fixed assets intangible
assets and other long-term assets 3213890.45 69444183.34
Cash paid for investment – –
Net increase in pledged loans – –
Net cash paid for acquisition of subsidiaries and
other business units 508955916.13 –
Cash paid relating to other investing activities – –
Subtotal of cash outflows from investing activities 512169806.58 69444183.34
Net cash flows from investing activities -133898350.40 465801638.95
166 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
Item 2025 2024
III. Cash flows from financing activities:
Cash received from investments – –
Including: C ash received from subsidiaries from
minority investments – –
Cash received from borrowings 19143466156.59 27224432497.83
Cash received relating to other financing activities 5690418955.84 6838493318.93
Subtotal of cash inflows from financing activities 24833885112.43 34062925816.76
Cash repayments of amounts borrowed 23730790366.40 33203238743.18
Cash paid for dividend and profit distribution or
interest payment 1000742987.66 1921902301.87
Including: Dividend and profit paid by subsidiaries to
minority shareholders – –
Cash paid relating to other financing activities 224416388.93 2662705748.14
Subtotal of cash outflows from financing activities 24955949742.99 37787846793.19
Net cash flows from financing activities -122064630.56 -3724920976.43
IV. Effect of foreign exchange rate changes on cash and
cash equivalents -1891790.72 23637176.58
V. Net increase in cash and cash equivalents -14646363.97 -612290496.30
Add: B alance of cash and cash equivalents as at the
beginning of the period 151943246.31 764233742.61
VI. Balance of cash and cash equivalents as at the end of
the period 137296882.34 151943246.31
2025 ANNUAL REPORT 167X Financial Report
6. Cash flow statement of the Parent Company
Unit: RMB
Item 2025 2024
I. Cash flows from operating activities:
Cash received from sales of goods and rendering
of services 755722828.19 8469958914.03
Tax rebates received – –
Cash received relating to other operating activities 14507774.23 225099137.16
Subtotal of cash inflows from operating activities 770230602.42 8695058051.19
Cash paid for goods and services 377128919.04 7516008175.22
Cash paid to and for employees 221648977.99 292646483.16
Payments of taxes and surcharges 58894414.44 37515271.04
Cash paid relating to other operating activities 24668774.42 314026900.98
Subtotal of cash outflows from operating activities 682341085.89 8160196830.40
Net cash flows from operating activities 87889516.53 534861220.79
II. Cash flows from investing activities:
Cash received from investments 211417.43 387305395.37
Cash received from investment income 1384673.77 143198463.59
Net cash received from disposal of fixed assets
intangible assets and other long-term assets 19697525.63 19188807.14
Net cash received from disposal of subsidiaries and
other business units – –
Cash received relating to other investing activities – –
Subtotal of cash inflows from investing activities 21293616.83 549692666.10
Cash paid for purchase of fixed assets intangible
assets and other long-term assets – 8324093.92
Subtotal of cash outflows from investing activities – 8324093.92
Net cash flows from investing activities 21293616.83 541368572.18
168 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
Item 2025 2024
III. Cash flows from financing activities:
Cash received from investments – –
Cash received from borrowings 8229727946.24 14145974981.53
Cash received relating to other financing activities 1604427901.28 2488411858.25
Subtotal of cash inflows from financing activities 9834155847.52 16634386839.78
Cash repayments of amounts borrowed 9633569113.90 17030448289.24
Cash paid for dividend and profit distribution or
interest payment 303130316.68 407710636.83
Cash paid relating to other financing activities 6785850.10 622627667.95
Subtotal of cash outflows from financing activities 9943485280.68 18060786594.02
Net cash flows from financing activities -109329433.16 -1426399754.24
IV. Effect of foreign exchange rate changes on cash and
cash equivalents -30443.41 -348158.85
V. Net increase in cash and cash equivalents -176743.21 -350518120.12
Add: Balance of cash and cash equivalents as at the
beginning of the period 268719.28 350786839.40
VI. Balance of cash and cash equivalents as at the
end of the period 91976.07 268719.28
2025 ANNUAL REPORT 169X Financial Report
170 SHANDONG CHENMING PAPER HOLDINGS LIMITED
7. Consolidated statement of changes in owners’ equity
Amount for the period
Unit: RMB
2025
Equity attributable to owners of the Parent Company
Other equity instruments Less: Other
Preference Perpetual Treasury comprehensive Special Surplus General risk Minority Total
Item Share capital shares bonds Others Capital reserves shares income reserves reserves provisions Retained profit Subtotal interest owners’ equity
I. Balance as at the end of the prior year 2934556200.00 – – – 5207678622.75 – -913708670.15 26800491.53 1212009109.97 80950584.11 607818020.70 9156104358.91 3679666266.24 12835770625.15
II. Balance as at the beginning of the year 2934556200.00 – – – 5207678622.75 – -913708670.15 26800491.53 1212009109.97 80950584.11 607818020.70 9156104358.91 3679666266.24 12835770625.15
III. Changes in the period (“-” denotes
decrease) – – – – 33600607.04 – -1679749.77 11742778.83 – -12901833.01 -8283030569.87 -8252268766.78 -1770325034.89 -10022593801.67
(i) Total comprehensive income – – – – – – -1679749.77 – – – -8295932402.88 -8297612152.65 -666910566.57 -8964522719.22
(ii) Capital paid in and reduced by owners – – – – 33600607.04 – – – – – – 33600607.04 -978682819.59 -945082212.55
1. Ordinary shares paid by owners – – – – – – – – – – – – -978682819.59 -978682819.59
2. Amount of share-based payments
recognised in owners’ equity – – – – – – – – – – – – – –
3. Others – – – – 33600607.04 – – – – – – 33600607.04 – 33600607.04
(iii) Profit distribution – – – – – – – – – – – – -126756041.68 -126756041.68
1. Transfer of general risk reserves – – – – – – – – – – – – – –
2. Distribution to owners (or
shareholders) – – – – – – – – – – – – -126756041.68 -126756041.68
(iv) Transfer within owners’ equity – – – – – – – – – -12901833.01 12901833.01 – 2024392.95 2024392.95
1. Others – – – – – – – – – -12901833.01 12901833.01 – 2024392.95 2024392.95
(v) Special reserves – – – – – – – 11742778.83 – – – 11742778.83 – 11742778.83
1. Withdrew in the period – – – – – – – 14684739.69 – – – 14684739.69 – 14684739.69
2. Used in the period – – – – – – – -2941960.86 – – – -2941960.86 – -2941960.86
IV. Balance as at the end of the period 2934556200.00 – – – 5241279229.79 – -915388419.92 38543270.36 1212009109.97 68048751.10 -7675212549.17 903835592.13 1909341231.35 2813176823.48X Financial Report
2025 ANNUAL REPORT 171
Amount for the prior period
Unit: RMB
2024
Equity attributable to owners of the Parent Company
Other equity instruments Less: Other
Preference Perpetual Capital Treasury comprehensive General risk
Item Share capital shares bonds Others reserves shares income Special reserves Surplus reserves provisions Retained profit Subtotal Minority interest Total owners’ equity
I. Balance as at the end of the prior year 2956813200.00 – – – 5328790899.61 63432450.00 -864881489.08 23322829.57 1212009109.97 79370294.91 8020182801.55 16692175196.53 4405680649.10 21097855845.63
II. Balance as at the beginning of the year 2956813200.00 – – – 5328790899.61 63432450.00 -864881489.08 23322829.57 1212009109.97 79370294.91 8020182801.55 16692175196.53 4405680649.10 21097855845.63
III. Changes in the period (“-” denotes
decrease) -22257000.00 – – – -121112276.86 -63432450.00 -48827181.07 3477661.96 – 1580289.20 -7412364780.85 -7536070837.62 -726014382.86 -8262085220.48
(i) Total comprehensive income – – – – – – -48827181.07 – – – -7410784491.65 -7459611672.72 -382234925.64 -7841846598.36
(ii) Capital paid in and reduced by owners -22257000.00 – – – -121112276.86 -63432450.00 – – – – – -79936826.86 -290042380.45 -369979207.31
1. Ordinary shares paid by owners – – – – – – – – – – – – -290042380.45 -290042380.45
2. Amount of share-based payments
recognised in owners’ equity -22257000.00 – – – -41175450.00 -63432450.00 – – – – – – – –
3. Others – – – – -79936826.86 – – – – – – -79936826.86 – -79936826.86
(iii) Profit distribution – – – – – – – – – 1580289.20 -1580289.20 – -123000000.00 -123000000.00
1. Transfer of general risk reserves – – – – – – – – – 1580289.20 -1580289.20 – – –
2. Distribution to owners (or
shareholders) – – – – – – – – – – – – -123000000.00 -123000000.00
(iv) Transfer within owners’ equity – – – – – – – – – – – – 69262923.23 69262923.23
1. Others – – – – – – – – – – – – 69262923.23 69262923.23
(v) Special reserves – – – – – – – 3477661.96 – – – 3477661.96 – 3477661.96
1. Withdrew in the period – – – – – – – 19870503.88 – – – 19870503.88 – 19870503.88
2. Used in the period – – – – – – – -16392841.92 – – – -16392841.92 – -16392841.92
IV. Balance as at the end of the period 2934556200.00 – – – 5207678622.75 – -913708670.15 26800491.53 1212009109.97 80950584.11 607818020.70 9156104358.91 3679666266.24 12835770625.15X Financial Report
172 SHANDONG CHENMING PAPER HOLDINGS LIMITED
8. Statement of changes in owners’ equity of the Parent Company
Amount for the period
Unit: RMB
2025
Other equity instruments Less: Other
Preference Perpetual Treasury comprehensive Total
Item Share capital shares bonds Others Capital reserves shares income Special reserves Surplus reserves Retained profit owners’ equity
I. Balance as at the end of the prior year 2934556200.00 – – – 5032163419.19 – – 7405266.87 1199819528.06 2471033182.58 11644977596.70
II. Balance as at the beginning of the year 2934556200.00 – – – 5032163419.19 – – 7405266.87 1199819528.06 2471033182.58 11644977596.70
III. Changes in the period (“-” denotes decrease) – – – – -26297501.66 – – 1629380.50 – -424255180.31 -448923301.47
(i) Total comprehensive income – – – – – – – – – -424255180.31 -424255180.31
(ii) Capital paid in and reduced by owners – – – – -26297501.66 – – – – – -26297501.66
1. Others – – – – -26297501.66 – – – – – -26297501.66
(iii) Profit distribution – – – – – – – – – – –
(iv) Transfer within owners’ equity – – – – – – – – – – –
(v) Special reserves – – – – – – – 1629380.50 – – 1629380.50
1. Withdrew in the period – – – – – – – 1629380.50 – – 1629380.50
2. Used in the period – – – – – – – – – – –
(vi) Others – – – – – – – – – – –
IV. Balance as at the end of the period 2934556200.00 – – – 5005865917.53 – – 9034647.37 1199819528.06 2046778002.27 11196054295.23X Financial Report
2025 ANNUAL REPORT 173
Amount for the prior period
Unit: RMB
2024
Other equity instruments Other
Preference Perpetual Less: comprehensive Total
Item Share capital shares bonds Others Capital reserves Treasury shares income Special reserves Surplus reserves Retained profit owners’ equity
I. Balance as at the end of the prior year 2956813200.00 – – – 5073338869.19 63432450.00 – 4612641.99 1199819528.06 3138783314.72 12309935103.96
II. Balance as at the beginning of the year 2956813200.00 – – – 5073338869.19 63432450.00 – 4612641.99 1199819528.06 3138783314.72 12309935103.96
III. Changes in the period (“-” denotes decrease) -22257000.00 – – – -41175450.00 -63432450.00 – 2792624.88 – -667750132.14 -664957507.26
(i) Total comprehensive income – – – – – – – – – -667750132.14 -667750132.14
(ii) Capital paid in and reduced by owners -22257000.00 – – – -41175450.00 -63432450.00 – – – – –
1. Amount of share-based payments
recognised in owners’ equity -22257000.00 – – – -41175450.00 -63432450.00 – – – – –
(iii) Profit distribution – – – – – – – – – – –
(iv) Transfer within owners’ equity – – – – – – – – – – –
(v) Special reserves – – – – – – – 2792624.88 – – 2792624.88
1. Withdrew in the period – – – – – – – 2792624.88 – – 2792624.88
2. Used in the period – – – – – – – – – – –
(vi) Others – – – – – – – – – – –
IV. Balance as at the end of the period 2934556200.00 – – – 5032163419.19 – – 7405266.87 1199819528.06 2471033182.58 11644977596.70X 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” a
joint-stock company incorporated in Shouguang City Shandong Province) was Shandong Shouguang Paper Mill
Corporation which was changed as a joint stock company with limited liability through offering to specific investors
in May 1993. In December 1996 with approval by Lu Gai Zi [1996] No. 270 issued by the People’s Government of
Shandong Province and Zheng Wei [1996] No. 59 of the Securities Committee of the State Council the Company was
changed as a joint stock company with limited liability established by share offer. The Company’s headquarters is
located at No. 2199 Nongsheng East Road Shouguang City Shandong Province.In May 1997 with approval by Zheng Wei Fa [1997] No. 26 issued by the Securities Committee of the State Council
the Company issued 115000000 domestic listed foreign shares (B shares) under public offering which were listed
and traded on Shenzhen Stock Exchange from 26 May 1997.In September 2000 with approval by Zheng Jian Gong Si Zi [2000] No. 151 issued by the China Securities Regulatory
Commission the Company issued additional 70000000 RMB ordinary shares (A shares) which were listed and
traded on Shenzhen Stock Exchange from 20 November 2000.In June 2008 with approval by the Stock Exchange of Hong Kong Limited the Company issued 355700000 H
shares. At the same time 35570000 H shares were allocated to the National Council for Social Security Fund by
our relevant state-owned shareholder and converted into overseas listed foreign shares (H shares) for the purpose of
reducing the number of state-owned shares. The additionally issued H shares were listed and traded on Hong Kong
Stock Exchange on 18 June 2008.As at 31 December 2025 the total share capital of the Company was 2934556200 shares. For details please refer
to Note VII. 40.Principal business activities: the Company is principally engaged in among other things processing and sale of paper
products (including machine-made paper and paper board) papermaking raw materials machinery and chemicals;
generation and sale of electric power and thermal power; forestry saplings growing processing and sale of timber;
manufacturing processing and sale of wood products hotel service investment properties and property service.The financial statements and notes thereto were approved at the third meeting of the eleventh session of the board of
directors of the Company (the “Board”) on 30 March 2026.
2. Scope of consolidation
Subsidiaries of the Company included in the scope of consolidation in 2025 totalled 72. For details please refer
to Note X “Interest in other entities”. The scope of consolidation of the Company during the year had four morecompanies included and nine companies less compared to the prior year. For details please refer to Note IX “Changein scope of consolidation”.
174 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
IV. Basis of Preparation of the Financial Statements
1. Basis of preparation
These financial statements are prepared in accordance with the accounting standards for business enterprises the
application guidelines thereof interpretations and other related rules (collectively referred to as “ASBEs”) promulgated
by the Ministry of Finance. In addition the Company also discloses relevant financial information in accordance withthe “Preparation Rules for Information Disclosure by Companies Offering Securities to the Public No. 15 – GeneralProvisions on Financial Reports” (revised in 2023) of the CSRC.The financial statements are presented on a going concern basis.The Company’s financial statements have been prepared on an accrual basis. Except for certain financial instruments
the financial statements are prepared under the historical cost convention. In the event that impairment of assets
occurs a provision for impairment is made accordingly in accordance with the relevant regulations.
2. Going concern
The Company’s net profit attributable to shareholders of the Company for 2025 was RMB-8296 million. As of 31
December 2025 the equity attributable to shareholders of the Company was RMB904 million and the current ratio
was 0.16. Some of the borrowings from financial institutions and the payments for goods to suppliers were overdue
and a number of litigation and arbitration cases arose from overdue debts.In view of the above the Board of the Company has conducted sufficient and detailed assessments after carefully
considering its liquidity operations and sources of financing in the future. The Company will take following actions to
improve its ability to continue as a going concern and its operations including:
(1) Strengthening team building to lay a solid foundation for operations development and organisation
Under the leadership of the Company’s new management team we will improve the cadre management system
optimise mechanisms for selecting and appointing personnel to ensure the right people are in the right roles
and establish a reserve pool of management talents and a talent pool for key positions. We will implement the
management team empowerment programme to stimulate the team’s intrinsic motivation reinforce the entire
workforce’s awareness of business operations and profitability and ensure the stability of both the workforce
and the management team.
(2) Comprehensively advancing the resumption of operation and production with revitalization and optimization
of existing assets
Since the suspension of production the Company has been actively pushing for new credit facilities and
ensuring the supply of raw materials and the maintenance of equipment through various channels in order
to accelerate the resumption of operation and production. Being bolstered by the robust support of Party
committees and governments at all levels and financial institutions the Huanggang base has been in normal
operation and the Shouguang base the Jilin base the Jiangxi base and the Zhanjiang base have successively
commenced operation since August 2025. As of 13 March 2026 the five major bases have resumed full
operation and production. Meanwhile the Company will step up efforts to dispose of non-core assets
continuously optimise its asset structure and enhance its core competitiveness thereby laying the foundation
for the Company’s healthy development.
(3) Raising funds through multiple channels to systematically mitigate existing debt risks
With the resumption of full operation and production at the five major bases the Company’s profitability
gradually recover laying a solid foundation for further broadening financing channels and optimising its capital
structure. The Company coordinated to convene provincial debt committees again and negotiate with various
parties to secure further extensions and interest rate reductions ensure funding continuity and continue to
reduce finance expenses on the other hand. The Company is actively engaging with strategic investors and
supply chain funding providers to raise funds through multiple channels to ensure normal production and
operations on the other hand. To date the Company has reached agreements on loan extensions and interest
rate reductions with 90 out of 109 financial institutions and has signed framework agreements with a number
of suppliers and resumed business cooperation with them with a view to gradually resolving outstanding debts
whilst continuing our collaboration.
2025 ANNUAL REPORT 175X Financial Report
IV. Basis of Preparation of the Financial Statements (Continued)
2. Going concern (Continued)
(4) Stepping up efforts to reduce production costs and enhance efficiency thereby improving core production
performance
The Company will recruit and cultivate high-calibre professionals tackle equipment bottlenecks and drive
forward the acceleration and modernisation of production lines establish a refined management system to
unleash production capacity through end-to-end control. Taking the machine’s design speed as a benchmark
the Company are systematically identifying existing issues across all machine-paper production lines and
continuing to drive forward speed-enhancement upgrades. It is expected that the average speed of some
production lines will increase by 100 m/min.The Company will set up a technical innovation department to research develop and promote new products.The Company plans to develop 31 new products in 2026 and some new products have already been launched
on the market. The Company will optimise its chemical preparation by conducting a comprehensive review and
optimisation of the application scenarios and usage levels of key chemicals such as sizing agents retention aids
and brighteners thereby reducing chemical consumption.The Company will maintain strict control over the quality and composition of raw materials establishing a robust
quality control system from the outset. It will enforce rigorous standards for the procurement of wood chips to
prevent from the inclusion of impurities such as bark and decayed wood and continuously improve the quality
of its own pulp production.The Company will upgrade its quality control system to capitalise on the advantages of its own pulp production.The Company will establish a centralised sampling and testing centre to implement centralised management
and establish a closed-loop quality control system covering both the raw material and production stages.Through hardware upgrades such as improving the configuration of ozone bleaching equipment for chemical
pulp and installing new wet-laid machines the Company will further enhance the production efficiency and
quality consistency of its own pulp thereby maximising the advantages of its own pulp production capacity.Through measures such as process optimisation and energy consumption monitoring to reduce energy wastage
the Company will promote a range of initiatives including biomass co-firing technology to continuously improve
energy efficiency and comprehensively enhance the quality and efficiency of its production operations.
(5) Optimising the procurement management system with strict control over costs and supply chain risks
The Company has established a digital and transparent procurement system to fully digitise the entire tendering
process thereby overcoming geographical constraints shortening the tendering cycle minimising human
intervention and ensuring a highly efficient and transparent process. It has also improved its tiered supplier
management and dynamic evaluation mechanisms to increase the proportion of direct sourcing dynamically
optimise the supplier database and encourage healthy competition among suppliers with direct sourcing
accounting for over 80% of suppliers. It has deepened collaboration within the industrial chain by signing
long-term agreements with key suppliers and state-owned enterprises and by fostering exemplary partner
organisations. It has built an independent and controllable logistics system deploying its fleet of new energy
vehicles. By optimising payment terms and adjusting the structure of raw material procurement the Company
has extended its operations upstream to include wood chip processing thereby ensuring a stable supply of key
raw materials.
(6) Focusing on market sales to improve quality expand sales and boost profits
The Company is restructuring its sales structure by establishing departments to focus on customer relations and
product development. It is also adjusting its product portfolio to increase the proportion of high-margin products
such as high-end coated paper high brightness duplex press paper high-end yellow kraft paper and high-end
electrostatic paper and reduce the investment in low-margin products such as the white offset paper series of
culture paper whilst developing new high-value-added products and securing high-quality new clients thereby
creating new source of profit growth. Seizing industry opportunities the Company is vigorously expanding
into overseas markets to increase the overseas market share of coated paper. It is also stepping up efforts to
develop direct-sales clients increasing the proportion of direct sales and establishing stable sustainable and
diversified market partnership models.By implementing the above measures the Company believes that it is appropriate to prepare the financial
statements for the reporting period on a going concern basis.
176 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates
Specific accounting policies and accounting estimates are indicated as follows:
The Company and its subsidiaries are engaged in the business of machine-made paper electricity and heat paper
chemicals property services hotel management etc. The Company and its subsidiaries have formulated a number
of specific accounting policies and accounting estimates for transactions and matters such as revenue recognition
determination of performance progress and R&D expenses based on their actual production and operation characteristics
in accordance with the requirements of the relevant ASBEs. For details please refer to the descriptions under Note V. 27
“Revenue”. For an explanation of the critical accounting judgments and estimates made by the management please refer to
Note V. 35 “Critical accounting judgments and estimates”.
1. Statement of compliance with the Accounting Standards for Business Enterprises
These financial statements have been prepared in conformity with the ASBEs which truly and fully reflect the financial
position of the consolidated entity and the Company as at 12 December 2025 and relevant information such as the
operating results and cash flows of the consolidated entity and the Company for 2025.
2. Accounting period
The accounting period of the Company is from 1 January to 31 December of each calendar year.
3. Operating cycle
The operating cycle of the Company lasts for 12 months.
4. Functional currency
The functional currency of the Company and its domestic subsidiaries is Renminbi (“RMB”). Overseas subsidiaries
of the Company recognise U.S. dollar (“USD” or “US$”) Japanese yen (“JPY”) Euro (“EUR”) and South Korean
Won (“KRW”) as their respective functional currency according to the general economic environment in which these
subsidiaries operate. The Company prepares the financial statements in RMB.
2025 ANNUAL REPORT 177X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
5. Determination method and selection basis of importance standards
? Applicable □ Not applicable
Item Importance standards
Significant accounts receivable with single Overdue accounts receivable and the amount of a single
provision for bad debt provisions receivable exceeds 0.5% of total assets
Write-off of significant accounts receivable The amount of a single write-off exceeds 0.5% of net assets
during the period
Significant prepayments aged more than Aged more than one year and the single amount exceeds 0.5%
one year of total assets
Significant receipts in advance aged more than Aged more than one year and the single amount exceeds 0.5%
one year of total assets
Significant other payables aged more than Aged more than one year and the single amount exceeds 0.5%
one year of total assets
Significant accounts payable aged more than Aged more than one year and the single amount exceeds 0.5%
one year of total assets
Bad debt provisions with significant amounts Individually identified or classified into the third stage the
reversed or recovered during the current period amount transferred or recovered exceeds 0.5% of total assets
Significant construction in progress Projects with budgets exceeding 0.5% of total assets
Significant non-wholly owned subsidiaries The total assets of the subsidiary exceed 10% of the Company
on a consolidated basis and the revenue or pre-tax profit
exceeds 10%
Significant investing activities Investment amount exceeds 0.5% of total assets
Significant joint ventures and associates The joint venture or associate operates normally with an
accounting amount exceeding 0.5% of total assets
Significant transfers of assets The transaction amount exceeds 0.5% of total assets
Significant pending litigations The subject matter amount of the litigation exceeds RMB10
million
Significant debt restructuring The restructuring amount exceeds 0.5% of total assets
6. Accounting treatment of business combinations under common control and not under common
control
(1) Business combination under common control
For the business combination involving entities under common control the assets and liabilities of the party
being merged that are obtained in the business combination by the absorbing party shall be measured at the
carrying amounts as recorded by the ultimate controlling party in the consolidated financial statements at the
combination date. The difference between the carrying amount of the consideration paid for the combination
and the carrying amount of the net assets obtained in the combination is charged to the capital reserve. If the
capital reserve is not sufficient to absorb the difference any excess shall be adjusted against retained earnings.
178 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
6. Accounting treatment of business combinations under common control and not under common
control (Continued)
(1) Business combination under common control (Continued)
Business combinations involving entities under common control and achieved in stages
The assets and liabilities of the party being merged that are obtained at the combination by the absorbing
party shall be measured at the carrying value as recorded by the ultimate controlling party in the consolidated
financial statements at combination date. The difference between the sum of the carrying value from original
shareholding portion and the new investment cost incurred at combination date and the carrying value of net
assets obtained at combination date shall be adjusted to capital reserve if the balance of capital reserve is
not sufficient to absorb the differences any excess is adjusted to retained earnings. The long-term investment
prior to the absorbing party obtaining the control of the party being merged the recognised profit or loss
comprehensive income and other change of owners’ equity at the closer date of the acquisition date and
combination date under common control shall separately offset the opening balance of retained earnings and
profit or loss during comparative statements.
(2) Business combination not under common control
For business combinations involving entities not under common control the cost for each combination is
measured at the aggregate fair value at acquisition date of assets given liabilities incurred or assumed and
equity securities issued by the acquirer in exchange for control of the acquiree. At acquisition date the acquired
assets liabilities or contingent liabilities of acquiree are measured at their fair value.Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net
assets the difference is recognised as goodwill and subsequently measured on the basis of its cost minus
accumulative impairment provision; Where the cost of combination is less than the acquirer’s interest in the fair
value of the acquiree’s identifiable net assets the difference is recognised in profit or loss for the current period
after reassessment.Business combinations involving entities not under common control and achieved in stages
The combination cost is the sum of consideration paid at acquisition date and fair value of the acquiree’s
equity investment held prior to acquisition date. The cost of equity of the acquiree held prior to acquisition
date shall be remeasured at the fair value at acquisition date and the difference between the fair value and
carrying amount shall be recognised as investment income or loss for the current period. Other comprehensive
income and changes of other owners’ equity related with acquiree’s equity held prior to acquisition date shall be
transferred to investment profit or loss for current period at acquisition date except for the other comprehensive
income incurred by the changes of net assets or net liabilities due to the remeasurement of defined benefit
plans and the other comprehensive income related to investments in non-trading equity instruments that were
previously designated as at fair value through other comprehensive income.
(3) Transaction fees attribution during business combination
The audit legal valuation advisory and other intermediary fees and other relevant administrative expenses
arising from business combinations are recognised in profit or loss when incurred. Transaction costs of equity
or debt securities issued as the considerations of business combination are included in the initial recognition
amounts.
2025 ANNUAL REPORT 179X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
7. Judgment criteria for control and preparation of consolidated financial statements
(1) Judgment criteria for control
The scope of consolidation of the consolidated financial statements is determined on the basis of control. The
term “control” refers to the fact that the Company has power over the investee and is entitled to variable returns
from its involvement with the investee and the ability to use its power over the investee to affect the amount of
those returns. The Company will reassess when changes in relevant facts and circumstances result in changes
in the relevant elements involved in the definition of control.When judging whether to include a structured entity into the scope of consolidation the Company
comprehensively considers all facts and circumstances including assessing the purpose and design of the
structured entity identifying the types of variable returns and assessing whether to control the structured entity
on the basis of whether it bears part or all of the return variability by participating in its related activities.
(2) Basis for preparation of the consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial statements of the
Company and its subsidiaries and other relevant information. In preparing the consolidated financial statements
the accounting policies and accounting periods of the Company and its subsidiaries shall be consistent and
intra-company significant transactions and balances are eliminated.A subsidiary and its business acquired through a business combination involving entities under common control
during the reporting period shall be included in the scope of the consolidation of the Company from the date
of being controlled by the ultimate controlling party and its operating results and cash flows from the date of
being controlled by the ultimate controlling party are included in the consolidated income statement and the
consolidated cash flow statement respectively.For a subsidiary and its business acquired through a business combination involving entities not under common
control during the reporting period its income expenses and profits are included in the consolidated income
statement and cash flows are included in the consolidated cash flow statement from the acquisition date to the
end of the reporting period.The shareholders’ equity of the subsidiaries that is not attributable to the Company is presented under
shareholders’ equity in the consolidated balance sheet as minority interest. The portion of net profit or loss of
subsidiaries for the period attributable to minority interest is presented in the consolidated income statement
under the “profit or loss of minority interest”. When the amount of loss attributable to the minority shareholders
of a subsidiary exceeds the minority shareholders’ portion of the opening balance of owners’ equity of the
subsidiary the excess amount shall be allocated against minority interest.
(3) Acquisition of non-controlling interests in subsidiaries
The difference between the long-term equity investments costs acquired by the acquisition of non-controlling
interests and the share of the net assets from subsidiaries from the date of acquisition or the date of
combination based on the new shareholding ratio as well as the difference between the proceeds from the
partial disposal of the equity investment without losing control over its subsidiary and the disposal of the
long-term equity investment corresponding to the share of the net assets of the subsidiaries from the date of
acquisition or the date of combination is adjusted to the capital reserve. If the capital reserve is not sufficient
any excess is adjusted to retained earnings.
180 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
7. Judgment criteria for control and preparation of consolidated financial statements (Continued)
(4) Accounting treatment for loss of control over subsidiaries
For the loss of control over a subsidiary due to disposal of a portion of the equity investment or other reasons
the remaining equity is remeasured at fair value on the date when the control is lost. The difference arising from
the sum of consideration received for disposal of equity interest and the fair value of remaining equity interest
over the sum of the share of the carrying amount of net assets of the former subsidiary calculated continuously
from the purchase date based on the shareholding percentage before disposal and the goodwill is recognised
as investment income in the period when the control is lost.Other comprehensive income related to equity investment in the former subsidiary shall be accounted for on
the same basis as the former subsidiary’s direct disposal of relevant assets or liabilities when the control is lost.Other changes in owners’ equity related to the former subsidiary that are accounted for using the equity method
shall be transferred to current profit or loss at the time when the control is lost.
8. Classification of joint arrangements and accounting treatment for joint operations
A joint arrangement refers to an arrangement of two or more parties have joint control. The joint arrangements of the
Company comprise joint operations and joint ventures.
(1) Joint operations
Joint operations refer to a joint arrangement during which the Company is entitled to relevant assets and
obligations of this arrangement.The Company recognises the following items in relation to its interest in a joint operation and accounts for them
in accordance with the relevant ASBEs:
A. the assets held solely by it and assets held jointly according to its share;
B. the liabilities assumed solely by it and liabilities assumed jointly according to its share;
C. the revenue from sale of output from joint operations;
D. the revenue from sale of output from joint operations according to its share;
E. the fees solely incurred by it and fees incurred from joint operations according to its share.
(2) Joint ventures
Joint ventures refer to a joint arrangement during which the Company only is entitled to net assets of this
arrangement.The Company accounts for its investments in joint ventures in accordance with the requirements relating to
accounting treatment using equity method for long-term equity investments.
2025 ANNUAL REPORT 181X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
9. Standards for recognising cash and cash equivalents
Cash refers to cash on hand and deposits readily available for payment purpose. Cash equivalents refer to short-term
and highly liquid investments held by the Company which are readily convertible into known amount of cash and
which are subject to insignificant risk of value change.
10. Foreign currency operations and translation of statements denominated in foreign currency
(1) Foreign currency operations
The foreign currency operations of the Company are translated into the functional currency at the prevailing
spot exchange rate on the date of exchange.On the balance sheet date foreign currency monetary items shall be translated at the spot exchange rate on
the balance sheet date. The exchange difference arising from the difference between the spot exchange rate
on the balance sheet date and the spot exchange rate upon initial recognition or the last balance sheet date will
be recognised in profit or loss for the period. The foreign currency non-monetary items measured at historical
cost shall still be measured by the functional currency translated at the spot exchange rate on the date of the
transaction. Foreign currency non-monetary items measured at fair value are translated at the spot exchange
rate on the date of determination of the fair value. The difference between the amounts of the functional
currency before and after the translation will be recognised in profit or loss or other comprehensive income for
the period based on the nature of the non-monetary items.
(2) Translation of financial statements denominated in foreign currency
When translating the financial statements denominated in foreign currency of overseas subsidiaries assets and
liabilities on the balance sheet are translated at the spot exchange rate prevailing at the balance sheet date;
owner’s equity items except for “retained profit” are translated at the spot exchange rates at the dates on which
such items arose.Income and expenses items in the income statement are translated at the average exchange rate for the year.All items in the cash flow statements shall be translated at the average exchange rate for the year. Effectsarising from changes of exchange rate on cash shall be presented separately as the “effect of foreign exchangerate 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.
182 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments
A financial instrument is a contract that gives rise to a financial asset of one party and a financial liability or equity
instrument of another party.
(1) Recognition and derecognition of financial instruments
Financial asset or financial liability will be recognised when the Company became one of the parties under a
financial instrument contract.Financial asset that satisfied any of the following criteria shall be derecognised:
* the contract right to receive the cash flows of the financial asset has terminated;
* the financial asset has been transferred and meets the derecognition criteria for the transfer of financial
asset as described below.A financial liability (or a part thereof) is derecognised only when the present obligation is discharged in full or in
part. If an agreement is entered between the Company (debtor) and a creditor to replace the existing financial
liabilities with new financial liabilities and the contractual terms of the new financial liabilities are substantially
different from those of the existing financial liabilities the existing financial liabilities shall be derecognised and
the new financial liabilities shall be recognised.Conventionally traded financial assets shall be recognised and derecognised at the trading date.
(2) Classification and measurement of financial assets
The Company classifies the financial assets according to the business model for managing the financial assets
and characteristics of the contractual cash flows as follows: financial assets measured at amortised cost
financial assets measured at fair value through other comprehensive income and financial assets measured at
fair value through profit or loss.Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair
value through profit or loss relevant transaction costs are directly recognised in profit or loss for the current
period. For other categories of financial assets relevant transaction costs are included in the amount initially
recognised. Accounts receivable arising from sales of goods or rendering services without significant financing
component are initially recognised based on the transaction price expected to be entitled by the Company.
2025 ANNUAL REPORT 183X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(2) Classification and measurement of financial assets (Continued)
Financial assets measured at amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated
at fair value through profit or loss:
The Company’s business model for managing such financial assets is to collect contractual cash flows;
The contractual terms of the financial asset stipulate that cash flows generated on specific dates are solely
payments of principal and interest on the principal amount outstanding.Subsequent to initial recognition such financial assets are measured at amortised cost using the effective
interest method. A gain or loss on a financial asset that is measured at amortised cost and is not part of a
hedging relationship shall be recognised in profit or loss for the current period when the financial asset is
derecognised amortised using the effective interest method or with impairment recognised.Financial assets measured at fair value through other comprehensive income
A financial asset is classified as measured at fair value through other comprehensive income if it meets both of
the following conditions and is not designated at fair value through profit or loss:
The Company’s business model for managing such financial assets is achieved both by collecting collect
contractual cash flows and selling such financial assets;
The contractual terms of the financial asset stipulate that cash flows generated on specific dates are solely
payments of principal and interest on the principal amount outstanding.Subsequent to initial recognition such financial assets are subsequently measured at fair value. Interest
calculated using the effective interest method impairment losses or gains and foreign exchange gains and
losses are recognised in profit or loss for the current period and other gains or losses are recognised in
other comprehensive income. On derecognition the cumulative gain or loss previously recognised in other
comprehensive income is reclassified from other comprehensive income to profit or loss.
184 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(2) Classification and measurement of financial assets (Continued)
Financial assets measured at fair value through profit or loss
The Company classifies the financial assets other than those measured at amortised cost and measured at fair
value through other comprehensive income as financial assets measured at fair value through profit or loss.Upon initial recognition the Company irrevocably designates certain financial assets that are required to be
measured at amortised cost or at fair value through other comprehensive income as financial assets measured
at fair value through profit or loss in order to eliminate or significantly reduce accounting mismatch.Upon initial recognition such financial assets are measured at fair value. Except for those held for hedging
purposes gains or losses (including interests and dividend income) arising from such financial assets are
recognised in the profit or loss for the current period.The business model for managing financial assets refers to how the Company manages its financial assets
in order to generate cash flows. That is the Company’s business model determines whether cash flows will
result from collecting contractual cash flows selling financial assets or both. The Company determines the
business model for managing financial assets on the basis of objective facts and specific business objectives
for managing financial assets determined by key management personnel.The Company assesses the characteristics of the contractual cash flows of financial assets to determine
whether the contractual cash flows generated by the relevant financial assets on a specific date are solely
payments of principal and interest on the principal amount outstanding. The principal refers to the fair value
of the financial assets at the initial recognition. Interest includes consideration for the time value of money for
the credit risk associated with the principal amount outstanding during a particular period of time and for other
basic lending risks costs and profits. In addition the Company evaluates the contractual terms that may result
in a change in the time distribution or amount of contractual cash flows from a financial asset to determine
whether it meets the requirements of the above contractual cash flow characteristics.All affected financial assets are reclassified on the first day of the first reporting period following the change in
the business model where the Company changes its business model for managing financial assets; otherwise
financial assets shall not be reclassified after initial recognition.
2025 ANNUAL REPORT 185X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(3) Classification and measurement of financial liabilities
At initial recognition financial liabilities of the Company are classified as financial liabilities measured at fair
value through profit or loss and financial liabilities measured at amortised cost. For financial liabilities not
classified as measured at fair value through profit or loss relevant transaction costs are included in the amount
initially recognised.Financial liabilities measured at fair value through profit or loss
Financial liabilities measured at fair value through profit or loss comprise held-for-trading financial liabilities and
financial liabilities designated at fair value through profit or loss upon initial recognition. Such financial liabilities
are subsequently measured at fair value and the gains or losses from the change in fair value and the dividend
or interest expenses related to the financial liabilities are included in the profit or loss of the current period.Financial liabilities measured at amortised cost
Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method
and the gains or losses arising from derecognition or amortisation are recognised in profit or loss for the current
period.Financial guarantee contracts
Financial guarantee contracts that are not designated as financial liabilities measured at fair value through profit
or loss are initially measured at fair value. Subsequently they are measured at the higher of the loss allowance
determined using the expected credit loss model and the balance of the initial recognition amount less
cumulative amortisation.
186 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(3) Classification and measurement of financial liabilities (Continued)
Classification between financial liabilities and equity instruments
A financial liability is a liability if:
* it has a contractual obligation to pay in cash or other financial assets to other parties.* it has a contractual obligation to exchange financial assets or financial liabilities under potential adverse
condition with other parties.* it is a non-derivative instrument contract which will or may be settled with the entity’s own equity
instruments and the entity will deliver a variable number of its own equity instruments according to such
contract.* it is a derivative instrument contract which will or may be settled with the entity’s own equity instruments
except for a derivative instrument contract that exchanges a fixed amount of cash or other financial asset
with a fixed number of its own equity instruments.Equity instruments are any contract that evidences a residual interest in the assets of an entity after deducting
all of its liabilities.If the Company cannot unconditionally avoid the performance of a contractual obligation by paying cash or
delivering other financial assets the contractual obligation meets the definition of financial liabilities.Where a financial instrument must or may be settled with the Company’s own equity instruments the
Company’s own equity instruments used to settle such instrument should be considered as to whether it is as
a substitute for cash or other financial assets or for the purpose of enabling the holder of the instrument to be
entitled to the remaining interest in the assets of the issuer after deducting all of its liabilities. For the former it is
a financial liability of the Company; for the latter it is the Company’s own equity instruments.
(4) Fair value of financial instruments
The methods for determining the fair value of the financial assets or financial liabilities are set out in Note V. 12.
