SHANDONG CHENMING PAPER HOLDINGS LIMITED 2022 Interim Financial Report
SHANDONG CHENMING PAPER HOLDINGS LIMITED
Interim Financial Report 2022
August 2022I Financial Report
I. Auditors’ Report
Is the interim report audited
□ Yes √ No
The interim financial report is unaudited.II. Financial Statements
The unit in the notes to the financial statements is: RMB
1. Consolidated Balance Sheet
Prepared by: Shandong Chenming Paper Holdings Limited
30 June 2022
Unit: RMB
Item 30 June 2022 31 December 2021
CURRENT ASSETS:
Monetary funds 14958681361.91 14119782939.66
Financial assets held for trading 51033051.57 110886182.88
Bills receivable 742590000.00 –
Accounts receivable 3344874025.14 2656517150.46
Accounts receivable financing 912727537.75 435459341.76
Prepayments 1029462815.63 891485078.46
Other receivables 2211345141.22 2252864083.00
Including: Interest receivable – –
Dividend receivable 3501220.33 –
Inventories 5388568445.28 5282631922.12
Non-current assets due within one year 5216044182.27 5216934172.61
Other current assets 1415587270.63 1903929492.85
Total current assets 35270913831.40 32870490363.80
NON-CURRENT ASSETS:
Long-term receivables 1727573276.15 1788759975.35
Long-term equity investments 1924214471.31 1866587685.35
Other non-current financial assets 519927003.25 519927003.25
Investment property 6357996507.32 6473538431.91
Fixed assets 34390613468.18 35653492676.15
Construction in progress 802407685.01 197749526.05
Bearer biological assets 10398523.90 –
Right-of-use assets 188830653.76 197429176.44
Intangible assets 1870500853.55 1592672934.54
Goodwill 26946905.38 26946905.38
Long-term prepaid expenses 47413231.29 49141773.14
Deferred income tax assets 1164178754.33 1114781456.78
Other non-current assets 884665880.41 489936694.10
Total non-current assets 49915667213.84 49970964238.44
Total assets 85186581045.24 82841454602.24
SHANDONG CHENMING PAPER HOLDINGS LIMITED 1
INTERIM REPORT 2022I Financial Report
II. Financial Statements (Cont’d)
1. Consolidated Balance Sheet (Cont’d)
Item 30 June 2022 31 December 2021
CURRENT LIABILITIES:
Short term borrowings 36359663944.57 33523025186.22
Bills payable 4035081278.85 3089512327.40
Accounts payable 3268986931.66 3871131345.34
Receipts in advance 26735329.19 38274028.20
Contract liabilities 1334133746.95 1382289597.54
Employee benefits payable 130627751.53 169899008.01
Taxes payable 176062048.68 321495480.67
Other payables 1544415534.74 1538013585.93
Including: Interest payable 65975461.61 55437777.80
Dividend payable – –
Non-current liabilities due within one year 4558351674.18 6601311227.98
Other current liabilities – –
Total current liabilities 51434058240.35 50534951787.29
NON-CURRENT LIABILITIES:
Long-term borrowings 5363235057.03 5276340154.98
Bonds payable – 155000000.00
Including: Preference shares – –
Perpetual Bonds – –
Lease liabilities 54751617.05 57281205.81
Long-term payables 3383399934.07 2358901022.99
Provisions 325259082.28 325259082.28
Deferred income 1521325740.88 1573681684.25
Deferred income tax liabilities 12761398.95 13210529.74
Other non-current liabilities – –
Total non-current liabilities 10660732830.26 9759673680.05
Total liabilities 62094791070.61 60294625467.34
OWNERS’ EQUITY:
Share capital 2984208200.00 2984208200.00
Other equity instruments 996000000.00 996000000.00
Including: Preference shares – –
Perpetual Bonds 996000000.00 996000000.00
Capital reserves 5250084902.32 5282805114.62
Less: Treasury shares 226860000.00 226860000.00
Other comprehensive income -596159006.77 -445582729.36
Surplus reserves 1212009109.97 1212009109.97
General risk provisions 76825918.60 76825918.60
Retained profit 9524268170.62 9210372613.81
Total equity attributable to owners of the Company 19220377294.74 19089778227.64
Minority interest 3871412679.89 3457050907.26
Total owners’ equity 23091789974.63 22546829134.90
Total liabilities and owners’ equity 85186581045.24 82841454602.24
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
2 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company
Unit: RMB