2025 ANNUAL REPORT 187X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(5) Impairment of financial assets
The Company makes provision for impairment based on expected credit losses (ECLs) on the following items:
Financial assets measured at amortised cost;
Receivables and investment in debt instruments measured at fair value through other comprehensive income;
Contract assets as defined in the Accounting Standards for Business Enterprises No. 14 – Revenue;
Lease receivables;
Financial guarantee contracts (except those measured at fair value through profit or loss or formed by
continuing involvement of transferred financial assets or the transfer does not qualify for derecognition).Measurement of ECLs
ECLs are the weighted average of credit losses of financial instruments weighted by the risk of default. Credit
losses refer to the difference between all contractual cash flows receivable according to the contract and
discounted according to the original effective interest rate and all cash flows expected to be received i.e. the
present value of all cash shortages.The Company takes into account reasonable and well-founded information such as past events current
conditions and forecasts of future economic conditions and calculates the probability-weighted amount of
the present value of the difference between the cash flows receivable from the contract and the cash flows
expected to be received weighted by the risk of default.The Company measures ECLs of financial instruments at different stages. If the credit risk of the financial
instrument did not increase significantly upon initial recognition it is at the first stage and the Company makes
provision for impairment based on the ECLs within the next 12 months; if the credit risk of a financial instrument
increased significantly upon initial recognition but has not yet incurred credit impairment it is at the second
stage and the Company makes provision for impairment based on the lifetime ECLs of the instrument; if the
financial instrument incurred credit impairment upon initial recognition it is at the third stage and the Company
makes provision for impairment based on the lifetime ECLs of the instrument.For financial instruments with low credit risk on the balance sheet date the Company assumes that the credit
risk did not increase significantly upon initial recognition and makes provision for impairment based on the
ECLs within the next 12 months.Lifetime ECLs represent the ECLs resulting from all possible default events over the expected life of a financial
instrument. The 12-month ECLs are the ECLs resulting from possible default events on a financial instrument
within 12 months (or a shorter period if the expected life of the financial instrument is less than 12 months) after
the balance sheet date and is a portion of lifetime ECLs.The maximum period to be considered when estimating ECLs is the maximum contractual period over which
the Company is exposed to credit risk including renewal options.
188 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(5) Impairment of financial assets (Continued)
Measurement of ECLs (Continued)
For the financial instruments at the first and second stages and with low credit risks the Company calculates
the interest income based on the book balance and the effective interest rate before deducting the impairment
provisions. For financial instruments at the third stage interest income is calculated based on the amortised
cost after deducting impairment provisions made from the book balance and the effective interest rate.For receivables such as bills receivable accounts receivable accounts receivable financing other receivables
and contract assets if the credit risk characteristics of a customer are significantly different from other
customers in the portfolio or the credit risk characteristics of such customer change significantly the Company
will make a separate provision for bad debts for such receivables. In addition to the receivables for which bad
debt provisions are made individually the Company divides the receivables into portfolios based on credit risk
characteristics and calculates bad debt provisions on a combined basis.Bills receivable and accounts receivable
For bills receivable and accounts receivable regardless of whether there is a significant financing component
the Company always makes provision for impairment at an amount equal to lifetime ECLs.When the Company is unable to assess the information of ECLs for an individual financial asset or contract
assets at a reasonable cost it classifies bills receivable accounts receivable and contract assets into portfolios
based on the credit risk characteristics and calculates the ECLs on a portfolio basis. The basis for determining
the portfolios is as follows:
A. Bills receivable
Bills receivable portfolio 1: Bank acceptance bills
Bills receivable portfolio 2: Commercial acceptance bills
B. Accounts receivable
Accounts receivable portfolio 1: Due from related party customers
Accounts receivable portfolio 2: Due from non-related party customers
Accounts receivable portfolio 3: Factoring receivables
2025 ANNUAL REPORT 189X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(5) Impairment of financial assets (Continued)
Bills receivable and accounts receivable (Continued)
For bills receivable classified as a portfolio the Company refers to the historical credit loss experience
combined with the current situation and the forecast of future economic conditions to calculate the ECLs based
on default risk exposure and lifetime ECL rate.For accounts receivable classified as a portfolio the Company refers to the historical credit loss experience
combined with the current situation and the forecast of future economic conditions to prepare a comparison
table of the ageing of accounts receivable and the lifetime ECL rate to calculate the ECLs. The aging of
accounts receivable is calculated from the date of recognition.Other receivables
The Company classifies other receivables into portfolios based on credit risk characteristics and calculates the
ECLs on a portfolio basis. The basis for determining the portfolios is as follows:
Other receivables portfolio 1: Amount due from government authorities
Other receivables portfolio 2: Amount due from related parties
Other receivables portfolio 3: Other receivables
For other receivables classified as a portfolio the Company calculates the ECLs based on default risk exposure
and the ECL rate over the next 12 months or the entire lifetime. For other receivables grouped by aging the
aging is calculated from the date of recognition.Long-term receivables
The Company’s long-term receivables include finance lease receivables warranty deposits receivable and
instalment receivable for asset transfers.
190 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(5) Impairment of financial assets (Continued)
Long-term receivables (Continued)
The Company classifies the finance lease receivables and warranty deposits receivable into portfolios based
on the credit risk characteristics and calculates the ECLs on a portfolio basis. The basis for determining the
portfolios is as follows:
A. Finance lease receivables
Finance lease receivables portfolio 1: Receivables not past due
Finance lease receivables portfolio 2: Overdue receivables
B. Other long-term receivables
Other long-term receivables portfolio 1: Warranty deposits receivable
Other long-term receivables portfolio 2: Sublease receivable for woodland
Other long-term receivables portfolio 3: Equity transfer receivables
Other long-term receivables portfolio 4: Debt transfer receivables
For finance lease receivables warranty deposits receivable and instalment receivable for asset transfers the
Company refers to the historical credit loss experience combined with the current situation and the forecast of
future economic conditions and calculates the ECLs based on default risk exposure and lifetime ECL rate.Except for those of finance lease receivables warranty deposits receivable and instalment receivable for asset
transfers the ECLs of other receivables and long-term receivables classified as a portfolio are measured based
on default risk exposure and ECL rate over the next 12 months or the entire lifetime.Debt investments and other debt investments
For debt investments and other debt investments the Company measures the ECLs based on the nature of the
investment the types of counterparty and risk exposure and default risk exposure and ECL rate within the next
12 months or the entire lifetime.
2025 ANNUAL REPORT 191X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(5) Impairment of financial assets (Continued)
Assessment of significant increase in credit risk
In assessing whether the credit risk of a financial instrument has increased significantly upon initial recognition
the Company compares the risk of default of the financial instrument at the balance sheet date with that at the
date of initial recognition to determine the relative change in risk of default within the expected lifetime of the
financial instrument.In determining whether the credit risk has increased significantly upon initial recognition the Company considers
reasonable and well-founded information including forward-looking information which can be obtained without
unnecessary extra costs or efforts. Information considered by the Company includes:
The debtor’s failure to make payments of principal and interest on their contractually due dates;
An actual or expected significant deterioration in a financial instrument’s external or internal credit rating (if any);
An actual or expected significant deterioration in the operating results of the debtor;
Existing or expected changes in the technological market economic or legal environment that have a significant
adverse effect on the debtor’s ability to meet its obligation to the Company.Depending on the nature of the financial instruments the Company assesses whether there has been a
significant increase in credit risk on either an individual basis or a collective basis. When the assessment is
performed on a collective basis the financial instruments are grouped based on their common credit risk
characteristics such as past due information and credit risk ratings.The Company determines that the credit risk on a financial asset has increased significantly if it is more than 30
days past due.Credit-impaired financial assets
At balance sheet date the Company assesses whether financial assets measured at amortised cost and debt
investments measured at fair value through other comprehensive income are credit-impaired. A financial asset
is credit-impaired when one or more events that have an adverse effect on the estimated future cash flows
of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following
observable events:
Significant financial difficulty of the issuer or debtor;
A breach of contract by the debtor such as a default or delinquency in interest or principal payments;
192 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(5) Impairment of financial assets (Continued)
Credit-impaired financial assets (Continued)
For economic or contractual reasons relating to the debtor’s financial difficulty the Company having granted to
the debtor a concession that would not otherwise consider;
It becoming probable that the debtor will enter bankruptcy or other financial reorganisation;
The disappearance of an active market for that financial asset because of financial difficulties of the issuer or
debtor.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 are
deducted from the carrying amount of the financial assets presented in the balance sheet; for debt investments
at fair value through other comprehensive income the Company makes provisions of impairment in other
comprehensive income without reducing the carrying amount of the financial asset.Write-offs
The book balance of a financial asset is directly written off to the extent that there is no realistic prospect of
recovery of the contractual cash flows of the financial asset (either partially or in full). Such write-off constitutes
derecognition of such financial asset. This is generally the case when the Company determines that the debtor
does not have assets or sources of income that could generate sufficient cash flows to repay the amounts
subject to the write-off. However financial assets that are written off could still be subject to enforcement
activities in order to comply with the Company’s procedures for recovery of amounts due.If a write-off of financial assets is subsequently recovered the recovery is credited to profit or loss in the period
in which the recovery occurs.
2025 ANNUAL REPORT 193X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(6) Transfer of financial assets
Transfer of financial assets refers to the transfer or delivery of financial assets to another party other than the
issuer of such financial assets (the transferee).If the Company transfers substantially all the risks and rewards of ownership of the financial asset to the
transferee the financial asset shall be derecognised. If the Company retains substantially all the risks and
rewards of ownership of a financial asset the financial asset shall not be derecognised.If the Company neither transfers nor retains substantially all the risks and rewards of ownership of the financial
asset it accounts for the transaction as follows: if the Company does not retain control it derecognises the
financial asset and recognises any resulting assets or liabilities; if the control over the financial asset is not
waived the relevant financial asset is recognised according to the extent of its continuing involvement in the
transferred financial asset and the relevant liability is recognised accordingly.
(7) Offset of financial assets and financial liabilities
If the Company owns the legitimate rights of offsetting the recognised financial assets and financial liabilities
which are enforceable currently and the Company plans to realise the financial assets or to clear off the
financial liabilities on a net amount basis or simultaneously the net amount of financial assets and financial
liabilities shall be presented in the balance sheet upon offsetting. Otherwise financial assets and financial
liabilities are presented separately in the balance sheet without offsetting.
12. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.The Company measures the relevant asset and liability at fair value based on the presumption that the orderly
transaction to sell the asset or transfer the liability takes place either in the principal market for the relevant asset or
liability or in the absence of a principal market in the most advantageous market for relevant the asset or liability. The
principal or the most advantageous market must be a trading market accessible by the Company at the measurement
date. The Company adopts the presumption that market participants would use when pricing the asset or liability in
their best economic interest.If there exists an active market for a financial asset or financial liability the Company uses the quotation on the active
market as its fair value. If the market for a financial instrument is inactive the Company uses valuation technique to
recognise its fair value.Fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic
benefits by using the asset in its best use or by selling it to another market participant that would use the asset in its
best use.The Company adopts valuation techniques that are appropriate in the current circumstance and for which sufficient
data and other information are available prioritises the use of relevant observable inputs and uses unobservable
inputs only under the circumstances where such relevant observable inputs cannot be obtained or practicably
obtained.
194 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
12. Fair value measurement (Continued)
Assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within
the fair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole.Level 1: based on quoted prices (unadjusted) in active markets for identical assets or liabilities obtainable at the
measurement date. Level 2: observable inputs for the relevant asset or liability either directly or indirectly except for
Level 1 input. Level 3: unobservable inputs for the relevant assets or liability.At each balance sheet date the Company reassesses assets and liabilities measured at fair value that are recognised
in the financial statements on a recurring basis to determine whether transfers have occurred between fair value
measurement hierarchy levels.
13. Inventories
(1) Classification of inventories
Inventories of the Company mainly include raw materials work in progress goods in stock development
products and consumable biological assets etc.
(2) Pricing of inventories dispatched
Inventories of the Company are measured at their actual cost when obtained. Cost of raw materials goods in
stock and others will be calculated with weighted average method when being dispatched.Consumable biological assets refer to biological assets held-for-sale which include growing timber. Consumable
biological assets without a stock are stated at historical cost at initial recognition and subsequently measured
at fair value when there is a stock. Changes in fair values shall be recognised as profit or loss in the current
period. The cost of self-planting self-cultivating consumable biological assets is the necessary expenses
directly attributable to such assets prior to canopy closure including borrowing costs eligible for capitalisation.Subsequent expenses such as maintenance cost incurred after canopy closure shall be included in profit or loss
for the current period.The cost of consumable biological assets shall at the time of harvest or disposal be carried forward at carrying
amount using the stock volume proportion method.
(3) Recognition of and provision for inventory impairment
At the balance sheet date inventories are measured at the lower of cost and net realisable value. If the net
realisable value is below the cost of inventories a provision for inventory impairment is made.Net realisable value refers to the amount of the estimated price of inventories less the estimated cost
incurred upon completion estimated sales expenses and taxes and levies. The realisable value of inventories
shall be determined on the basis of definite evidence purpose of holding the inventories and effect of
after-balance-sheet date events.The Company usually makes provisions for inventory impairment on the basis of individual inventory items;
however for inventories with large quantities and lower unit prices these inventories are accrued impairment
according to inventory categories.
2025 ANNUAL REPORT 195X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
13. Inventories (Continued)
(4) Inventory stock taking system
The Company implements permanent inventory system as its inventory stock taking system.
(5) Amortisation of low-value consumables and packaging materials
The low-value consumables of the Company are amortised when issued for use.Packaging materials for turnover are amortised when issued for use.
14. Long-term equity investments
Long-term equity investments include the equity investments in subsidiaries joint ventures and associates. Associates
of the Company are those investees that the Company imposes significant influence over.
(1) Determination of initial investment cost
Long-term equity investments acquired through business combinations: for a long-term equity investment
acquired through a business combination involving enterprises under common control the investment cost shall
be the absorbing party’s share of the carrying amount of the owners’ equity under the consolidated financial
statements of the ultimate controlling party on the date of combination. For a long-term equity investment
acquired through a business combination involving enterprises not under common control the investment cost
of the long-term equity investment shall be the cost of combination.Long-term equity investments acquired through other means: for a long-term equity investment acquired
by cash payment the initial investment cost shall be the purchase cost actually paid; for a long-term equity
investment acquired by issuing equity securities the initial investment cost shall be the fair value of equity
securities issued.
(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.
196 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
14. Long-term equity investments (Continued)
(2) Subsequent measurement and method for profit or loss recognition (Continued)
For a long-term equity investment accounted for using the equity method where the initial investment cost
exceeds the investor’s interest in the fair value of the investee’s identifiable net assets at the acquisition date
no adjustment shall be made to the investment cost of the long-term equity investment. Where the initial
investment cost is less than the investor’s interest in the fair value of the investee’s identifiable net assets at the
acquisition date adjustment shall be made to the carrying amount of the long-term equity investment and the
difference shall be charged to profit or loss for the current period.Under the equity method investment gain and other comprehensive income shall be recognised based on
the Company’s share of the net profits or losses and other comprehensive income made by the investee
respectively. Meanwhile the carrying amount of long-term equity investment shall be adjusted. The carrying
amount of long-term equity investment shall be reduced based on the Group’s share of profit or cash dividend
distributed by the investee. In respect of the other movement of net profit or loss other comprehensive income
and profit distribution of investee the carrying amount of long-term equity investment shall be adjusted and
included in the capital reserves (other capital reserves). The Group shall recognise its share of the investee’s net
profits or losses based on the fair values of the investee’s individual separately identifiable assets at the time of
acquisition after making appropriate adjustments thereto according to the accounting policies and accounting
periods of the Company.For additional equity investment made in order to obtain significant influence or common control over investee
without resulted in control the initial investment cost under the equity method shall be the aggregate of
fair value of previously held equity investment and additional investment cost on the date of transfer. For
investments in non-trading equity instruments that were previously classified as at fair value through other
comprehensive income the cumulative fair value changes associated with them that were previously included
in other comprehensive income are transferred to retained earnings upon the change to the equity method of
accounting.In the event of loss of common control or significant influence over investee due to partial disposal of equity
investment the remaining equity interest after disposal shall be accounted for according to the Accounting
Standard for Business Enterprises No. 22 – Recognition and measurement of Financial Instruments. The
difference between its fair value and carrying amount shall be included in profit or loss for the current period. In
respect of other comprehensive income recognised under previous equity investment using equity method it
shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or
liability by investee at the time when equity method was ceased to be used. Movement of other owners’ equity
related to the previous equity investment shall be transferred to profit or loss for the current period.
2025 ANNUAL REPORT 197X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
14. Long-term equity investments (Continued)
(2) Subsequent measurement and method for profit or loss recognition (Continued)
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 Company is reduced due to the capital increase of other investors and as a
result the Company loses the control of but still can apply common control or impose significant influence over
the investee the net asset increase due to the capital increase of the investee attributable to the Company shall
be recognised according to the new shareholding ratio and the difference with the original carrying amount of
the long-term equity investment corresponding to the shareholding ratio reduction part that should be carried
forward shall be recorded in the profit or loss for the current period; and then it shall be adjusted according to
the new shareholding ratio as if equity method is used for accounting when acquiring the investment.In respect of the transactions between the Company and its associates and joint ventures the share of
unrealised gain or loss arising from internal transactions shall be eliminated by the portion attributable to the
Company. Investment gain or loss shall be recognised accordingly. However any unrealised loss arising from
internal transactions between the Company and an investee is not eliminated to the extent that the loss is
impairment loss of the transferred assets.
(3) Basis for determining the common control and significant influence on the investee
Common control is the contractually agreed sharing of control over an arrangement which relevant activities
of such arrangement must be decided by unanimously agreement from parties who share control. When
determining if there is any common control it should first be identified if the arrangement is controlled by
all the participants or the group consisting of the participants and then determined if the decision on the
arranged activity can be made only with the unanimous consent of the participants sharing the control. If all the
participants or a group of participants can only decide the relevant activities of certain arrangement through
concerted action it can be considered that all the participants or a group of participants share common
control on the arrangement. If there are two or more participant groups that can collectively control certain
arrangement it does not constitute common control. When determining if there is any common control the
relevant protection rights will not be taken into account.Significant influence is the power of the investor to participate in the financial and operating policy decisions
of an investee but to fail to control or joint control the formulation of such policies together with other parties.When determining if there is any significant influence on the investee the influence of the voting shares of the
investee held by the investor directly and indirectly and the potential voting rights held by the investor and
other parties which are exercisable in the current period and converted to the equity of the investee including
the warrants stock options and convertible bonds that are issued by the investee and can be converted in the
current period shall be taken into account.
198 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
14. Long-term equity investments (Continued)
(3) Basis for determining the common control and significant influence on the investee (Continued)
When the Company holds directly or indirectly through the subsidiary 20% (inclusive) to 50% of the voting
shares of the investee it is generally considered to have significant influence on the investee unless there
is concrete evidence to prove that it cannot participate in the production and operation decision-making of
the investee and cannot pose significant influence in this situation. When the Company owns less than 20%
(exclusive) of the voting shares of the investee it is generally considered that it has not significantly influenced
on the investee unless there is concrete evidence to prove that it can participate in the production and
operation decision-making of the investee and can impose significant influence in this situation.
(4) Impairment test method and impairment provision
For the method for making impairment provision for the investment in subsidiaries associates and joint
ventures please refer to Note V. 23.
15. Investment property
Investment property refers to real estate held to earn rentals or for capital appreciation or both. The investment
property of the Company includes leased land use rights land use rights held for sale after appreciation and leased
buildings.The investment property of the Company is measured initially at cost upon acquisition and subject to depreciation or
amortisation in the relevant periods according to the relevant provisions on fixed assets or intangible assets.For the method for making impairment provision for the investment property adopted cost method for subsequent
measurement please refer to Note V. 23.When an investment property is sold transferred retired or damaged the amount of proceeds on disposal of the
property net of the carrying amount and related tax and surcharges is recognised in profit or loss for the current
period.
16. Fixed assets
(1) Conditions for recognition of fixed assets
Fixed assets represent the tangible assets held by the Company using in the production of goods rendering of
services and for operation and administrative purposes with useful life over one year.Fixed assets are recognised when it is probable that the related economic benefits will flow to the Company and
the costs can be reliably measured.The Company’s fixed assets are initially measured at the actual cost at the time of acquisition.Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probable
that the associated economic benefits will flow to the Company and the related cost can be reliably measured.The cost of routine repairs of fixed assets that do not qualify as capitalised subsequent expenditure is charged
to current profit or loss or included in the cost of the related assets in accordance with the beneficiary object
when incurred. The carrying amount of the replaced part is derecognised.
2025 ANNUAL REPORT 199X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
16. Fixed assets (Continued)
(2) Depreciation method of fixed assets
The Company adopts the straight-line method for depreciation. Provision for depreciation will be started
when the fixed asset reaches its expected usable state and stopped when the fixed asset is derecognised
or classified as a non-current asset held for sale. Without regard to the depreciation provision the Company
determines the annual depreciation rate by category estimated useful lives and estimated residual value of the
fixed assets as below:
Annual depreciation
Category Useful life (year) Residual value (%) rate (%)
Housing and building structure 20-40 5-10 2.25-4.75
Machinery and equipment 8-20 5-10 4.50-11.88
Transportation equipment 5-8 5-10 11.25-19.00
Electronic equipment and others 5 5-10 18.00-19.00
Where for the fixed assets for which impairment provision is made to determine the depreciation rate the
accumulated amount of the fixed asset impairment provision that has been made shall be deducted.
(3) The impairment test method and impairment provision method of the fixed assets are set out in Note V. 23.
(4) The Company will review the useful lives estimated net residual value and depreciation method of the fixed
assets at the end of each year.When there is any difference between the useful lives estimate and the originally estimated value the useful
lives of the fixed asset shall be adjusted. When there is any difference between the estimated net residual value
estimate and the originally estimated value the estimated net residual value shall be adjusted.
(5) Disposal of fixed assets
A fixed asset is derecognised on disposal or when it is expected that there shall be no economic benefit arising
from using or after disposal. Where the fixed assets are sold transferred retired or damaged the income
received after disposal after deducting the carrying amount and related taxes are recognised in profit or loss for
the current period.
200 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
17. Construction in progress
Construction in progress of the Company is recognised based on the actual construction cost including all necessary
expenditures incurred for construction projects capitalised borrowing costs for the construction in progress before it
has reached the working condition for its intended use and other related expenses during the construction period.A construction in progress is reclassified to fixed assets when it has reached the working condition for its intended
use. For technological transformation or new machine-made paper projects the projects will be put into trial operation
for a period of time (usually three months) upon completion of construction. After the internal acceptance is completed
during the trial operation period the construction in progress will be transferred to fixed assets.The method for impairment provision of construction in progress is set out in Note V. 23.
18. Materials for project
The materials for project of the Group refer to various materials prepared for construction in progress including
construction materials equipment not yet installed and tools for production.The purchased materials for project are measured at cost and the planning materials for project are transferred to
construction in progress. After the completion of the project the remaining materials for project are transferred to
inventory.The method for impairment provision of materials for project is set out in Note V. 23.The closing balance of materials for project is presented as “construction in progress” item in the balance sheet.
19. Borrowing costs
(1) Recognition principle for the capitalisation of the borrowing costs
The borrowing costs incurred by the Company directly attributable to the acquisition construction or production
of a qualifying asset will be capitalised and included in the cost of relevant asset. Other borrowing costs will be
recognised as expenses when incurred according to the incurred amount and included in the profit or loss for
the current period. When the borrowing costs meet all the following conditions capitalisation shall be started:
* The capital expenditure has been incurred which includes the expenditure incurred by paying cash
transferring non-cash assets or undertaking interest-bearing liabilities for acquiring constructing or
producing the qualifying assets;
* the borrowing costs have been incurred; and
* the acquisition construction or production activity necessary for the asset to be ready for its intended use
or sale has been started.
2025 ANNUAL REPORT 201X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
19. Borrowing costs (Continued)
(2) Capitalisation period of borrowing costs
When a qualifying asset acquired constructed or produced by the Company is ready for its intended use or
sale the capitalisation of the borrowing costs shall discontinue. The borrowing costs incurred after a qualifying
asset is ready for its intended use or sale shall be recognised as expenses when incurred according to the
incurred amount and included in the profit or loss for the current period.Capitalisation of borrowing costs shall be suspended during periods in which the acquisition construction or
production of a qualifying asset is interrupted abnormally when the interruption is for a continuous period of
more than 3 months. The capitalisation of the borrowing costs shall be continued in the normal interruption
period.
(3) Calculation methods for capitalisation rate and capitalised amount of the borrowing costs
Where funds are borrowed for a specific purpose the amount of interest to be capitalised shall be the actual
interest expense incurred on that borrowing for the period less any bank interest earned from depositing the
borrowed funds before being used into banks or any investment income on the temporary investment of those
funds. Where funds are borrowed for general purpose the Company shall determine the amount of interest
to be capitalised on such borrowings by applying a capitalisation rate to the weighted average of the excess
amounts of cumulative expenditures on the asset over and above the amounts of specific-purpose borrowings.The capitalisation rate shall be the weighted average of the interest rates applicable to the general-purpose
borrowings.During the capitalisation period exchange differences on a specific purpose borrowing denominated in foreign
currency shall be capitalised. Exchange differences related to general-purpose borrowings denominated in
foreign currency shall be included in profit or loss for the current period.
20. Bearer biological assets
(1) Standards for recognising bearer biological assets
Bearer biological assets refer to biological assets held for the purpose of producing agricultural products
providing labour services or renting. The Company’s bearer biological assets are mainly tea trees. Bearer
biological assets are initially measured at cost. The cost of a planted or propagated bearer biological asset
includes the expenses directly attributable to the asset and necessarily incurred before the asset is ready for its
intended production and operation including the borrowing costs that are eligible for capitalisation.The management protection and feeding costs of a biological asset subsequent to crown closure or after
the asset is ready for its intended production and operation are expensed and recognised in profit or loss as
incurred. According to experience the tea trees grown by the Company generally take 7 years to reach the
crown closure stage.Depreciation of bearer biological assets is calculated using the straight-line method over the estimated useful
life of each biological asset less its residual value as follows:
Type of bearer biological Annual depreciation
assets Useful life (year) Residual value (%) rate (%)
Tea tree 20 5.00
202 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
20. Bearer biological assets (Continued)
(1) Standards for recognising bearer biological assets (Continued)
The Company reviews the useful life and estimated net residual value of a bearer biological asset and the
depreciation method applied at least at each financial year-end. A change in the useful life or estimated
net residual value of a fixed asset or the depreciation method used shall be accounted for as a change in
accounting estimate.The difference between the disposal income of the sale loss death or damage of a bearer biological asset net
of its carrying amount and related taxes is recognised in profit or loss for the current period.
(2) Treatment of impairment of bearer biological assets
The method for impairment provision of bearer biological assets is set out in Note V. 23.
21. Intangible assets
The intangible assets of the Company include land use rights software patents and certificates of third party right.The intangible asset is initially measured at cost and its useful life is determined upon acquisition. If the useful life
is finite the intangible asset will be amortised over the estimated useful life using the amortisation method that
can reflect the estimated realisation of the economic benefits related to the asset starting from the time when it is
available for use. If it is unable to reliably determine the estimated realisation straight-line method shall be adopted
for amortisation.The intangible assets with uncertain useful life will not be amortised. The amortisation methods for the intangible
assets with finite useful life are as follows:
The basis for
Category Useful life determining useful life Method of amortisation Remark
Land use rights 50-70 Years of certificate Straight-line method
Software 5-10 Estimated years for Straight-line method
software replacement
Patents 5-20 Useful life of purchase Straight-line method
Certificates of third party right 3 Useful life of purchase Straight-line method
The Company reviews the useful life and amortisation method of the intangible assets with finite useful life at the end
of each year. If it is different from the previous estimates the original estimates will be adjusted and will be treated as
a change in accounting estimate.If it is estimated on the balance sheet date that certain intangible asset can no longer bring future economic benefit
to the company the carrying amount of the intangible asset will be entirely transferred into the profit or loss for the
current period.The impairment method for the intangible assets is set out in Note V. 23.
2025 ANNUAL REPORT 203X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
22. R&D expenses
The R&D expenses of the Company are expenses directly related to the R&D activities of the Company including the
wages R&D staff direct investment costs depreciation expenses and long-term prepaid expenses design expenses
equipment testing expenses amortisation expenses of intangible assets and outsourced R&D expenses and other
expenses. Among them the wages of R&D staff are included in R&D expenses based on working hours of related
projects. Equipment production lines and sites shared between R&D activities and other production and operation
activities are included in R&D expenses according to the proportion of working hours and the proportion of area.The Company divides the expenses on internal R&D projects into expenses in the research phase and expenses in
the development phase.Expenses in the research phase are recognised in profit or loss when incurred.Expenses in the development phase will only be capitalised if they meet all of the following conditions: it is technically
feasible to complete the intangible asset for use or sale; there is an intention to complete and use or sell the intangible
asset; the intangible asset will generate economic benefits including demonstrating that there is a market for the
products produced using the intangible asset or for the intangible asset itself and if the intangible asset is to be
used internally its usefulness can be demonstrated; there are sufficient technical financial and other resources to
support the completion of the development of the intangible asset and the ability to use or sell the intangible asset;
the expenses attributable to the development phase of the intangible asset can be reliably measured. Development
expenses that do not meet the above conditions are included in profit or loss for the period.After meeting the above conditions and passing the technical feasibility and economic feasibility studies to become
a formal project the Company’s research and development project will enter the development phase. Capitalised
expenses in the development phase are presented as development expenses on the balance sheet and are
transferred to intangible assets from the date the project is put to its intended use. All R&D expenses of the Company
are included in the current profits and losses when incurred.
23. Asset impairment
Impairment of long-term equity investments in subsidiaries associates and joint ventures asset impairment on
investment property fixed assets construction in progress bearer biological assets measured at cost right-of-use
assets intangible assets goodwill and others (excluding inventories deferred tax assets and financial assets)
subsequently measured at cost is determined as follows:
The Company determines if there is any indication of asset impairment as at the balance sheet date. If there is any
evidence indicating that an asset may be impaired recoverable amount shall be estimated for impairment test.Goodwill arising from business combinations intangible assets with an indefinite useful life and intangible assets
not ready for intended use will be tested for impairment annually regardless of whether there is any indication of
impairment.
204 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
23. Asset impairment (Continued)
The recoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of the
future cash flows expected to be derived from the asset. The Company estimates the recoverable amount of an
individual asset. If it is not possible to estimate the recoverable amount of the individual asset the Company shall
determine the recoverable amount of the asset group to which the asset belongs. The determination of an asset group
is based on whether major cash inflows generated by the asset group are independent of the cash inflows from other
assets or asset groups.When the recoverable amount of an asset or an asset group is less than its carrying amount the carrying amount is
reduced to its recoverable amount. The reduction amount is charged to profit or loss and an impairment provision is
made accordingly.For the purpose of impairment test of goodwill the carrying amount of goodwill acquired in a business combination is
allocated to the relevant asset groups on a reasonable basis from the acquisition date; where it is difficult to allocate
to the related asset groups it is allocated to the combination of related asset groups. The related asset groups or
combination of asset groups are those which can benefit from the synergies of the business combination and are not
larger than the reportable segments identified by the Company.In the impairment test if there is any indication that an asset group or a combination of asset groups related to
goodwill may be impaired the Company first tests the asset group or set of asset groups excluding goodwill for
impairment calculates the recoverable amount and recognises the corresponding impairment loss. An impairment test
is then carried out on the asset group or combination of asset groups containing goodwill by comparing its carrying
amount with its recoverable amount. If the recoverable amount is lower than the carrying amount an impairment loss
is recognised for goodwill.An impairment loss recognised shall not be reversed in a subsequent period.
24. Long-term prepaid expenses
The long-term prepaid expenses incurred by the Company shall be recognised based on the actual cost and evenly
amortised over the estimated benefit period. For the long-term prepaid expense that cannot benefit the subsequent
accounting periods its value after amortisation shall be entirely included in the profit or loss for the current period.
2025 ANNUAL REPORT 205X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
25. Employee benefits
(1) Scope of employee benefits
Employee benefits are all forms of considerations or compensation given by an enterprise in exchange for
services rendered by employees or for the termination of employment. Employee benefits include short-term
staff remuneration post-employment benefits termination benefits and other long-term employee benefits.Employee benefits include benefits provided to employees’ spouses children other dependants survivors of
the deceased employees or other beneficiaries.Employee benefits are presented as “employee benefits payable” and “long-term employee benefits payable” in
the balance sheet respectively according to liquidity.
(2) Short-term staff remuneration
Employee wages 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.
(3) Post-employment benefits
Post-employment benefit plans include defined contribution plans and defined benefit plans. A defined
contribution plan is a post-employment benefit plan under which the Company pays fixed contributions
into a separate fund and the Company has no further obligations for payment. A defined benefit plan is a
post-employment benefit plan other than a defined contribution plan.Defined contribution plans
Defined contribution plans include basic pension insurance and unemployment insurance.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.
(4) Termination benefits
When the Company provides termination benefits to employees employee benefits liabilities arising from
termination benefits are recognised in profit or loss for the current period at the earlier of the following dates:
when the Company cannot revoke unilaterally compensation for dismissal due to the cancellation of labour
relationship plans and employee redundant proposals; the Company recognises cost and expenses related to
payment of compensation for dismissal and restructuring.For the early retirement plans economic compensations before the actual retirement date were classified as
termination benefits. During the period from the date of cease of render of services to the actual retirement
date relevant wages and contribution to social insurance for the employees proposed to be paid are recognised
in profit or loss on a one-off basis. Economic compensation after the official retirement date such as normal
pension is accounted for as post-employment benefits.
206 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
25. Employee benefits (Continued)
(5) Other long-term benefits
Other long-term employee benefits provided by the Group to employees that meet the conditions for defined
contribution plans are accounted for in accordance with the relevant provisions relating to defined contribution
plans as stated above. If the conditions for defined benefit plans are met the benefits shall be accounted forin accordance with the relevant provisions relating to defined benefit plans but the “changes arising from theremeasurement of net liabilities or net assets of defined benefit plans” in the relevant employee benefits shall be
included in the current profit and loss or the relevant costs of assets.
26. Provisions
Obligations pertinent to the contingencies which satisfy the following conditions are recognised by the Company as
provisions:
(1) the obligation is a current obligation borne by the Company;
(2) it is likely that an outflow of economic benefits from the Company will be resulted from the performance of the
obligation;
(3) the amount of the obligation can be reliably measured.
The provisions shall be initially measured based on the best estimate for the expenditure required for the
performance of the current obligation after taking into account relevant risks uncertainties time value of
money and other factors pertinent to the contingencies. If the time value of money has significant influence the
best estimates shall be determined after discounting the relevant future cash outflow. The Company reviews
the carrying amount of the provisions on the balance sheet date and adjust the carrying amount to reflect the
current best estimates.If all or some expenses incurred for settlement of recognised provisions are expected to be borne by the
third party the compensation amount shall on a recoverable basis be recognised as asset separately and
compensation amount recognised shall not be more than the carrying amount of provisions.
27. Revenue
(1) General principles
The Company recognises revenue when it satisfies a performance obligation in the contract i.e. when the
customer obtains control of the relevant goods or services.Where a contract has two or more performance obligations the Company on the commencement date of the
contract 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.
2025 ANNUAL REPORT 207X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
27. Revenue (Continued)
(1) General principles (Continued)
If one of the following conditions is fulfilled the Company performs its performance obligation within a certain
period; otherwise it performs its performance obligation at a point of time:
* when the customer simultaneously receives and consumes the economic benefits provided by the
Company when the Company performs its obligations under the contract.* when the customer is able to control the goods in progress in the course of performance by the Company
under the contract.* when the goods produced by the Company under the contract are irreplaceable and the Company has
the right to payment for performance completed to date during the whole contract term.For performance obligations performed within a certain period the Company recognises revenue by measuring
the progress towards completion of that performance obligation within that certain period. When the progress
of performance cannot be reasonably determined if the costs incurred by the Company are expected to
be compensated the revenue shall be recognised at the amount of costs incurred until the progress of
performance can be reasonably determined.For performance obligation performed at a point of time the Company recognises revenue at the point of time
at which the customer obtains control of relevant goods or services. To determine whether a customer has
obtained control of goods or services the Company considers the following indications:
* The Company has the current right to receive payment for the goods or services which is when the
customer has the current payment obligations for the goods.* The Company has transferred the legal title of the goods to the customer which is when the client
possesses the legal title of the goods.* The Company has transferred the physical possession of goods to the customer which is when the
customer obtains physical possession of the goods.* The Company has transferred all of the substantial risks and rewards of ownership of the goods to the
customer which is when the customer obtains all of the substantial risks and rewards of ownership of the
goods.* The customer has accepted the goods or services.* Other information indicates that the customer has obtained control of the goods.
208 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
27. Revenue (Continued)
(2) Specific methods
The Company’s revenue mainly comes from the following types of business: sales of goods provision of hotel
and property services and provision of financial leasing and factoring services.Sales of goods
The Company produces and sells machine-made paper and raw materials electricity and steam papermaking
chemicals and other products.In terms of domestic sales revenue is recognised at a point in time when the control over the goods is
transferred after the Company has delivered the goods (other than electricity and steam) sold to the location as
specified in the contract and the customer has accepted the goods.In terms of overseas sales revenue is recognised on the day when the goods (other than electricity and steam)
sold are loaded on board and declared.The sales of electricity and steam by the Company are performance obligations performed within a certain
period. For sales of electricity the Company recognises revenue from sales of electricity based on the quantity
of electricity delivered to customers every month at a price agreed in the contract. For sales of steam the
Company recognises revenue from sales of steam based on the amount of steam delivered to customers every
month at a price agreed in the contract.The credit periods granted by the Company to customers in various industries are consistent with the practices
of various industries therefore there is no significant financing component.The Company provides product quality assurance for the sales of products and recognises corresponding
provisions. The Company does not provide any additional services or additional quality assurance so the
product quality assurance does not constitute a separate fulfilment obligation.The Company’s cooperation model with distributors is outright sales and the recognition of sales revenue under
the distribution model is consistent with the direct sales model.Certain contracts between the Company and its customers contain arrangements on sales rebates which will
give rise to variable consideration. The Company determines the best estimates on the variable consideration
based on expected values or the most probable amount provided that transaction prices including variable
consideration shall not exceed the cumulative amount of recognised revenue upon the removal of relevant
uncertainties in connection with which a significant reversal is highly unlikely.For sales of machine-made paper with sales return clauses the revenue recognised is subject to the cumulative
amount of recognised revenue in connection with which a significant reversal is highly unlikely. The Company
recognises the liabilities according to the expected amount of refund and recognises the carrying amount of the
goods returned at the time of transfer deducting the estimated cost of recovering the goods as an asset (including
the loss of the value of the returned goods).
2025 ANNUAL REPORT 209X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
27. Revenue (Continued)
(2) Specific methods (Continued)
Provision of hotel and property services
The Company provides hotel and property services to external parties. Since the customers obtain and consume
the economic benefits brought by the Company’s performance of the contract while the Company performs the
contract the Company recognises revenue according to the progress of the contract performance. Since the
performance progress occurs evenly the Company recognises revenue by amortising on a straight-line basis
over the service period.Provision of financial leasing and factoring services
The Company recognises revenue from external financial leasing and factoring services according to the
effective interest rate.For assets that have not experienced credit impairment the Company determines its interest income based
on the amount of the book balance of the financial asset (i.e. without considering the impact of impairment)
multiplied by the effective interest rate.There are two cases for financial assets with credit impairment:
For financial assets that are not credit-impaired when purchased or originated but are credit-impaired in
subsequent periods the Company shall in the subsequent periods when impairment occurs determine its
income based on the amount of the amortised cost of the financial asset (i.e. the book balance minus the
accrued impairment) multiplied by the effective interest rate (the effective interest rate determined at the time of
initial recognition which does not change due to the occurrence of impairment).For financial assets that are credit-impaired when purchased or originated the Company shall upon initial
recognition determines its income based on the amount of the amortised cost of the financial asset multiplied
by the credit-adjusted effective interest rate (i.e. the interest rate at which the projected future cash flows after
impairment are discounted to the amortised cost at the time of purchase or origination).
210 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
28. Contract costs
Contract costs are either the incremental costs of obtaining a contract or the costs to fulfil a contract.Incremental costs of obtaining a contract are those costs that the Company incurs to obtain a contract that it
would not have incurred if the contract had not been obtained e.g. sales commission. The Company recognises the
incremental costs of obtaining a contract as an asset if it expects to recover those costs. Other costs of obtaining a
contract other than incremental costs that are expected to be recovered are recognised in profit or loss in the period
in which they are incurred.If the costs to fulfil a contract are not within the scope of inventories or other ASBEs the Company recognises an
asset from the costs incurred to fulfil a contract only if those costs meet all of the following criteria:
* the costs relate directly to an existing contract or to a specifically identifiable anticipated contract including
direct labour direct materials allocations of overheads (or similar costs) costs that are explicitly chargeable to
the customer and other costs that are incurred only because the Company entered into the contract;
* the costs enhance resources of the Company that will be used in satisfying performance obligations in the
future;
* the costs are expected to be recovered.Assets recognised for the costs of obtaining a contract and assets recognised for the costs to fulfil a contract (the
“assets related to contract costs”) are amortised on the same basis as the related goods or services revenue and
recognised in profit or loss for the current period. If the amortisation period does not exceed one year it shall be
recognised in profit or loss for the current period.The Company recognises an impairment loss by providing for the excess amount to the extent that the carrying
amount of an asset related to contract costs exceeds the difference between:
* remaining amount of consideration that the Company expects to receive in exchange for the goods or services
to which the asset relates;
* the cost estimated to be happened for the transfer of related goods or services.
2025 ANNUAL REPORT 211X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
29. Government grants
A government grant is recognised when the grant will be received and that the Company will comply with the
conditions attaching to the grant.If a government grant is in the form of a monetary asset it is measured at the amount received or receivable. If a
government grant is in the form of non-monetary asset it is measured at fair value; if the fair value cannot be obtained
in a reliable way it is measured at the nominal amount of RMB1.Government grants obtained for acquisition or construction of long-term assets or other forms of long-term asset
formation are classified as government grants related to assets while the remaining government grants are classified
as government grants related to revenue.Regarding the government grant not clearly defined in the official documents and can form long-term assets the
part of government grant which can be referred to the value of the assets is classified as government grant related
to assets and the remaining part is government grant related to revenue. For the government grant that is difficult to
distinguish the entire government grant is classified as government grant related to revenue.A government grant related to an asset shall be recognised as deferred income and evenly amortised to profit or loss
over the useful life of the asset in a reasonable and systematic manner. For a government grant related to revenue if
the grant is a compensation for related costs expenses or losses incurred the grant shall be recognised in profit or
loss for the current period or used to offset related costs; if the grant is a compensation for related costs expenses
or losses to be incurred in subsequent periods the grant shall be recognised as deferred income and recognised in
profit or loss over the periods in which the related costs expenses or losses are recognised or used to offset related
costs. A government grant measured at nominal amount is directly included in profit or loss for the current period. The
Company adopts a consistent approach to the same or similar government grants.A government grant related to daily activities is recognised in other gains or used to offset related costs relying on
the essence of economic business; otherwise recognised in non-operating income or used to offset non-operating
expenses.For the repayment of a government grant already recognised if the carrying amount of relevant assets was written off
at initial recognition the carrying amount of the assets shall be adjusted; if there is any related deferred income the
repayment shall be offset against the carrying amount of the deferred income and any excess shall be recognised in
profit or loss for the current period; otherwise the repayment shall be recognised immediately in profit or loss for the
current period.
212 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
30. Deferred income tax assets and deferred income tax liabilities
Income tax comprises current income tax expense and deferred income tax expense which are included in profit
or loss for the current period as income tax expenses except for deferred tax arising from a business combination
which is adjusted against the carrying amount of goodwill and deferred tax related to transactions or events that are
directly recognised in owners’ equity which are recognised in owners’ equity.Temporary differences arising from the difference between the carrying amount of an asset or liability and its tax base
at the balance sheet date of the Company shall be recognised as deferred income tax using the balance sheet liability
method.All the taxable temporary differences are recognised as deferred income tax liabilities except for those incurred in the
following transactions:
(1) The initial recognition of goodwill and the initial recognition of an asset or liability in a transaction which is
neither a business combination nor affects accounting profit or taxable profit when the transaction occurs (other
than a single transaction that the initially recognised assets and liabilities result in an equal amount of taxable
temporary differences and deductible temporary differences);
(2) The taxable temporary differences associated with investments in subsidiaries associates and joint ventures
and the Company is able to control the timing of the reversal of the temporary difference and it is probable that
the temporary difference will not reverse in the foreseeable future.The Company recognises a deferred income tax asset for the carry forward of deductible temporary differences
deductible losses and tax credits to subsequent periods to the extent that it is probable that future taxable profits
will be available against which the deductible temporary differences deductible losses and tax credits can be utilised
except for those incurred in the following transactions:
(1) The transaction is neither a business combination nor affects accounting profit or taxable profit when the
transaction occurs (other than a single transaction that the initially recognised assets and liabilities result in an
equal amount of taxable temporary differences and deductible temporary differences);
(2) The deductible temporary differences associated with investments in subsidiaries associates and joint ventures
the corresponding deferred income tax asset is recognised when both of the following conditions are satisfied:
it is probable that the temporary difference will reverse in the foreseeable future and it is probable that taxable
profits will be available in the future against which the temporary difference can be utilised.At the balance sheet date deferred income tax assets and deferred income tax liabilities are measured at the tax
rates that are expected to apply to the period when the asset is realised or the liability is settled and their tax effect is
reflected accordingly.At the balance sheet date the Company reviews the carrying amount of a deferred income tax asset. If it is probable
that sufficient taxable profits will not be available in future periods to allow the benefit of the deferred tax asset to be
utilised the carrying amount of the deferred tax asset is reduced. Any such reduction in amount is reversed when it
becomes probable that sufficient taxable profits will be available.
2025 ANNUAL REPORT 213X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
30. Deferred income tax assets and deferred income tax liabilities (Continued)
At the balance sheet date deferred income tax assets and deferred income tax liabilities are presented as the net
amount after offsetting when the following conditions are met at the same time:
(1) The tax payer within the Company has the legal right to settle current income tax assets and current income tax
liabilities on a net basis;
(2) Deferred income tax assets and deferred income tax liabilities are related to income taxes levied by the same
tax collection and administration authority on the same taxpayer within the Company.
31. Leases
(1) Identification of leases
On the beginning date of the contract the Company (as a lessee or lessor) assesses whether the customer in
the contract has the right to obtain substantially all of the economic benefits from use of the identified asset
throughout the period of use and has the right to direct the use of the identified asset throughout the period of
use. If a contract conveys the right to control the use of an identified asset and multiple identified assets for a
period of time in exchange for consideration the Company identifies such contract is or contains a lease.
(2) The Company as lessee
On the beginning date of the lease the Company recognises right-of-use assets and lease liabilities for all
leases except for short-term lease and low-value asset lease with simplified approach.The accounting policy for right-of-use assets is set out in Note V. 32.The lease liability is initially measured at the present value of the lease payments that are not paid at the
beginning date of the lease using the interest rate implicit in the lease. Where the interest rate implicit in the
lease cannot be determined the incremental borrowing rate is used as the discount rate. Lease payments
include fixed payments and in-substance fixed payments less any lease incentives receivable; variable
lease payments that are based on an index or a rate; the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option; payments for terminating the lease if the lease term reflects the
lessee exercising that option of terminating; and amounts expected to be payable by the lessee under residual
value guarantees. Subsequently the interest expense on the lease liability for each period during the lease term
is calculated using a constant periodic rate of interest and is recognised in profit or loss for the current period.Variable lease payments not included in the measurement of lease liabilities are recognised in profit or loss for
the period in which they actually arise.
214 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
31. Leases (Continued)
(2) The Company as lessee (Continued)
Short-term lease
Short-term leases refer to leases with a lease term of less than 12 months from the commencement date
except for those with a purchase option.Lease payments on short-term leases are recognised in the cost of related assets or current profit or loss on a
straight-line basis over the lease term.For short-term leases the Company chooses to adopt the above simplified approach for the following types of
assets that meet the conditions of short-term lease according to the classification of leased assets.Low-value equipment
Transportation vehicles
Low-value asset lease
A low-value asset lease is a lease that the value of a single leased asset is below RMB40000 when it is a new
asset.Lease payments on low-value asset leases are recognised on a straight-line basis over the lease term and
either included in the cost of the related asset or charged to profit or loss for the current period.For a low-value asset lease the Company chooses the above simplified approach based on the specific
circumstances of each lease.Lease modification
The Company accounts for a lease modification as a separate lease when the modification occurs and the
following conditions are met: * the lease modification expands the scope of lease by adding the right to use
one or more of the leased assets; and * the increase in consideration is equivalent to the separate price for the
expanded scope of lease adjusted for that contractual situation.Where a lease modification is not accounted for as a separate lease at the effective date of the lease
modification the Company reallocates the consideration of the modified contract redetermines the lease term
and remeasures the lease liability based on the present value of the lease payments after the modification and
the revised discount rate.If a lease modification results in a reduction in the scope of the lease or a shortening of the lease term the
Company reduces the carrying amount of the right-of-use asset accordingly and includes in the profit or loss for
the period the gain or loss associated with the partial or complete termination of the lease.Where other lease modifications result in a remeasurement of the lease liability the Company adjusts the
carrying amount of the right-of-use asset accordingly.
2025 ANNUAL REPORT 215X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
31. Leases (Continued)
(3) The Company as lessor
When the Company is a lessor a lease is recognised 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
recognised as operating leases.Finance leases
Under finance leases the Company accounts for finance lease receivables at the beginning of the lease term
at the net lease investment which is the sum of the unsecured residual value and the present value of the
lease receipts outstanding at the commencement date of the lease discounted at the interest rate implicit in
the lease. The Company as lessor calculates and recognises interest income for each period of the lease term
based on a fixed periodic interest rate. Variable lease payments acquired by the Company as lessor that are not
included in the net measurement of lease investments are included in profit or loss for the period when they are
actually incurred.Derecognition and impairment of finance lease receivables are accounted for in accordance with the
requirements under the Accounting Standard for Business Enterprises No. 22 – Recognition and Measurement
of Financial Instruments and the Accounting Standards for Business Enterprises No. 23 – Transfer of Financial
Assets.Operating lease
Lease payments under operating leases are recognised in profit or loss for the current period on a straight-line
basis over the lease term. Initial direct costs incurred in relation to operating leases are capitalised and
amortised over the lease term on the same basis as rental income and recognised in profit or loss for the current
period. The variable lease payments obtained in relation to operating leases that are not included in the lease
payments are recognised in profit or loss in the period in which they actually incurred.Lease modification
The Company accounts for a modification in an operating lease as a new lease from the effective date of the
modification and the amount of lease receipts received in advance or receivable in respect of the lease prior to
the modification is treated as a receipt under the new lease.The Company accounts for a modification in a finance lease as a separate lease when the change occurs and
the following conditions are met: * the modification expands the scope of lease by adding the right to use one
or more of the leased assets; and * the increase in consideration is equivalent to the separate price for the
expanded scope of lease adjusted for that contractual situation.Where a finance lease is modified and not accounted for as a separate lease the Company accounts for the
modified lease in the following circumstances: * If the modification takes effect on the lease commencement
date the lease will be classified as an operating lease the Company will account for it as a new lease from
the effective date of the lease modification and use the net lease investment before the effective date of
the lease modification as the book value of the lease asset; * If the modification takes effect on the lease
commencement date the lease will be classified as a finance lease and the Company will conduct accounting
treatment in accordance with the Accounting Standards for Business Enterprises No. 22 – Recognition and
Measurement of Financial Instruments on modifying or renegotiating contracts.
216 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
31. Leases (Continued)
(4) Sublease
When the Company is an intermediate lessor the sublease is classified with reference to the right-of-use assets
arising from the head lease. If the head lease is a short-term lease for which the Company adopts a simplified
approach then the Company classifies the sublease as an operating lease.
(5) Sale and leaseback
The lessee and the lessor shall assess and determine whether the transfer of assets in a sale and leaseback
transaction is a sale in accordance with the requirements of the Accounting Standard for Business Enterprises
No. 14 – Revenue.Where asset transfer under the sale and leaseback transactions is a sale the lessee shall measure the right
– of-use assets created by the sale and leaseback based on the portion of carrying amount of the original
assets related to right of use obtained upon leaseback and only recognise relevant profit or loss for the
right transferred to the lessor. The lessor shall account for the purchase of assets in accordance with other
applicable ASBEs and account for the lease of assets in accordance with the Accounting Standard for Business
Enterprises No. 21 – Lease.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; the lessor shall not 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.
32. Right-of-use assets
(1) Conditions for recognition of right-of-use assets
Right-of-use assets are defined as the right of underlying assets in the lease term for the Company as a lessee.Right-of-use assets are initially measured at cost at the commencement date of the lease. The cost includes the
amount of the initial measurement of lease liability; lease payments made at or before the inception of the lease
less any lease incentives enjoyed; initial direct costs incurred by the Company as lessee; costs to be incurred
in dismantling and removing the underlying assets restoring the site on which it is located or restoring the
underlying asset to the condition required by the terms and conditions of the lease incurred by the Company
as lessee. As a lessee the Company recognises and measures the costs of dismantling and restoration in
accordance with the Accounting Standard for Business Enterprises No. 13 – Contingencies. Subsequently the
lease liability is adjusted for any remeasurement of the lease liability.
(2) Depreciation method of right-of-use assets
The Company uses the straight-line method for depreciation. Where the Company as a lessee is reasonably
certain to obtain ownership of the leased asset at the end of the lease term such asset is depreciated over the
remaining useful life of the leased asset. Where ownership of the lease assets during the lease term cannot be
reasonably determined right-of-use assets are depreciated over the lease term or the remainder of useful lives
of the lease assets whichever is shorter.
(3) For the methods of impairment test and impairment provision of right-of-use assets please refer to Note V.
23.
2025 ANNUAL REPORT 217X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
33. Production safety expenses and maintenance costs
According to relevant provisions the Company makes provisions for production safety expenses based on the
revenue of the power plant in the previous year and the prescribed percentages. The specific provisions are as
follows: * if the revenue of the previous year did not exceed RMB10 million provisions would be made at 3%; *
if the revenue of the previous year exceeded RMB10 million but did not exceed RMB100 million provisions would
be made at 1.5%; * if the revenue of the previous year exceeded RMB100 million but did not exceed RMB1000
million provisions would be made at 1%; * if the revenue of the previous year exceeded RMB1000 million but did
not exceed RMB5000 million provisions would be made at 0.8%; * if the revenue of the previous year exceeded
RMB5000 million but did not exceed RMB10000 million provisions would be made at 0.6%; * if the revenue of the
previous year exceeded RMB10000 million provisions would be made at 0.2%.Provisions for production safety expenses and maintenance costs are included in the cost of related products or profit
or loss of the current period and are included in “special reserves” correspondingly.When the provisions for production safety expenses and maintenance costs are utilised within the prescribed scope
if such production safety expenses are applied and related to revenue expenditures specific reserve is directly offset.When fixed assets are incurred they are included in the “construction in progress” item and transferred to fixed
assets when the status of the assets is ready for intended use. They are then offset against specific reserve based on
the amount included in fixed assets while corresponding amount is recognised in accumulated depreciation. Such
fixed assets are no longer depreciated in subsequent periods.
34. Debt restructuring
(1) The Company as the debtor
The debt is derecognised when the current obligation of the debt is discharged. Specifically when the
uncertainty about the execution process and results of the debt restructuring agreement is eliminated the gains
and losses related to the debt restructuring are recognised.If debt restructuring is carried out by repaying debts with assets the Company shall derecognise the relevant
assets and the debts paid off when they meet the conditions for derecognition and the difference between the
book value of the debts paid off and the book value of the transferred assets shall be included in the current
profit and loss.If the debt is converted into equity instruments for debt restructuring the Company shall derecognise the
debts paid off when they meet the conditions for derecognition. When the Company initially recognises an
equity instrument it is measured based on the fair value of the equity instrument. If the fair value of the equity
instrument cannot be measured reliably it is measured based on the fair value of the debt paid off. The
difference between the book value of the debts paid off and the recognised amount of the equity instrument
shall be included in the current profit and loss.When a debt restructuring involves the modification of other terms of a debt the Company shall recognise and
measure the restructured debts in accordance with the Accounting Standards for Business Enterprises No. 22 –
Recognition and Measurement of Financial Instruments and the Accounting Standards for Business Enterprises
No. 37 – Presentation of Financial Instruments.When a debt is settled by multiple assets or combination of various methods in a debt restructuring the
Company shall recognise and measure the equity instruments and restructured debts in accordance with the
aforementioned methods and the difference between the book value of the debts paid off and the sum of the
book value of the transferred assets and the recognised amount of the equity instruments and restructured
debts shall be included in the current profit and loss.
218 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
34. Debt restructuring (Continued)
(2) The Company as the creditor
The debt receivable are derecognised when the contractual rights to receive the cash flows under the debt
receivable expire. Specifically when the uncertainty about the execution process and results of the debt
restructuring agreement is eliminated the gains and losses related to the debt restructuring are recognised.If debt restructuring is carried out by repaying debts with assets the Company shall initially recognise assets
other than the transferred financial assets at cost. In particular the cost of inventories includes the fair value
of the debt receivable and any directly attributable expenditure including taxes transportation costs handling
costs insurance and other costs for bringing the assets to the current position and condition; the cost
of investment in associates or joint ventures includes the fair value of the debt receivable and any directly
attributable expenditure including taxes; the cost of investment property includes the fair value of the debt
receivable and any directly attributable expenditure including taxes; the cost of fixed assets includes the fair
value of the debt receivable and any directly attributable expenditure including taxes transportation costs
handling costs installation costs professional service fees and other costs for bringing the assets to the status
for intended use; the cost of intangible assets includes the fair value of the debt receivable and any directly
attributable expenditure including taxes for bringing the assets to the status for intended use. The difference
between the fair value and the book value of the debt receivable is included in the current profit and loss.When the debt restructuring causes the Company to convert the debt receivable to an equity investment of
joint ventures or associates the Company shall measure the initial investment cost based on the sum of the fair
value of debt receivable and any directly attributable taxes and other costs of the investment. The difference
between the fair value and the book value of the debt receivable is included in the current profit and loss.When a debt restructuring involves the modification of other terms of a debt the Company recognises
and measures the restructured debt receivable in accordance with the Accounting Standards for Business
Enterprises No. 22 – Recognition and Measurement of Financial Instruments.When a debt is settled by multiple assets or combination of various methods in a debt restructuring the
Company first recognises and measures the financial assets received and restructured debt receivable in
accordance with the Accounting Standards for Business Enterprises No. 22 – Recognition and Measurement of
Financial Instruments and then allocates the net value which is the fair value of the debt receivable deducted
by the recognised amount of financial assets received and restructured debt receivable to the costs of
non-financial assets received based on their relative fair value. The difference between the fair value and the
book value of the debt receivable is included in the current profit and loss.
2025 ANNUAL REPORT 219X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
35. Critical accounting judgments and estimates
The Company gives continuous assessment on among other things the reasonable expectations of future events
and the critical accounting estimates and key assumptions adopted according to its historical experience and other
factors. The critical accounting estimates and key assumptions that are likely to lead to significant adjustment risks of
the carrying amount of assets and liabilities for the next financial year are listed as follows:
Deferred income tax assets
Deferred income tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit
will be available against which the losses can be utilised. Significant management judgement is required to determine
the amount of deferred income tax assets that can be recognised based upon the likely timing and amount of future
taxable profits together with future tax planning strategies.Classification of financial assets
Significant judgements involved in determining the classification of financial assets include the analysis of business
models and contractual cash flow characteristics.Factors considered by the Company in determining the business model for a group of financial assets include how the
asset’s performance is evaluated and reported to key management personnel how risks are assessed and managed
and how the relevant management personnel are compensated.When the Company assesses whether the contractual cash flows of the financial assets are consistent with basic
lending arrangements the main judgements are described as below: whether the principal amount may change over
the life of the financial asset (for example if there are repayments of principal); whether the interest includes only
consideration for the time value of money credit risk other basic lending risks and a profit margin and cost. For
example whether the amount repaid in advance reflects only the outstanding principal and interest thereon as well as
reasonable compensation paid for early termination of the contract.Measurement of the ECLs of accounts receivable
The Company calculates the ECLs of accounts receivable using the exposure to default risk and ECL rate of accounts
receivable and determines the ECL rate based on default probability and default loss rate. When determining the
ECL rate the Company adjusts its historical data by referring to information such as historical credit loss experience
as well as current situation and forward-looking information. When considering the forward-looking information
indicators used by the Company include the risk of economic downturn external market environment technology
environment and changes in customers. The assumptions relating to the ECL calculation are monitored and reviewed
by the Company on a regular basis.Measurement of past due credit losses on finance lease receivables
The Company calculates the ECLs of financial lease receivables using the exposure to default risk and ECL rate
of financial lease receivables and determines the ECL rate based on default probability and default loss rate.When determining the ECL rate the Company takes into account the current status and repayment ability of the
counterparty while considering the value of collateral guarantees and other credit enhancement measures related to
the lease receivables.
220 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
35. Critical accounting judgments and estimates (Continued)
Impairment of goodwill
The Company assesses the impairment of goodwill at least annually which requires estimates of the use value of
asset groups allocated with goodwill. When estimating the use value the Company is required to estimate the future
cash flows from such asset groups while selecting the appropriate discount rate to calculate the present value of
future cash flows.Impairment of inventories
On the balance sheet date the Company determines the net realisable value of its inventories based on the estimated
selling prices of the inventories less costs estimated to be incurred upon completion estimated selling expenses and
related taxes. The realisable value of inventories shall be determined on the basis of definite evidence purpose of
holding the inventories and effect of after-balance-sheet-date events. If the net realisable value is below the cost of
inventories a provision for inventory impairment is made.Impairment of fixed assets and long-term equity investments
The Company assesses the impairment of fixed assets and long-term equity investments at least annually. When any
event or change in circumstances indicates that the carrying amount may not be recoverable the carrying amount
of such project is reviewed for impairment. If the carrying amount of an asset exceeds its recoverable amount
impairment loss is recognised for the difference. The recoverable amount is determined as the higher of the asset’s
fair value less costs of disposal and the present value of the asset’s estimated future cash flows. A number of
assumptions are made in estimating the recoverable amount of assets including future cash flows and discount rates
relating to non-current assets. If future events differ from these assumptions the recoverable amount shall be revised
which may have an impact on the operations or financial position of the Company.
36. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
The Company did not have any change in significant accounting policies during the year.
(2) Changes in significant accounting estimates
The Company did not have any change in significant accounting estimates during the year.
(3) First-time implementation of new accounting standards from 2025 onwards involving adjustments to the
financial statements at the beginning of the year of initial application
□ Applicable ? Not applicable
2025 ANNUAL REPORT 221X Financial Report
VI. Taxation
1. Main tax types and tax rates
Tax type Tax base Tax rate (%)
Value added tax (VAT) VAT payable (VAT payable is calculated by multiplying 13/9/6
taxable sales amount by the applicable tax rate less
current deductible input VAT)
Property tax Rental income and property price 1.2/12
Urban maintenance and construction tax Actual turnover tax paid 7
Enterprise income tax Taxable income 25
Disclosure of taxable entities subject to different EIT tax rates
Name of taxable entity EIT tax rate (%)
Shandong Chenming Paper Holdings Limited 15
Shouguang Meilun Paper Co. Ltd. 15
Jilin Chenming Paper Co. Ltd. 15
Zhanjiang Chenming Pulp & Paper Co. Ltd. 15
Huanggang Chenming Pulp & Paper Co. Ltd. 15
Shouguang Xinyuan Coal Co. Ltd. 20
Shouguang Chenming Papermaking Machine Co. Ltd. 20
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 7 December 2024 the Company received a high and new technology enterprise certificate with a
certification number of GR202437001530. Pursuant to the requirements under the Law of the People’s Republic
of China on Enterprise Income Tax and the relevant policies the Company is subject to a corporate income tax
rate of 15% of taxable income and is entitled to the preferential treatment from 2024 to 2026.Shouguang Meilun Paper Co. Ltd. a subsidiary of the Company received a high and new technology enterprise
certificate with a certification number of GR202437000114 on 7 December 2024. 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 2024 to 2026.Jilin Chenming Paper Co. Ltd. a subsidiary of the Company received a high and new technology enterprise
certificate with a certification number of GR202522000396 on 28 October 2025. 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 2025 to 2027.
222 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VI. Taxation (Continued)
2. Tax incentives (Continued)
(1) Enterprise income tax (Continued)
Zhanjiang Chenming Pulp & Paper Co. Ltd. a subsidiary of the Company received a high and new technology
enterprise certificate with a certification number of GR202444002840 on 19 November 2024. 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 2024 to 2026.Huanggang Chenming Pulp & Paper Co. Ltd. a subsidiary of the Company received a high and new
technology enterprise certificate with a certification number of GR202342003128 on 5 December 2023. Pursuant
to the requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant
policies Huanggang Chenming is subject to an enterprise income tax rate of 15% of taxable income and is
entitled to the preferential treatment from 2023 to 2025.Pursuant to the requirements of Rule 27(1) of Law of the People’s Republic of China on Enterprise Income Tax
and Rule 86(1) of Regulations for the Implementation of Law of the People’s Republic of China on Enterprise
Income Tax Zhanjiang Chenming Arboriculture Development Co. Ltd. Yangjiang Chenming Arboriculture
Development Co. Ltd. Nanchang Chenming Arboriculture Development Co. Ltd. and Chenming Arboriculture
Co. Ltd. which are the subsidiaries of the Company are entitled to preferential tax treatment and have
completed the filings for EIT reduction for exemption from EIT.Shouguang Xinyuan Coal Co. Ltd. and Shouguang Chenming Papermaking Machine Co. Ltd. which are
subsidiaries of the Company are small and micro enterprises. Pursuant to the Announcement of the Ministry of
Finance and the State Administration of Taxation on Further Implementation of Preferential Income Tax Policies
for Small and Micro Enterprises (Cai Shui [2022] No. 13) and the Announcement of the Ministry of Finance and
the State Administration of Taxation on the Implementation of Preferential Income Tax Policies for Small and
Micro Enterprises and Individual Industrial and Commercial Business (Cai Shui [2023] No. 6) the annual taxable
income of a small low-profit enterprise that is less than RMB3 million shall be included in its taxable income at a
reduced rate of 25% with the applicable enterprise income tax rate of 20%.
(2) Value-added Tax (“VAT”)
Pursuant to Rule 10 of the Interim Regulation of the People’s Republic of China on Value Added Tax Zhanjiang
Chenming Arboriculture Development Co. Ltd. Yangjiang Chenming Arboriculture Development Co. Ltd.Nanchang Chenming Arboriculture Development Co. Ltd. and Chenming Arboriculture Co. Ltd. which are
subsidiaries of the Company are exempt from VAT and have completed the filings for VAT reduction for
exemption from VAT.
2025 ANNUAL REPORT 223X Financial Report
VII. Notes to items of the consolidated financial statements
1. Monetary funds
Unit: RMB
Item Closing balance Opening balance
Treasury cash 2409711.16 1363319.76
Bank deposit 134887171.18 150579926.55
Other monetary funds 63728850.28 5728747806.12
Interest accrued on deposits 9372989.33 29188759.75
Total 210398721.95 5909879812.18
Including: Total deposits in overseas banks 87837664.31 90613912.87
Other explanations:
* Other monetary funds of RMB731682.03 were the guarantee deposit for the application for acceptance bills by
the Company;
* Other monetary funds of RMB22001346.27 were the guarantee deposit for the application for letter of credit
with the banks by the Company;
* Other monetary funds of RMB5740595.00 were the guarantee deposit for the application for loans with the
banks by the Company.* At the end of the reporting period other monetary funds of RMB721316.33 were the guarantee deposit of time
deposit placed by the Company with the banks.* Other monetary funds of RMB34533910.65 were locked-up due to reasons such as litigations or being unused
for a long time resulting in restriction on the use of that account’s balance.
2. Financial assets held for trading
Unit: RMB
Item Closing balance Opening balance
Financial assets measured at fair value through profit or loss 38791121.74 37259325.70
Including:
Investment in equity instruments 38791121.74 37259325.70
Total 38791121.74 37259325.70
Other explanation:
Financial assets held for trading were shares of China Bohai Bank subscribed by the Company.
224 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
3. Bills receivable
(1) Bills receivable by category
Unit: RMB
Item Closing balance Opening balance
Bank acceptance bill 793939333.83
Commercial acceptance bills 506605701.74
Total 793939333.83 506605701.74
(2) Bills receivable endorsed or discounted by the Company but not yet due as at the balance sheet date at the
end of the reporting period
Unit: RMB
Amount Amount not yet
derecognised as derecognised
at the end of the as at the end of the
Item reporting period reporting period
Bank acceptance bills 790446731.06
Total 790446731.06
(3) Bills transferred to accounts receivable due to non-performance of the issuer at the end of the reporting
period
Unit: RMB
Amounts
transferred to
accounts receivable
at the end of the
Item reporting period
Commercial acceptance bills 27600000.00
2025 ANNUAL REPORT 225X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
4. Accounts receivable
(1) Disclosure by ageing
Unit: RMB
Closing Opening
Ageing book balance book balance
Within 1 year (including 1 year) 678753229.22 929046115.66
1 to 2 years 101784033.19 274913099.67
2 to 3 years 33088622.94 352196765.13
Over 3 years 364766347.06 1112205999.57
Subtotal 1178392232.41 2668361980.03
Less: Bad debt provision 435648096.21 1284071666.33
Total 742744136.20 1384290313.70
The basis used by the ageing analysis of the accounts receivable of the Company: the ageing of accounts
receivable is the length of time of the Company’s outstanding accounts receivable based on invoice date. The
closing balance is recognised one by one from the end of the period onwards until the amounts add up to the
balance. It is also broken up by intervals of within 1 year 1-2 years 2-3 years and over 3 years.
(2) Disclosure by bad debt provision method
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Provision Provision
Percentage percentage Percentage percentage
Category Amount (%) Amount (%) Book value Amount (%) Amount (%) Book value
Accounts receivable assessed
individually for bad debt provision 330577872.37 28.05 330462462.30 99.97 115410.07 252399157.18 9.46 244457449.18 96.85 7941708.00
Accounts receivable assessed
collectively for bad debt provision 847814360.04 71.95 105185633.91 12.41 742628726.13 2415962822.85 90.54 1039614217.15 43.03 1376348605.70
Including:
Due from related party customers 4293349.49 0.37 367735.61 8.57 3925613.88 1945551.12 0.07 13618.86 0.7 1931932.26
Due from non-related party customers 843521010.55 71.58 104817898.30 12.43 738703112.25 1153594000.22 43.23 126192125.69 10.94 1027401874.53
Factoring receivables 1260423271.51 47.24 913408472.60 72.47 347014798.91
Total 1178392232.41 100 435648096.21 36.97 742744136.20 2668361980.03 100 1284071666.33 48.12 1384290313.70
226 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
4. Accounts receivable (Continued)
(2) Disclosure by bad debt provision method (Continued)
Items assessed individually for bad debt provision:
Unit: RMB
Closing balance
Bad debt Provision Reasons for
Name Book balance provision percentage (%) making provision
Customer 1 26697528.70 26697528.70 100.00 Long outstanding
Customer 2 19898829.81 19898829.81 100.00 Long outstanding
Customer 3 14813369.27 14813369.27 100.00 Long outstanding
Customer 4 14453432.93 14453432.93 100.00 Long outstanding
Customer 5 13396601.22 13396601.22 100.00 Long outstanding
Customer 6 10954285.12 10954285.12 100.00 Long outstanding
Customer 7 10624137.64 10624137.64 100.00 Long outstanding
Customer 8 10614691.35 10614691.35 100.00 Long outstanding
Customer 9 10250525.02 10250525.02 100.00 Long outstanding
72 companies including
customer 10 198874471.31 198759061.24 99.94 Long outstanding
Total 330577872.37 330462462.30 99.97
Unit: RMB
Opening balance
Bad debt Provision Reasons for
Name Book balance provision percentage (%) making provision
Customer 1 26697528.70 26697528.70 100 Long outstanding
Customer 2 17600000.00 9658292.00 54.88 Long outstanding
Customer 3 14813369.27 14813369.27 100 Long outstanding
Customer 4 14453432.93 14453432.93 100 Long outstanding
Customer 5 13396601.22 13396601.22 100 Long outstanding
Customer 6 10954285.12 10954285.12 100 Long outstanding
Customer 7 10624137.64 10624137.64 100 Long outstanding
Customer 8 10614691.35 10614691.35 100 Long outstanding
Customer 9 10250525.02 10250525.02 100 Long outstanding
46 companies including
customer 10 122994585.93 122994585.93 100 Long outstanding
Total 252399157.18 244457449.18 96.85
2025 ANNUAL REPORT 227X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
4. Accounts receivable (Continued)
(2) Disclosure by bad debt provision method (Continued)
Categories being assessed collectively for bad debt provision: 2
Category being assessed collectively for bad debt provision: Due from related party customers
Unit: RMB
Closing balance
Provision
Name Book balance Bad debt provision percentage (%)
Within 1 year 3422664.43 105049.93 3.07
1 to 2 years 870685.06 262685.68 30.17
Total 4293349.49 367735.61 8.57
Category being assessed collectively for bad debt provision: Due from non-related party customers
Unit: RMB
Closing balance
Provision
Name Book balance Bad debt provision percentage (%)
Within 1 year 675330564.79 18168780.78 2.69
1 to 2 years 100913348.13 34646259.90 34.33
2 to 3 years 13189793.13 7139652.94 54.13
Over 3 years 54087304.50 44863204.68 82.95
Total 843521010.55 104817898.30 12.43
Whether the bad debt provision for accounts receivable is made according to the general model of ECLs:
□ Applicable ? Not applicable
(3) Provision recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMB
Changes in the period
C ategory Opening balance Provision Recovery or reversal Written-off Others Closing balance
Bad debt provision 1284071666.33 304132733.41 3641227.24 18860003.86 -1130055072.43 435648096.21
Total 1284071666.33 304132733.41 3641227.24 18860003.86 -1130055072.43 435648096.21
Explanation: “Others” included a decrease in bad debts of RMB1129969628.31 from disposal of subsidiaries and a decrease in bad
debts of RMB85444.12 due to changes in exchange rates.
228 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
4. Accounts receivable (Continued)
(4) Top five accounts receivable and contract assets based on closing balance of debtors
The total amount of top five accounts receivable based on closing balance of debtors for the period amounted
to RMB215385582.38 in total accounting for 18.28% of the total closing balance of accounts receivable. The
closing balance of the corresponding bad debt provision amounted to RMB66103945.53 in total.Unit: RMB
Closing balance
of bad debt
As a percentage provision of
of the closing accounts
Closing balance balance of the receivable and
Closing balance of accounts total accounts impairment
of accounts Closing balance receivable and receivable and allowance for
Name of entity receivable of contract assets contract assets contract assets (%) contract assets
Customer 1 57622476.41 57622476.41 4.89 1550044.62
Customer 2 45493811.40 45493811.40 3.86 45493811.40
Customer 3 45453103.07 45453103.07 3.86 1222688.47
Customer 4 35092837.57 35092837.57 2.98 16984042.82
Customer 5 31723353.93 31723353.93 2.69 853358.22
T otal 215385582.3 8 215385582.3 8 18.2 8 66103945.5 3
5. Accounts receivable financing
(1) Accounts receivable financing by category
Unit: RMB
Item Closing balance Opening balance
Bills receivable 35978138.45 100730797.32
T otal 35978138.45 100730797.32
Explanation: All the accounts receivable financing of the Company were bank acceptance bills. Since the terms of the bank
acceptance bills did not exceed one year and both parties to the endorsement of the bills agreed to offset equal amounts
of accounts receivable and payable based on the face value of the bills fair value equalled amortised cost.Certain subsidiaries of the Company discount and endorse part of the bank acceptance bills based on their
daily capital management needs. Therefore the bank acceptance bills of the subsidiaries are classified as
financial assets measured at fair value through other comprehensive income.The Company has no bank acceptance bill assessed individually for impairment provision. At the end of the
reporting period the Company believed that there is no significant credit risk in the bank acceptance bills held
and no major losses will be incurred due to default of banks.
2025 ANNUAL REPORT 229X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
5. Accounts receivable financing (Continued)
(2) Accounts receivable financing endorsed or discounted but not yet due as at the balance sheet date at the
end of the reporting period
Unit: RMB
Amount Amount
derecognised not yet derecognised
as at the end of as at the end of
Item the reporting period the reporting period
Bank acceptance bills 1623727215.08
T otal 1623727215.0 8
Explanation: Bank acceptance bills used for discounting were accepted by banks with higher credit ratings the credit risk and
deferred payment risk were very small and the interest rate risk related to the bills had been transferred to the banks. It
was determined that the major risks and rewards of the ownership of the bills had been transferred so these bills were
derecognised.
6. Other receivables
Unit: RMB
Item Closing balance Opening balance
Dividend receivable 22659149.81
Other receivables 302065195.40 1061992721.13
T otal 302065195.40 1084651870.94
(1) Dividends receivable
1) Classification of dividends receivable
Unit: RMB
Item (or investee) Closing balance Opening balance
Weifang Chenchuang Equity Investment Fund
Partnership (Limited Partnership) 22659149.81
T otal 22659149.81
230 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
6. Other receivables (Continued)
(2) Other receivables
1) Classification of other receivables by nature
Unit: RMB
Nature Closing book balance Opening book balance
Open credit 530150792.13 2522792110.64
Guarantee deposit and deposit 17728522.85 14874445.09
Reserve and borrowings 7630872.36 16114760.18
Others 8967157.23 7975085.22
Subtotal 564477344.57 2561756401.13
Less: Bad debt provision 262412149.17 1499763680.00
Total 302065195.40 1061992721.13
2) Disclosure by ageing
Unit: RMB
Ageing Closing book balance Opening book balance
Within 1 year (including 1 year) 90215052.30 680590285.93
1 to 2 years 229760548.66 409320986.47
2 to 3 years 14229629.01 198957834.50
Over 3 years 230272114.60 1272887294.23
Subtotal 564477344.57 2561756401.13
Less: Bad debt provision 262412149.17 1499763680.00
T otal 302065195.40 1061992721.13
The basis used by the ageing analysis: the ageing of other receivables is the length of time of the
Company’s outstanding other receivables based on invoice date. The closing balance is recognised one
by one from the end of the period onwards until the amounts add up to the balance. It is also broken up
by intervals of within 1 year 1-2 years 2-3 years and over 3 years.