Item 30 June 2022 31 December 2021
CURRENT ASSETS:
Monetary funds 7063348459.37 6827656382.37
Bills receivable 3955040000.00 3625270000.00
Accounts receivable 1214929356.15 141601245.51
Accounts receivable financing 343168472.49 7923732.09
Prepayments 452913807.74 239461509.15
Other receivables 8021857221.76 8900179262.54
Including: Interest receivable – –
Dividend receivable – 126325018.50
Inventories 691539694.58 639423803.30
Non-current assets due within one year 13795169.59 –
Other current assets 142455846.78 44894366.29
Total current assets 21899048028.46 20426410301.25
NON-CURRENT ASSETS:
Long-term receivables 14401926.55 13612038.99
Long-term equity investments 18826252125.87 18806029815.18
Other non-current financial assets 119927003.25 119927003.25
Fixed assets 3638101674.93 3753927591.49
Construction in progress 120165950.03 94436880.66
Intangible assets 512652321.51 520068337.11
Deferred income tax assets 409761599.79 393918032.54
Other non-current assets 48375235.23 7000000.00
Total non-current assets 23689637837.16 23708919699.22
Total assets 45588685865.62 44135330000.47
CURRENT LIABILITIES:
Short-term borrowings 14903735390.93 13761223259.09
Bills payable 9210957194.28 9725713524.15
Accounts payable 1824630352.59 1129675956.85
Receipts in advance – –
Contract liabilities 1338045087.62 888114906.08
Staff remuneration payables 59016682.93 57487223.39
Tax payables 10423309.95 115257929.68
Other payables 670688794.45 970585670.47
Including: Interest payable 77790375.01 55437777.80
Dividend receivable – –
Non-current liabilities due within one year 1901997326.57 2111092964.34
Other current liabilities – –
Total current liabilities 29919494139.32 28759151434.05
SHANDONG CHENMING PAPER HOLDINGS LIMITED 3
INTERIM REPORT 2022I Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company (Cont’d)
Item 30 June 2022 31 December 2021
NON-CURRENT LIABILITIES:
Long-term borrowings 1838330770.83 1779135700.00
Bonds payable – 155000000.00
Long-term payables 293666383.24 52376768.35
Provisions 325259082.28 325259082.28
Deferred income 34111573.96 35232490.83
Deferred income tax liabilities – –
Other non-current liabilities – –
Total non-current liabilities 2491367810.31 2347004041.46
Total liabilities 32410861949.63 31106155475.51
OWNERS’ EQUITY:
Share capital 2984208200.00 2984208200.00
Other equity instruments 996000000.00 996000000.00
Including: Preference shares – –
Perpetual Bonds 996000000.00 996000000.00
Capital reserves 5147515323.53 5154365336.31
Less: Treasury shares 226860000.00 226860000.00
Other comprehensive income – –
Surplus reserves 1199819528.06 1199819528.06
Retained profit 3077140864.40 2921641460.59
Total owners’ equity 13177823915.99 13029174524.96
Total liabilities and owners’ equity 45588685865.62 44135330000.47
4 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
II. Financial Statements (Cont’d)
3. Consolidated Income Statement
Unit: RMB
Item First half of 2022 First half of 2021
I. Total revenue 16676428365.83 17172816354.53
Including: Revenue 16676428365.83 17172816354.53
II. Total operating costs 16436429464.84 14740489809.82
Including: Operating costs 14054949279.20 11861060977.92
Taxes and surcharges 116108890.55 163794026.94
Sales and distribution expenses 138055763.65 147622738.74
General and administrative expenses 422766365.85 492048555.49
Research and development expense 683514560.93 757021354.57
Finance expenses 1021034604.66 1318942156.16
Including: Interest expenses 991475816.56 1399107777.11
Interest income 150582370.85 221507514.16
Plus: Other income 149264611.68 123098748.58
Investment income (“-” denotes loss) -24138176.90 98631701.79
Including: In vestment income from associates and
joint ventures 26616556.58 82955115.52
Ga in on change in fair value
(“-” denotes loss) -58813415.49 -99119691.89
Credit impairment loss (“-” denotes loss) -25363341.17 -279757983.46
Los s on impairment of assets
(“-” denotes loss) 1936644.09 –
Ga in on disposal of assets
(“-” denotes loss) 1605314.49 48920358.12