2025 ANNUAL REPORT 231X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
6. Other receivables (Continued)
(2) Other receivables (Continued)
3) Particulars of bad debt provisionWhen one or more of the following circumstances occurs it is considered as “a significant increase incredit risk upon initial recognition” and shall be assigned to stage 2: the payment has been overdue for
more than 30 days but not more than 90 days; the debtor encountered an adverse event that affected
its solvency; significant adverse changes in the value of collateral or the quality of guarantees or credit
enhancements provided by third parties.When one or more of the following circumstances occurs it is considered as “credit impairment hasoccurred” and shall be assigned to stage 3: the payment has been overdue for more than 90 days; the
debtor encountered major financial difficulties or was likely to go bankrupt or undergo other financial
restructuring; other situations that violate contractual agreements and indicate that there is objective
evidence of impairment of financial assets.As at the end of the reporting period closing bad debt provision at stage 1:
ECL rate for the next
Category Book balance 12 months (%) Bad debt provision Carrying amount
Items assessed collectively for bad debt
provision 389754487.59 27.81 108382164.36 281372323.23
Amount due from government agencies 7377645.24 10.31 760793.30 6616851.94
Amount due from related parties 257408963.53 31.90 82110849.54 175298113.99
Other receivables 124967878.82 20.41 25510521.52 99457357.30
T otal 389754487.5 9 27.8 1 108382164.3 6 281372323.2 3
As at the end of the reporting period the Group did not have interest receivables dividends receivables
and other receivables in stage 2.Closing bad debt provision at stage 3
Category Book balance Lifetime ECL rate (%) Bad debt provision Carrying amount
Items assessed individually for bad debt
provision 174722856.98 88.16 154029984.81 20692872.17
Total 174722856.9 8 88.1 6 154029984.8 1 20692872.1 7
232 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
6. Other receivables (Continued)
(2) Other receivables (Continued)
3) Particulars of bad debt provision (Continued)
Items assessed individually for bad debt provision:
Unit: RMB
Closing balance
Provision
Name Book balance Bad debt provision percentage (%) Reason for provision
Customer 1 42786737.29 32120815.44 75.07 Uncertain recovery to a certain extent
Customer 2 9408410.84 4793316.47 50.95 Uncertain recovery to a certain extent
Customer 3 6197937.85 6197937.85 100.00 Uncertain recovery to a certain extent
Customer 4 6000000.00 6000000.00 100.00 Uncertain recovery to a certain extent
213 customers including customer 5 110329771.00 104917915.05 95.09 Uncertain recovery to a certain extent
Total 174722856.98 154029984.81 88.16
Bad debt provision based on the general model of ECLs:
Unit: RMB
Stage 1 Stage 2 Stage 3
ECLs for the Lifetime ECLs Lifetime ECLs
Bad debt provision next 12 months (not credit-impaired) (credit-impaired) Total
Balance as at 1 January 2025 56487807.03 1443275872.97 1499763680.00
Balance as at 1 January 2025 for the period
– Transferred to stage 2
– Transferred to stage 3
– Transferred to stage 2
– Transferred to stage 1
Provision for the period 65179688.62 453913465.21 519093153.83
Reversal for the period 12567406.37 42750819.10 55318225.47
Transfer for the period
Write-off for the period 87.81 11473637.53 11473725.34
Other changes -717837.11 -1688934896.74 -1689652733.85
Balance as at 31 December 2025 108382164.36 154029984.81 262412149.17
Explanation: “Others” included a decrease in bad debts of RMB1689619079.75 from disposal of subsidiaries and a decrease
in bad debts of RMB33654.10 due to changes in exchange rates.
2025 ANNUAL REPORT 233X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
6. Other receivables (Continued)
(2) Other receivables (Continued)
3) Particulars of bad debt provision (Continued)
Changes in carrying book balances with significant changes in loss provision for the period
□ Applicable ? Not applicable
4) Provision recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMB
Changes in the period
Recovery or Transfer or
Category Opening balance Provision reversal write-off Others Closing balanc e
Bad debt provision for
other receivables 1499763680.00 519093153.83 55318225.47 11473725.34 -1689652733.85 262412149.1 7
Total 1499763680.00 519093153.83 55318225.47 1 1473725.34 -1689652733.8 5 262412149.1 7
5) Top five other receivables according to closing balance of debtors
The total amount of the Company’s top five other receivables based on closing balance of debtors for the
period was RMB342155192.10 which accounted for 57.68% of the closing balance of the total other
receivables. The closing balance of corresponding bad debt provision amounted to RMB106418910.16.Unit: RMB
As a
percentage of
the closing Closing balance
balance of total of bad debt
Name of entity Nature Closing balance Ageing other receivables (%) provision
Customer 1 Financial support 161681854.41 Within 1 year and 28.64 30010602.34
1 to 2 years
Customer 2 Financial support 83230249.84 1 to 4 years 14.74 41564674.85
Customer 3 Open credit 42786737.29 4 to 5 years and 7.58 32120815.44
over 5 years
Customer 4 Open credit 20610819.36 Within 1 year 3.65 1030540.97
Customer 5 Open credit 17316806.81 Within 1 year and 3.07 7020135.34
1 to 5 years
Total 325626467.7 1 57.68 111746768.94
234 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
7. Prepayments
(1) Prepayments by ageing
Unit: RMB
Closing balance Opening balance
Ageing Amount Percentage (%) Amount Percentage (%)
Within 1 year 175145505.30 62.12 592705315.78 93.80
1 to 2 years 106785382.77 37.88 39188179.36 6.20
Total 281930888.07 100.00 631893495.14 100.00
(2) Top five prepayments based on closing balance of prepaid parties
The total amount of top five prepayments based on closing balance of prepaid parties for the period amounted
to RMB79553621.88 accounting for 28.22% of the closing balance of the total prepayments.Unit: RMB
As a percentage
of the closing
Closing balance balance of the total
Name of entity of prepayments prepayments (%)
Supplier 1 37628281.71 13.35
Supplier 2 12520584.08 4.44
Supplier 3 11730248.09 4.16
Supplier 4 8974508.00 3.18
Supplier 5 8700000.00 3.09
T otal 79553621.88 28.22
2025 ANNUAL REPORT 235X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
8. Inventories
Whether the Company needs to comply with the disclosure requirements for real estate industries
No
(1) Categories of inventories
Unit: RMB
Closing balance Opening balance
Impairment Impairment
provision for provision for
inventories inventories
or performance or performance
Item Book balance costs Carrying amount Book balance costs Carrying amount
Raw materials 1717133758.35 17057043.13 1700076715.22 1225049193.59 15709012.21 1209340181.38
Work-in-process products 22951311.02 22951311.02 121749898.40 121749898.40
Goods in stock 559227643.16 29138403.73 530089239.43 269949625.20 22030676.68 247918948.52
Consumable biological assets 1063081495.03 1063081495.03 1256379773.85 1256379773.85
T otal 3362394207.56 46195446.86 3316198760.70 2873128491.04 37739688.89 2835388802.15
Note: Consumable biological assets are forestry assets.
(2) Impairment provision for inventories and performance costs
Unit: RMB
Increase during the period Decrease during the period
Item Opening balance Provision Others Reversal or transfer Others Closing balance
Raw materials 15709012.21 2679681.98 1331651.06 17057043.13
Goods in stock 22030676.68 29138403.73 22030676.68 29138403.73
Total 37739688.89 31818085.71 23362327.74 46195446.86
Reason for reversal or written-off of
Basis for recognition of net realisable value/ impairment provision for inventories/
Item residual consideration with future cost performance costs during the period
Raw materials The cost of raw materials is higher than their net Written-off of impairment provision for inventories due to
realisable value sales of impaired spare parts during the period
Goods in stock The cost of goods in stock is higher than their net Written-off of impairment provision for inventories due to
realisable value s ales of impaired goods in stock during the period
236 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
9. Non-current assets due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term receivables due within one year 194204719.66 2840365519.48
Total 194204719.66 2840365519.48
Explanations: * L ong-term receivables due within one year as at the end of the reporting period amounting to RMB0.00 (amount for the
prior year: RMB2816898675.87) were financial lease receivables;
* L ong-term receivables due within one year as at the end of the reporting period amounting to RMB17874763.63 (amount
for the prior year: RMB23098378.89) were deposits receivable;
* L ong-term receivables due within one year as at the end of the reporting period amounting to RMB368464.72 (amount for
the prior year: RMB368464.72) were sublease receivables;
* L ong-term receivables due within one year as at the end of the reporting period amounting to RMB175961491.31 (amount
for the prior year: RMB0.00) were equity transfer receivables.
(1) Long-term receivables due within one year
□ Applicable ? Not applicable
10. Other current assets
Unit: RMB
Item Closing balance Opening balance
Input tax amount to be deducted 195703989.75 135623629.69
Prepaid expenses 44689608.58 144335745.61
Prepaid tax 9103609.81 7659808.66
Receivables under financial lease due within one year 182672726.43
Factoring receivables due within one year 74820340.44
Other payments 2798952.00 14798952.00
T otal 252296160.14 559911202.83
2025 ANNUAL REPORT 237X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
11. Long-term receivables
(1) Particulars of long-term receivables
Unit: RMB
Closing balance Opening balance
Bad debt Carrying Bad debt Discount rate
Item Book balance provision amount Book balance provision Carrying amount range
Finance lease payments 5247340922.67 2041452234.56 3205888688.11 4%-12%
Less: Unrealised financing
income 121865194.82 121865194.82
Deposit for finance lease 131898975.36 131898975.36 247738958.47 247738958.47 3%-12%
Less: Unrealised financing
income 22819303.12 22819303.12 25782566.94 25782566.94
Sublease receivable for
woodland 19799728.16 899519.98 18900208.18 18790408.36 899519.98 17890888.38 3.60%
Less: Unrealised financing
income 6941058.10 6941058.10 6803007.48 6803007.48
Equity transfer receivables 743396900.00 743396900.00 3.50%
Less: Unrealised financing
income 56582365.94 56582365.94
Debt transfer receivables 2262956136.67 2262956136.67 3.50%
Less: Unrealised financing
income 508717826.72 508717826.72
Subtotal 2562991186.31 899519.98 2562091666.33 5359419520.26 2042351754.54 3317067765.72
Less: Long-term receivables
due within one year 194204719.66 194204719.66 4867758553.13 2027393033.65 2840365519.48
Less: Classified as other
current liabilities 29274914.41 29274914.41 196410443.69 196410443.69
Total 2339511552.24 899519.98 2338612032.26 295250523.44 14958720.89 280291802.55
(2) Disclosure by bad debt provision method
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Provision Provision
Percentage percentage Carrying Percentage percentage Carrying
Category Amount (%) Amount (%) amount Amount (%) Amount (%) amount
Items assessed collectively
for bad debt provision 2339511552.24 100.00 899519.98 0.04 2338612032.26 295250523.44 100.00 14958720.89 5.07 280291802.55
Including:
Receivables not past due 281184018.32 95.24 14059200.91 5.00 267124817.41
Sublease receivable for
woodland 12490205.34 0.53 899519.98 7.20 11590685.36 11618936.16 3.93 899519.98 7.74 10719416.18
Deposits receivable 61929994.20 2.65 61929994.20 2447568.96 0.83 2447568.96
Equity transfer receivables 510853042.75 21.84 510853042.75
Debt transfer receivables 1754238309.95 74.98 1754238309.95
Total 2339511552.24 100.00 899519.98 0.04 2338612032.26 295250523.44 100.00 14958720.89 5.07 280291802.55
238 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
11. Long-term receivables (Continued)
(2) Disclosure by bad debt provision method (Continued)
Items assessed collectively for bad debt provision: Receivables not past due
Unit: RMB
Closing balance Balance as at the end of the prior year
Long-term Bad debt ECL rate Long-term Bad debt ECL rate
receivables provision (%) receivables provision (%)
Within 1 year
1 to 2 years 85192921.52 4259646.06 5.00
2 to 3 years 85192921.54 4259646.08 5.00
Over 3 years 110798175.26 5539908.77 5.00
Total 281184018.32 14059200.91 5.00
Items assessed collectively for bad debt provision: Sublease receivable for woodland
Unit: RMB
Closing balance Balance as at the end of the prior year
Long-term Bad debt ECL rate Long-term Bad debt ECL rate
receivables provision (%) receivables provision (%)
Within 1 year
1 to 2 years 44716.69 1082.14 2.42 381729.44 9237.43 2.42
2 to 3 years 46326.50 1894.75 4.09 395471.70 16179.23 4.09
Over 3 years 12399162.15 896543.09 7.23 10841735.02 874103.32 8.06
Total 12490205.34 899519.98 7.20 11618936.16 899519.98 7.74
Items assessed collectively for bad debt provision: Deposits receivable
Unit: RMB
Closing balance Balance as at the end of the prior year
Long-term Bad debt ECL rate Long-term Bad debt ECL rate
receivables provision (%) receivables provision (%)
Within 1 year
1 to 2 years 19843812.58 2204172.55
2 to 3 years 4274512.29 243396.41
Over 3 years 37811669.33
Total 61929994.20 2447568.96
2025 ANNUAL REPORT 239X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
11. Long-term receivables (Continued)
(2) Disclosure by bad debt provision method (Continued)
Items assessed collectively for bad debt provision: Equity transfer receivables
Unit: RMB
Closing balance Balance as at the end of the prior year
Long-term Bad debt ECL rate Long-term Bad debt ECL rate
receivables provision (%) receivables provision (%)
1 to 2 years 182120143.50
2 to 3 years 238494348.53
Over 3 years 90238550.72
Total 510853042.75
Items assessed collectively for bad debt provision: Debt transfer receivables
Unit: RMB
Closing balance Balance as at the end of the prior year
Long-term Bad debt ECL rate Long-term Bad debt ECL rate
receivables provision (%) receivables provision (%)
Within 1 year
1 to 2 years
2 to 3 years
Over 3 years 1754238309.95
Total 1754238309.95
(3) Provision recovery or reversal of bad debt provision for the period
Unit: RMB
Changes in the period
Recovery or Transfer or
Category Opening balance Provision reversal write-off Others Closing balance
Bad debt provision 14958720.89 -14059200.91 899519.98
Total 14958720.89 -14059200.91 899519.98
Explanation: “Others” included a decrease in bad debts of RMB14059200.91 from disposal of subsidiaries
240 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
12. Long-term equity investments
Unit: RMB
Change for the period
Investment Distribution
Opening gain or loss Adjustment Other of cash Closing
balance of recognised of other change in dividend balance of
Opening balance impairment Additional Withdrawn under equity comprehensive equity or profit Impairment Closing balance impairment
Investee (carrying amount) provision contribution contribution method income interest declared provision Others (carrying amount) provision
I. Joint ventures
Shouguang Chenming Huisen New-style
Construction Materials Co. Ltd. 8368935.72 259312.75 8628248.47
Weifang Port Wood Chip Wharf Co. Ltd. 87317015.51 -14268788.56 73048226.95
Shouguang Meite Environmental
Technology Co. Ltd. 17960215.27 -2402458.95 15557756.32
Shouguang Jintou Industrial Investment
Partnership (Limited Partnership) 1779091176.56 897736842.91 -881354333.65
Weifang Xingxing United Chemical Co.Ltd. 78795494.34 13078890.78 17565000.00 61230494.34 30643890.78
Subtotal 1971532837.40 13078890.78 897736842.91 -897766268.41 17565000.00 158464726.08 30643890.78
II. Associates
Zhuhai Dechen New Third Board Equity
Investment Fund Company (Limited
Partnership) 27167682.31 -2391537.09 24776145.22
Ningbo Kaichen Huamei Equity
Investment Fund Partnership (Limited
Partnership) 135554820.00 10527197.37 146082017.37
Nanchang Tianchen Port Co. Ltd. 56995531.95 1175839.86 6110988.50 52060383.31 6110988.50
Goldtrust Futures Co. Ltd 194450748.14 4010000.00 4882718.93 199333467.07 4010000.00
Xuchang Chenming Paper Co. Ltd. 5994545.96 5994545.96
Chenming (Qingdao) Asset Management
Co. Ltd. 826793.21 2489134.31 3315927.52
Wuhan Chenming Hanyang Paper
Holdings Co. Ltd. 229854588.36 235897.86 4048296.84 226042189.38 4048296.84
Guangdong Nanyue Bank Co. Ltd. 1354652410.17 -60811105.19 -7962815.66 1285878489.32
Subtotal 1999502574.14 10004545.96 -43891853.95 -7962815.66 10159285.34 1937488619.19 20163831.30
Total 3971035411.54 23083436.74 897736842.91 -941658122.36 -7962815.66 27724285.34 2095953345.27 50807722.08
Explanation: The Company estimates the fair value of an investee on the balance sheet date by conducting profit forecasts on the investee
or hiring an appraisal organisation to conduct appraisals. Disposal expenses which mainly taking the corporate income tax on
equity transfer are used to estimate the recoverable amount of the related investment. 10-year treasury rate is selected as the
risk – free rate and the average market yield is calculated and determined based on the Shanghai Stock Exchange Composite
Index and the Shenzhen Stock Exchange Composite Index over the past 15 years; The Company’s equity investments in
Goldtrust Futures Co. Ltd. Shouguang Chenming Huisen New-style Construction Materials Co. Ltd. Weifang Port Wood
Chip Wharf Co. Ltd. Shouguang Meite Environmental Technology Co. Ltd. Weifang Xingxing United Chemical Co. Ltd. and
Guangdong Nanyue Bank Co. Ltd. had been frozen due to overdue debts and other reasons.
2025 ANNUAL REPORT 241X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
12. Long-term equity investments (Continued)
Determination of net amount of recoverable amount measured at fair value after deducting disposal expenses
? Applicable □ Not applicable
Unit: RMB
Basis of
Determination of fair determination
Carrying Recoverable value and disposal Key of key
Item amount amount Impairment expenses parameter parameter
Weifang Xingxing United
Chemical Co. Ltd. 78795494.34 61230494.34 17565000.00 Contracts or agreements
Nanchang Tianchen Port Co. Ltd. 58171371.81 52060383.31 6110988.50 Contracts or agreements
Wuhan Chenming Hanyang Paper
Holdings Co. Ltd 230090486.22 226042189.38 4048296.84 Contracts or agreements
Total 367057352.37 339333067.03 27724285.34
Determination of recoverable amount based on the present value of expected future cash flows
□ Applicable ? Not applicable
13. Other non-current financial assets
Unit: RMB
Item Closing balance Opening balance
Investment in debt instruments 241977314.93 650001725.86
Investment in equity instruments 85957311.39 101028728.82
Total 327934626.32 751030454.68
242 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
14. Investment property
(1) Investment property under the cost method
? Applicable □ Not applicable
Unit: RMB
Housing and
Item building structure Total
I. Original carrying amount
1. Opening balance 7134063378.49 7134063378.49
2. Increase during the period
(1) Purchase
3. Decrease during the period 172061891.55 172061891.55
(1) Disposal 172061891.55 172061891.55
4. Closing balance 6962001486.94 6962001486.94
II. Accumulated depreciation and accumulated amortisation
1. Opening balance 1288600119.94 1288600119.94
2. Increase during the period 191638494.63 191638494.63
(1) Provision or amortisation 191638494.63 191638494.63
3. Decrease during the period 29219769.45 29219769.45
(1) Disposal 29219769.45 29219769.45
4. Closing balance 1451018845.12 1451018845.12
III. Impairment provision
1. Opening balance 102227990.09 102227990.09
2. Increase during the period 6690930.16 6690930.16
(1) Provision 6690930.16 6690930.16
3. Decrease during the period
(1) Disposal
4. Closing balance 108918920.25 108918920.25
IV. Carrying amount
1. Closing carrying amount 5402063721.57 5402063721.57
2. Opening carrying amount 5743235268.46 5743235268.46
Note: Investment properties under the Company primarily include:
* Pujiang International Finance Plaza located at No. 1098 Dongdaming Road Hongkou District Shanghai is a long-term held
office property of Shanghai Hongtai Real Estate Co. Ltd. a subsidiary of the Company and leasehold land mainly used for
external rental or office purposes;
* Jinan Chenming Finance Building (濟南晨鳴金融大廈) located in No. 7 Zone Hanyu Financial Business Center No. 7000 Jingshi
Road Jinan Innovation Zone is a long-term held office property of Shandong Chenming Investment Limited a subsidiary of the
Company and leasehold land mainly used for external rental or office purposes;
* Fatum Apartment (法朵公寓) located at No. 463 Anbo Road No. 22 Lane 467 Anbo Road Yangpu District Shanghai is
a long-term held office property of Shanghai Heruiming Property Management Co. Ltd. a subsidiary of the Company and
leasehold land mainly used for external rental purposes;
* Guangzhou Zhengjia Plaza (廣州正佳廣場) located at Room 3901-3926 No. 372 Huanshi East Road Yuexiu District
Guangzhou is a long-term held office property of Guangzhou Chenming Property Management Co. Ltd. a subsidiary of the
Company and leasehold land mainly used for external rental purposes;
2025 ANNUAL REPORT 243X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
14. Investment property (Continued)
(1) Investment property under the cost method (Continued)
* Shenzhen Zhuoyue Baozhong Times Square (深圳卓越寶中時代廣場) located at Room 3201-3210 Building C Zhuoyue
Baozhong Times Square (Phase 2) Xin’an Sub-district Bao’an District Shenzhen is a long-term held office property of
Guangzhou Chenming Property Management Co. Ltd. a subsidiary of the Company and leasehold land mainly used for
external rental purposes.* Shanghai Xizang South Road shop located at No. 518-528 Xizang South Road Shanghai is a long-term store held by Wuhan
Junheng Property Management Co. Ltd. a subsidiary and leasehold land mainly for external rental purposes.Explanation: * The Company conducted impairment tests on the property assets accounted for as investment properties at among
others Pujiang International Finance Plaza Shenzhen Zhuoyue Baozhong Times Square (深圳卓越寶中時代廣場) and
Guangzhou Yuexiu Zhengjia Oriental International Plaza (廣州越秀正佳東方國際廣場) by hiring an appraisal organisation
or conducting internal estimations to estimate the recoverable amount. The recoverable amount was determined as the
net amount of fair value less disposal expenses with fair value primarily based on the market prices of similar commercial
properties in the vicinity of the property. Disposal expenses included selling expenses and relevant taxes and fees
associated with asset disposal; * For details of restricted ownership please refer to note VII. 24.Determination of recoverable amount as the net amount of fair value less disposal expenses
? Applicable □ Not applicable
Determination of fair
Recoverable value and disposal Basis of determination
Item Carrying amount amount Impairment expenses Key parameter of key parameter
Pujiang International Transaction unit price in the commercial Determined based on
Finance Plaza 3753904255.11 3747213324.95 6690930.16 Assessment property market market surveys.Total 3753904255.11 3747213324.95 6690930.16
Determination of recoverable amount based on the present value of expected future cash flows
□ Applicable ? Not applicable
(2) Investment property under the fair value method
□ Applicable ? Not applicable
(3) Particulars of investment property without obtaining property right certificates
The Company has no investment property without obtaining property right certificates.
15. Fixed assets
Unit: RMB
Item Closing balance Opening balance
Fixed assets 29219679495.81 31855069324.04
Disposal of fixed assets [* ] [ * ]
Total 29219679495.81 31855069324.04
244 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
15. Fixed assets (Continued)
(1) Particulars of fixed assets
Unit: RMB
Electronic
Housing and Machinery and Transportation equipment
Item building structure equipment equipment and others Total
I. Original carrying amount:
1. Opening balance 11820547859.70 43724325201.35 268370299.02 380586884.62 56193830244.69
2. Increase during the period 9685184.65 81662343.01 1006811.65 25101495.15 117455834.46
(1) Acquisition 8483349.78 80183769.32 1006811.65 1657971.83 91331902.58
(2) Transferred from
construction in progress 1201834.87 1478573.69 23443523.32 26123931.88
3. Decrease during the period 187652108.15 476970512.45 27516895.84 5783865.16 697923381.60
(1) Disposal or retirement 187652108.15 476970512.45 27516895.84 5783865.16 697923381.60
4. Closing balance 11642580936.20 43329017031.91 241860214.83 399904514.61 55613362697.55
II. Accumulated depreciation
1. Opening balance 2900330968.52 20704110792.91 214213548.69 254658460.96 24073313771.08
2. Increase during the period 300840075.21 1761645769.44 8936734.75 3739568.49 2075162147.89
(1) Provision 300840075.21 1761645769.44 8936734.75 3739568.49 2075162147.89
3. Decrease during the period 10921706.92 348289481.73 22688339.02 5178717.77 387078245.44
(1) Disposal or retirement 10921706.92 348289481.73 22688339.02 5178717.77 387078245.44
4. Closing balance 3190249336.81 22117467080.62 200461944.42 253219311.68 25761397673.53
III. Impairment provision
1. Opening balance 65307038.71 192690987.81 13889.13 7435233.92 265447149.57
2. Increase during the period 51778601.69 418012059.08 469790660.77
(1) Provision 51778601.69 418012059.08 469790660.77
3. Decrease during the period 50000000.00 52952282.13 102952282.13
(1) Disposal or retirement 50000000.00 52952282.13 102952282.13
4. Closing balance 67085640.40 557750764.76 13889.13 7435233.92 632285528.21
IV. Carrying amount
1. Closing carrying amount 8385245958.99 20653799186.53 41384381.28 139249969.01 29219679495.81
2. Opening carrying amount 8854909852.47 22827523420.63 54142861.20 118493189.74 31855069324.04
Explanation: The Company conducted impairment tests on the property assets accounted for as fixed assets at among others
Pujiang International Finance Plaza and Chenming Cultural Square by hiring an appraisal organisation or conducting
internal estimations to estimate the recoverable amount. The recoverable amount of an asset is the higher of its fair value
less disposal expenses and the present value of the future cash flows expected to be derived from the asset with fair
value primarily based on the market prices of similar commercial assets in the vicinity of the property assets. Disposal
expenses included selling expenses and relevant taxes and fees associated with asset disposal; The Company conducted
impairment tests on the machinery and equipment of major manufacturing companies determination of recoverable
amount of the relevant equipment based on present value of expected net cash flows.
2025 ANNUAL REPORT 245X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
15. Fixed assets (Continued)
(2) Particulars of temporarily idle fixed assets
Unit: RMB
Original carrying Accumulated Impairment Carrying
Item amount depreciation provision amount Remark
Housing and building structure 72464084.41 28507077.07 3093008.64 40863998.70
Machinery and equipment 1361720732.33 777777856.80 335910673.67 248032201.86
Electronic equipment 1851227.95 1587755.71 251732.52 11739.72
Total 1436036044.69 807872689.58 339255414.83 288907940.28
(3) Particulars of fixed assets without obtaining property right certificates
Unit: RMB
Reason for not yet obtaining
Item Carrying amount property right certificates
Housing and building structure (Chongmin Culture Development (Shanghai) Co. Ltd.) 1114121167.78 Under application
Housing and building structure (Zhanjiang Chenming Pulp & Paper Co. Ltd.) 921921749.55 Under application
Housing and building structure (Shouguang Meilun Paper Co. Ltd.) 454016356.26 Under application
Housing and building structure (Jiangxi Chenming Paper Co. Ltd.) 183560131.89 Under application
Housing and building structure (Shandong Chenming Paper Holdings Limited) 129601811.78 Under application
Housing and building structure (Huanggang Chenming Pulp & Paper Co. Ltd.) 22112950.97 Under application
Total 2825334168.23
246 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
15. Fixed assets (Continued)
(4) Impairment test on fixed assets
? Applicable □ Not applicable
Determination of recoverable amount as the net amount of fair value less disposal expenses
? Applicable □ Not applicable
Unit: RMB
Determination of
fair value and Basis of determination
Item Carrying amount Book value Impairment disposal expenses Key parameter of key parameter
Pujiang International 983414112.71 981635511.02 1778601.69 Assessment Transaction unit price in the commercial Determined based on
Finance Plaza property market market surveys.Yunnan Murong Xincheng 70983076.60 20983076.60 50000000.00 Assessment Transaction unit price in the commercial Determined based on
Real Estate property market market surveys.Machinery and equipment 809413196.02 391401136.94 418012059.08 Market Inquiry N/A N/A
Total 1863810385.33 1394019724.56 469790660.77
Determination of recoverable amount based on the present value of expected future cash flows
□ Applicable ? Not applicable
16. Construction in progress
Unit: RMB
Item Closing balance Opening balance
Construction in progress 619780121.33 586611718.04
Materials for project 6860400.59 7226885.83
Total 626640521.92 593838603.87
2025 ANNUAL REPORT 247X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
16. Construction in progress (Continued)
(1) Particulars of construction in progress
Unit: RMB
Closing balance Opening balance
Impairment Impairment
Item Book balance provision Carrying amount Book balance provision Carrying amount
Relocation of Wuhan 4800 papermaking machine
project (Zhanjiang Chenming) 555984128.45 94359128.45 461625000.00 549063751.76 86712411.44 462351340.32
Technological transformation project 143562303.05 11645893.36 131916409.69 129380245.56 11645893.36 117734352.20
Environmental retrofit and alkali boilers flue
gas denitrification deep governance project
(Huanggang Pulp & Paper) 19712686.12 19712686.12
300000 tonnes softwood pulp project
(Shandong Chenming) 12703321.77 6177296.25 6526025.52 12703321.77 6177296.25 6526025.52
Others 18586706.04 18586706.04 23648105.73 23648105.73
Total 750549145.43 130769024.10 619780121.33 714795424.82 128183706.78 586611718.04
248 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
16. Construction in progress (Continued)
(2) Changes in material construction in progress projects for the period
Unit: RMB
Capitalisation
Including: rate of the
Transfer to Other Capitalised interest
Increase fixed asset deductions Accumulated Accumulated interest amount
Opening during the during the during the Closing investment to Construction capitalised amount during during the
Project name Budget balance period period period balance budget (%) progress (%) interest the period period Source of fund
Relocation of Wuhan 4800 Self-owned
papermaking machine project funds and
(Zhanjiang Chenming) 800000000.00 549063751.76 6920376.69 555984128.45 69.50 71.00 borrowings
300000 tonnes Self-owned
softwood pulp project funds and
(Shandong Chenming) 1488980000.00 12703321.77 12703321.77 0.85 0.70 borrowings
Total 2288980000.00 561767073.53 6920376.69 568687450.22
(3) Impairment provision for construction in progress for the period
Unit: RMB
Opening Increase during Decrease during Reason for
Item balance the period the period Closing balance provision
300000 tonnes softwood pulp project
(Shandong Chenming) 6177296.25 6177296.25
Closed deodorisation at wastewater treatment
plant (Shandong Chenming) 5061399.69 5061399.69
Relocation of Wuhan 4800 papermaking
machine project (Zhanjiang Chenming)) 86712411.44 7646717.01 94359128.45
Automation upgrade for water treatment
(Jilin Chenming) 662764.60 662764.60
Differentiated viscose fibre and spinning and
chemical project (Huanggang Pulp & Paper) 12609724.89 12609724.89
Others 16960109.91 16960109.91
Total 128183706.78 7646717.01 5061399.69 130769024.10 －
Explanation: The Company conducted impairment tests or assessments on important construction projects. Impairment was made
based on the results of such tests or assessments.
2025 ANNUAL REPORT 249X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
16. Construction in progress (Continued)
(4) Impairment provision for construction in progress
? Applicable □ Not applicable
Determination of recoverable amount based on the present value of expected future cash flows
? Applicable □ Not applicable
Unit: RMB
Term of Key parameter Basis of determination
Carrying Recoverable forecast Key parameter for for stabilisation of key parameter for
Item amount amount Impairment period forecast period period stabilisation period
Relocation of Wuhan 469271717.01 461625000.00 7646717.01 14.5 Unit price sales volume Unit price sales volume Feasibility report + market
4800 papermaking operating costs operating costs forecast analysis
machine project
Total 469271717.01 461625000.00 7646717.01
(5) Materials for project
Unit: RMB
Closing balance Opening balance
Impairment Impairment
Item Book balance provision Carrying amount Book balance provision Carrying amount
Special materials 6860400.59 6860400.59 7226885.83 7226885.83
Total 6860400.59 6860400.59 7226885.83 7226885.83
250 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
17. Bearer biological assets
(1) Bearer biological assets under the cost method
? Applicable □ Not applicable
Unit: RMB
Item Tea tree Total
I. Original carrying amount:
1. Opening balance 18704143.60 18704143.60
2. Increase during the period
(1) Cultivation 31227.72 31227.72
4. Closing balance 18735371.32 18735371.32
II. Accumulated depreciation
1. Opening balance
2. Increase during the period
3. Decrease during the period
4. Closing balance
III. Impairment provision
1. Opening balance 9352071.80 9352071.80
2. Increase during the period
(1) Provision 7509762.39 7509762.39
3. Decrease during the period
4. Closing balance 16861834.19 16861834.19
IV. Carrying amount
1. Closing carrying amount 1873537.13 1873537.13
2. Opening carrying amount 9352071.80 9352071.80
(2) Impairment test on bearer biological assets under the cost method
? Applicable □ Not applicable
Determination of recoverable amount as the net amount of fair value less disposal expenses
? Applicable □ Not applicable
2025 ANNUAL REPORT 251X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
17. Bearer biological assets (Continued)
(2) Impairment test on bearer biological assets under the cost method (Continued)
Unit: RMB
Basis of
determination
Carrying Recoverable Determination of fair value and Key of key
Item amount amount Impairment disposal expenses parameter parameter
Tea tree 18735371.32 1873537.13 16861834.19 See explanation for details
Total 18735371.32 1873537.13 16861834.19
Explanation: According to the stocktaking the Company estimated that tea tress corresponding to 90% of the area were withered or
had poor growth due to management and maintenance and therefore a 90% impairment was provided. Determination of
recoverable amount based on the present value of expected future cash flows
□ Applicable ? Not applicable
(3) Bearer biological assets measured at fair value
□ Applicable ? Not applicable
252 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
18. Right-of-use assets
(1) Particulars of right-of-use assets
Unit: RMB
Housing and
Item Land use rights building structure Total
I. Original carrying amount
1. Opening balance 192872810.81 110497066.62 303369877.43
2. Increase during the period 1616441.22 1616441.22
(1) Adjustment of lease liabilities 1616441.22 1616441.22
3. Decrease during the period 8574880.74 105016513.76 113591394.50
(1) Transfer or held for sale 8409743.14 105000000.00 113409743.14
(2) Other decreases 165137.60 16513.76 181651.36
4. Closing balance 185914371.29 5480552.86 191394924.15
II. Accumulated depreciation
1. Opening balance 34120660.16 3224904.40 37345564.56
2. Increase during the period 8706581.16 5829778.17 14536359.33
(1) Provision 8706581.16 5829778.17 14536359.33
3. Decrease during the period 4285017.66 7500000.00 11785017.66
(1) Transfer or held for sale 4285017.66 7500000.00 11785017.66
4. Closing balance 38542223.66 1554682.57 40096906.23
III. Impairment provision
1. Opening balance
2. Increase during the period
3. Decrease during the period
4. Closing balance
IV. Carrying amount
1. Closing carrying amount 147372147.63 3925870.29 151298017.92
2. Opening carrying amount 158752150.65 107272162.22 266024312.87
Explanation: The reason for other decreases is that the original recognised amount of right-of-use assets was tax included and as
the invoices for leasing have been received the input tax amount offset the original carrying amount of the right-of-use
assets.
(2) Impairment test on right-of-use assets
□ Applicable ? Not applicable
Determination of recoverable amount measured at fair value after deducting disposal expenses
□ Applicable ? Not applicable
Determination of recoverable amount based on the present value of expected future cash flows
□ Applicable ? Not applicable
2025 ANNUAL REPORT 253X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
19. Intangible assets
(1) Particulars of intangible assets
Unit: RMB
Certificates
of third
Item Land use rights Software Patents party right Total
I. Original carrying amount
1. Opening balance 2195765131.05 22964503.01 27493613.05 15908674.87 2262131921.98
2. Increase during the period 2186455.91 2186455.91
(1) Acquisition 2186455.91 2186455.91
3. Decrease during the period 4159004.87 1528538.15 5687543.02
(1) Disposal 4159004.87 1528538.15 5687543.02
4. Closing balance 2193792582.09 21435964.86 27493613.05 15908674.87 2258630834.87
II. Accumulated amortisation
1. Opening balance 569617649.10 22664165.23 1673649.21 15908674.87 609864138.41
2. Increase during the period 48640634.27 18944.09 94950.00 48754528.36
(1) Provision 48640634.27 18944.09 94950.00 48754528.36
3. Decrease during the period 2723219.10 1247144.46 3970363.56
(1) Disposal 2723219.10 1247144.46 3970363.56
4. Closing balance 615535064.27 21435964.86 1768599.21 15908674.87 654648303.21
III. Impairment provision
1. Opening balance
2. Increase during the period
3. Decrease during the period
4. Closing balance
IV. Carrying amount
1. Closing carrying amount 1578257517.82 25725013.84 1603982531.66
2. Opening carrying amount 1626147481.95 300337.78 25819963.84 1652267783.57
As at the end of the period the intangible assets from internal R&D of the Company accounted for 0% of the
balance of intangible assets.Explanation: For details of restricted ownership please refer to note VII. 24.
(2) Information and resources recognised as intangible assets
□ Applicable ? Not applicable
254 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
19. Intangible assets (Continued)
(3) Right-of-use assets without proper title certificates
Unit: RMB
Reason for not yet
obtaining property
Item Carrying amount right certificates
Land (Shandong Chenming Paper Holdings Limited) 1273453.56 Under application
Land (Zhanjiang Chenming Pulp & Paper Co. Ltd.) 55700905.91 Under application
Total 56974359.47
(4) Impairment test on intangible assets
□ Applicable ? Not applicable
20. Goodwill
(1) Original carrying amount of goodwill
Unit: RMB
Increase during Decrease during
the period the period
Arising from
Name of investee or event Opening business
generating goodwill balance combinations Disposal Closing balance
Jilin Chenming Paper Co. Ltd. 14314160.60 14314160.60
Jiangxi Chenming Port Co. Ltd. 8273638.42 8273638.42
Total 22587799.02 22587799.02
(2) Provision for impairment of goodwill
Unit: RMB
Increase during Decrease during
Name of investee or event Opening the period the period
generating goodwill balance Provision Disposal Closing balance
Jilin Chenming Paper Co. Ltd. 14314160.60 14314160.60
Jiangxi Chenming Port Co. Ltd. 8273638.42 8273638.42
Total 22587799.02 22587799.02
2025 ANNUAL REPORT 255X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
20. Goodwill (Continued)
(3) Specific determination of recoverable amount
Determination of recoverable amount as the net amount of fair value less disposal expenses
□ Applicable ? Not applicable
Determination of recoverable amount based on the present value of expected future cash flows
□ Applicable ? Not applicable
(4) Fulfilment of performance undertaking and corresponding impairment of goodwill
Goodwill was formed when a performance undertaking existed and the reporting period or the previous period
fell within the performance undertaking period.□ Applicable ? Not applicable
21. Long-term prepaid expenses
Unit: RMB
Opening Increase during Amortisation Other Closing
Item balance the period during the period deductions balance
Bank financial advisory fees 249308500.01 52485999.96 196822500.05
Woodland expenses 8126767.91 1726097.77 6400670.14
Others 32242278.95 441421.42 3508292.94 29175407.43
Total 289677546.87 441421.42 57720390.67 232398577.62
256 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
22. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before offsetting
Unit: RMB
Closing balance Opening balance
Deductible Deferred Deductible Deferred
temporary income temporary income
Item difference tax assets difference tax assets
Provision for impairment of assets 285110497.72 49745802.22 722577808.85 148433553.46
Outstanding payables 257788652.79 56051325.73
Deferred income 124286727.16 19065837.91 134649677.05 20197451.55
Deductible loss 11848018483.09 1963277198.49 9715020431.43 1565956688.49
Total 12257415707.97 2032088838.62 10830036570.12 1790639019.23
(2) Deferred income tax liabilities before offsetting
Unit: RMB
Closing balance Opening balance
Taxable Deferred Taxable Deferred
temporary income temporary income tax
Item differences tax liabilities differences liabilities
Asset valuation increment from
business combinations involving
entities not under common control 29326095.33 4398914.30 33371073.97 5005661.10
Unrealised gain or loss arising from
intra-group transactions 5072493.44 1268123.36 14360332.90 3590083.23
Total 34398588.77 5667037.66 47731406.87 8595744.33
(3) Deferred income tax assets or liabilities presented as net amount after offsetting
Unit: RMB
Offset of deferred
Offset of deferred Closing balance of income tax assets Opening balance of
income tax assets deferred income tax and liabilities at the deferred income tax
and liabilities at the assets or liabilities beginning of the assets or liabilities
Item end of the period after offsetting period after offsetting
Deferred income tax assets 2032088838.62 1790639019.23
Deferred income tax liabilities 5667037.66 8595744.33
2025 ANNUAL REPORT 257X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
22. Deferred income tax assets/deferred income tax liabilities (Continued)
(4) The breakdown of unrecognised deferred income tax assets
Unit: RMB
Item Closing balance Opening balance
Deductible temporary difference 1892186000.35 5404679879.65
Deductible loss 2419096409.51 2074025508.84
Total 4311282409.86 7478705388.49
(5) Expiry of deductible loss of unrecognised deferred income tax assets falls in the years as follows
Unit: RMB
Year Closing balance Opening balance Remark
2025—208245408.21
2026121576764.07590291155.76
2027354571231.45110332902.30
2028183443840.16425783078.02
20291052221145.73739372964.55
2030707283428.10—
Total 2419096409.51 2074025508.84
23. Other non-current assets
Unit: RMB
Closing balance Opening balance
Impairment Carrying Impairment Carrying
Item Book balance provision amount Book balance provision amount
Payments for engineering and
equipment 139310773.13 8466700.00 130844073.13 125012037.98 125012037.98
Proposed refund for land 288232412.76 288232412.76 288232412.76 288232412.76
Others 2612250.68 2612250.68
Total 427543185.89 8466700.00 419076485.89 415856701.42 415856701.42
258 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
24. Assets with restricted ownerships or right to use
Unit: RMB
End of the period Beginning of the period
Type of Type of
Item Book balance Carrying amount restriction Restriction Book balance Carrying amount restriction Restriction
Fixed assets 39673397581.16 21032970345.50 Charged As collateral for bank 34375256421.29 20001586415.43 Charged As collateral for bank
borrowings and long-term borrowings and long-term
payables (Note VII. 15) payables (Note VII. 15)
Investment 6897297786.90 5357575638.82 Charged As collateral for bank 6742657317.44 5433525500.09 Charged As collateral for bank
property borrowings (Note VII. 14) borrowings (Note VII. 14)
Intangible 1842713402.08 1308852997.82 Charged As collateral for bank 1789243785.12 1312981381.52 Charged As collateral for bank
assets borrowings and long-term borrowings and long-term
payables (Note VII. 19) payables (Note VII. 19)
Long-term 1584342692.88 1578247974.28 Frozen Pledged and locked-up due 1549103158.31 1549103158.31 Frozen Freeze for non-payment
equity to creditors’ rights (Note VII. 12)
investments guarantee (Note VII. 12)
Inventories 764268342.37 741627115.10 Charged As collateral for contract 120195864.99 103566055.40 Court Seizure due to non-payment
and court performance. Seizure due seizure (Note VII. 8)
seizure to non-payment
(Note VII. 8)
Monetary 63728850.28 63728850.28 Pledged As deposits for acceptance 5728747806.12 5728747806.12 Pledged As deposits for acceptance
funds and bills and letters of credit and bills and letters of credit
locked-up security deposits for locked-up security deposits for
loans deposit reserves or loans deposit reserves or
account locked-up account locked-up
freezing by litigation etc. freezing by litigation etc.(Note VII. 1) (Note VII. 1)
Accounts 207017962.56 206147426.74 Pledged As pledge for borrowings
receivable (Note VII. 4)
Total 50825748655.67 30083002921.80 50512222315.83 34335657743.61
Other explanations:
As at 31 December 2025 housing building structure and equipment with the book value of RMB21032970345.50 (31 December
2024: book value of RMB20001586415.43) investment properties with the book value of RMB5357575638.82 (31 December 2024:
book value of RMB5433525500.09) and intangible assets with the book value of RMB1308852997.82 (31 December 2024: book
value of RMB1312981381.52) were pledged as collateral for long-term borrowings of RMB3650321853.80 (31 December 2024:
RMB3669467809.18) short-term borrowings of RMB960000000.00 (31 December 2024: RMB1375200404.98) and long-term payables of
RMB3373734381.04 (31 December 2024: RMB3600767587.75).