III. Operating profit (“-” denotes loss) 284490537.69 2324099677.85
Plus: Non-operating income 1093429.33 18721283.64
Less: Non-operating expenses 10202739.60 2332530.96
IV. Total profit (“-” denotes loss) 275381227.42 2340488430.53
Less: Income tax expenses 1378726.69 274057779.20
V. Net profit (“-” denotes loss) 274002500.73 2066430651.33
(I) Classification according to the continuity of operation
1. Net profit from continuing operations
(“-” denotes loss) 274002500.73 2066430651.33
2. Net profit from discontinued operations
(“-” denotes loss) – –
(II) Classification according to ownership
1. Net profit attributable to shareholders of
the Company 230141463.76 2021095417.54
2. Profit or loss of minority interest 43861036.97 45335233.79
VI. Net other comprehensive income after tax -150576277.41 50956682.73
Net other comprehensive income after tax attributable to
shareholders of the Company -150576277.41 50956682.73
(I) Other comprehensive income that cannot be
reclassified to profit and loss in subsequent periods – –
(II) Other comprehensive income that will be reclassified
to profit and loss in subsequent periods -150576277.41 50956682.73
1. Other comprehensive income that may be
reclassified to profit or loss under the equity
method 4743150.54 –
2. Exchange differences arising from translation
of financial statements denominated in
foreign currencies -155319427.95 50956682.73
Other comprehensive income net of tax attributable to
non-controlling interests – –
SHANDONG CHENMING PAPER HOLDINGS LIMITED 5
INTERIM REPORT 2022I Financial Report
II. Financial Statements (Cont’d)
3. Consolidated income statement (Cont’d)
Item First half of 2022 First half of 2021
VII. Total comprehensive income 123426223.32 2117387334.06
To tal comprehensive income attributable to shareholders of
the Company 79565186.35 2072052100.27
Total comprehensive income attributable to minority interest 43861036.97 45335233.79
VIII. Earnings per share:
(I) Basic earnings per share 0.064 0.604
(II) Diluted earnings per share 0.064 0.604
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
6 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
II. Financial Statements (Cont’d)
4. Income statement of the Company
Unit: RMB
Item First half of 2022 First half of 2021
I. Revenue 3746662856.50 4683453465.64
Less: Operating costs 3381230045.73 3511074075.94
Taxes and surcharges 14470073.85 42172707.76
Sales and distribution expenses 3847240.05 6054328.93
General and administrative expenses 89156653.40 133937050.37
Research and development expense 165518080.69 183256544.45
Finance expenses 210696803.24 206076531.65
Including: Interest expenses 333394473.97 442271605.59
Interest income 230217851.40 304371806.49
Plus: Other income 24145213.86 2494987.66
Investment income (“-” denotes loss) 237259432.75 2679672292.80
In cluding: Investment income from associates and joint
ventures -5337689.31 -4587981.17
Gains on changes in fair value (“-” denotes loss) – –
Credit impairment loss (“-” denotes loss) -722675.75 29056014.19
Loss on impairment of assets (“-” denotes loss) – –
Gain on disposal of assets (“-” denotes loss) 172652.98 4656034.96
II. Operating profit (“-” denotes loss) 142598583.38 3316761556.15
Plus: Non-operating income 61000.00 486916.50
Less: Non-operating expenses 3003746.82 389511.26
III. Total profit (“-” denotes total loss) 139655836.56 3316858961.39
Less: Income tax expenses -15843567.25 74345014.02
IV. Net profit (“-” denotes net loss) 155499403.81 3242513947.37
(I) Net profit from continuing operations
(“-” denotes net loss) 155499403.81 3242513947.37
V. Net other comprehensive income after tax – –
(I) Other comprehensive income that cannot be
reclassified to profit and loss in subsequent periods – –
(II) Other comprehensive income that will be
reclassified to profit and loss in subsequent periods – –
VI. Total comprehensive income 155499403.81 3242513947.37
VII. Earnings per share:
(I) Basic earnings per share – –
(II) Diluted earnings per share – –
SHANDONG CHENMING PAPER HOLDINGS LIMITED 7
INTERIM REPORT 2022I Financial Report
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement
Unit: RMB
Item First half of 2022 First half of 2021
I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 16841914152.37 19245544236.25
Tax rebates received 697745590.84 1118668.30
Cash received relating to other operating activities 833956367.80 1036500713.48
Subtotal of cash inflows from operating activities 18373616111.01 20283163618.03
Cash paid for goods and services 15019129399.82 12689406657.79
Cash paid to and for employees 721958063.20 639736604.16
Payments of taxes and surcharges 635688016.57 1207344439.05
Cash paid relating to other operating activities 998576421.97 999490395.09
Subtotal of cash outflows from operating activities 17375351901.56 15535978096.09
Net cash flows from operating activities 998264209.45 4747185521.94
II. Cash flows from investing activities:
Cash received from investments – 20000000.00
Cash received from investment income 4740000.00 36500000.00
Net cash received from disposal of fixed assets intangible
assets and other long-term assets 3921115.56 104108628.71
Ne t cash received from disposal of subsidiaries and
other business units – 4503417.80
Cash received relating to other investing activities – 251414794.52
Subtotal of cash inflows from investing activities 8661115.56 416526841.03
Ca sh paid for purchase of fixed assets intangible assets
and other long-term assets 815285839.39 221876188.00
Cash paid on investments – 1100000000.00
Subtotal of cash outflows from investing activities 815285839.39 1321876188.00
Net cash flows from investing activities -806624723.83 -905349346.97
8 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement (Cont’d)
Item First half of 2022 First half of 2021
III. Cash flows from financing activities:
Cash received from investments 400000000.00 2500000000.00
Including: Cash received from subsidiaries from minority
investment 400000000.00 2500000000.00
Cash received from borrowings 17740613294.18 15114516924.13
Cash received relating to other financing activities 2078910644.82 2734332351.51
Subtotal of cash inflows from financing activities 20219523939.00 20348849275.64
Cash repayments of amounts borrowed 16096915969.19 16987908936.87
Ca sh paid for dividend and profit distribution or interest
payment 1053952956.06 1427506125.27
In cluding: Dividend and profit paid by subsidiaries to
minority shareholders – 48309125.87
Cash paid relating to other financing activities 3310774061.40 5519292287.81
Subtotal of cash outflows from financing activities 20461642986.65 23934707349.95
Net cash flows from financing activities -242119047.65 -3585858074.31
IV. Effect of foreign exchange rate changes on cash and
cash equivalents 24169806.97 -19367887.88
V. Net increase in cash and cash equivalents -26309755.06 236610212.78
Plu s: Balance of cash and cash equivalents as at the
beginning of the period 3168915847.02 4389169963.79
VI. Balance of cash and cash equivalents as at the end of
the period 3142606091.96 4625780176.57
SHANDONG CHENMING PAPER HOLDINGS LIMITED 9
INTERIM REPORT 2022I Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company
Unit: RMB
Item First half of 2022 First half of 2021
1. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 3937092906.31 5570459385.98
Tax rebates received 9335732.78 90900.00
Cash received relating to other operating activities 268488989.46 163966043.41
Subtotal of cash inflows from operating activities 4214917628.55 5734516329.39
Cash paid for goods and services 3559003036.92 3201957139.47
Cash paid to and for employees 168707495.45 175948976.35
Payments of taxes and surcharges 146897297.11 176576815.11
Cash paid relating to other operating activities 255001227.95 301406268.10
Subtotal of cash outflows from operating activities 4129609057.43 3855889199.03
Net cash flows from operating activities 85308571.12 1878627130.36
II. Cash flows from investing activities:
Cash received from investments – 20000000.00
Cash received from investment income 401816698.06 2284760273.97