2025 ANNUAL REPORT 259X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
25. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMB
Item Closing balance Opening balance
Credit borrowings 11979509006.38 8292279333.33
Guaranteed borrowings 8259872805.64 8087802486.06
Mortgage borrowings 960000000.00 1375200404.98
Discounted borrowings 28450000.00 8179010348.64
Pledged borrowings 846066236.10
Total 21227831812.02 26780358809.11
Explanation of the classification of short-term borrowings:
* For classification and amount of mortgage borrowings and mortgage assets please see 1. Monetary funds and 24. Assets with
restricted ownerships or right to use in Note VII.* Short-term borrowings included accrued interest of RMB115238055.82.* Mortgage borrowings of RMB960000000.00 were also guaranteed by related parties.
(2) Overdue outstanding short-term borrowings
At the end of the period the overdue debts of the Company totalled RMB3271834083.88 of which overdue
short-term borrowings amounted to RMB1246810183.88 and in accordance with Interpretation No. 17
the liabilities transferred to short-term borrowings totalled RMB2025023900.00 including overdue bank
acceptance bills of RMB855023900.00 and overdue long-term borrowings of RMB1170000000.00.Major overdue borrowings
Unit: RMB
Overdue interest
Borrower Closing balance Borrowing rate Overdue time rate
Bank 1 940000000.00 4.90% 2024-12-20 5.78%
Bank 2 167500000.00 3.50% 2025-11-10 5.25%
Bank 3 172700000.00 3.80% 2025-11-13 3.80%
Bank 4 100000000.00 4.50% 2025-1-12 6.75%
Bank 5 100000000.00 5.00% 2025-9-24 7.50%
Total 1480200000.00 － － －
260 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
26. Bills payable
Unit: RMB
Category Closing balance Opening balance
Commercial acceptance bills [ * ] 1213818112.99
Bank acceptance bills [ * ] 210100000.00
Total [ * ] 1423918112.99
Explanation: Total outstanding bills payable due as at the end of the period amounted to RMB3806025623.87 which was classified and
presented as accounts payable short-term borrowings and other payables.
27. Accounts payable
(1) Particulars of accounts payable
Unit: RMB
Item Closing balance Opening balance
Payment for goods 8153559514.97 7272978630.96
Payment for engineering 192204178.21 217322928.02
Payment for equipment 166260317.16 117822089.47
Others 96703042.58 100843758.02
Total 8608727052.92 7708967406.47
(2) Significant accounts payable with more than 1-year aging or overdue
Unit: RMB
Reason for outstanding
Item Closing balance or not transfer
Supplier 537536126.69 Limited working capital
Total 537536126.69
2025 ANNUAL REPORT 261X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
27. Accounts payable (Continued)
(3) Disclosure by ageing
Unit: RMB
Item Closing balance Reason for outstanding or not transfer
Within 1 year (including 1 year) 4594547596.78 As agreed in the contract and failure to
pay in full due to a shortage of funds
1 to 2 years 3715889916.30 As agreed in the contract and failure to
pay in full due to a shortage of funds
2 to 3 years 75845709.26 As agreed in the contract and failure to
pay in full due to a shortage of funds
Over 3 years 222443830.58 As agreed in the contract and failure to
pay in full due to a shortage of funds
Total 8608727052.92
The basis used by the ageing analysis of the accounts payable of the Company: the ageing of accounts payable
is the length of time of the Company’s outstanding accounts payable based on invoice date. The closing
balance is recognised one by one from the end of the period onwards until the amounts add up to the balance.It is also broken up by intervals of within 1 year 1-2 years 2-3 years and over 3 years.
(4) Are there any overdue payments to small – and medium-sized enterprises
? Yes □ No
Unit: RMB
Number of overdue contracts 1040.00
Amount of overdue contracts 1075928514.54
Outstanding overdue amount 1066903382.95
Detailed explanation of overdue payments: Some payments were not paid on schedule due to shutdown for
maintenance of some production bases of the Company in 2025.
262 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
28. Other payables
Unit: RMB
Item Closing balance Opening balance
Other payables 4122796378.76 2710367670.63
Dividend payable 428732780.80 63042283.31
Interest payable 220493880.88 123000000.00
Total 4772023040.44 2896409953.94
(1) Interest payable
Unit: RMB
Item Closing balance Opening balance
Interest on overdue borrowings 227513016.88 49289730.81
Interest on overdue bills 139431608.24 2397040.00
Interest on overdue appropriation of funds 38266578.75 8842575.24
Interest on overdue finance lease payments 23521576.93 2512937.26
Total 428732780.80 63042283.31
2025 ANNUAL REPORT 263X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
28. Other payables (Continued)
(2) Dividend payable
Unit: RMB
Item Closing balance Opening balance
Minority shareholder 1 42000000.00 42000000.00
Minority shareholder 2 30000000.00
Minority shareholder 3 30000000.00
Minority shareholder 4 28323937.26
Minority shareholder 5 27000000.00 27000000.00
Minority shareholder 6 24000000.00
Minority shareholder 7 21000000.00
Minority shareholder 8 18000000.00
Minority shareholder 9 113295.75
Minority shareholder 10 56647.87
Minority shareholder 11 54000000.00
Total 220493880.88 123000000.00
(3) Other payables
Other payables by nature
Unit: RMB
Item Closing balance Opening balance
Open credit 3366576146.66 2194650156.21
Accrued expenses 476305081.06 282776392.24
Guarantee deposit deposit and warranty 204143549.97 182034513.50
Others 75771601.07 50906608.68
Total 4122796378.76 2710367670.63
264 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
29. Receipts in advance
(1) Particulars of receipts in advance
Unit: RMB
Item Closing balance Opening balance
Prepaid rents and property fees 61929311.57 54538940.24
Total 61929311.57 54538940.24
30. Contract liabilities
Unit: RMB
Item Closing balance Opening balance
Payment for goods in advance 296299701.36 274829824.35
Total 296299701.36 274829824.35
31. Staff remuneration payables
(1) Particulars of staff remuneration payables
Unit: RMB
Increase Decrease
Opening during the during the
Item balance period period Closing balance
I. Short-term remuneration 249763696.29 795682148.96 684642598.16 360803247.09
II. Retirement benefit plan-defined
contribution scheme 1623963.71 187116191.45 179948901.60 8791253.56
III. Termination benefits 382858.76 382858.76
Total 251387660.00 983181199.17 864974358.52 369594500.65
2025 ANNUAL REPORT 265X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
31. Staff remuneration payables (Continued)
(2) Particulars of short-term remuneration
Unit: RMB
Increase Decrease
Opening during the during the Closing
Item balance period period balance
1. Salaries bonuses allowance and
subsidies 226577081.55 601038801.30 523229077.21 304386805.64
2. Staff welfare 24238881.03 24238881.03
3. Social insurance premium 556514.71 85424332.63 82084533.14 3896314.20
Of which: Medical insurance
premium 509385.25 76195213.46 73759231.62 2945367.09
Work-related injury
insurance premium 10519.09 7722059.16 7065943.57 666634.68
Maternity insurance
premium 36610.37 1507060.01 1259357.95 284312.43
4. Housing provident funds 11133496.47 72119502.10 51219664.26 32033334.31
5. Union funds and workers’
education 10352340.61 12683915.90 3866848.74 19169407.77
6. Other short-term remuneration 1144262.95 176716.00 3593.78 1317385.17
Total 249763696.29 795682148.96 684642598.16 360803247.09
(3) Defined contribution plan
Unit: RMB
Increase Decrease
Opening during the during the Closing
Item balance period period balance
1. Basic pension insurance premiums 1263873.32 179429117.90 172732472.24 7960518.98
2. Unemployment insurance
premiums 360090.39 7687073.55 7216429.36 830734.58
Total 1623963.71 187116191.45 179948901.60 8791253.56
266 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
32. Tax payables
Unit: RMB
Property tax Closing balance Opening balance
Property tax 87753548.45 44930390.41
Value added tax 61371499.03 86589345.15
Land use tax 24244163.62 19563508.13
Land appreciation tax 7876101.58 2024028.20
Stamp duty 7340819.31 11784134.43
Resource tax 4197008.75 5839230.84
Environmental protection tax 3671483.63 3282700.03
Urban maintenance and construction tax 2452751.51 5779995.16
Educational surcharges and others 2217514.48 4599189.85
Individual income tax 1392474.96 2280921.30
Enterprise income tax 651191.83 6750896.17
Total 203168557.15 193424339.67
33. Non-current liabilities due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term borrowings due within one year 1708085598.10 1207756283.94
Long-term payables due within one year 603473207.11 367723693.41
Lease liabilities due within one year 1613098.62 2456986.79
Total 2313171903.83 1577936964.14
34. Other non-current liabilities
Unit: RMB
Item Closing balance Opening balance
Overdue finance leasing borrowings 1471511608.24 2680562600.58
Overdue factoring borrowings 68000000.00
Total 1539511608.24 2680562600.58
2025 ANNUAL REPORT 267X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
35. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMB
Item Closing balance Opening balance
Mortgage borrowings 3650321853.80 3669467809.18
Credit borrowings 1921655004.17 1221043391.30
Guaranteed borrowings 1712619479.85 1080907277.70
Subtotal 7284596337.82 5971418478.18
Less: Long-term borrowings due within one year 1708085598.10 1207756283.94
Total 5576510739.72 4763662194.24
Types of long-term borrowings explanation:
* For classification and amount of mortgage borrowings and mortgage assets please see 1. Monetary funds and 24. Assets with
restricted ownerships or right to use in Note VII.* In accordance with Interpretation No. 17 the Company reclassified long-term payables that were past due and non-current
liabilities that were previously reported as due within one year. The loan agreement stipulates that in the event of a loan overdue
the creditor shall require the borrower to immediately repay the full amount of the loan. Since the above debts had triggered the
default clause in the contract and no extension agreement had been reached with the creditors on the balance sheet date based
on the characteristics of liquidity risk and the immediacy of repayment obligations the Company adjusted the full amount of the
book balance to the “short-term borrowings” account.* Among mortgage borrowings borrowings of RMB3329331101.20 have been guaranteed by related parties.* Long-term borrowings included accrued interest of RMB25696013.93 of which the accrued interest of long-term borrowings
due within one year was RMB15922892.68.
(2) Analysis of long-term borrowings
Unit: RMB
The carrying amounts of the above borrowings are
due within the following periods: Closing balance Opening balance
Within one year 1708085598.10 1207756283.94
More than one year but not more than two years from
the balance sheet date 401068331.22 1658505512.29
More than two years but not more than five years from
the balance sheet date 3615262317.52 1094831874.75
More than five years from the balance sheet date 1560180090.98 2010324807.20
Subtotal 7284596337.82 5971418478.18
Less: Amounts due within one year as shown under
current liabilities 1708085598.10 1207756283.94
Total 5576510739.72 4763662194.24
268 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
36. Lease liabilities
Unit: RMB
Item Closing balance Opening balance
Lease payments payable 47313243.06 52866869.42
Less: Unrecognised financing expenses 11349895.34 13317409.57
Subtotal 35963347.72 39549459.85
Less: Lease liabilities due within one year 1613098.62 2456986.79
Total 34350249.10 37092473.06
37. Long-term payables
Unit: RMB
Item Closing balance Opening balance
Long-term payables 1685368809.50 774965008.29
Total 1685368809.50 774965008.29
Other explanations: In accordance with Interpretation No. 17 the Company reclassified long-term payables that were past due and
non-current liabilities that were previously reported as due within one year. The loan agreement stipulates that in the
event of a loan overdue the creditor shall require the borrower to immediately repay the full amount of the loan. Since
the above debts had triggered the default clause in the contract and no extension agreement had been reached with
the creditors on the balance sheet date based on the characteristics of liquidity risk and the immediacy of repayment
obligations the Company adjusted the full amount of the book balance to the “other current liabilities” account.
2025 ANNUAL REPORT 269X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
37. Long-term payables (Continued)
(1) Long-term payables by nature
Unit: RMB
Item Closing balance Opening balance
Financial leasing borrowings 3373734381.04 3600767587.75
China Development Bank Special Fund 275000000.00 275000000.00
Contributions by other partners 140894158.22 137894158.22
Retention for the financial leasing operations 6000000.00
Subtotal 3789628539.26 4019661745.97
Less: Long-term payables due within one year 603473207.11 367723693.41
Less: Other current liabilities 1500786522.65 2876973044.27
Total 1685368809.50 774965008.29
Other explanations:
Contributions by other partners refer to the contributions made by other partners to Weifang Chenming Growth Driver Replacement
Equity Investment Fund Partnership (Limited Partnership) and Weifang Chendu Equity Investment Partnership (Limited Partnership) and
such contributions are reclassified as financial liabilities on a consolidation basis.
38. Provisions
Unit: RMB
Item Closing balance Opening balance Reason
Late fees relating to taxes 22299945.73 Estimated late fees relating to taxes
Pending litigations 5935000.00 5935000.00 Estimated compensation for losses
Total 28234945.73 5935000.00
Other explanations:
The Company was involved in a number of legal proceedings and a total of RMB5935000.00 was provided as provisions based on the
potential compensation for losses
270 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
39. Deferred income
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance Reason
Government grants 1240939485.52 [●] 156356670.76 1084582814.76 Financial provision
Total 1240939485.52 [●] 156356670.76 1084582814.76 －
Items in respect of government grants:
Unit: RMB
Included in Written down
New grants non-operating Included in against cost
Opening during the income for other income expenses for Asset-related/
Liability item balance period the period for the period the period Other changes Closing balance income-related
Funding for environmental protection 478415952.52 50928082.72 427487869.80 Asset-related
Huanggang forestry-pulp-paper
project 420942087.45 25026217.80 41377787.52 354538082.13 Asset-related
Infrastructure and environmental
protection engineering 185285787.80 11517589.48 12227345.28 161540853.04 Asset-related
Financial subsidies for technological
transformation project 89417910.72 9333104.96 80084805.76 Asset-related
Zhanjiang forestry-pulp-paper project 38522698.43 4094632.92 34428065.51 Asset-related
Project fund for National Key
Technology Research and
Development Program 629025.00 164700.00 464325.00 Asset-related
Others 27726023.60 1687210.08 26038813.52 Asset-related
Total 1240939485.52 102751537.96 53605132.80 1084582814.76
40. Share capital
Unit: RMB
Increase/decrease during the year (+/-)
Shares
converted
Opening balance New issue Bonus issue from reserves Others Subtotal Closing balance
Total number of shares 2934556200.00 2934556200.00
2025 ANNUAL REPORT 271X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
41. Capital reserves
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance
Share premium 4478658035.54 35625000.00 2024392.96 4512258642.58
Other capital reserves 729020587.21 729020587.21
Total 5207678622.75 35625000.00 2024392.96 5241279229.79
Other explanations including changes (increase or decrease) during the period and reasons for such changes: Shouguang Chenming Art Paper
Co. Ltd. a subsidiary of the Company distributed dividends to the Company during the period resulting in an increase in capital reserves
of RMB35625000.00 under equity transaction; Chenming (HK) Limited a subsidiary of the Company acquired 25% minority interests in
Shouguang Chenming Art Paper Co. Ltd. resulting in a decrease in capital reserves of RMB2024392.96.
42. Other comprehensive income
Other comprehensive income attributable to the Company in the balance sheet is as follows:
Unit: RMB
Amount for the
period
Less: Transferred
from other
comprehensive
income in prior
Attributable to periods to retained
parent company profit during the
Item Opening balance after tax period Closing balance
I. Other comprehensive income that cannot be
reclassified to profit or loss
II. Other comprehensive income that will be
reclassified to profit and loss -913708670.15 -1679749.77 -915388419.92
1. Other comprehensive income that may be
reclassified to profit and loss under the
equity method -4769636.88 -7962815.66 -12732452.54
2. Exchange differences arising from
translation of financial statements
denominated in foreign currencies -908939033.27 6283065.89 -902655967.38
Total other comprehensive income -913708670.15 -1679749.77 -915388419.92
272 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
42. Other comprehensive income (Continued)
Other comprehensive income attributable to the parent company in the income statement:
Unit: RMB
Amount during the period
Less: Transferred
from other
comprehensive
income in prior Less: Attributable
Incurred before periods to profit to minority Attributable to
income tax for or loss during Less: Income shareholders parent company
Item the period the period tax expenses after tax after tax
I. Other comprehensive income that cannot
be reclassified to profit or loss
II. Other comprehensive income that will be
reclassified to profit and loss -1679749.77 -1679749.77
1. Other comprehensive income that may
be reclassified to profit and loss under
the equity method -7962815.66 -7962815.66
2. Exchange differences arising from
translation of financial statements
denominated in foreign currencies 6283065.89 6283065.89
Total other comprehensive income -1679749.77 -1679749.77
43. Special reserves
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance
Production safety expenses 26800491.53 14684739.69 2941960.86 38543270.36
Total 26800491.53 14684739.69 2941960.86 38543270.36
44. Surplus reserves
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance
Statutory surplus reserves 1212009109.97 1212009109.97
Total 1212009109.97 1212009109.97
2025 ANNUAL REPORT 273X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
45. General risk provisions
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance
General risk provisions 80950584.11 12901833.01 68048751.10
Total 80950584.11 12901833.01 68048751.10
Explanation: The decrease in general risk provisions during the period was due to the disposal of the subsidiary Shandong Chenming
Commercial Factoring Co. Ltd. The closing balance of general risk provisions was accrued by the Company’s subsidiary
Shandong Chenming Group Finance Co. Ltd based on 1% of the balance of the receivables.
46. Retained profit
Unit: RMB
Item The period The prior period
Retained profit as at the end of the prior period before adjustment 607818020.70 8020182801.55
Adjustment to opening balance of retained earnings
(increase + decrease -)
Opening balance of retained profit after adjustment 607818020.70 8020182801.55
Add: Net profit for the period attributable to shareholders
of the parent company -8295932402.88 -7410784491.65
Less: Transfer of general risk reserves -12901833.01 1580289.20
Retained profit as at the end of the period -7675212549.17 607818020.70
274 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
47. Revenue and operating costs
Unit: RMB
Amount for the period Amount for the prior period
Item Revenue Costs Revenue Costs
Principal activities 6117796647.11 8551284791.74 22602034544.86 22085665323.51
Other activities 68753596.86 51073295.67 127440307.90 59163344.92
Total 6186550243.97 8602358087.41 22729474852.76 22144828668.43
The lower of the audited total profit net profit net profit after deducting extraordinary gains or losses of the Company
during the reporting period is a negative number
? Yes □ No
Unit: RMB
Item Current year Specific deductions Prior year Specific deductions
Revenue 6186550243.97 22729474852.76
Total deductions from revenue 68753596.86 Revenue from sales of materials of 159980820.39 Revenue from sales of materials of
RMB29363912.91 and other RMB105595945.36 and other
revenue of RMB39389683.95. revenue of RMB54384875.03.Proportion of total deductions from revenue to 1.11% 0.70%
revenue
I. Revenue from operations not related to
principal operations
1. Revenue from operations other than normal 68753596.86 Revenue from sales of materials 159980820.39 Revenue from sales of materials
operation such as revenue realised from of RMB29363912.91 and other of RMB105595945.36 and other
leasing fixed assets intangible assets revenue of RMB39389683.95. revenue of RMB54384875.03.packaging materials sales of materials
exchanges for non-monetary assets with
materials engaging in entrusted management
business and revenue included in revenue
from principal operations but generated from
operations other than normal operation of the
Company.Subtotal of revenue from operations not related 68753596.86 Revenue from sales of materials of 159980820.39 Revenue from sales of materials of
to principal operations RMB29363912.91 and other RMB105595945.36 and other
revenue of RMB39389683.95. revenue of RMB54384875.03.II. Income without commercial substance
III. Other income not related to the principal
operations or without commercial substance
Revenue after deductions 6117796647.11 Revenue from sales of materials of 22569494032.37 Revenue from sales of materials of
RMB29363912.91 and other RMB105595945.36 and other
revenue of RMB39389683.95. revenue of RMB54384875.03.
2025 ANNUAL REPORT 275X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
47. Revenue and operating costs (Continued)
Breakdown of revenue and operating costs:
Unit: RMB
Machine-made paper Financial services Hotel and property rentals Others Total
Category of contract Revenue Operating costs Revenue Operating costs Revenue Operating costs Revenue Operating costs Revenue Operating costs
Type of business 5987245980.96 8286577826.62 6816454.86 39303.45 148204363.73 208184229.49 44283444.42 107556727.85 6186550243.97 8602358087.41
Including:
Machine-made paper 4209486448.14 6476422202.79 4209486448.14 6476422202.79
Chemical pulp 1539769602.57 1529284223.52 1539769602.57 1529284223.52
Electricity and steam 173515289.61 229531430.07 173515289.61 229531430.07
Construction materials 2695946.74 13444492.96 2695946.74 13444492.96
Property and rentals 146618394.97 208181527.93 146618394.97 208181527.93
Paper chemicals 104714.23 104963.91 104714.23 104963.91
Others 64369926.41 51235006.33 6816454.86 39303.45 1585968.76 2701.56 41587497.68 94112234.89 114359847.71 145389246.23
By geographical area 5987245980.96 8286577826.62 6816454.86 39303.45 148204363.73 208184229.49 44283444.42 107556727.85 6186550243.97 8602358087.41
Including:
Mainland China 5595387435.30 7829760017.12 6816454.86 39303.45 148204363.73 208184229.49 44283444.42 107556727.85 5794691698.31 8145540277.91
Other countries and
regions 391858545.66 456817809.50 391858545.66 456817809.50
By the timing of delivery 5987245980.96 8286577826.62 6816454.86 39303.45 148204363.73 208184229.49 44283444.42 107556727.85 6186550243.97 8602358087.41
Including:
Goods (at a point in time) 5810811154.63 8055626090.88 15954761.24 5464217.66 44118515.36 101945953.13 5870884431.23 8163036261.67
Services (within a certain
period) 176434826.33 230951735.74 6816454.86 39303.45 132249602.49 202720011.83 164929.06 5610774.72 315665812.74 439321825.74
By sales channel 5987245980.96 8286577826.62 6816454.86 39303.45 148204363.73 208184229.49 44283444.42 107556727.85 6186550243.97 8602358087.41
Including:
Distribution 4250770191.32 5919099434.30 4250770191.32 5919099434.30
Direct sales 1736475789.64 2367478392.32 6816454.86 39303.45 148204363.73 208184229.49 44283444.42 107556727.85 1935780052.65 2683258653.11
Total 5987245980.96 8286577826.62 6816454.86 39303.45 148204363.73 208184229.49 44283444.42 107556727.85 6186550243.97 8602358087.41
Explanation: Disclosure of revenue from contracts with customers was based on the breakdown information by major
category as well as the relationship between the breakdown and the revenue of each reportable segment.
276 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
47. Revenue and operating costs (Continued)
Breakdown of revenue from principal activities
* By industry
Unit: RMB
Amount for the year Amount for the prior year
Name of industry Revenue Costs Revenue Costs
Machine-made paper 4209486448.14 6476422202.79 20179848508.57 19870513391.35
Chemical pulp 1539769602.57 1529284223.52 1519262130.75 1370195011.59
Electricity and steam 173515289.61 229531430.07 216763239.54 259600886.37
Hotel and property rentals 146618394.97 208181527.93 193494961.95 213050117.25
Construction materials 2695946.74 13444492.96 127783427.12 135982330.21
Paper chemicals 104714.23 104963.91 88627247.45 76919302.04
Others 45606250.85 94315950.56 276255029.48 159404284.70
Total 6117796647.11 8551284791.74 22602034544.86 22085665323.51
* Machine-made paper by main product type
Unit: RMB
Amount for the year Amount for the prior year
Name of industry Revenue Costs Revenue Costs
Coated paper 1377624572.84 1352622852.37 3758928113.95 3263366438.24
Duplex press paper 943510985.22 1029636395.75 6117888314.70 5767014322.77
Electrostatic paper 557850204.85 662418845.01 3547162310.53 3146628608.35
White paper board 514738628.42 520133310.95 4553056974.25 5140713897.07
Anti-sticking raw paper 468615431.58 446373350.81 909489122.98 772483237.25
Thermal paper 111375090.91 123577428.62 432929902.58 422071788.54
Others 235771534.32 283540453.44 860393769.58 814075382.06
Shutdown loss 2058119565.84 544159717.07
Total 4209486448.14 6476422202.79 20179848508.57 19870513391.35
2025 ANNUAL REPORT 277X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
47. Revenue and operating costs (Continued)
* Machine-made paper by geographical segment
Unit: RMB
Amount for the year Amount for the prior year
Name of industry Revenue Costs Revenue Costs
Mainland China 3817627902.48 6019604393.29 15532435260.58 15238409893.90
Other countries and regions 391858545.66 456817809.50 4647413247.99 4632103497.45
Total 4209486448.14 6476422202.79 20179848508.57 19870513391.35
* Revenue from top 5 customers
Unit: RMB
Percentage of the
Total revenue from total revenue in the
Period top 5 customers same period (%)
20251731623559.3527.98%
20246640449070.9229.22%
Information related to performance obligations:
Company’s
Nature of goods Whether the commitments
Time for fulfilment that the Company person is the expected to Types of quality assurance
of performance Significant terms of undertakes to primary person be refunded to offered by the Company and
Item obligations payment transfer in charge customers related obligations
Machine-made Domestic sales on the Domestic sales tend Produces easily Yes None Guaranteed quality assurance
paper day of delivery to the to be provided on distinguishable should there be objections to
customer; foreign an invoice basis; product quality within 7 days
sales on the day of foreign sales tend of arrival the products can
customs clearance to be prepaid be returned and exchanged
Information related to the transaction price allocated to residual performance obligations:
As at the end of the reporting period the amount of revenue with signed contracts but unfulfilled or uncompleted
performance obligation was RMB1293935904.26 in which RMB1293935904.26 was expected to be recognised in
2026.
278 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
48. Taxes and surcharges
Unit: RMB
Amount for Amount for
Item the period the prior period
Property tax 82976959.04 85290265.89
Land use tax 18888157.88 41247568.81
Stamp duty 11730025.57 46117978.93
Resource tax 7707877.36 12908476.74
Urban maintenance and construction tax 5783629.03 13956911.51
Environmental tax 3709521.34 12876424.84
Educational surcharges 2377544.73 6220575.30
Local education surcharges 1585500.00 4147050.24
Water conservation funds 94612.39 901231.53
Others 129247.05 2294796.67
Total 134983074.39 225961280.46
Explanation: For details of the calculation basis of various taxes and surcharges please refer to Note VI Taxes.
49. General and administrative expenses
(1) Breakdown of administrative expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Wages and surcharges 222286595.52 246167228.89
Depreciation expenses 123391294.46 128779641.74
Amortisation of intangible assets and long-term expenses 44323326.48 51506321.75
Welfare expenses 25657060.47 45660222.08
Intermediary service expenses 13834703.84 22648125.77
Litigation expenses 12010355.43 23259822.70
Legal costs 9363344.00 47505377.69
Business hospitality expenses 9360218.93 90745828.51
Insurance premium 9294595.87 14953971.53
Repair cost and consumption of materials 8212165.59 15827440.75
Travel expenses 7770528.17 11382389.61
Office expenses 1890074.87 3249506.16
Termination benefits expenses 385394.68 2591967.39
Others 27287688.86 46891129.43
Total 515067347.17 751168974.00
2025 ANNUAL REPORT 279X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
49. General and administrative expenses (Continued)
(2) Breakdown of auditor expenses under administrative expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Audit expenses for financial statements 2641509.43 2641509.43
Audit expenses for internal control 1037735.85 1037735.85
Other service expenses 344339.62 [* ]
Total 4023584.91 3679245.28
50. Sales and distribution expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Wages and surcharges 65051299.02 132918538.10
Travel expenses 8834560.40 28721204.65
Business hospitality expenses 7684767.30 47459555.70
Rental expenses 6836817.00 6921416.15
Depreciation expenses 4598036.59 4742847.33
Selling commissions 1365896.54 4618204.21
Office expenses 329795.94 2117947.35
Others 9620196.69 13671395.63
Total 104321369.48 241171109.12
51. Research and development expense
Unit: RMB
Amount for Amount for
Item the period the prior period
Wages and surcharges 37658159.83 123022797.35
Depreciation expenses 33641802.58 64184587.23
Insurance premium 8025011.32 25909846.14
Consumption of materials 6591941.90 725049519.67
Utilities 2699288.88 130904560.17
Welfare expenses 1843032.00 4556030.19
Housing provident funds 1629610.20 4151966.75
Union funds 523578.63 1271458.04
Other expenses 648586.15 1280988.88
Total 93261011.49 1080331754.42
280 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
52. Finance expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Interest expenses 1603023405.76 1869661335.22
Less: Capitalised interest amount
Interest income 88939981.38 182479117.53
Foreign exchange gains and losses -6516528.86 -50235759.26
Less: Capitalisation of foreign exchange gains and losses
Bank charges and others 128427969.15 331036008.91
Total 1635994864.67 1967982467.34
53. 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 102751537.96 104694629.18
Government grants – directly included in profit or loss 16403688.04 15808074.49
Additional deduction of VAT 15295723.71 174580943.06
Refund of handling fees for withholding and payment
of individual income tax 215397.47 513801.11
Gain on debt restructuring -36820293.24 205966.46
Total 97846053.94 295803414.30
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 2419619.63 -9757917.81
Other non-current financial assets -16120945.31 -29047290.52
Gain on change in fair value of consumable biological
assets measured at fair value -135025589.35 -153411759.17
Total -148726915.03 -192216967.50
Note 1: The breakdown of gain on change in fair value of the financial assets held for trading is as follows:
Item Amount for the period Amount for the prior period
Investments in non-trading equity instruments-Equity investments 2419619.63 -9757917.81
2025 ANNUAL REPORT 281X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
55. Investment income
Unit: RMB
Amount for Amount for
Item the period the prior period
Dividend on financial assets held for trading and other
non-current financial assets 1384673.77 23957613.40
Investment gain on disposal or deregistration of subsidiaries -13860273.93 -2985381.21
Investment gain on derecognition of financial assets -594689754.74 -101812317.04
Income from long-term equity investments accounted for
using the equity method -941658122.36 -689387136.28
Gain on debt restructuring 3313951.9
Total -1548823477.26 -766913269.23
56. Credit impairment loss
Unit: RMB
Amount for Amount for
Item the period the prior period
Bad debt loss of accounts receivable -300491506.17 -738698849.57
Bad debt loss of other receivables -463774928.36 -991241165.49
Bad debt loss of financial lease payments -1331187543.87 -1468149193.40
Total -2095453978.40 -3198089208.46
57. Loss on impairment of assets
Unit: RMB
Amount for Amount for
Item the period the prior period
Impairment losses on goodwill -8273638.42
Impairment losses on investment properties -6690930.16 -102227990.09
Impairment losses on bearer biological assets -7509762.39 -9352071.80
Impairment losses on construction in progress -7646717.01 -106382270.42
Impairment losses on other non-current assets -8466700.00
Impairment losses on long-term equity investments -27724285.34 -17088890.78
Inventory impairment losses -28350747.41 -20403446.82
Impairment losses on fixed assets -469790660.77 -69027097.92
Total -556179803.08 -332755406.25
282 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
58. Gain on disposal of assets
Unit: RMB
Amount for Amount for
Source of gain on disposal of assets the period the prior period
Gain on disposal of fixed assets (“-” denotes loss) 1845812.40 27626956.14
Gain on disposal of intangible assets (“-” denotes loss) 3555505.39
Sublease (“-” denotes loss) 4204825.88 27779307.50
Total 9606143.67 55406263.64
59. Non-operating income
Unit: RMB
Included in
non-recurring
Amount for Amount for profit or loss
Item the period the prior period in the period
Exempted debts 199933.10 766729.62 199933.10
Fines compensation income 332273.86 3064805.35 332273.86
Gain on damage and retirement of
non-current assets 434344.88 836632.57 434344.88
Others 452328.59 479470.17 452328.59
Total 1418880.43 5147637.71 1418880.43
2025 ANNUAL REPORT 283X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
60. Non-operating expenses
Unit: RMB
Included in
non-recurring
Amount for Amount for profit or loss
Item the period the prior period in the period
Utilisation cancellation and trading of carbon
emission quota 1806975.37 10143868.80 1806975.37
Loss on damage and retirement of
non-current assets 9292904.04 18017286.66 9292904.04
Litigation compensation 19071077.55 8683133.63 19071077.55
Fines and late payment charges 30084231.99 369107.90 30084231.99
Donation 300000.00
Others 210423.25 90780.95 210423.25
Total 60465612.20 37604177.94 60465612.20
61. Income tax expenses
(1) Particulars of income tax expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Current income tax calculated according to tax law and
related regulations 7225398.42 29520796.36
Deferred income tax expenses -244596647.54 -89692493.81
Total -237371249.12 -60171697.45
284 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
61. Income tax expenses (Continued)
(2) The reconciliation between accounting profit and income tax expenses
Unit: RMB
Amount for
Item the period
Total profit -9200214218.57
Income tax expenses calculated at statutory (or applicable) tax rates -1380032132.79
Effect of different tax rates applicable to certain subsidiaries -880331421.03
Adjustments to income tax for prior periods 32670497.36
Profit and loss of joint ventures and associates accounted for using the equity method 217943975.96
Income not subject to tax (listed with “-”)
Non-deductible costs expenses and losses 10664903.27
The impact of tax rate changes on the opening deferred income tax balance -116209590.21
Tax effect of utilisation of unrecognised deductible losses and deductible temporary
differences in the previous year (listed with “-”) -6696233.07
Tax effect of utilisation of unrecognised deductible losses and deductible temporary
differences 1892193552.89
Tax effect of R&D fee deduction (listed with “-”) -7213150.92
Tax incentives such as 10% deduction for income from particle board -361650.58
Income tax expense -237371249.12
62. Items on statements of cash flow
(1) Cash relating to operating activities
Cash received relating to other operating activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Net proceedings from the financial leasing business 343872799.18 260647420.02
Finance expenses – Interest income 38463083.47 145479117.53
Government grants 16619085.51 24021791.25
Default penalty and fine 332273.86 882182.24
Open credit and other income 30758072.72 93824314.21
Total 430045314.74 524854825.25
2025 ANNUAL REPORT 285X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
62. Items on statements of cash flow (Continued)
(1) Cash relating to operating activities (Continued)
Cash paid relating to other operating activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Transportation expenses 151156136.86 658951178.78
Cargo handling charges 21300424.52 22750943.01
Intermediary service expenses 21148844.44 57572669.84
Business hospitality expenses 16949640.52 120249429.77
Travel expenses 16545678.22 39774276.92
Waste disposal expenses 14391261.36 19349998.12
Insurance premium 9735809.70 9735854.15
Leasing expenses 8380837.98 13784498.82
Repair expenses 7438068.15 11283362.12
Financial institutions charge 5013385.08 251788057.09
Office expenses 2215626.32 10013183.60
Net investment in factoring business 127400000.00
Others 74714356.00 82890384.62
Total 348990069.15 1425543836.84
(2) Cash relating to investing activities
Significant cash received relating to investing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Net cash received from disposal of subsidiaries 330186207.35 503938946.58
Total 330186207.35 503938946.58
286 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
62. Items on statements of cash flow (Continued)
(2) Cash relating to investing activities (Continued)
Significant cash paid relating to investing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Net cash paid for acquisition of subsidiaries 508955916.13
Total 508955916.13
(3) Cash relating to financing activities
Cash received relating to other financing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Net recovery of guarantee deposit 5665018955.84 5592493318.93
Equipment leaseback 25400000.00 1246000000.00
Total 5690418955.84 6838493318.93
2025 ANNUAL REPORT 287X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
62. Items on statements of cash flow (Continued)
(3) Cash relating to financing activities (Continued)
Cash paid relating to other financing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Repayment of equipment leaseback 185272956.66 2134347896.07
Acquisition of non-controlling interests 35748432.27 300000000.00
Current accounts 3395000.00 68200000.00
China Development Bank equity 68750000.00
Share repurchase under the share incentive scheme 67391949.19
Security deposit for financial leasing 22550000.00
Lease payable 1465902.88
Total 224416388.93 2662705748.14
Changes in liabilities arising from financing activities
? Applicable □Not applicable
Unit: RMB
Increase during the period Decrease during the period
Item Opening balance Cash changes Non-cash changes Cash changes Non-cash changes Closing balance
Short-term borrowings 26780358809.11 15735746660.13 1420444943.18 22342418600.40 366300000.00 21227831812.02
Long-term borrowings 5971418478.18 2156540905.58 315026181.55 922392321.92 235996905.57 7284596337.82
Long-term payables 4019661745.97 25400000.00 185272956.66 70160250.05 3789628539.26
Other payables (financing) 1071906381.38 1251178590.88 812601179.97 34082388.31 1476401403.98
Lease liabilities 39549459.85 1967514.23 5553626.36 35963347.72
Total 37882894874.49 19168866156.59 1737438638.96 24262685058.95 712093170.29 33814421440.80
288 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
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 -8962842969.45 -7793019417.29
Add: Provision for asset impairment 2651633781.48 3530844614.71
Depreciation of fixed assets depreciation of oil and gas
assets and depreciation of bearer biological assets 2266800642.52 2309092359.37
Depreciation of right-of-use assets 14536359.33 9158391.16
Amortisation of intangible assets 48754528.36 53604298.74
Amortisation of long-term prepaid expenses 57720390.67 17291989.71
Loss on disposal of fixed assets intangible assets and
other long-term assets (“-” denotes gain) -9606143.67 -55406263.64
Loss on retirement of fixed assets (“-” denotes gain 8858559.16 17180654.09
Loss on changes in fair value (“-” denotes gain) 148726915.03 192216967.50
Finance expenses (“-” denotes gain) 1603023405.76 1869661335.22
Investment loss (“-” denotes gain) 1548823477.26 766913269.23
Decrease in deferred income tax assets (“-” denotes
increase) -241449819.39 -100781137.74
Increase in deferred income tax liabilities (“-” denotes
decrease) -2928706.67 -894414.72
Decrease in inventories (“-” denotes increase) -682563995.34 1876512079.56
Decrease in operating receivables (“-” denotes increase) 1969584950.08 795688330.88
Increase in operating payables (“-” denotes decrease) -175862967.42 -864871392.18
Others
Net cash flows from operating activities 243208407.71 2623191664.60
2. Major investing and financing activities not involving cash
settlements:
Capital converted from debts
Convertible corporate bonds due within one year
Fixed assets under finance leases
Addition of right-of-use assets 103125000.00
3. Net change in cash and cash equivalents:
Closing balance of cash 137296882.34 151943246.31
Less: Opening balance of cash 151943246.31 764233742.61
Add: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -14646363.97 -612290496.30
2025 ANNUAL REPORT 289X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
63. Supplementary information on cash flow statement (Continued)
(2) Net cash paid for acquisition of subsidiaries in current period
Unit: RMB
Amount
Cash or cash equivalents paid in the current period for merger during the period 512000000.00
Of which: Weifang Chenchuang Equity Investment Fund Partnership
(Limited Partnership) 512000000.00
Less: Cash and cash equivalents held by subsidiaries at the date of acquisition 3044083.87
Of which: Weifang Chenchuang Equity Investment Fund Partnership
(Limited Partnership) 3044083.87
Net cash paid for acquisition of subsidiaries 508955916.13
(3) Net cash from disposal of subsidiaries received in current period
Unit: RMB
Amount
Cash or cash equivalents received in the current period from disposal of subsidiaries
during the period 330650000.00
Of which: Shandong Shengming Corporate Management Co. Ltd. 330000000.00
Shouguang Wei Yuan Logistics Company Limited 650000.00
Less: Cash and cash equivalents held by the subsidiary on the date of loss of control 463792.65
Of which: Shandong Shengming Corporate Management Co. Ltd. 463792.65
Shouguang Wei Yuan Logistics Company Limited
Net cash received from disposal of subsidiaries 330186207.35
(4) Cash and cash equivalents composition
Unit: RMB
Item Closing balance Opening balance
I. Cash 137296882.34 151943246.31
Of which: Treasury cash 2409711.16 1363319.76
Bank deposit that can be used for payment at any time 134887171.18 150579926.55
II. Cash equivalent
Of which: Bond investment with maturity within 3 months
III. Balance of cash and cash equivalents as at the end of
the period 137296882.34 151943246.31
Of which: Restricted cash and cash equivalents used by
the Company or subsidiaries within the Group
290 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
63. Supplementary information on cash flow statement (Continued)
(5) Monetary funds other than cash and cash equivalents
Unit: RMB
Amount for Amount for Reasons why it is not cash
Item the period the prior period and cash equivalents
Other monetary funds 63728850.28 5728747806.12 See Note VII.1 for details
Interest accrued on deposits 9372989.33 29188759.75 See Note VII.1 for details
Total 73101839.61 5757936565.87
64. Notes to items of statements of changes in owners’ equity
Nil
65. Foreign currency items
(1) Foreign currency items
Unit: RMB
Closing foreign Closing balance
Item currency balance Exchange rate in RMB
Monetary funds
Including: USD 12666054.60 7.0288 89027164.57
EUR 726592.14 8.2355 5983849.57
HKD 71034.36 0.90322 64159.65
JPY 1480.68 0.044797 66.33
Accounts receivable
Of which: USD 3787783.90 7.0288 26623575.48
EUR 16054.05 8.2355 132213.13
JPY 181514831.57 0.044797 8131319.91
Accounts payable
Of which: USD 63994475.73 7.0288 449804371.01
EUR 636342.38 8.2355 5240597.67
JPY 232448.16 0.044797 10412.98
Other receivables
Of which: USD 1034958.25 7.0288 7274514.55
EUR 186334.37 8.2355 1534556.70
Other payables
Of which: EUR 8699.49 8.2355 71644.65
JPY 10885.77 0.044797 487.65
Long-term borrowings
Of which: EUR 3144484.08 8.2355 25896398.67
2025 ANNUAL REPORT 291X Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
65. Foreign currency items
(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 Place of incorporation
No. Name of subsidiary of business Functional currency Functional currency
1 Chenming GmbH Hamburg Germany Hamburg Germany EUR
2 Chenming Paper Korea Co. Ltd. Seoul Korea Seoul Korea KRW
3 Chenming Paper Japan Co. Ltd. Tokyo Japan Tokyo Japan JPY
4 Chenming (Overseas) Limited Hong Kong China Hong Kong China USD
5 Chenming (Singapore) Limited Singapore Singapore USD
6 Chenming (HK) Limited Hong Kong China Hong Kong China USD
66. Leases
(1) The Company as a lessee
Unit: RMB
Amount during
Item the period
Short-term lease expenses 6165815.26
(2) The Company as a lessor
Operating lease as a lessor
? Applicable □ Not applicable
Lease income
Unit: RMB
Amount during
Item the period
Lease income 123162854.85
292 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
66. Leases (Continued)
(2) The Company as a lessor (Continued)
The Company as a lessor
□ Applicable ? Not applicable
Undiscounted lease payments for each of the next five years
? Applicable □ Not applicable
Unit: RMB
Annual undiscounted lease payments
Item Closing balance Opening balance
The first year 140742027.37 152207821.18
The second year 148401301.62 159924290.10
The third year 151864581.72 157974084.34
The fourth year 148513224.23 160776701.99
The fifth year 154290681.50 158478080.32
Five years later 160281567.85 155500794.16
Total 904093384.29 944861772.09
VIII. R&D Expenses
Unit: RMB
Amount during Amount during
Item the period the prior period
Wages and surcharges 37658159.83 123022797.35
Depreciation expenses 33641802.58 64184587.23
Insurance premium 8025011.32 25909846.14
Consumption of materials 6591941.90 725049519.67
Utilities 2699288.88 130904560.17
Welfare expenses 1843032.00 4556030.19
Housing provident funds 1629610.20 4151966.75
Union funds 523578.63 1271458.04
Other expenses 648586.15 1280988.88
Total 93261011.49 1080331754.42
Of which: R&D expenses included in profit or loss 93261011.49 1080331754.42
2025 ANNUAL REPORT 293X Financial Report
IX. Change in Scope of Consolidation
1. Disposal of a subsidiary
Any transaction or event that results in the loss of control of any subsidiary during the period
?Yes □No
Unit: RMB
Determination
and key
Difference assumption
between Carrying of fair value Relevant
consideration amount Fair value of remaining other
and share of remaining of remaining shareholding comprehensive
of net assets shareholding shareholding as of the income of
of relevant as of the date as of the date date of loss former
subsidiary Remaining of loss of of loss of Gain or of control subsidiary
Disposal Disposal Disposal The basis for as per shareholding control as per control as per loss in as per transferred
consideration percentage method at Date of determining consolidated as of the date consolidated consolidated fair value of consolidated to profit or
at the date of at the date of the date of loss of the date of financial of loss of financial financial remaining financial loss or retained
Name of subsidiary loss of control loss of control loss of control control loss of control statements control statements statements shareholding statements profit
Shouguang Wei Yuan Logistics
Company Limited 650000.00 100.00% Transfer 2025/4/30 Loss of control 166396.34 0.00 0.00 0.00 N/A N/A N/A
Shandong Shengming Enterprise
Management Co. Ltd. and
subsidiaries 1073396900.00 100.00% Transfer 2025/12/31 Loss of control -38573691.25 0.00 0.00 0.00 N/A N/A N/A
Any transaction or event that results in the loss of control of any subsidiary during the period
□ Yes ? No
2. Change in scope of consolidation due to other reasons
The Company’s subsidiary Shandong Chenming Paper Sales Co. Ltd. acquired the trust beneficiary rights of
Minmetals Trust – Chenming Paper Venture No.1 Investment Collective Fund Trust Plan held by Xinyu Xinhengming
Trading Co. Ltd. (新余新恒鳴貿易有限公司) and Shandong Zhemin Trading Co. Ltd. (山東哲民貿易有限公司)
thereby obtaining control over Weifang Chenchuang Equity Investment Fund Partnership (Limited Partnership) and
accordingly included it in the scope of consolidation.During the period the subsidiaries Zhanjiang Meilun Pulp & Paper Co. Ltd. and Chenming Paper United States Co.Ltd. were deregistered while Zhanjiang Chenming Paper Co. Ltd. Chenming International Trade Import and Export
Co. Limited and Shanghai Hongtai Tengda Industrial Development Co. Ltd. were newly established.
294 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
X. Interest in Other Entities
1. Interest in subsidiaries
(1) Constitution of the Group
Unit: RMB’0000
Principle Shareholding Issued Issued
Register place of Place of Nature of Type of legal Direct Indirect debt share
Name of subsidiary capital business incorporation business person (%) (%) Acquisition securities capital
Shouguang Meilun Paper 480104.55 Shouguang Shouguang Paper making For-profit 68.28 18.50 Establishment 0 0
Co. Ltd. corporation
Shouguang Meichen Energy 100.00 Shouguang Shouguang Electricity For-profit 100 Establishment 0 0
Technology Co. Ltd. corporation
Shandong Chenming Paper 1000.00 Weifang Weifang Paper product For-profit 100 Establishment 0 0
Co. Ltd. trading corporation
Shouguang Kunhe 1000.00 Shouguang Shouguang Trading For-profit 100 Establishment 0 0
Trading Co. Ltd. corporation
Shouguang Chenming Art 2000.00 (USD) Shouguang Shouguang Paper making For-profit 75 25 Establishment 0 0
Paper Co. Ltd. corporation
Shandong Chenming Pulp & 10000.00 Shouguang Shouguang Sales of paper For-profit 100 Establishment 0 0
Paper Sales Co. Ltd. corporation
Shanghai Chenming Pulp & 10000.00 Shanghai Shanghai Paper product For-profit 100 Establishment 0 0
Paper Sales Co. Ltd. trading corporation
Shandong Chenming Paper Sales 10000.00 Shouguang Shouguang Paper product For-profit 100 Establishment 0 0
Co. Ltd. trading corporation
Chenming International Trade 100.00 (USD) Hong Kong Hong Kong Paper product For-profit 100 Establishment 0 0
Import and Export Co. Limited trading corporation
Shouguang Chenming Import 70000.00 Shouguang Shouguang Trading For-profit 35.71 64.29 Establishment 0 0
and Export Trade Co. Ltd. corporation
Jiangxi Chenming Supply Chain 200.00 Jiangxi Jiangxi Trading For-profit 70 Establishment 0 0
Management Co. Ltd. corporation
Zhanjiang Chenming Pulp & 691357.24 Zhanjiang Zhanjiang Paper making For-profit 80.28 Establishment 0 0
Paper Co. Ltd. corporation
Zhanjiang Chenming 130000.00 Zhanjiang Zhanjiang Arboriculture For-profit 100 Establishment 0 0
Arboriculture corporation
Development Co. Ltd.Yangjiang Chenming 22000.00 Yangjiang Yangjiang Arboriculture For-profit 100 Establishment 0 0
Arboriculture corporation
Development Co. Ltd.Guangdong Huirui Investment 25800.00 Zhanjiang Zhanjiang Investment For-profit 100 Establishment 0 0
Co. Ltd. corporation
Hubei Changjiang Chenming 200100.00 Huanggang Huanggang Fund For-profit 59.97 Establishment 0 0
Huanggang Equity Investment corporation
Fund Partnership
(Limited Partnership)
Hainan Chenming Technology 20000.00 Haikou Haikou Wholesale For-profit 100 Establishment 0 0
Co. Ltd. and retail corporation
Foshan Chenming Import and 20000.00 Foshan Foshan Trading For-profit 100 Establishment 0 0
Export Trade Co. Ltd. corporation
2025 ANNUAL REPORT 295X Financial Report
X. Interest in Other Entities (Continued)
1. Interest in subsidiaries (Continued)
(1) Constitution of the Group (Continued)
Principle Shareholding Issued Issued
Register place of Place of Nature of Type of legal Direct Indirect debt share
Name of subsidiary capital business incorporation business person (%) (%) Acquisition securities capital
Zhanjiang Chenming Technology 10000.00 Zhanjiang Zhanjiang Paper product For-profit 100 Establishment 0 0
Development Co. Ltd. trading corporation
Zhanjiang Chenming Paper 1000.00 Shouguang Shouguang Paper product For-profit 100 Establishment 0 0
Co. Ltd. trading corporation
Guangdong Chenming Panels 1000.00 Guangdong Guangdong Panels For-profit 100 Establishment 0 0
Co. Ltd. corporation
Jiangxi Chenming Tea Co. Ltd. 1000.00 Jiangxi Jiangxi Tea business For-profit 100 Establishment 0 0
corporation
Jiangxi Chenming Paper 32673.32 (USD) Nanchang Nanchang Paper making For-profit 100 Establishment 0 0
Co. Ltd. corporation
Jiangxi Chenming Logistics 500.00 Nanchang Nanchang Logistics For-profit 100 Establishment 0 0
Co. Ltd. corporation
Nanchang Shengheng Trading 10000.00 Nanchang Nanchang Trading For-profit 100 Establishment 0 0
Co. Ltd. corporation
Nanchang Kunheng Trading 1000.00 Nanchang Nanchang Trading For-profit 100 Establishment 0 0
Co. Ltd. corporation
Nanchang Chenming 1000.00 Nanchang Nanchang Arboriculture For-profit 100 Establishment 0 0
Arboriculture corporation
Development Co. Ltd.Jiangxi Chenming Port Co. Ltd. 1507.00 Jiangxi Jiangxi Cargo For-profit 100 Merger and 0 0
transportation corporation acquisition
Jilin Chenming Paper Co. Ltd. 300000.00 Jilin Jilin Paper making For-profit 100 Acquisition 0 0
corporation
Fuyu Chenming Paper Co. Ltd. 30800.00 Fuyu Fuyu Paper making For-profit 100 Establishment 0 0
corporation
Jilin Chenming New Wall 1000.00 Jilin Jilin Wall materials For-profit 100 Establishment 0 0
Materials Co. Ltd. corporation
Jilin Chenming Logistics 1000.00 Jilin Jilin Logistics For-profit 100 Establishment 0 0
Co. Ltd. corporation
Jilin Chenming Pulp & Fiber 5000.00 Huanggang Huanggang Trading For-profit 100 Establishment 0 0
Trading Co. Ltd. corporation
Huanggang Chenming Pulp & 335000.00 Huanggang Huanggang Pulp For-profit 14.09 85.91 Establishment 0 0
Paper Co. Ltd. production corporation
Huanggang Chenming Paper 100000.00 Huanggang Huanggang Paper making For-profit 100 Establishment 0 0
Technology Co. Ltd. corporation
Huanggang Chenming Port 5000.00 Huanggang Huanggang Port services For-profit 100 Establishment 0 0
Service Co. Ltd. corporation
Hubei Huanggang Chenming 300.00 Huanggang Huanggang Capital market For-profit 60 Establishment 0 0
Equity Investment Fund services corporation
Management Co. Ltd.
296 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
X. Interest in Other Entities (Continued)
1. Interest in subsidiaries (Continued)
(1) Constitution of the Group (Continued)
Principle Shareholding Issued Issued
Register place of Place of Nature of Type of legal Direct Indirect debt share
Name of subsidiary capital business incorporation business person (%) (%) Acquisition securities capital
Hubei Chenming Technology 5000.00 Huanggang Huanggang Paper product For-profit 100 Establishment 0 0
Industrial Co. Ltd. trading corporation
Shandong Chenming Group 500000.00 Jinan Jinan Finance For-profit 80 20 Establishment 0 0
Finance Co. Ltd. corporation
Chenming (HK) Limited 9990.00 (USD) Hong Kong Hong Kong Paper product For-profit 100 Establishment 0 0
trading corporation
Shandong Chenming Investment 20000.00 Jinan Jinan Investment For-profit 100 Establishment 0 0
Limited corporation
Jinan Chenming Paper Sales 10000.00 Jinan Jinan Investment For-profit 100 Establishment 0 0
Co. Ltd. management/ corporation
Paper product
trading
Chenming GmbH 65.00 (USD) Germany Germany Paper product For-profit 100 Establishment 0 0
trading corporation
Chenming Paper Japan Co. Ltd. 150.00 (USD) Japan Japan Paper product For-profit 100 Establishment 0 0
trading corporation
Yimei Limited (依美有限公司) 50.00 (USD) British Virgin British Virgin Investment For-profit 100 Establishment 0 0
Islands Islands corporation
Chenming Paper Korea Co. Ltd. 100.00 (USD) South Korea South Korea Paper product For-profit 100 Establishment 0 0
trading corporation
Chenming (Overseas) Co. Ltd. 2000.00 (USD) Hong Kong Hong Kong Paper product For-profit 100 Establishment 0 0
trading corporation
Chenming (Singapore) Co. Ltd. 2000.00 (USD) Singapore Singapore Paper product For-profit 100 Establishment 0 0
trading corporation
Meilun (BVI) Limited 5.00 (USD) Cayman Cayman Commerce For-profit 100 Establishment 0 0
corporation
Shanghai Chenming Industry 370000.00 Shanghai Shanghai Property For-profit 100 Establishment 0 0
Co. Ltd. investment corporation
and
management
Shanghai Hongtai Tengda 8000.00 Shanghai Shanghai Trading For-profit 100 Establishment 0 0
Industrial Development corporation
Co. Ltd.Shanghai Chenyin Trading 41000.00 Shanghai Shanghai Trading For-profit 51 Establishment 0 0
Co. Ltd. corporation
Shanghai Hongtai Real Estate 60391.77 Shanghai Shanghai Real estate For-profit 100 Merger and 0 0
Co. Ltd. corporation acquisition
Shanghai Hongtai Property 200.00 Shanghai Shanghai Property For-profit 100 Merger and 0 0
Management Co. Ltd. corporation acquisition
Shanghai Herui Investment 30150.00 Shanghai Shanghai Business For-profit 100 Merger and 0 0
Co. Ltd. services corporation acquisition
2025 ANNUAL REPORT 297X Financial Report
X. Interest in Other Entities (Continued)
1. Interest in subsidiaries (Continued)
(1) Constitution of the Group (Continued)
Principle Shareholding Issued Issued
Register place of Place of Nature of Type of legal Direct Indirect debt share
Name of subsidiary capital business incorporation business person (%) (%) Acquisition securities capital
Wuhan Junheng Property 39600.00 Wuhan Wuhan Property For-profit 100 Merger and 0 0
Management Co. Ltd. corporation acquisition
Guangzhou Chenming Property 100000.00 Guangzhou Guangzhou Property For-profit 100 Establishment 0 0
Management Co. Ltd. corporation
Shanxi Fuyin Industrial 36000.00 Taiyuan Taiyuan Wholesale For-profit 100 Acquisition 0 0
Trading Co. Ltd. and retail corporation
Chongmin Culture Development 20000.00 Shanghai Shanghai Lease and For-profit 100 Acquisition 0 0
(Shanghai) Co. Ltd. business corporation
services
Shouguang Chenming 200.00 Shouguang Shouguang Machinery For-profit 100 Establishment 0 0
Papermaking Machine manufacturing corporation
Co. Ltd.Shouguang Hongxiang Printing 80.00 Shouguang Shouguang Printing and For-profit 100 Acquisition 0 0
and Packaging Co. Ltd. packaging corporation
Shouguang Chenming Modern 1000.00 Shouguang Shouguang Transportation For-profit 100 Establishment 0 0
Logistic Co. Ltd. corporation
Shouguang Hongyi Decorative 200.00 Shouguang Shouguang Packaging For-profit 100 Merger and 0 0
Packaging Co. Ltd. corporation acquisition
Shouguang Xinyuan Coal 300.00 Shouguang Shouguang Coal For-profit 100 Merger and 0 0
Co. Ltd. corporation acquisition
Shouguang City Run Sheng 2380.00 Shouguang Shouguang Purchase and For-profit 100 Merger and 0 0
Wasted Paper Recycle sale of waste corporation acquisition
Co. Ltd
Huanggang Chenming 7000.00 Huanggang Huanggang Arboriculture For-profit 100 Establishment 0 0
Arboriculture Development corporation
Co. Ltd.Chenming Arboriculture 10000.00 Wuhan Wuhan Arboriculture For-profit 100 Establishment 0 0
Co. Ltd. corporation
Hailaer Chenming Paper 1600.00 Hailaer Hailaer Paper making For-profit 75 Establishment 0 0
Co. Ltd. corporation
Weifang Chenming Growth 100000.00 Weifang Weifang Fund For-profit 79 Establishment 0 0
Driver Replacement Equity corporation
Investment Fund Partnership
(Limited Partnership)
Weifang Chendu Equity 32000.00 Shouguang Shouguang Capital market For-profit 79.69 Establishment 0 0
Investment Partnership services corporation
(Limited Partnership)
Shandong Yujing Grand Hotel 4192.48 (USD) Shouguang Shouguang Catering For-profit 90.05 Establishment 0 0
Co. Ltd. corporation
Weifang Chenchuang Equity 90300.00 Weifang Weifang Equity For-profit 99.67 Merger and 0 0
Investment Fund Partnership investment corporation acquisition
(Limited Partnership)
298 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
X. Interest in Other Entities (Continued)
1. Interest in subsidiaries (Continued)
(2) Major non-wholly owned subsidiaries
Unit: RMB
Dividend to
Gain or loss attributable minority interest
to minority interest declared during Closing balance
Name of subsidiary Minority interest during the period the period of minority interest
Shouguang Meilun Paper Co. Ltd. 13.21 -229488758.03 1380768448.07
Zhanjiang Chenming Pulp & Paper
Co. Ltd. 19.72 -418634212.64 126756041.68 859042185.23
(3) Key financial information of major non-wholly owned subsidiaries
Unit: RMB
Closing balance Opening balance
Non-current Current Non-current Non-current Current Non-current
Name of subsidiary Current assets assets Total assets liabilities liabilities Total liabilities Current assets assets Total assets liabilities liabilities Total liabilities
Shouguang Meilun Paper Co. Ltd. 5638334917.92 9266216250.55 14904551168.47 7547551168.31 881715334.28 8429266502.59 10198457312.12 9544065823.56 19742523135.68 12006315839.27 7392419.69 12013708258.96
Zhanjiang Chenming Pulp & Paper Co. Ltd. 5643877771.78 13253813129.03 18897690900.81 12688287928.17 397269726.29 13085557654.46 8429523936.97 11986351774.32 20415875711.29 11877878416.94 473681057.41 12351559474.35
Unit: RMB
Amount during the period Amount during 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
Shouguang Meilun Paper Co. Ltd. 3431543810.39 -1093225282.26 -1093225282.26 -2833111.58 8141538879.98 -570290773.09 -570290773.09 498166092.88
Zhanjiang Chenming Pulp & Paper
Co. Ltd. 166846503.02 -2122557877.02 -2130520692.68 -10076400.04 10918531151.42 -883547814.00 -877177341.17 349194411.81
2025 ANNUAL REPORT 299X Financial Report
X. Interest in Other Entities (Continued)
2. Transaction changing shareholding in but not causing to loss of control over subsidiaries
(1) Changing in shareholding in subsidiaries
The Company previously held 75% equity interest in Shouguang Chenming Art Paper Co. Ltd. In June 2025
the Company and ARJOWIGGINS HKK2 LIMITED entered into an equity transfer agreement and acquired
additional 25% equity interests for a consideration of RMB35748442.80.
(2) Effect of the transactions on minority interest and equity attributable to the owners of the parent company
Unit: RMB
Shouguang Chenming
Item Art Paper Co. Ltd.Cost of acquisition/Disposal consideration 35748442.80
– Cash 35748442.80
Total cost of acquisition/disposal consideration 35748442.80
Less: Share of net assets of the subsidiary calculated based on the proportion of
equity interest acquired/disposed of 33724049.84
Difference 2024392.96
Including: Capital reserve adjustment 2024392.96
3. Interest in joint ventures or associates
(1) Major joint ventures and associates
Accounting
method for
investment in
Principle place Place of Nature of Shareholding (%) joint ventures
Name of joint venture and associate of business incorporation business Direct Indirect or associates
I. Joint ventures
Shouguang Jintou Industrial Investment
Partnership (Limited Partnership) Shouguang Shouguang Investment 49.57 Equity method
II. Associates
Guangdong Nanyue Bank Co. Ltd. Guangdong Guangdong Bank 4.46 Equity method
* The Company holds 4.46% equity interest in Guangdong Nanyue Bank Co. Ltd. but is the second largest shareholder and is
able to exercise significant influence over Guangdong Nanyue Bank Co. Ltd. by appointing one director to the board of directors
(out of a total of nine directors on the board of directors).* The investment in the joint venture Shouguang Jintou Industrial Investment Partnership (Limited Partnership) was disposed of
during the current period.
300 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
X. Interest in Other Entities (Continued)
3. Interest in joint ventures or associates (Continued)
(2) Key financial information of major joint ventures
Unit: RMB
Closing balance/ Opening balance/
Amount during Amount during
the period the prior period
Shouguang Jintou Shouguang Jintou
Industrial Investment Industrial Investment
Partnership (Limited Partnership (Limited
Partnership) Partnership)
Current assets [* ] 1469875783.97
Of which: Cash and cash equivalents [* ] 11415277.31
Non-current assets [* ] 594445221.29
Total assets [* ] 2064321005.26
Current liabilities [* ] 257355454.66
Non-current liabilities [* ] 22702318.57
Total liabilities [* ] 280057773.23
Net assets [* ] 1784263232.03
Of which: Minority interest [ * ] 5172055.47
Equity interest attributable to shareholders
of the parent company [* ] 1779091176.56
Share of net assets based on shareholding [* ] 881884821.67
Adjustments [* ] 897206354.89
Of which: Others [* ] 897206354.89
Carrying amount of equity investment in joint ventures [* ] 1779091176.56
Fair value of equity investment in joint ventures with a
quoted price in the open market
Revenue 546773193.94 503795502.75
Finance expenses -32875.29 1790006.41
Income tax expenses
Net profit -881354333.65 -565479070.99
Total comprehensive income -881354333.65 -565479070.99
Dividends received from joint ventures during the year
2025 ANNUAL REPORT 301X Financial Report
X. Interest in Other Entities (Continued)
3. Interest in joint ventures or associates (Continued)
(3) Key financial information of major associates
Unit: RMB
Closing balance/ Opening balance/
Amount during Amount during
the period the prior period
Guangdong Nanyue Guangdong Nanyue
Bank Co. Ltd. Bank Co. Ltd.Current assets 213834774008.61 195708622711.11
Non-current assets 124669090061.85 132561137018.86
Total assets 338503864070.46 328269759729.97
Current liabilities 290958764493.77 273238389155.39
Non-current liabilities 18695631540.20 24657998149.20
Total liabilities 309654396033.97 297896387304.59
Net assets 28849468036.49 30373372425.38
Of which: Minority interest
Equity interest attributable to shareholders of
the parent company 28849468036.49 30373372425.38
Share of net assets based on shareholding 1285878489.32 1354652410.17
Adjustments
Of which: Goodwill
Carrying amount of equity investment in associates 1285878489.32 1354652410.17
Fair value of equity investment with a quoted price
in the open market
Revenue 2845533548.17 2784608144.97
Net profit 334826945.99 420235807.79
Other comprehensive income -172505538.85 142835713.60
Total comprehensive income 162321407.14 563071521.39
Dividends received from associates during the year
302 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
X. Interest in Other Entities (Continued)
3. Interest in joint ventures or associates (Continued)
(4) Summary financial information of non-major joint ventures and associates
Unit: RMB
Closing balance/ Opening balance/
Amount during Amount during
the period the period
Joint ventures:
Total carrying amount of investment 158464726.08 192441660.84
Total amount of the following items based on shareholding
Net profit -16411934.76 8537278.56
Other comprehensive income
Total comprehensive income -16411934.76 8537278.56
Associates:
Total carrying amount of investment 651610129.87 644850163.97
Total amount of the following items based on shareholding
Net profit 16919251.24 -151193462.54
Other comprehensive income
Total comprehensive income 16919251.24 -151193462.54
2025 ANNUAL REPORT 303X Financial Report
XI. Government grants
1. Government grants recognised at the end of the reporting period at the amount receivable
□ Applicable ? Not applicable
Reasons for not receiving the estimated amount of government grants at the estimated time
□ Applicable ? Not applicable
2. Liabilities in respect of government grants
? Applicable □ Not applicable
Unit: RMB
Included in
New grants non-operating Included in Charged
during the income for other income against Asset-related/
Liability item Opening balance period the period for the period cost expenses Other changes Closing balance income-related
Funding for environmental protection 478415952.52 50928082.72 427487869.80 Asset-related
Huanggang forestry-pulp- 420942087.45 25026217.80 41377787.52 354538082.13 Asset-related
paper project
Infrastructure and environmental 185285787.80 11517589.48 12227345.28 161540853.04 Asset-related
protection engineering
Financial subsidies for technological 89417910.72 9333104.96 80084805.76 Asset-related
transformation project
Zhanjiang forestry-pulp-paper project 38522698.43 4094632.92 34428065.51 Asset-related
Project fund for National Key 629025.00 164700.00 464325.00 Asset-related
Technology Research and
Development Program
Others 27726023.60 1687210.08 26038813.52 Asset-related
Total 1240939485.52 102751537.96 53605132.80 1084582814.76
304 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XI. Government grants (Continued)
3. Government grants included in profit or loss for the period
? Applicable □ Not applicable
Unit: RMB
Accounting Amount for Amount for
Subsidy item item the period the prior period
Funding for environmental protection Other income 50928082.72 50778082.72
Huanggang pulp-forestry-paper project Other income 25026217.80 25026217.80
Sewage treatment and water conservation
transformation project Other income 11517589.48 11517589.45
Financial subsidies for technological
transformation project Other income 9333104.96 8958104.96
Government awards Other income 8820000.00 3153800.00
Zhanjiang forestry-pulp-paper project Other income 4094632.92 4094632.92
Sea-rail intermodal transport subsidy Other income 3398531.70
Afforestation subsidy Other income 1270805.23 1032091.00
Special fund for the development of modern
commerce and trade Other income 885000.00 4946000.00
Employment stabilisation subsidy Other income 717112.24 3388129.28
Special subsidy for foreign trade Other income 2660000.00
Project fund for National Key Technology Research
and Development Program Other income 164700.00 164700.00
Industrial development subsidy Other income 105244.56 117967.00
Others Other income 2894204.39 4665388.54
Total 119155226.00 120502703.67
XII. Risk relating to financial instruments
Main financial instruments of the Company include monetary funds bills receivable accounts receivable accounts
receivable financing other receivables non-current assets due within one year other current assets financial assets held
for trading other non-current financial assets long-term receivables bills payable accounts payable other payables
short-term borrowings financial liabilities held for trading non-current liabilities due within one year long-term borrowings
lease liabilities and long-term payables. Details of financial instruments refer to related notes. The risks associated with
these financial instruments and the risk management policies adopted by the Company to mitigate these risks are described
below. The management of the Company manages and monitors these exposures to ensure that the above risks are
controlled in a limited extent.
1. Various risks from financial instruments
Risks associated with the financial instrument of the Company mainly include credit risk liquidity risk market risk
(including exchange rate risk interest rate risk and commodity price risk).
2025 ANNUAL REPORT 305X Financial Report
XII. Risk relating to financial instruments (Continued)
1. Various risks from financial instruments (Continued)
The Company aims to seek the appropriate balance between the risks and benefits in order to mitigate the adverse
effects on the Company’s financial performance from financial risk. Based on such risk management objectives the
Company’s risk management policies are established to identify and analyse the risks faced by the Company to
set appropriate risk limits and devise corresponding internal control procedures and to monitor risks faced by the
Company. Such risk management policies and internal control systems are reviewed regularly to adapt to changes
in market conditions and the Company’s activities. The internal audit department of the Company undertakes both
regular and ad-hoc reviews of risk management controls and procedures.The board of directors is responsible to plan and establish the Company’s risk management structure make risk
management policies and related guidelines and supervise the implementation of risk management. The Company
has already made risk management risks to identify and analyse risks that the Company face. These policies
mentioned specific risks covering market credit risk and liquidity risk etc. The Company regularly assesses market
environment and the operation of the Company changes to determine if to make alteration to risk management policy
and systems. The Company’s risk management is implemented by Risk Management Committee according to the
approval of the board of directors. The Risk Management Committee works closely with other business department of
the Company to identify evaluate and avoid certain risks. The Company’s internal audit department will audit the risk
management control and procedures regularly and report the result to Audit Committee of the Company.The Company spreads risks through diverse investment and business lines and through making risk management
policy to reduce risks of single industry specific area and counterparty.
(1) Credit risk
Credit risk refers to risk associated with the default of contract obligation of a transaction counterparty resulting
in financial losses to the Company.The Company manages credit risk based on category. Credit risks mainly arose from bank deposit bills
receivable accounts receivable other receivables and long-term receivables etc.The Company’s bank deposit mainly deposits in state-owned banks and other large and medium-sized listed
banks. The Company anticipated that the bank deposit does not have significant credit risk.For accounts receivable other receivables and long-term receivables the Company set related policies to
control exposure of credit risks. The Company evaluates client’s credit quality and set related credit period
based on the client’s financial status credit records and other factors such as current market situation etc. The
Company keeps monitor the client’s credit record and for client with deteriorate credit records the Company
will ensure the credit risk is under control in whole by means of written notice of payment collection shorten or
cancel credit period.The Company’s debtor spread over different industry and area. The Company continued to assess the credit
evaluation to receivables and purchase credit guarantee insurance if necessary.The biggest credit risk exposure of the Company is the carrying amount of each financial asset in the balance
sheet. The Company did not provide financial guarantee which resulted in credit risks.The amount of top 5 accounts receivable of the Company accounted for 18.28% (2024: 39.64%) of the
Company’s total accounts receivable. The amount of top 5 other receivable of the Company accounted for
57.68% (2024: 66.28%) of the Company’s total other receivables.
306 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XII. Risk relating to financial instruments (Continued)
1. Various risks from financial instruments (Continued)
(2) Liquidity risk
Liquidity risk refers to the risks that the Company will not be able to meet its obligations associated with its
financial liabilities that are settled by delivering cash or other financial assets.To manage the liquidity risk the Company monitors and maintains a level of cash and cash equivalents to
finance the Company’s operations and mitigate the effects of fluctuations in cash flows. The management of
the Company monitors the usage of bank borrowings and ensures compliance with the borrowing agreements.In the meantime we obtain commitments from major financial institutions to provide sufficient standby funds to
meet short-term and long-term funding needs.Operating cash of the Company was generated from capital and bank and other borrowings. As at the end of
the period the Company’s unused bank loan credit was RMB38 million (end of the prior year: RMB11176.9188
million).As at the end of the period the financial assets financial liabilities and off balance sheet guarantee held by the
Company are analysed by their maturity date as below at their remaining undiscounted contractual cash flows (in
RMB’0000):
Closing balance
Item Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Financial assets:
Monetary funds 20102.57 20102.57
Financial assets held for trading 3879.11 3879.11
Bills receivable 79393.93 79393.93
Accounts receivable 117839.22 117839.22
Accounts receivable financing 3597.81 3597.81
Other receivables 56447.73 56447.73
Long-term receivables 22273.51 85946.09 182121.83 290341.43
Other non-current financial assets 32793.46 32793.46
Other current assets 279.90 279.90
Non-current assets due within one year 22005.00 22005.00
Total financial assets 303545.27 22273.51 85946.09 214915.29 626680.16
Financial liabilities:
Short-term borrowings 2111259.38 2111259.38
Accounts payable 860872.71 860872.71
Other payables 434329.03 434329.03
Non-current liabilities due within one year 239668.26 239668.26
Other current liabilities 165995.04 165995.04
Long-term borrowings 39129.52 361526.23 156018.01 556673.76
Lease liabilities 277.47 1402.07 3051.79 4731.33
Long-term payables 75048.40 105998.05 181046.45
Total financial liabilities and
contingent liabilities 3812124.42 114455.39 468926.35 159069.80 4554575.96
2025 ANNUAL REPORT 307X Financial Report
XII. Risk relating to financial instruments (Continued)
1. Various risks from financial instruments (Continued)
(2) Liquidity risk (Continued)
As at the end of the prior year the financial assets financial liabilities and off-balance sheet guarantee held by the
Company are analysed by their maturity date as below at their remaining undiscounted contractual cash flows (in
RMB’0000):
Balance as at the end of the prior year
Item Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Financial assets:
Monetary funds 588069.11 588069.11
Financial assets held for trading 3725.93 3725.93
Bills receivable 50660.57 50660.57
Accounts receivable 266836.20 266836.20
Accounts receivable financing 10073.08 10073.08
Other receivables 256175.64 256175.64
Long-term receivables 11281.94 22341.95 1432.04 35055.93
Other non-current financial assets 75103.05 75103.05
Other current assets 88236.02 88236.02
Non-current assets due within one year 491100.90 491100.90
Total financial assets 1754877.45 11281.94 22341.95 76535.09 1865036.43
Financial liabilities:
Short-term borrowings 2675234.73 2675234.73
Bills payable 142391.81 142391.81
Accounts payable 770896.74 770896.74
Other payables 283336.77 283336.77
Non-current liabilities due within one year 160954.54 160954.54
Other current liabilities 286369.42 286369.42
Long-term borrowings 165672.85 109483.19 201032.48 476188.52
Lease liabilities 286.71 1011.20 3615.65 4913.56
Long-term payables 46996.82 34565.33 81562.15
Total financial liabilities and contingent liabilities 4319184.01 212956.38 145059.72 204648.13 4881848.24
The financial liabilities disclosed above are based on cash flows that are not discounted and may differ from the
carrying amount of the line items of the balance sheet.Maximum guarantee amount for signed guarantee contracts does not represent the amount to be paid.