Ne t cash received from disposal of fixed assets intangible
assets and other long-term assets 3527572.65 847248.68
Cash received relating to other investing activities – 251414794.52
Subtotal of cash inflows from investing activities 405344270.71 2557022317.17
Ca sh paid for purchase of fixed assets intangible assets
and other long-term assets 12870064.02 –
Cash paid on investments – 882210000.00
Cash paid relating to other investing activities – –
Subtotal of cash outflows used in investing activities 12870064.02 882210000.00
Net cash flows from investing activities 392474206.69 1674812317.17
10 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company (Cont’d)
Item First half of 2022 First half of 2021
III. Cash flows from financing activities:
Cash received from borrowings 10531501508.20 10020478661.27
Cash received relating to other financing activities 247000000.00 156665920.24
Subtotal of cash inflows from financing activities 10778501508.20 10177144581.51
Cash repayments of amounts borrowed 10584544305.53 8736105095.52
Ca sh paid for dividend and profit distribution or
interest payment 320363139.80 219435214.79
Cash paid relating to other financing activities 307022816.27 4871112670.18
Subtotal of cash outflows from financing activities 11211930261.60 13826652980.49
Net cash flows from financing activities -433428753.40 -3649508398.98
IV. Effect of foreign exchange rate changes on cash and cash
equivalents 6179448.15 2460284.82
V. Net increase in cash and cash equivalents 50533472.56 -93608666.63
Plu s: Balance of cash and cash equivalents as at the
beginning of the period 893454314.56 301284723.52
VI. Balance of cash and cash equivalents as at the end of the
period 943987787.12 207676056.89
SHANDONG CHENMING PAPER HOLDINGS LIMITED 11
INTERIM REPORT 2022I Financial Report
12 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
II. Financial Statements (Cont’d)
7. Consolidated statement of changes in owners’ equity
Amounts for the period
Unit: RMB
Item First half of 2022
Equity attributable to owners of the Company
Other equity instruments Other
Preference Perpetual Capital Less: comprehensive Special Surplus General risk Retained Minority Total
Share capital shares Bonds Others reserves treasury shares income reserves reserves provisions profit Others Subtotal interest owners’ equity
I. Balance as at the end of the prior year 2984208200.00 – 996000000.00 – 5282805114.62 226860000.00 -445582729.36 – 1212009109.97 76825918.60 9210372613.81 – 19089778227.64 3457050907.26 22546829134.90
Plus: Others – – – – -55547014.21 – – – – – 83754093.05 – 28207078.84 – 28207078.84
II. Balance as at the beginning of the year 2984208200.00 – 996000000.00 – 5227258100.41 226860000.00 -445582729.36 – 1212009109.97 76825918.60 9294126706.86 – 19117985306.48 3457050907.26 22575036213.74
III. Changes in the period (“-” denotes decrease) – – – – 22826801.91 – -150576277.41 – – – 230141463.76 – 102391988.26 414361772.63 516753760.89
(I) Total comprehensive income – – – – – – -150576277.41 – – – 230141463.76 – 79565186.35 44038587.32 123603773.67
(II) Capital paid in and reduced by owners – – – – 22826801.91 – – – – – – – 22826801.91 370323185.31 393149987.22
1. Ordinary shares paid by owners – – – – – – – – – – – – – 370323185.31 370323185.31
2. Capital paid by holders of other equity
instruments – – – – – – – – – – – – – – –
3. Amount of share-based payments
recognised in owners’ equity – – – – -6850012.78 – – – – – – – -6850012.78 – -6850012.78
4. Others – – – – 29676814.69 – – – – – – – 29676814.69 – 29676814.69
(III) Profit distribution – – – – – – – – – – – – – – –
(IV) Transfer within owners’ equity – – – – – – – – – – – – – – –
IV. Balance as at the end of the period 2984208200.00 – 996000000.00 – 5250084902.32 226860000.00 -596159006.77 – 1212009109.97 76825918.60 9524268170.62 – 19220377294.74 3871412679.89 23091789974.63I Financial Report
SHANDONG CHENMING PAPER HOLDINGS LIMITED 13
INTERIM REPORT 2022
II. Financial Statements (Cont’d)
7. Consolidated statement of changes in owners’ equity (Cont’d)