308 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XII. Risk relating to financial instruments (Continued)
1. Various risks from financial instruments (Continued)
(3) Market risk
Market risk including interest rate risk exchange rate risk and other price risks refers to the risk that the fair
value or future cash flow of a financial instrument will be fluctuated due to the changes in market price.Interest rate risk
Interest rate risk refers to the risk that the fair value or future cash flow of a financial instrument will be fluctuated
due to the floating rate. Interest rate risk arises from recognised interest-bearing financial instrument and
unrecognised financial instrument (e.g. loan commitments).The Company’s interest rate risk arises from long-term interest-bearing liabilities including long-term borrowing
and bonds payable. Financial liabilities issued at floating rate expose the Company to cash flow interest rate
risk. Financial liabilities issued at fixed rate expose the Company to fair value interest rate risk. The Company
determines the relative proportions of its fixed rate and floating rate contracts depending on the prevailing
market conditions and to maintain an appropriate combination of financial instruments at fixed rate and floating
rate through regular reviews and monitors.The Company closely monitors the interest rate position of the Company. The Company 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 Company’s outstanding floating
rate interest-bearing borrowings and therefore could have a material adverse effect on the Company’s
financial result. The management will make adjustments with reference to the latest market conditions. These
adjustments may include enter into interest swap agreement to mitigate its exposure to the interest rate risk.Interest bearing financial instrument held by the Company are as follows (in RMB’0000):
Amount for
Item Amount for the period the prior period
Financial instrument with fixed interest rate
Financial liabilities
Including: Short-term borrowings 2111259.38 2675234.73
Long-term borrowings 556673.76 476188.52
Long-term borrowings due within one year 169216.27 120435.06
Total 2837149.41 3271858.31
Financial instrument with float interest rate
Financial assets
Including: Monetary funds 19861.60 587932.77
Total 19861.60 587932.77
2025 ANNUAL REPORT 309X Financial Report
XII. Risk relating to financial instruments (Continued)
1. Various risks from financial instruments (Continued)
(3) Market risk (Continued)
Interest rate risk (Continued)
The financial instruments held by the Company at the reporting date expose the Company to fair value interest
rate risk. This sensitivity analysis as above has been determined assuming that the change in interest rates had
occurred at the reporting date and arisen from the recalculation of the above financial instrument issued at new
interest rates. The non-derivative tools issued at floating interest rate held by the Company at the reporting
date expose the Company to cash flow interest rate risk. The effect to the net profit and shareholder’s equity
illustrated in the sensitivity analysis as above is arisen from the effect to the annual estimate amount of interest
expenses or revenue at the floating interest rate. The analysis is performed on the same basis for prior year.Exchange rate risk
Exchange rate risk refers to the risk that the fair value or future cash flows of a financial instrument will be
fluctuated due to the changes in foreign currency rates. Foreign currency risk arises on financial instruments
that are denominated in a currency other than the functional currency in which they are measured.The principal business of the Company is situated within the PRC and is denominated in RMB. However
foreign exchange risks still exist for the assets and liabilities in foreign currencies and future foreign currency
transactions as recognised by the Company (assets and liabilities in foreign currencies and foreign currency
transactions are mainly denominated in USD EUR HKD and JPY).The following table details the financial assets and liabilities held by the Company which denominated in foreign
currencies and amounted to RMB as at the end of the period are as follows (in RMB’0000):
Liabilities denominated in Assets denominated in
foreign currency foreign currency
Balance as at Balance as at
the end of the end of
Item Closing balance the prior year Closing balance the prior year
USD 44980.44 66705.08 12292.53 42042.69
EUR 3120.86 3838.45 765.06 1044.24
HKD 6.42 143.97
JPY 1.09 813.14 677.92
SGD 2.12
GBP 1.61
Total 48102.39 70543.53 13877.15 43912.55
The Company continuously monitors the size of the Group’s foreign currency transactions and foreign currency
assets and liabilities to minimise the foreign exchange risks it faces and for this reason the Company may aim
to avoid foreign exchange risk by signing forward foreign exchange contracts or currency swap contracts.
310 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XII. Risk relating to financial instruments (Continued)
1. Various risks from financial instruments (Continued)
(3) Market risk (Continued)
Exchange rate risk
With other variables unchanged the after-tax effect of the possible reasonable changes in the exchange rate of
foreign currency to RMB on the current profit and loss of the Company is as follows (in RMB’0000):
Increase (decrease) in
after-tax profits Amount for the period Amount for the prior period
Increase in exchange rate of USD 5% -1634.40 5% -1233.12
Decrease in exchange rate of USD -5% 1634.40 -5% 1233.12
Increase in exchange rate of EUR 5% -117.79 5% -139.71
Decrease in exchange rate of EUR -5% 117.79 -5% 139.71
Other price risks
Other price risks refer to the risk of fluctuations caused by changes in market prices other than exchange rate
risks and interest rate risks whether arising from factors related to a single financial instrument or its issuer or
from factors related to all similar financial instruments traded on the market. Other price risks can stem from
changes in commodity prices stock market indexes equity instrument prices and other risk variables.Listed equity instrument investments held by the Company classified as financial assets held for trading other
non-current financial assets and other equity instrument investments are measured at fair value on the balance
sheet date. Therefore the Company is subject to the risk of changes in the securities market.The Company monitors closely the impact of price changes on the price risk of the Company’s investment in
equity securities. Currently the Company has not taken any measures to avoid other price risks. However the
management is responsible for monitoring other price risks and will consider holding multiple equity securities
portfolios to reduce the price risk of equity securities investment when necessary.With other variables unchanged the after-tax effect of the change of 4.11% (prior year: -19.52%) in equity
securities investment prices on the Company’s current profit and loss and other comprehensive income is as
follows (in RMB’0000):
Increase (decrease) in Increase (decrease) in
after-tax profits other comprehensive income
Balance for Balance for Balance for Balance for
Item the period the prior period the period the prior period
Due to the rise in the price of
equity securities investment
Due to the decline in the price of
equity securities investment 153.18 -903.50
2025 ANNUAL REPORT 311X Financial Report
XII. Risk relating to financial instruments (Continued)
2. Capital management
The objective of the Company’s capital risk management is to safeguard the Company’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.In order to maintain or adjust the capital structure the Company may adjust its financing methods adjust the number
of dividends paid to shareholders return capital to shareholders issue new shares and other equity instruments or
disposes assets to reduce its liabilities.The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net liabilities divided by
total capital. As at the end of the period the Company’s gearing ratio is 94.44% (end of the prior year: 79.79%).
3. Financial assets
(1) By transfer method
? Applicable □ Not applicable
Unit: RMB
Nature of financial Amount of financial Confirmation of
Transfer Method assets transferred assets transferred derecognition
Transfer by agreement Debt receivable 87189645.64 Derecognised Where the Company transferred
substantially all of the risks
and rewards
Transfer by agreement Debt receivable 2262956136.67 Derecognised Where the Company transferred
substantially all of the risks
and rewards
Endorsement or discounting Bills receivable 790446731.06 Not derecognised Where the Company retains
almost all the risks and
rewards including the risk of
default associated with it
Endorsement or discounting Accounts receivable 1623727215.08 Derecognised Where the Company transferred
financing substantially all of the risks
and rewards
Total 4764319728.45
(2) Financial assets derecognised due to transfer
? Applicable □ Not applicable
Unit: RMB
Gains or losses
Amount of financial associated with
Item Method of financial assets transfer assets derecognised derecognition
Debt receivable Transfer by agreement 87189645.64 -83297505.26
Debt receivable Transfer by agreement 2262956136.67 -508717826.72
Accounts receivable financing Endorsement or discounting 1623727215.08 -5510957.14
Total 3973872997.39 -597526289.12
312 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XIII. Fair value disclosure
1. Fair value of assets and liabilities measured at fair value as at the end of the period
Based on the inputs of the lowest level that are of great significance to the measurement as a whole in the fair value
measurement the fair value can be categorised as:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.Level 2: Observable inputs other than the quoted market price of assets or liabilities in Level 1 either directly (the
prices) or indirectly (derived from prices).Level 3: Any input that is not based on observable market data (unobservable inputs) is used for assets or liabilities
(1) Items and amounts measured at fair value
As at the end of the period assets and liabilities measured at fair value are listed as follows based on the three
hierarchies as set out above:
Unit: RMB
Fair value at the end of the period
Fair value Fair value Fair value
measurements measurements measurements
categorised categorised categorised
Item into Level 1 into Level 2 into Level 3 Total
I. Measurement of fair value on an ongoing
basis
(i) Financial assets held for trading 38791121.74 38791121.74
1. Equity instrument investments 38791121.74 38791121.74
(ii) Accounts receivable financing － 35978138.45 35978138.45
(iii) Other non-current financial assets 327934626.32 327934626.32
(iv) Biological assets 1063081495.03 1063081495.03
1. Consumable biological assets 1063081495.03 1063081495.03
Total assets measured at fair value on an
ongoing basis 38791121.74 1426994259.80 1465785381.54
For financial assets that are traded in an active market the Company determines the fair value based on the
quoted price in the active market. For other non-current financial assets that are not traded in an active market
the fair value at the end of the period is determined by evaluating the investment in Shandong Hongqiao Venture
Capital Co. Ltd.; for the investment in Jiaohui Chenming Zhuli (Suzhou) Emerging Industry Development Fund
Partnership (Limited Partnership) the Company determines the fair value at the end of the period by calculating
the average price-earnings ratio price-to-book ratio and price-to-sales ratio of listed companies in the same
industry in combination with its profit prediction; the fair value of the investment in Shanghai Hengzhan Venture
Capital Center (Limited Partnership) and Lide Technology Co. Ltd. is based on historical cost.
2025 ANNUAL REPORT 313X Financial Report
XIII. Fair value disclosure
1. Fair value of assets and liabilities measured at fair value as at the end of the period
(2) Quantitative information about significant unobservable inputs used in the Level 3 fair value measurement
that are significant
Fair value as at the
Item end of the period Valuation techniques Unobservable inputs Range
Equity instrument investments:
Shandong Hongqiao Venture Capital Co. Ltd. 43360000.00 Cost method
Jiaohui Chenming Zhuli (Suzhou) Emerging Industry 241977314.93 See explanation for details
Development Fund Partnership (Limited Partnership)
Consumable biological assets:
Forestry 1063081495.03 Replacement cost method roll back Unit price per tonne of Eucalyptus wood RMB510
method of market price revaluation Unit price per tonne of wet pine RMB515
method of harvest Unit price per tonne of fir wood RMB490
Explanation: The Company has no active trading market for Jiaohui Chenming Zhuli (Suzhou) Emerging Industry Development Fund
Partnership (Limited Partnership). The Company determines the fair value at the end of the period by calculating the
average price-earnings ratio price-to-book ratio and price-to-sales ratio of listed companies in the same industry in
combination with its profit prediction.
(3) Reconciliation of fair value measurements categorised within Level 3 of the fair value hierarchy
Total profit or loss for the period
Transferred to other
Transfer to Transferred to profit comprehensive
Item (current amount) Opening balance Level 3 Transfer from Level 3 and loss income Closing balance
Accounts receivable financing 100730797.32 64752658.87 35978138.45
Other non-current financial assets 751030454.68 406974883.05 -16120945.31 327934626.32
Biological assets: 1256379773.85 58272689.47 -135025589.35 1063081495.03
Consumable biological assets 1256379773.85 58272689.47 -135025589.35 1063081495.03
Total 2108141025.85 530000231.39 -151146534.66 1426994259.80
XIV. Related parties and related party transactions
1. Parent company of the Company
Shareholding of Voting right of the
Place of the parent company parent company
Name of parent company incorporation Business nature Registered capital in the Company in the Company
Chenming Holdings Co. Ltd. Shouguang Investment in manufacture of 1238787700 15.50% 15.50%
paper electricity steam
and arboriculture
314 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XIV. Related parties and related party transactions (Continued)
1. Parent company of the Company (Continued)
Description of the parent company of the Company:
The ultimate controller of the Company is Shouguang State-owned Assets Supervision and Administration Office.
2. Subsidiaries of the Company
For details of the Company’s subsidiaries please refer to Note X. 1.
3. Joint ventures and associates of the Company
For details of material joint ventures and associates of the Company please refer to Note X. 3.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
Weifang Port Wood Chip Wharf Co. Ltd. A joint venture of the Company
Shouguang Meite Environmental Technology Co. Ltd. A joint venture of the Company
Weifang Xingxing United Chemical Co. Ltd. A joint venture of the Company
Shouguang Chenming Huisen New-style Construction A joint venture of the Company
Materials Co. Ltd.Wuhan Chenming Qianneng Electric Power Co. Ltd. A subsidiary of an associate of the Company
Wuhan Chenming Hanyang Paper Holdings Co. Ltd. An associate of the Company
Chenming (Qingdao) Asset Management An associate of the Company
Guangdong Nanyue Bank Co. Ltd. An associate of the Company
Xuchang Chenming Paper Co. Ltd. An associate of the Company
4. Other related parties
Name of other related parties Relation
Shouguang Huixin Construction Materials Co. Ltd. A subsidiary of a company invested by the Directors
and Senior Management of the Company
Lide Technology Co. Ltd. A subsidiary of a company invested by the Directors
and Senior Management of the Company
Shouguang Chenming Guangyuan Real Property Company A subsidiary of a company invested by the Directors
Limited and Senior Management of the Company
Sunshine OJI (Shouguang) Special Paper Co. Ltd. An entity in which the former chairman of the
Company’s controlling shareholder served as a
director within the past twelve months
Jiang Yanshan Li Weixian Liu Peiji Meng Feng Zhu Yanli Key management personnel of the Company
Song Yuchen Wang Ying Zhang Zhiyuan Luo Xinhua
Wan Gang Kong Pengzhi Ge Guangming Dong Lianming
Guo Qinyan Yuan Xikun Chu Hon Leung Hu Changqing
(resigned) Li Xingchun (resigned) Li Feng (resigned)
Han Tingde (resigned) Li Chuanxuan (resigned) Li Zhihui
(resigned) Sun Jianfei (resigned) Yin Meiqun (resigned)
Yang Biao (resigned) Li Zhenzhong (resigned) Li Mingtang
(resigned)
2025 ANNUAL REPORT 315X Financial Report
XIV. Related parties and related party transactions (Continued)
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
Subject matter of Whether the
the related party Amount for Transaction transaction facility Amount for
Related party transactions the period facility approved is exceeded the prior period
Weifang Port Wood Chip Wharf Co. Ltd. Port miscellaneous fees 4924499.03 110000000.00 No 86203912.59
Shouguang Meite Environmental Technology Co. Ltd. Purchase of chemical 8711556.00 N/A N/A 22683726.74
materials
Table on sales of goods/providing of services
Unit: RMB
Subject matter of the related
Related party party transactions Amount for the period Amount for the prior period
Shouguang Chenming Huisen New-style Construction Sales of electricity and steam 13840589.89 13910563.45
Materials Co. Ltd.Shouguang Huixin Construction Materials Co. Ltd. Sales of electricity etc. 39476.20 238057.97
Shouguang Meite Environmental Technology Co. Ltd. Sales of electricity water etc. 1117250.04 2922144.29
Sunshine OJI (Shouguang) Special Paper Co. Ltd. Sales of steam 7030100.00
(2) Related party leasing
The Company as lessor:
Unit: RMB
Lease income recognised Lease income recognised
Name of lessee Type of leased asset for the current period for the previous period
Shouguang Chenming Huisen New-style Construction Land 233944.95 233944.95
Materials Co. Ltd.Shouguang Huixin Construction Materials Co. Ltd. Land 123853.21 123853.21
Shouguang Meite Environmental Technology Co. Ltd. Housing 1467889.95 1467889.91
Chenming (Qingdao) Asset Management Housing and building structure 667610.46
Lide Technology Co. Ltd. Housing and building structure 331694.19 1918497.41
316 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(3) Related party guarantee
The Company as guarantor
Unit: RMB
Whether
performance
Amount under Commencement Expiry date of of guarantee is
Party being guaranteed guarantee date of guarantee guarantee completed
Chenming (HK) Limited 3851256.79 2025-10-8 2026-1-6 No
Chenming (HK) Limited 13831610.94 2025-11-14 2026-2-12 No
Chenming (HK) Limited 3780268.58 2025-11-17 2026-2-16 No
Chenming (HK) Limited 6487969.27 2025-11-18 2026-2-16 No
Chenming (HK) Limited 3629209.82 2025-11-26 2026-2-24 No
Chenming (HK) Limited 2930702.86 2025-12-23 2026-3-23 No
Chenming (HK) Limited 4343687.49 2025-12-23 2026-3-23 No
Chenming (HK) Limited 3993563.98 2025-12-29 2026-3-30 No
Chenming (HK) Limited 3500143.20 2025-12-29 2026-3-30 No
Chenming (HK) Limited 33295369.51 2024-1-4 2030-1-3 No
Chenming (HK) Limited 8002077.94 2025-10-16 2026-4-14 No
Chenming (HK) Limited 2469841.60 2025-10-24 2026-4-26 No
Chenming (HK) Limited 7480744.04 2025-10-24 2026-4-26 No
Chenming (HK) Limited 4467225.96 2025-11-4 2026-5-3 No
Hainan Chenming Technology Co. Ltd. 50000000.00 2025-1-16 2026-1-16 No
Hainan Chenming Technology Co. Ltd. 126000000.00 2025-3-28 2026-3-28 No
Hainan Chenming Technology Co. Ltd. 39600000.00 2025-6-10 2026-6-10 No
Hainan Chenming Technology Co. Ltd. 50000000.00 2025-7-20 2026-7-20 No
Hainan Chenming Technology Co. Ltd. 110000000.00 2025-7-21 2026-7-18 No
2025 ANNUAL REPORT 317X Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(3) Related party guarantee (Continued)
Whether
performance
Amount under Commencement Expiry date of of guarantee is
Party being guaranteed guarantee date of guarantee guarantee completed
Hainan Chenming Technology Co. Ltd. 8400000.00 2025-7-2 2026-7-2 No
Hainan Chenming Technology Co. Ltd. 70000000.00 2025-11-26 2026-11-26 No
Huanggang Chenming Pulp & Paper Co. Ltd. 20000000.00 2024-4-28 2026-4-27 No
Huanggang Chenming Pulp & Paper Co. Ltd. 90000000.00 2025-5-20 2026-5-19 No
Huanggang Chenming Pulp & Paper Co. Ltd. 30000000.00 2024-7-19 2026-7-18 No
Huanggang Chenming Pulp & Paper Co. Ltd. 45000000.00 2024-8-14 2026-8-13 No
Huanggang Chenming Pulp & Paper Co. Ltd. 50000000.00 2024-9-23 2026-9-23 No
Huanggang Chenming Pulp & Paper Co. Ltd. 30000000.00 2024-10-18 2026-10-18 No
Huanggang Chenming Pulp & Paper Co. Ltd. 741640000.00 2019-12-16 2031-12-15 No
Huanggang Chenming Pulp & Paper Co. Ltd. 73985646.20 2025-2-28 2027-9-28 No
Huanggang Chenming Pulp & Paper Co. Ltd. 68000000.00 2025-4-25 2027-12-5 No
Huanggang Chenming Pulp & Paper Co. Ltd. 84900000.00 2022-5-20 2026-10-27 No
Huanggang Chenming Pulp & Paper Co. Ltd. 43993016.93 2022-11-30 2028-2-25 No
Huanggang Chenming Pulp & Paper Co. Ltd. 19760595.47 2023-1-12 2027-4-24 No
Huanggang Chenming Pulp & Paper Co. Ltd. 30000000.00 2023-3-9 2026-3-9 No
Huanggang Chenming Pulp & Paper Co. Ltd. 43569402.86 2023-4-24 2026-12-10 No
Huanggang Chenming Pulp & Paper Co. Ltd. 9165073.88 2023-5-10 2026-4-15 No
Huanggang Chenming Pulp & Paper Co. Ltd. 120365399.50 2023-7-18 2027-11-15 No
Huanggang Chenming Pulp & Paper Co. Ltd. 59800740.00 2023-11-23 2027-11-23 No
Huanggang Chenming Pulp & Paper Co. Ltd. 76928689.66 2024-1-30 2028-1-30 No
Jilin Chenming Pulp & Fiber Trading Co. Ltd. 10000000.00 2024-9-24 2026-9-24 No
Jilin Chenming Paper Co. Ltd. 15000000.00 2024-5-17 2026-6-15 No
Jilin Chenming Paper Co. Ltd. 183925999.23 2023-12-15 2026-11-13 No
Jilin Chenming Paper Co. Ltd. 90998111.11 2024-9-29 2026-9-28 No
Jilin Chenming Paper Co. Ltd. 48000000.00 2025-12-17 2028-9-29 No
Jilin Chenming Paper Co. Ltd. 33000000.00 2025-11-6 2028-11-6 No
Jilin Chenming Paper Co. Ltd. 179750000.00 2025-11-6 2030-10-29 No
Jiangxi Chenming Paper Co. Ltd. 10000000.00 2024-10-31 2025-10-27 No
Jiangxi Chenming Paper Co. Ltd. 193450000.00 2025-2-21 2026-2-20 No
Jiangxi Chenming Paper Co. Ltd. 19959366.67 2025-4-3 2026-1-26 No
Jiangxi Chenming Paper Co. Ltd. 59748619.03 2025-4-8 2026-1-26 No
Jiangxi Chenming Paper Co. Ltd. 70000000.00 2025-4-24 2026-4-23 No
Jiangxi Chenming Paper Co. Ltd. 19800000.00 2025-5-22 2026-5-21 No
Jiangxi Chenming Paper Co. Ltd. 19800000.00 2025-5-23 2026-5-22 No
Jiangxi Chenming Paper Co. Ltd. 20350000.00 2025-6-27 2026-5-20 No
Jiangxi Chenming Paper Co. Ltd. 19545000.00 2025-11-30 2026-11-29 No
Jiangxi Chenming Paper Co. Ltd. 20000000.00 2025-11-30 2026-11-29 No
Jiangxi Chenming Paper Co. Ltd. 20000000.00 2025-11-30 2026-11-29 No
Jiangxi Chenming Paper Co. Ltd. 3500000.00 2025-11-30 2026-11-29 No
318 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(3) Related party guarantee (Continued)
Whether
performance
Amount under Commencement Expiry date of of guarantee is
Party being guaranteed guarantee date of guarantee guarantee completed
Jiangxi Chenming Paper Co. Ltd. 6500000.00 2025-11-30 2026-11-29 No
Jiangxi Chenming Paper Co. Ltd. 2965100.00 2025-12-20 2026-12-20 No
Jiangxi Chenming Paper Co. Ltd. 2850400.00 2025-12-21 2026-12-21 No
Jiangxi Chenming Paper Co. Ltd. 979314.95 2025-12-30 2026-12-30 No
Jiangxi Chenming Paper Co. Ltd. 1050948.10 2025-12-30 2026-12-30 No
Jiangxi Chenming Paper Co. Ltd. 1289794.55 2025-12-30 2026-12-28 No
Jiangxi Chenming Paper Co. Ltd. 2000000.00 2025-12-30 2026-12-28 No
Jiangxi Chenming Paper Co. Ltd. 2008854.97 2025-12-30 2026-12-29 No
Jiangxi Chenming Paper Co. Ltd. 5000000.00 2025-12-30 2026-12-30 No
Jiangxi Chenming Paper Co. Ltd. 17000000.00 2025-12-30 2026-12-30 No
Jiangxi Chenming Paper Co. Ltd. 29000000.00 2025-12-30 2026-12-29 No
Jiangxi Chenming Paper Co. Ltd. 50000000.00 2025-12-30 2026-12-29 No
Jiangxi Chenming Paper Co. Ltd. 70000000.00 2025-12-30 2026-12-29 No
Jiangxi Chenming Paper Co. Ltd. 80000000.00 2025-12-30 2026-12-29 No
Jiangxi Chenming Paper Co. Ltd. 91200000.00 2025-12-30 2026-12-28 No
Jiangxi Chenming Paper Co. Ltd. 9979500.00 2025-12-16 2026-10-27 No
Jiangxi Chenming Paper Co. Ltd. 66000000.00 2025-9-11 2028-8-29 No
Jiangxi Chenming Paper Co. Ltd. 30000000.00 2025-9-12 2028-8-29 No
Jiangxi Chenming Paper Co. Ltd. 20000000.00 2025-9-18 2028-8-29 No
Jiangxi Chenming Paper Co. Ltd. 100000000.00 2025-9-24 2028-8-29 No
Jiangxi Chenming Paper Co. Ltd. 100000000.00 2025-9-25 2028-8-29 No
Jiangxi Chenming Paper Co. Ltd. 100000000.00 2025-9-26 2028-8-29 No
Jiangxi Chenming Paper Co. Ltd. 500000000.00 2025-12-31 2028-8-29 No
Jiangxi Chenming Paper Co. Ltd. 57600000.00 2024-9-29 2026-3-29 No
Jiangxi Chenming Paper Co. Ltd. 30000000.00 2023-9-8 2026-8-22 No
Jiangxi Chenming Paper Co. Ltd. 106975661.00 2022-2-28 2028-2-28 No
Jiangxi Chenming Paper Co. Ltd. 15334938.09 2023-12-4 2027-10-15 No
Jiangxi Chenming Paper Co. Ltd. 30000000.00 2024-10-17 2027-10-17 No
Jiangxi Chenming Paper Co. Ltd. 13971781.19 2022-10-11 2026-9-7 No
Jiangxi Chenming Paper Co. Ltd. 11259827.27 2022-8-18 2026-7-24 No
Jiangxi Chenming Paper Co. Ltd. 52835042.81 2022-5-23 2026-12-15 No
Jiangxi Chenming Paper Co. Ltd. 39999702.50 2024-4-30 2026-10-29 No
Shandong Chenming Pulp & Paper Sales Co. Ltd. 150000000.00 2024-2-8 2025-2-12 No
2025 ANNUAL REPORT 319X Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(3) Related party guarantee (Continued)
Whether
performance
Amount under Commencement Expiry date of of guarantee is
Party being guaranteed guarantee date of guarantee guarantee completed
Shandong Chenming Pulp & Paper Sales Co. Ltd. 50000000.00 2024-9-24 2025-9-23 No
Shandong Chenming Pulp & Paper Sales Co. Ltd. 400000000.00 2025-3-29 2026-3-24 No
Shandong Chenming Pulp & Paper Sales Co. Ltd. 25000000.00 2025-3-26 2026-3-25 No
Shandong Chenming Pulp & Paper Sales Co. Ltd. 50000000.00 2025-3-27 2026-3-26 No
Shandong Chenming Pulp & Paper Sales Co. Ltd. 75000000.00 2025-3-31 2026-3-30 No
Shandong Chenming Pulp & Paper Sales Co. Ltd. 130000000.00 2025-4-2 2026-4-1 No
Shandong Chenming Pulp & Paper Sales Co. Ltd. 128402137.00 2025-4-2 2026-4-1 No
Shandong Chenming Pulp & Paper Sales Co. Ltd. 101549733.00 2025-4-7 2026-4-6 No
Shandong Chenming Pulp & Paper Sales Co. Ltd. 203370000.00 2025-8-15 2026-8-14 No
Shandong Chenming Pulp & Paper Sales Co. Ltd. 100000000.00 2025-9-10 2026-9-9 No
Shandong Chenming Pulp & Paper Sales Co. Ltd. 32680000.00 2025-9-19 2026-9-18 No
Shandong Chenming Pulp & Paper Sales Co. Ltd. 153810000.00 2025-10-10 2026-10-9 No
Shanghai Chenming Pulp & Paper Sales Co. Ltd. 5600000.00 2024-6-4 2025-5-30 No
Shanghai Chenming Pulp & Paper Sales Co. Ltd. 6300000.00 2024-6-14 2025-6-9 No
Shanghai Chenming Pulp & Paper Sales Co. Ltd. 5600000.00 2024-6-20 2025-5-28 No
Shanghai Chenming Pulp & Paper Sales Co. Ltd. 20000000.00 2024-6-21 2025-6-18 No
Shanghai Chenming Pulp & Paper Sales Co. Ltd. 8750000.00 2023-2-13 2027-6-30 No
Shanghai Chenming Pulp & Paper Sales Co. Ltd. 519000000.00 2024-10-18 2029-9-24 No
Shanghai Chenming Pulp & Paper Sales Co. Ltd. 11300000.00 2025-2-28 2028-2-27 No
Shanghai Heruiming Property Management Co. Ltd. 20000000.00 2025-4-2 2025-9-30 No
Shanghai Heruiming Property Management Co. Ltd. 59980000.00 2024-5-23 2024-11-8 No
Shanghai Hongtai Real Estate Co. Ltd. 1994545455.00 2023-6-9 2038-3-20 No
Shouguang Chenming Import and Export Trade Co. Ltd. 120000000.00 2025-11-19 2028-11-18 No
Shouguang Chenming Import and Export Trade Co. Ltd. 31179628.93 2024-8-25 2024-11-25 No
Shouguang Chenming Import and Export Trade Co. Ltd. 12595822.02 2024-8-26 2024-11-25 No
Shouguang Chenming Import and Export Trade Co. Ltd. 31892669.52 2024-9-24 2024-12-25 No
Shouguang Chenming Import and Export Trade Co. Ltd. 90959280.79 2024-9-26 2024-12-25 No
Shouguang Chenming Import and Export Trade Co. Ltd. 28842694.68 2024-10-27 2025-1-25 No
Shouguang Chenming Import and Export Trade Co. Ltd. 44522892.05 2024-10-28 2025-1-25 No
Shouguang Meilun Paper Co. Ltd. 71649000.00 2023-10-23 2024-10-23 No
Shouguang Meilun Paper Co. Ltd. 20000000.00 2025-2-27 2026-2-26 No
Shouguang Meilun Paper Co. Ltd. 55369763.58 2025-5-28 2026-5-27 No
Shouguang Meilun Paper Co. Ltd. 176546779.00 2025-6-25 2026-6-24 No
Shouguang Meilun Paper Co. Ltd. 45727471.00 2025-6-3 2026-6-2 No
320 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(3) Related party guarantee (Continued)
Whether
performance
Amount under Commencement Expiry date of of guarantee is
Party being guaranteed guarantee date of guarantee guarantee completed
Shouguang Meilun Paper Co. Ltd. 98114605.00 2025-6-5 2026-6-4 No
Shouguang Meilun Paper Co. Ltd. 45880000.00 2025-7-25 2026-6-24 No
Shouguang Meilun Paper Co. Ltd. 45880000.00 2025-7-25 2026-6-24 No
Shouguang Meilun Paper Co. Ltd. 10000000.00 2025-12-22 2026-12-21 No
Shouguang Meilun Paper Co. Ltd. 29400000.00 2025-7-23 2026-1-23 No
Shouguang Meilun Paper Co. Ltd. 199400000.00 2025-11-12 2026-12-12 No
Shouguang Meilun Paper Co. Ltd. 133253598.00 2025-12-12 2026-12-11 No
Shouguang Meilun Paper Co. Ltd. 49497280.00 2025-12-15 2026-12-14 No
Shouguang Meilun Paper Co. Ltd. 93998400.00 2025-12-31 2026-12-30 No
Shouguang Meilun Paper Co. Ltd. 25113500.00 2025-12-31 2026-12-30 No
Shouguang Meilun Paper Co. Ltd. 44000000.00 2025-12-31 2026-12-30 No
Shouguang Meilun Paper Co. Ltd. 59900000.00 2025-12-31 2026-12-30 No
Shouguang Meilun Paper Co. Ltd. 269000000.00 2021-9-9 2029-12-20 No
Shouguang Meilun Paper Co. Ltd. 17907687.59 2021-12-14 2025-12-14 No
Shouguang Meilun Paper Co. Ltd. 2887491.97 2021-12-20 2025-12-20 No
Shouguang Meilun Paper Co. Ltd. 162119849.20 2022-3-14 2029-5-25 No
Shouguang Meilun Paper Co. Ltd. 8850506.04 2022-5-24 2027-4-30 No
Shouguang Meilun Paper Co. Ltd. 14345230.30 2022-6-6 2025-6-5 No
Shouguang Meilun Paper Co. Ltd. 21399530.65 2022-6-28 2026-6-28 No
Shouguang Meilun Paper Co. Ltd. 30000000.00 2022-8-25 2025-8-25 No
Shouguang Meilun Paper Co. Ltd. 21466666.64 2022-9-30 2026-12-15 No
Shouguang Meilun Paper Co. Ltd. 109591059.30 2022-11-25 2028-1-15 No
Shouguang Meilun Paper Co. Ltd. 194000000.00 2022-12-27 2027-12-24 No
Shouguang Meilun Paper Co. Ltd. 5074948.25 2022-12-29 2026-11-25 No
Shouguang Meilun Paper Co. Ltd. 12000000.00 2023-1-18 2027-1-18 No
Shouguang Meilun Paper Co. Ltd. 5000000.00 2023-3-29 2028-3-20 No
Shouguang Meilun Paper Co. Ltd. 114500000.00 2023-6-9 2030-9-20 No
Shouguang Meilun Paper Co. Ltd. 34420409.16 2023-8-30 2028-4-5 No
Shouguang Meilun Paper Co. Ltd. 16578745.04 2023-10-8 2026-5-15 No
Shouguang Meilun Paper Co. Ltd. 42973200.00 2023-10-25 2029-9-25 No
Shouguang Meilun Paper Co. Ltd. 499000000.00 2024-1-18 2029-1-18 No
Shouguang Meilun Paper Co. Ltd. 42278885.85 2024-1-29 2027-1-28 No
Shouguang Meilun Paper Co. Ltd. 25446656.28 2024-4-12 2025-4-12 No
Shouguang Meilun Paper Co. Ltd. 46166000.35 2024-5-24 2028-11-24 No
2025 ANNUAL REPORT 321X Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(3) Related party guarantee (Continued)
Whether
performance
Amount under Commencement Expiry date of of guarantee is
Party being guaranteed guarantee date of guarantee guarantee completed
Shouguang Meilun Paper Co. Ltd. 69240954.05 2024-5-28 2028-5-26 No
Shouguang Meilun Paper Co. Ltd. 27000000.00 2024-6-28 2027-6-28 No
Shouguang Meilun Paper Co. Ltd. 52827551.13 2024-7-5 2028-2-15 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 85500000.00 2023-11-29 2024-11-21 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2023-12-9 2026-12-8 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2025-12-31 2026-12-30 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 38000000.00 2024-3-21 2026-3-20 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 10500000.00 2024-3-26 2025-3-26 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 31000000.00 2024-3-28 2026-3-27 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 30000000.00 2024-3-29 2026-3-27 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 25000000.00 2024-5-16 2026-5-15 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 75770782.44 2024-5-23 2024-11-26 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 45000000.00 2024-5-29 2026-5-28 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 63000000.00 2024-5-31 2026-5-27 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 40000000.00 2024-6-6 2026-6-5 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 38372000.00 2024-6-6 2026-5-28 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 47784000.00 2024-6-6 2026-5-27 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 48000000.00 2024-6-26 2026-6-23 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 62000000.00 2024-6-28 2026-6-24 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 200000000.00 2024-7-12 2026-7-9 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 29000000.00 2024-7-18 2026-7-15 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2024-7-23 2026-7-22 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 67000000.00 2024-7-24 2026-7-20 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 41408350.00 2024-7-24 2026-7-20 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 60000000.00 2024-8-7 2026-8-6 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 59000000.00 2024-8-8 2026-8-7 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 67000000.00 2024-8-14 2026-8-13 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2024-9-25 2025-9-24 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 78000000.00 2024-10-10 2025-10-10 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 62000000.00 2024-10-11 2025-4-10 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 109960000.00 2024-10-15 2026-10-14 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 730401.44 2024-10-17 2025-1-16 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 167500000.00 2024-11-11 2025-11-10 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 6000000.00 2024-11-13 2025-5-12 No
322 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(3) Related party guarantee (Continued)
Whether
performance
Amount under Commencement Expiry date of of guarantee is
Party being guaranteed guarantee date of guarantee guarantee completed
Zhanjiang Chenming Pulp & Paper Co. Ltd. 100200000.00 2024-11-14 2025-11-13 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 59460000.00 2024-11-20 2025-11-19 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2024-9-12 2025-1-12 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2024-9-20 2025-1-17 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 14050000.00 2025-1-3 2026-1-8 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 204970000.00 2025-3-29 2026-9-28 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 45670000.00 2025-3-29 2026-9-28 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 129820000.00 2025-3-31 2026-9-30 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 5000000.00 2025-3-10 2026-3-9 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 40000000.00 2025-3-10 2026-3-9 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 39900000.00 2025-3-10 2026-3-9 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 67000000.00 2025-1-3 2025-7-3 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 65000000.00 2025-1-10 2025-7-10 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 25000000.00 2025-3-31 2026-3-30 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 25290000.00 2025-3-31 2026-3-30 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 13800000.00 2025-4-28 2026-10-27 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 50290000.00 2025-4-28 2026-4-27 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2025-4-28 2026-4-27 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 48700000.00 2025-4-29 2026-4-27 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 60000000.00 2025-5-21 2026-5-20 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 98350000.00 2025-5-20 2026-5-19 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 49505526.00 2025-5-26 2026-5-25 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 494474.00 2025-5-28 2026-5-27 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 47500000.00 2025-6-17 2026-6-16 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 35000000.00 2025-6-18 2026-6-17 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 30000000.00 2025-6-18 2026-6-17 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 4630000.00 2025-6-20 2026-6-20 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 12300000.00 2025-6-23 2026-6-23 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 9000000.00 2025-7-21 2026-7-21 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 10000000.00 2025-7-30 2026-7-30 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 8000000.00 2025-9-18 2026-9-18 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 35250000.00 2025-12-19 2026-12-18 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 35250000.00 2025-12-19 2026-12-18 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 940000000.00 2018-3-26 2029-3-25 No
2025 ANNUAL REPORT 323X Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(3) Related party guarantee (Continued)
Whether
performance
Amount under Commencement Expiry date of of guarantee is
Party being guaranteed guarantee date of guarantee guarantee completed
Zhanjiang Chenming Pulp & Paper Co. Ltd. 65000000.00 2022-6-17 2025-6-16 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 65000000.00 2022-6-17 2025-6-16 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 58940000.00 2024-6-27 2024-12-27 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 70000000.00 2024-6-27 2024-12-27 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 26620000.00 2024-6-28 2024-12-28 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 25000000.00 2024-6-28 2024-12-28 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 69440000.00 2024-6-28 2024-12-28 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 30000000.00 2024-7-2 2025-1-2 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 65000000.00 2024-8-14 2025-2-14 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 274400000.00 2016-8-18 2028-3-13 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 60540260.41 2022-6-29 2030-6-29 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 49970000.00 2023-3-31 2029-3-17 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 60000000.00 2023-6-2 2026-6-2 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 60900191.21 2023-6-20 2026-6-20 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 199700000.00 2023-7-12 2029-6-12 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 99700000.00 2024-4-29 2029-6-12 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 164172110.17 2023-11-8 2029-11-8 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2024-9-13 2029-3-13 No
Zhanjiang Chenming Arboriculture Development Co. Ltd. 44160000.00 2024-3-29 2026-3-27 No
Weifang Port Wood Chip Wharf Co. Ltd. 77895000.00 2017-12-15 2027-12-20 No
Total 18597879374.99
324 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(4) Remuneration of key management staff
The Company has 27 key management staff for the period and 23 for the prior period. The remuneration
payment is as follows:
Unit: RMB’0000
Item Amount during the period Amount during the prior period
Remuneration of key management staff 976.09 1622.15
* Distribution band of remuneration of key management staff
Amount during Amount during
the year the prior year
Band of annual remuneration (RMB’0000) (RMB’0000)
Total 976.09 1622.15
Of which: (number of staff in each band of amount)
RMB4.00-4.80 million
RMB3.60-4.00 million
RMB3.20-3.60 million
RMB2.80-3.20 million
RMB2.40-2.80 million 1
RMB2.00-2.40 million 2
RMB1.60-2.00 million 1 2
RMB1.20-1.60 million 1
RMB0.80-1.20 million 1 4
Below RMB0.80 million 23 15
2025 ANNUAL REPORT 325X Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(4) Remuneration of key management staff (Continued)
* Breakdown of remuneration of key management staff
Amount during the year (RMB’0000) Total (RMB’0000)
Salaries Of which: Of which: Of which: Of which:
allowances deferred Social Pension Housing deferred deferred
Key management staff Fees Bonuses and benefits payment insurance insurance fund payment Total payment
Zhang Zhiyuan 3.33 3.33
Luo Xinhua 3.33 3.33
Wan Gang 3.33 3.33
Kong Pengzhi 3.33 3.33
Yin Meiqun 16.67 8.33 16.67 8.33
Yang Biao 16.67 8.33 16.67 8.33
Sun Jianfei 16.67 8.33 16.67 8.33
Li Zhihui 16.67 8.33 16.67 8.33
Subtotal of independent
non-executive Director 80.00 33.32 80.00 33.32
Song Yuchen 3.33 3.33
Wang Ying 3.33 3.33
Li Chuanxuan 16.67 8.33 16.67 8.33
Han Tingde 16.67 8.33 16.67 8.33
Subtotal of non-executive
Directors 40.00 16.66 40.00 16.66
Jiang Yanshan 6.23 1.78 1.15 0.72 0.29 0.29 7.67 2.07
Li Weixian 154.27 91.31 11.33 7.12 5.34 0.00 170.94 91.31
Liu Peiji 6.19 1.77 1.15 0.72 0.29 0.29 7.63 2.06
Meng Feng 13.70 0.00 1.15 0.72 0.29 0.29 15.14 0.29
Zhu Yanli 7.00 2.01 1.15 0.72 0.29 0.29 8.44 2.30
Hu Changqin 235.58 103.45 10.51 6.53 2.85 0.00 248.94 103.45
Li Xingchun 6.00 0.00 0.00 0.00 0.00 0.00 6.00 0.00
Li Feng 7.43 1.68 6.34 3.96 1.58 0.44 15.35 2.12
Subtotal of executive
Directors 436.40 202.00 32.78 20.49 10.93 1.60 480.11 203.60
Subtotal of other Senior
Management 327.12 189.43 39.54 24.71 9.32 2.98 375.98 192.41
Total 883.52 441.41 72.32 45.20 20.25 4.58 976.09 445.99
326 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(4) Remuneration of key management staff (Continued)
* Breakdown of remuneration of key management staff
Amount during the prior year (RMB’0000)
Social welfare contribution
Salaries Of which:
allowances Social Pension Housing Total
Key management staff Fees Bonuses and benefits insurance insurance fund (RMB’0000)
Yin Meiqun 20 20
Yang Biao 20 20
Sun Jianfei 20 20
Li Zhihui 20 20
Subtotal of independent non-executive
Director 80 80
Li Chuanxuan 20 20
Han Tingde 20 20
Subtotal of non-executive Directors 40 40
Chen Hongguo 199.17 6.78 4.32 1.52 207.47
Hu Changqin 159.6 11.31 7.05 3.09 174
Li Xingchun 201 201
Li Weixian 150.46 11.31 7.05 5.29 167.06
Li Feng 84.64 7.24 4.6 1.66 93.54
Subtotal of executive Directors 794.87 36.64 23.02 11.56 843.07
Li Kang 48.05 6.67 4.25 1.52 56.24
Pan Ailing 10 10
Zhang Hong 10 10
Qiu Lanju 46.25 6.84 4.24 1.72 54.81
Sang Ailing 19.16 3.63 2.25 0.85 23.64
Total of Supervisors 133.46 17.14 10.74 4.09 154.69
Subtotal of other Senior Management 452.72 41.67 26.17 10 504.39
Total 1501.05 95.45 59.93 25.65 1622.15
Note: a. Social welfare contribution includes basic pension insurance medical insurance work-related injury insurance
maternity insurance and unemployment insurance.b. During the reporting period the Company fully implemented the requirements of the newly amended Company
Law of the People’s Republic of China the Transitional Arrangements for the Implementation of the Supporting
Rules of the New Company Law of the China Securities Regulatory Commission the Guidelines for the Articles of
Association of Listed Companies among others by revising its corporate governance structure and abolishing the
supervisory committee the functions and powers of which as stipulated under the Company Law of the People’s
Republic of China being exercised by the Audit Committee of the Board.
2025 ANNUAL REPORT 327X Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(4) Remuneration of key management staff (Continued)
* The 5 highest paid individuals of the Company during the year included 2 directors of the Company and
3 other senior management personnel. The remuneration range of 3 senior management personnel were
RMB1.20-1.60 million RMB0.80-1.20 million and below RMB0.80 million respectively with a total annual
salary of RMB2.8926 million (RMB1.6202 million of which was deferred payment) including salaries
allowances and benefits amounting to RMB2.6479 million (RMB1.6058 million of which was deferred
payment) social insurance of RMB195800 (including pension insurance of RMB122400) and housing
provident fund of RMB48900 (RMB14400 of which was deferred payment).A. Remuneration of the five highest paid individuals
Amounts during Amounts during
Item the period (RMB’0000) the prior year (RMB’0000)
Salaries allowances and benefits 654.64 816.31
Housing provident fund 13.08 11.56
Social welfare contribution 41.42 36.64
Of which: Pension insurance 25.89 23.02
Total 709.14 864.51
B. Distribution band of remuneration of the five highest paid individuals
Number of individuals Number of individuals
Band of annual remuneration during the year during the prior year
RMB4.00-4.80 million
RMB3.20-3.60 million
RMB2.80-3.20 million
RMB2.40-2.80 million 1
RMB2.00-2.40 million 2
RMB1.60-2.00 million 1 2
RMB1.20-1.60 million 1
RMB0.80-1.20 million 1 1
Below RMB0.80 million 1
* For the financial year ended 31 December 2025 no other bonuses which are discretionary or are based
on the Company’s the Company’s or any member of the Company’s performance were paid to or
receivable by the 5 highest paid individuals and no other emoluments were paid by the Company to the
Directors of the Company and the five highest paid individuals as an inducement to join or upon joining
the Company or as compensation for loss of office. None of the Directors waived any emoluments during
the year.
328 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XIV. Related parties and related party transactions (Continued)
6. Related party accounts receivable and accounts payable
(1) Accounts receivable
Unit: RMB
Closing balance Opening balance
Bad debt Bad debt
Item Related party Book balance provision Book balance provision
Accounts receivable Shouguang Chenming Huisen New-style
Construction Materials Co. Ltd. 1242213.20 22608.28 903414.15 6323.90
Accounts receivable Lide Technology Co. Ltd. 171451.91 1200.16
Accounts receivable Shouguang Chenming Guangyuan
Property Management Co. Ltd. 3051136.29 345127.33 870685.06 6094.80
Other receivables Wuhan Chenming Hanyang Paper
Holdings Co. Ltd. 161681854.41 30010602.34 238093358.44 13523702.76
Other receivables Shouguang Meite Environmental
Technology Co. Ltd. 11939404.05 10535572.35 11179201.88 5603487.91
Other receivables Weifang Port Wood Chip Wharf Co. Ltd. 83230249.84 41564674.85 79397749.84 12131778.23
Other receivables Shouguang Chenming Guangyuan Real
Property Company Limited 22000.00 1100.00
Other receivables Shanghai Chenxinming Industrial
Development Co. Ltd. 300000.00
Other receivables Qingdao Chenming Paper Product Sales
Co. Ltd. 257455.23
Prepayments Shouguang Huixin Construction Materials
Co. Ltd. 130816.20
2025 ANNUAL REPORT 329X Financial Report
XIV. Related parties and related party transactions (Continued)
6. Related party accounts receivable and accounts payable (Continued)
(2) Accounts payable
Unit: RMB
Closing book Opening book
Item Related party balance balance
Accounts payable Wuhan Chenming Qianneng Electric Power Co. Ltd. 4869.10 4869.10
Accounts payable Wuhan Chenming Hanyang Paper Holdings Co. Ltd. 14034825.00 13921249.12
Accounts payable Weifang Xingxing United Chemical Co. Ltd. 26905494.34 26905494.34
Accounts payable Weifang Port Wood Chip Wharf Co. Ltd. 16812701.25 22610306.71
Accounts payable Shouguang Meite Environmental Technology Co. Ltd. 8668875.09 15292739.96
Accounts payable Shouguang Huixin Construction Materials Co. Ltd. 42929.24
Other payables Wuhan Chenming Hanyang Paper Holdings Co. Ltd. 5194879.89
Other payables Lide Technology Co. Ltd. 559897.05
Other payables Chenming (Qingdao) Asset Management Co. Ltd. 1806000.00
Other payables Chenming Holdings Co. Ltd. 35870656.11 38500000.00
Other payables Weifang Xingxing United Chemical Co. Ltd. 16860000.00 16860000.00
Other payables Shouguang Chenming Guangyuan Real Property
Company Limited 208955749.51 197714644.82
Other payables Shandong Shengming Corporate Management Co.Ltd. 46156087.64
Other payables Chenming Management and Consulting (Shandong)
Co. Ltd. 273900.00
Other payables Shandong Dingkun Asset Management Partnership
(Limited Partnership) 171500.00
Contract liabilities Shouguang Chenming Guangyuan Real Property
Company Limited 239618.43
Contract liabilities Sunshine OJI (Shouguang) Special Paper Co. Ltd. 119900.00
330 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XIV. Related parties and related party transactions (Continued)
6. Related party accounts receivable and accounts payable (Continued)
(3) Deposits with related parties
Unit: RMB
Closing book Opening book
Item Related party balance balance
Short-term borrowings Guangdong Nanyue Bank Co. Ltd. 2777.07 1891614.39
Other monetary funds Guangdong Nanyue Bank Co. Ltd. 2163322.52 87600000.00
(4) Loans from related parties
Unit: RMB
Closing book Opening book
Item Related party balance balance
Short-term borrowings Guangdong Nanyue Bank Co. Ltd. 759790000.00 857890000.00
XV. Share-based Payment
1. General information of share-based payment
□ Applicable ? Not applicable
2. Equity-settled share-based payment
□ Applicable ? Not applicable
3. Cash-settled share-based payment
□ Applicable ? Not applicable
4. Share-based payment expense for the period
□ Applicable ? Not applicable
2025 ANNUAL REPORT 331X Financial Report
XVI. Undertaking and contingency
1. Significant commitments
(1) Capital commitments
Unit: RMB
Capital commitments contracted for but not yet necessary Balance as at the end
to be recognised in the financial statement Closing balance of the prior year
Commitments in relation to acquisition and construction of
long-term assets 303504260.20 298488760.20
(2) Other commitments
As at 31 December 2025 the Company has no other commitments that should be disclosed.
2. Contingency
(1) Contingent liabilities arising from pending litigation and arbitration and their financial impacts
Unit: RMB
Amount of the
Plaintiff Defendant Cause of action Trial to be heard subject matter Case status
Plaintiff 1 The Company Property leasing Hongkou District People’s Court of 93887000.00 Second instance
agreement dispute Shanghai Municipality appeal against the
first instance ruling
Plaintiff 2 The Company Financial leasing Tianhe District People’s Court of 65289000.00 Pending first instance
agreement dispute Guangzhou City ruling
Plaintiff 3 The Company Construction Minhang District People’s Court of 39998000.00 Pending first instance
agreement dispute Shanghai Municipality ruling
Plaintiff 4 The Company Construction Mazhang District People’s Court 32477000.00 Pending first instance
agreement dispute of Zhanjiang City ruling
Plaintiff 5 The Company Dispute over non- Luchuan County People’s Court 15670000.00 Pending first instance
payment of ruling
commercial paper
upon maturity
Plaintiff 6 The Company Financial leasing Huangdao District People’s Court 14835300.00 Pending first instance
agreement dispute of Qingdao City ruling
Plaintiff 7 The Company Dispute over non- People’s Court of Shouguang City 13000000.00 Pending first instance
payment of ruling
commercial paper
upon maturity
Plaintiff 8 The Company Land infringement Qingzhou City People’s Court 11879000.00 Pending first instance
liability dispute ruling
Total 287035300.00
332 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XVI. Undertaking and contingency (Continued)
2. Contingency (Continued)
(2) Equity interest subject to freeze
The Company’s equity investments in subsidiaries being pledged as a result of overdue debts or financial
guarantees are as follows:
Equity interest in entity pledged Pledgee
Shanghai Chenming Industry Co. Ltd. Pledgee 1
Shanghai Hongtai Real Estate Co. Ltd. Pledgee 2
Shanghai Heruiming Property Management Co. Ltd. Pledgee 3
Shanghai Heruiming Property Management Co. Ltd. Pledgee 4
Guangdong Huirui Investment Co. Ltd. Pledgee 5
Guangdong Huirui Investment Co. Ltd. Pledgee 6
Guangdong Huirui Investment Co. Ltd. Pledgee 7
Guangdong Huirui Investment Co. Ltd. Pledgee 8
Hainan Chenming Technology Co. Ltd. Pledgee 9
Hainan Chenming Technology Co. Ltd. Pledgee 10
Hainan Chenming Technology Co. Ltd. Pledgee 11
Yangjiang Chenming Arboriculture Development Co. Ltd. Pledgee 12
Yangjiang Chenming Arboriculture Development Co. Ltd. Pledgee 13
Yangjiang Chenming Arboriculture Development Co. Ltd. Pledgee 14
Zhanjiang Chenming Technology Development Co. Ltd. Pledgee 15
Zhanjiang Chenming Paper Co. Ltd. Pledgee 16
Foshan Chenming Import and Export Trade Co. Ltd. Pledgee 17
Zhanjiang Chenming Arboriculture Development Co. Ltd. Pledgee 18
Zhanjiang Chenming Arboriculture Development Co. Ltd. Pledgee 19
Zhanjiang Chenming Arboriculture Development Co. Ltd. Pledgee 20
Zhanjiang Chenming Arboriculture Development Co. Ltd. Pledgee 21
Guangdong Chenming Panels Co. Ltd. Pledgee 22
Zhanjiang Chenming Pulp & Paper Co. Ltd. Pledgee 23
Zhanjiang Chenming Pulp & Paper Co. Ltd. Pledgee 24
Zhanjiang Chenming Pulp & Paper Co. Ltd. Pledgee 25
Shandong Yujing Grand Hotel Co. Ltd. Pledgee 26
Shandong Yujing Grand Hotel Co. Ltd. Pledgee 27
As at 31 December 2025 the Company had no other contingencies that should be disclosed.
2025 ANNUAL REPORT 333X Financial Report
XVII. Post-balance sheet event
Unit: RMB
Amount of the
Plaintiff Defendant Cause of action Trial to be heard subject matter Case status
Plaintiff 1 The Company Litigation filed by the plaintiff Guangzhou Intermediate 965250800.00 Pending settlement after
for default on repayment of People’s Court first instance trial
borrowings
Plaintiff 2 The Company Litigation filed by the plaintiff for Mazhang District People’s Court 25314500.00 Pending ruling after trial
the non-payment of overdue of Zhanjiang City
payment for engineering
Plaintiff 3 The Company Demand of full refund of the Guangzhou Arbitration 16679300.00 Pending first instance trial
deposit paid by the plaintiff as Commission
the equity transfer transaction
was not completed
Total 1007244600.00
XVIII. Other Material Matters
1. Material debt restructuring
As of 31 December 2025 bank borrowings and financial leasing borrowings of the Company were overdue. To
date agreements on loan extensions and interest rate reductions have been reached with 90 out of 109 financial
institutions.
2. Transfer and Disposal of Significant Assets
In order to further optimise the asset structure revitalise inefficient assets improve asset utilisation efficiency
expedite capital recovery increase cash inflow focus on the main business of pulping and paper making and
enhance the Company’s profitability the Company externally transferred its 100% equity interest in Shandong
Shengming Corporate Management Co. Ltd. and the related debts for RMB3336.3530 million during the period.
334 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XVIII. Other Material Matters (Continued)
3. Discontinued operation
Unit: RMB
Amount for Amount for the
Item the period prior period
Revenue from discontinued operations (A) -636898874.17 -40051046.70
Less: Termination of operating expenses (B) 150566903.32 242953206.16
Total profit from discontinued operations (C) -787465777.49 -283004252.86
Less: income tax expense for termination of operations (D) 135762.03 510529074.15
Net profit from operating activities (E = C-D) -787601539.52 -793533327.01
Asset impairment loss/(reversal) (F) -2115359300.34 -3021529650.83
Total proceeds from disposal (G) -1384429.42 86597.83
Disposal of related income tax expenses (H)
Net profit of disposal (I = G-H) -1384429.42 86597.83
Net profit from discontinued operations (J = E + F + I) -2904345269.28 -3814976380.01
Of which: Discontinued operating profit attributable to shareholders of
the Parent Company -2904345269.28 -3814976380.01
Discontinued operating profit attributable to minority
shareholders
Net cash flow from operating activities 956467.44 267886307.14
Net cash flow from investing activities -2225011.42 -94985.00
Net cash flow from financing activities -14305.04 -268346738.39
The profit from continuing operations realised in the current period was RMB-6058497700.17 of which the profit
from continuing operations attributable to the shareholders of the Parent Company was RMB-5391587133.60. The
Company thoroughly divested its financial leasing business to focus on its principal activities.
2025 ANNUAL REPORT 335X Financial Report
XVIII. Other Material Matters (Continued)
4. Segment information
(1) Basis for determination and accounting policies
According to the Company’s internal organisational structure management requirements and internal reporting
system the Company’s operating business is divided into 4 reporting segments. These report segments are
determined based on the financial information required by the Company’s daily internal management. The
management of the Group regularly evaluates the operating results of these reporting segments to determine
the allocation of resources to them and evaluate their performance.The Company’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) Hotels and property rentals segment which is responsible for hotel services and property rental;
(4) Other segments which is responsible for the above segments otherwise.
The transfer prices of the transfer transactions between the Company’s segments are based on market
prices.Segment report information is disclosed in accordance with the accounting policies and measurement
standards adopted by each segment when reporting to management. These accounting policies and
measurement basis are consistent with the accounting policies and measurement basis used in preparing
the financial statements.
336 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XVIII. Other Material Matters (Continued)
4. Segment information (Continued)
(2) Financial Information of Reporting Segment
Unit: RMB
Hotel and
Current period or end of the current period Machine-made paper Financial services property rentals Others Offset Total
Revenue 6093549372.69 13783298.43 153804975.05 215508513.52 290095915.72 6186550243.97
Including: Revenue from external transactions 5987245980.96 6816454.86 148204363.73 44283444.42 6186550243.97
Revenue from inter-segment
transactions 106303391.73 6966843.57 5600611.32 171225069.10 290095915.72 –
Including: Revenue from principal activities 5932070319.68 13783298.43 152219006.29 116575057.25 96851034.54 6117796647.11
Operating costs 8393006804.28 65501758.69 212081419.90 286259350.35 354491245.81 8602358087.41
Including: Costs of principal activities 8244037143.99 65501758.69 212078718.34 190905411.68 161238240.96 8551284791.74
Operating expenses 85037516.98 – 18650790.78 633061.72 – 104321369.48
Including: Wages 58280529.64 6441768.67 329000.71 65051299.02
Depreciation expenses 916993.02 3681043.57 – 4598036.59
Office expenses 321622.37 8173.57 – 329795.94
Travel expenses 8725415.05 1200.00 107945.35 8834560.40
Selling commissions – 1365896.54 – 1365896.54
Rental expenses 3088424.30 3619033.67 129359.03 6836817.00
Hospitality expenses 7668006.25 4234.05 12527.00 7684767.30
Others 6036526.35 3529440.71 54229.63 9620196.69
Operating profit/(loss) -11717331277.88 -1507023065.78 -649304687.31 -293578683.50 -5026070227.67 -9141167486.80
Total assets 42556893305.68 4363734465.17 7455226833.78 6517035931.90 10272741628.40 50620148908.13
Total liabilities 40874255586.68 2682626572.88 5806812548.98 1656023486.48 3212746110.37 47806972084.65
Additional information:
1. Capital expenditure
Including: Total cost of construction in
progress incurred for the current period 67458583.19 67458583.19
Fixed assets purchased 84788547.59 163204.85 6025741.72 354408.42 91331902.58
Intangible assets purchased 3469012.63 1282556.72 2186455.91
2025 ANNUAL REPORT 337X Financial Report
XVIII. Other Material Matters (Continued)
4. Segment information (Continued)
(2) Financial Information of Reporting Segment (Continued)
Hotel and
Prior period or end of the prior period Machine-made paper Financial services property rentals Others Offset Total
Revenue 22631951988.07 294265189.14 218472144.22 875895266.62 1291109735.29 22729474852.76
Including: Revenue from external transactions 22121097000.91 194122370.30 195920780.92 218334700.63 22729474852.76
Revenue from inter-segment
transactions 510854987.16 100142818.84 22551363.30 657560565.99 1291109735.29
Including: Revenue from principal activities 22342338732.50 294265189.14 216040917.16 516279443.44 766889737.38 22602034544.86
Operating costs 22142564244.40 129290999.94 220948362.81 954139643.19 1302114581.91 22144828668.43
Including: Costs of principal activities 21817408428.61 129290999.94 220061816.68 604455575.82 685551497.54 22085665323.51
Operating expenses 211301293.09 19786226.71 3500573.46 -6583015.86 241171109.12
Including: Wages 125648321.41 6041820.39 1228396.30 132918538.10
Depreciation expenses 1065408.58 3675184.06 2254.69 4742847.33
Office expenses 2104193.40 13620.13 133.82 2117947.35
Travel expenses 28246818.27 3097.06 471289.32 28721204.65
Selling commissions 71407.60 4546796.61 4618204.21
Rental expenses 6821793.52 99622.63 6921416.15
Hospitality expenses 40762381.84 29770.00 84388.00 -6583015.86 47459555.70
Others 6580968.47 5475938.46 1614488.70 13671395.63
Operating profit/(loss) -3938128030.75 -2518087175.80 -961022745.28 -367642543.68 35854079.00 -7820734574.51
Total assets 70105850088.46 12533349415.32 8425823090.03 7499755004.88 35055482456.61 63509295142.08
Total liabilities 52435567469.59 3878708512.86 5238836562.08 2351979014.66 13231567042.26 50673524516.93
Total cost of construction in progress incurred
for the current period 296435087.14 249532.12 296684619.26
Fixed assets purchased 146444059.24 903834.50 55906328.10 1081819.68 204336041.52
Intangible assets purchased
338 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XIX. Major Item Notes of the Parent Company’s Financial Statements
2. Accounts receivable
(1) Disclosure by ageing
Unit: RMB
Ageing Closing book balance Opening book balance
Within 1 year 1805177349.81 240828735.48
1 to 2 years 189054.07
2 to 3 years 1500000.00
Over 3 years 4502821.17 3002821.17
Subtotal 1809869225.05 245331556.65
Less: Bad debt provision 6808866.35 4543616.41
Total 1803060358.70 240787940.24
(2) Disclosure by bad debt provision method
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Provision Provision
Percentage percentage Carrying Percentage percentage Carrying
Category Amount (%) Amount (%) amount Amount (%) Amount (%) amount
Assessed individually for
bad debt provision
Assessed collectively for
bad debt provision 1809869225.05 100.00 6808866.35 0.38 1803060358.70 245331556.65 100.00 4543616.41 1.85 240787940.24
Including:
Due from related party
customers 1787722899.81 98.78 1787722899.81 225768022.18 92.03 5370.25 225762651.93
Due from non-related
party customers 22146325.24 1.22 6808866.35 30.74 15337458.89 19563534.47 7.97 4538246.16 23.20 15025288.31
2025 ANNUAL REPORT 339X Financial Report
XIX. Major Item Notes of the Parent Company’s Financial Statements (Continued)
2. Accounts receivable (Continued)
(2) Disclosure by bad debt provision method (Continued)
Items assessed collectively for bad debt provision: Due from related party customers
Unit: RMB
Closing balance
Name Book balance Bad debt provision Provision percentage (%)
Within 1 year 1787722899.81
Total 1787722899.81
Items assessed collectively for bad debt provision: Due from non-related party customers
Unit: RMB
Closing balance
Name Book balance Bad debt provision Provision percentage (%)
Within 1 year 17454450.00 2249007.57 12.89
1 to 2 years 189054.07 57037.61 30.17
2 to 3 years
Over 3 years 4502821.17 4502821.17 100.00
Total 22146325.24 6808866.35 30.74
Whether the bad debt provision for accounts receivable is made according to the general model of ECLs:
□ Applicable ? Not applicable
340 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XIX. Major Item Notes of the Parent Company’s Financial Statements (Continued)
2. Accounts receivable (Continued)
(3) Provision recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMB
Changes in the period
Category Opening balance Provision Recovery or reversal Written-off Others Closing balance
Bad debt provision 4543616.41 2308126.17 42876.23 6808866.35
Total 4543616.41 2308126.17 42876.23 6808866.35
(4) Top five accounts receivable and contract assets based on closing balance of debtors
The total amount of top five accounts receivable and contract assets based on closing balance of debtors
for the period amounted to RMB1796515443.99 in total accounting for 99.26% of the total closing balance
of accounts receivable and contract assets. The closing balance of the corresponding bad debt provision
amounted to RMB6671607.57 in total.Unit: RMB
As a percentage
of the closing Closing balance of
balance of the total bad debt provision
Closing balance of accounts receivable of accounts
Name of entity accounts receivable (%) receivable
Customer 1 1167883738.67 64.53
Customer 2 456303123.75 25.21
Customer 3 160451531.57 8.87
Customer 4 7454450.00 0.41 2249007.57
Customer 5 4422600.00 0.24 4422600.00
Total 1796515443.99 99.26 6671607.57
2. Other receivables
Unit: RMB
Item Closing balance Opening balance
Interest receivable
Dividend receivable 142500000.00
Other receivables 5569475196.11 8459731199.92
Total 5711975196.11 8459731199.92
2025 ANNUAL REPORT 341X Financial Report
XIX. Major Item Notes of the Parent Company’s Financial Statements (Continued)
2. Other receivables (Continued)
(1) Dividends receivable
Unit: RMB
Investee Closing book balance Opening book balance
Shouguang Chenming Art Paper Co. Ltd. 142500000.00
Subtotal 142500000.00
Less: Bad debt provision
Total 142500000.00
(2) Other receivables
1 Classification of other receivables by nature
Unit: RMB
Nature Closing book balance Opening book balance
Open credit 5700252589.33 8539141510.67
Guarantee deposit and deposit 4314449.08 820000.00
Reserve and borrowings 5189667.08 13009976.80
Others 1150970.20
Subtotal 5709756705.49 8554122457.67
Less: Bad debt provision 140281509.38 94391257.75
Total 5569475196.11 8459731199.92
2) Disclosure by ageing
Unit: RMB
Ageing Closing book balance Opening book balance
Within 1 year 4291577401.96 8439577689.53
1 to 2 years 1311253000.77 8767733.14
2 to 3 years 6507927.37 41423849.01
Over 3 years 100418375.39 64353185.99
Subtotal 5709756705.49 8554122457.67
Less: Bad debt provision 140281509.38 94391257.75
Total 5569475196.11 8459731199.92
342 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XIX. Major Item Notes of the Parent Company’s Financial Statements (Continued)
2. Other receivables (Continued)
(1) Other receivables (Continued)
3) Particulars of bad debt provision
Closing bad debt provision at stage 1:
Unit: RMB
12-month Bad debt Carrying
Category Book balance ECL rate (%) provision amount
Bad debt provision assessed
collectively 5646025393.15 1.37 77235372.56 5568790020.59
Amount due from government
agencies 100054.07 92.00 92054.07 8000.00
Amount due from related parties 5623849338.09 1.27 71588327.55 5552261010.54
Other receivables 22076000.99 25.16 5554990.94 16521010.05
Total 5646025393.15 1.37 77235372.56 5568790020.59
As at the end of the period the Company did not have interest receivables dividends receivables and
other receivables at stage 2.Closing bad debt provision at stage 3:
Unit: RMB
Lifetime ECL Bad debt
Name Book balance rate (%) provision Carrying amount
Bad debt provision assessed
individually 63731312.34 98.92 63046136.82 685175.52
Total 63731312.34 98.92 63046136.82 685175.52
Items assessed individually for bad debt provision:
Unit: RMB
Name Book balance Lifetime ECL rate (%) Bad debt provision Carrying amount Reason
Customer 1 5526048.24 100% 5526048.24 Uncertain recovery to a certain extent
Customer 2 4725039.89 100% 4725039.89 Uncertain recovery to a certain extent
Customer 3 4019935.23 100% 4019935.23 Uncertain recovery to a certain extent
94 customers including customer 4 49460288.98 98.61% 48775113.46 685175.52 Uncertain recovery to a certain extent
Total 63731312.34 98.92% 63046136.82 685175.52
2025 ANNUAL REPORT 343X Financial Report
XIX. Major Item Notes of the Parent Company’s Financial Statements (Continued)
2. Other receivables (Continued)
(1) Other receivables (Continued)
4) Provision recovery or reversal of bad debt provision for the period
Unit: RMB
Stage 1 Stage 2 Stage 3
ECLs for Lifetime ECLs Lifetime
the next 12 (not credit- ECLs (credit-
Bad debt provision months impaired) impaired) Total
Opening balance 26930069.45 67461188.30 94391257.75
Opening balance in the current period
– Transferred to stage 2
– Transferred to stage 3
– Reversed to stage 2
– Reversed to stage 1
Provision for the period 50305303.11 50305303.11
Reversal for the period 4415051.48 4415051.48
Transfer for the period
Write-off for the period
Other changes
Closing balance 77235372.56 63046136.82 140281509.38
344 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XIX. Major Item Notes of the Parent Company’s Financial Statements (Continued)
2. Other receivables (Continued)
(1) Other receivables (Continued)
5) Top five accounts receivable based on closing balance of debtors
The total amount of top five other receivables based on closing balance of debtors for the period
amounted to RMB4057288816.89 in total accounting for 71.06% of the total closing balance of other
receivables. The closing balance of the corresponding bad debt provision amounted to RMB0.00 in total.Unit: RMB
Percentage to
total closing Closing balance
balance of other of bad debt
Name of entity Nature Closing balance Ageing receivables (%) provision
Customer 1 Open credit 2262956136.67 Within 1 year 39.63
Customer 2 Open credit 1161403603.22 Within 1 year 1-2 years 20.34
Customer 3 Open credit 250000000.00 1-2 years 4.38
Customer 4 Open credit 203127563.23 Within 1 year 1-2 years 3.56
Customer 5 Open credit 179801513.77 Within 1 year 1-2 years 3.15
Total 4057288816.89 71.06
3. Long-term equity investments
Unit: RMB
Closing balance Opening balance
Item Book balance Impairment provision Book value Book balance Impairment provision Book value
Investment in subsidiaries 16443510434.42 16443510434.42 18327937687.22 18327937687.22
Investment in associates 81676475.42 81676475.42 95685951.23 95685951.23
Investment in joint ventures 180168636.07 5994545.96 174174090.11 169543841.48 5994545.96 163549295.52
Total 16705355545.91 5994545.96 16699360999.95 18593167479.93 5994545.96 18587172933.97
2025 ANNUAL REPORT 345X Financial Report
(1) Investment in subsidiaries
Unit: RMB
Change for the period
Opening balance Closing balance
Opening balance of impairment Additional Withdrawn Impairment Closing balance of impairment
Investee (carrying amount) provision contribution contribution provision Others (carrying amount) provision
Chenming Paper Korea Co. Ltd. 6143400.00 6143400.00
Chenming GmbH 4083235.00 4083235.00
Hailaer Chenming Paper Co. Ltd. 12000000.00 12000000.00
Huanggang Chenming Pulp & Paper Co.Ltd. 2350000000.00 1878019452.80 471980547.20
Huanggang Chenming Arboriculture
Development Co. Ltd. 70000000.00 70000000.00
Jinan Chenming Paper Sales Co. Ltd. 100000000.00 100000000.00
Shandong Yujing Grand Hotel Co. Ltd. 280500000.00 280500000.00
Zhanjiang Chenming Pulp & Paper Co.Ltd. 5275000000.00 5275000000.00
Shouguang Chenming Modern Logistic
Co. Ltd. 10000000.00 10000000.00
Shouguang Chenming Art Paper Co.Ltd. 113616063.80 113616063.80
Shouguang Meilun Paper Co. Ltd. 4949441979.31 4949441979.31
Shouguang Chenming Import and Export
Trade Co. Ltd. 250000000.00 250000000.00
Shouguang Chenming Papermaking
Machine Co. Ltd. 2000000.00 2000000.00
Shouguang Hongxiang Printing and
Packaging Co. Ltd. 3730000.00 3730000.00
Shandong Chenming Group Finance
Co. Ltd. 4000000000.00 4000000000.00
Chenming Arboriculture Co. Ltd. 45000000.00 45000000.00
Chenming Paper United States Co. Ltd. 6407800.00 6407800.00
Weifang Chenming Growth Driver
Replacement Equity Investment Fund
Partnership (Limited Partnership) 559722323.96 559722323.96
Weifang Chendu Equity Investment
Partnership (Limited Partnership) 290292885.15 290292885.15
Total 18327937687.22 1884427252.80 16443510434.42
346 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XIX. Major Item Notes of the Parent Company’s Financial Statements (Continued)
3. Long-term equity investments (Continued)
(2) Investment in associates and joint ventures
Unit: RMB
Change for the period
Investment
Opening Opening gain or loss Adjustment
balance balance of recognised of other Distribution of Closing balance Closing balance
(carrying impairment Additional Withdrawn under equity comprehensive Other change in cash dividend or Impairment (carrying of impairment
Investee amount) provision contribution contribution method income equity interest profit declared provision Others amount) provision
I. Associates
Zhuhai Dechen New Third Board Equity
Investment Fund Company (Limited
Partnership) 27167682.31 -2391537.09 24776145.22
Ningbo Kaichen Huamei Equity
Investment Fund Partnership (Limited
Partnership) 135554820.00 10527197.37 146082017.37
Chenming (Qingdao) Asset Management
Co. Ltd. 826793.21 2489134.31 3315927.52
Xuchang Chenming Paper Co. Ltd. 5994545.96 5994545.96
Subtotal 163549295.52 5994545.96 10624794.59 174174090.11 5994545.96
II. Joint ventures
Shouguang Chenming Huisen New-style
Construction Materials Co. Ltd. 8368935.72 259312.75 8628248.47
Weifang Port Wood Chip Wharf Co. Ltd. 87317015.51 -14268788.56 73048226.95
Subtotal 95685951.23 -14009475.81 81676475.42
Total 259235246.75 5994545.96 -3384681.22 255850565.53 5994545.96
Determination of recoverable amount as the net amount of fair value less disposal expenses
□ Applicable ? Not applicable
Determination of recoverable amount based on the present value of expected future cash flows
□ Applicable ? Not applicable
2025 ANNUAL REPORT 347X Financial Report
XIX. Major Item Notes of the Parent Company’s Financial Statements (Continued)
4. Revenue and operating costs
Unit: RMB
Amount for the period Amount for the prior period
Item Revenue Costs Revenue Costs
Principal activities 181129673.65 370909366.33 4647274143.27 4671882008.18
Other activities 391689453.44 92571201.01 2828232639.49 2448694783.65
Total 572819127.09 463480567.34 7475506782.76 7120576791.83
Breakdown information of operating revenues and operating costs:
Unit: RMB
Machine-made paper Others Total
Category of contract Revenue Operating costs Revenue Operating costs Revenue Operating costs
Type of business 181129673.65 370909366.33 391689453.44 92571201.01 572819127.09 463480567.34
Including:
Machine-made paper 178508617.82 365217109.53 178508617.82 365217109.53
Others 2621055.83 5692256.80 391689453.44 92571201.01 394310509.27 98263457.81
By geographical area 181129673.65 370909366.33 391689453.44 92571201.01 572819127.09 463480567.34
Including:
Chinese Mainland 175088486.00 366238288.21 391689453.44 92571201.01 566777939.44 458809489.22
Other countries and regions 6041187.65 4671078.12 6041187.65 4671078.12
By the timing of delivery 181129673.65 370909366.33 391689453.44 92571201.01 572819127.09 463480567.34
Including:
Goods (at a point in time) 181129673.65 370909366.33 364112894.42 76812240.96 545242568.07 447721607.29
Services (within a certain period) 27576559.02 15758960.05 27576559.02 15758960.05
By sales channels 181129673.65 370909366.33 391689453.44 92571201.01 572819127.09 463480567.34
Including:
Distribution 24351173.28 214251955.52 24351173.28 214251955.52
Direct sales 156778500.37 156657410.81 391689453.44 92571201.01 548467953.81 249228611.82
Total 181129673.65 370909366.33 391689453.44 92571201.01 572819127.09 463480567.34
348 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XIX. Major Item Notes of the Parent Company’s Financial Statements (Continued)
4. Revenue and operating costs (Continued)
Information related to performance obligations:
Company’s commitments Types of quality assurance
Time for fulfilment of Nature of goods that the Whether the person is the expected to be refunded to offered by the Company and
Item performance obligations Significant terms of payment Company undertakes to transfer primary person in charge customers related obligations
Machine-made paper Domestic sales on the day of delivery Domestic sales tend to be Produces easily distinguishable Yes No Guaranteed quality assurance
to the customer; foreign sales on provided on an invoice should there be objections
the day of customs clearance basis; foreign sales tend to to product quality within 7
be prepaid days of arrival the products
can be returned and
exchanged
Other explanations: The Company’s performance obligations for sales of machine-made paper are generally less than
one year and the Company takes advance payments or provides credit terms depending on the customer. When the
Company is the primary responsible party for a sale it generally obtains the unconditional right to receive payment
when control of the merchandise is transferred to the customer either at the time of shipment or upon delivery to the
destination specified by the customer.Information related to the transaction price allocated to residual performance obligations:
At the end of the reporting period the amount of revenue with signed contracts but unfulfilled or uncompleted
performance obligation was RMB325030098.61 in which RMB325030098.61 was expected to be recognised in
2026.
5. Investment income
Unit: RMB
Amount for Amount for
Item the period the prior period
Income from long-term equity investments accounted for using the
cost method 142500000.00 47000000.00
Income from long-term equity investments accounted for using the
equity method -3384681.22 -132754796.54
Investment gain on disposal of long-term equity investments -6407800.00
Investment gain on derecognition of financial assets -17770062.57
Investment gain on holding other non-current financial assets 1384673.77 1298463.59
Total 134092192.55 -102226395.52
2025 ANNUAL REPORT 349X Financial Report
XX. 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 provision for assets impairment) -602291481.76
Government grants except for the government grants closely
related to the normal operation of the Company granted in
accordance with an established standard and having an ongoing
effect on the Company’s profit or loss in compliance with
national policies and regulations 64188680.68
Except for effective hedging activities conducted in the ordinary
course of business of the Company gain or loss arising from
the change in fair value of financial assets and financial liabilities
held by a non-financial company as well as gain or loss arising
from disposal of its financial assets and financial liabilities -3174128.31
Reversal of provision for impairment of receivables individually
tested for impairment 13201496.76
Profit or loss from debt restructuring -36001298.50
Profit or loss from changes in the fair value of consumable
biological assets subsequently measured at fair value -135025589.35
Other non-operating income and expenses other than the above
items -50188172.61
Total extraordinary gains or losses -749290493.09
Less: Effect of income tax of extraordinary gains or losses 8296434.22
Net extraordinary gains or losses -757586927.31
Less: Net effect of extraordinary gains or losses attributable to
minority interest (after tax) -130921063.70
Extraordinary gains or losses attributable to ordinary shareholders
of the Company -626665863.61
Details of other gain or loss items that fall within the definition of extraordinary gain or loss:
□ Applicable ? Not applicable
The Company did not have details of other gain or loss items that fall within the definition of extraordinary gain or loss.Explanation on the extraordinary gain or loss items as illustrated in the Explanatory Announcement on Information
Disclosure for Companies Offering Their Securities to the Public No.1 – Extraordinary Gains or Losses defined as its
recurring gain or loss items
? Applicable □ Not applicable
350 SHANDONG CHENMING PAPER HOLDINGS LIMITEDX Financial Report
XX. Supplementary information (Continued)
1. Breakdown of extraordinary gains or losses for the current period (Continued)
Item Amount involved Reasons
Other income 54147545.32 Government grants related to assets that are closely related to the
Company’s normal operations are subsequently amortised to other
income which has a continuing effect on the Company’s profit or loss
and is therefore accounted for as recurring profit or loss.
2. Return on net assets and earnings per share
Earnings per share
Weighted
average return Basic Diluted
Profit for the reporting period on net assets (%) (RMB per share) (RMB per share)
Net profit attributable to ordinary shareholders of the Company -164.83 -2.83 -2.83
Net profit after extraordinary gains or losses attributable to
ordinary shareholders of the Company -152.38 -2.61 -2.61
Basic earnings per share of continued operations and discontinued operations
Amount
Calculation of basic earnings per share Amount for the period for the prior period
Net profit attributable to ordinary shareholders of the
Parent Company -8295932402.88 -7410784491.65
Of which: net profit attributable to continued operations -5391587133.60 -3595808111.64
net profit attributable to discontinued operations -2904345269.28 -3814976380.01
Basic earnings per share -2.83 -2.53
Of which: basic earnings per share of continued operations -1.84 -1.23
Basic earnings per share of discontinued operations -0.99 -1.30
For discontinued operations please refer to Note XVIII. 3.
2025 ANNUAL REPORT 351X Financial Report
XX. Supplementary information (Continued)
3. Accounting data difference under accounting standard at home and abroad
(1) Differences of net profit and net assets disclosed in financial reports prepared under IAS and Chinese
accounting standards
□ Applicable ? Not applicable
(2) Differences of net profit and net assets disclosed in financial reports prepared under oversea and Chinese
accounting standards
□ Applicable ? Not applicable
(3) Reasons for the differences in figures under domestic and foreign accounting standards. The name of
the foreign audit institution shall be indicated if the data audited by the foreign audit institution has been
regulated differently.□ Applicable ? Not applicable
The Board of Shandong Chenming Paper Holdings Limited
30 March 2026
352 SHANDONG CHENMING PAPER HOLDINGS LIMITED2025 ANNUAL REPORT
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