Amounts for the prior year
Unit: RMB
Item First half of 2021
Equity attributable to owners of the Company
Other equity instruments Other
Preference Perpetual Capital Less: comprehensive Special Surplus General risk Retained Minority Total
Share capital shares Bonds Others reserves treasury shares income reserves reserves provisions profit Others Subtotal interest owners’ equity
I. Balance as at the end of the prior year 2984208200.00 4477500000.00 996000000.00 – 5321911413.75 226860000.00 -561686607.66 – 1212009109.97 74122644.20 9999764028.74 – 24276968789.00 1523294926.24 25800263715.24
II. Balance as at the beginning of the year 2984208200.00 4477500000.00 996000000.00 – 5321911413.75 226860000.00 -561686607.66 – 1212009109.97 74122644.20 9999764028.74 – 24276968789.00 1523294926.24 25800263715.24
III. Changes in the period (“-” denotes decrease) – -2238750000.00 – – -62515691.49 – 57905699.87 – – – 1261950931.88 – -981409059.74 2414621834.30 1433212774.56
(I) Total comprehensive income – – – – – – 57905699.87 – – – 2021095417.54 – 2079001117.41 45335233.79 2124336351.20
(II) Capital paid in and reduced by owners – -2238750000.00 – – -62515691.49 – – – – – – – -2301265691.49 2417595726.38 116330034.89
1. Ordinary shares paid by owners – – – – – – – – – – – – – 2417595726.38 2417595726.38
2. Capital paid by holders of other equity
instruments – -2238750000.00 – – -11250000.00 – – – – – – – -2250000000.00 – -2250000000.00
3. Amount of share-based payments
recognised in owners’ equity – – – – 26330034.89 – – – – – – – 26330034.89 – 26330034.89
4. Others – – – – -77595726.38 – – – – – – – -77595726.38 – -77595726.38
(III) Profit distribution – – – – – – – – – – -759144485.66 – -759144485.66 -48309125.87 -807453611.53
1. Distribution to owners (or shareholders) – – – – – – – – – – -759144485.66 – -759144485.66 -48309125.87 -807453611.53
IV. Balance as at the end of the period 2984208200.00 2238750000.00 996000000.00 – 5259395722.26 226860000.00 -503780907.79 – 1212009109.97 74122644.20 11261714960.62 – 23295559729.26 3937916760.54 27233476489.80I Financial Report
14 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
II. Financial Statements (Cont’d)
8. Statement of changes in owners’ equity of the Company
Amounts for the period
Unit: RMB
Item First half of 2022
Other equity instruments Other
Preference Perpetual Less: comprehensive Special Surplus Total
Share capital shares Bonds Others Share capital Treasury shares income reserves reserves Retained profit Others owners’ equity
I. Balance as at the end of the prior year 2984208200.00 – 996000000.00 – 5154365336.31 226860000.00 – – 1199819528.06 2921641460.59 – 13029174524.96
II. Balance as at the beginning of the year 2984208200.00 – 996000000.00 – 5154365336.31 226860000.00 – – 1199819528.06 2921641460.59 – 13029174524.96
III. Changes in the period
(“-” denotes decrease) – – – – -6850012.78 – – – – 155499403.81 – 148649391.03
(I) Total comprehensive income – – – – – – – – – 155499403.81 – 155499403.81
(II) Capital paid in and reduced by owners – – – – -6850012.78 – – – – – – -6850012.78
1. Amount of share-based payments
recognised in owners’ equity – – – – -6850012.78 – – – – – – –6850012.78
(III) Profit distribution – – – – – – – – – – – –
(IV) Transfer within owners’ equity – – – – – – – – – – – –
IV. Balance as at the end of the period 2984208200.00 – 996000000.00 – 5147515323.53 226860000.00 – – 1199819528.06 3077140864.40 – 13177823915.99I Financial Report
SHANDONG CHENMING PAPER HOLDINGS LIMITED 15
INTERIM REPORT 2022
II. Financial Statements (Cont’d)
8. Statement of changes in owners’ equity of the Company (Cont’d)
Amounts for the prior year
Unit: RMB
Item First half of 2021
Other equity instruments Other
Preference Perpetual Less: comprehensive Special Surplus Total
Share capital shares Bonds Others Share capital Treasury shares income reserves reserves Retained profit Others owners’ equity
I. Balance as at the end of the prior year 2984208200.00 4477500000.00 996000000.00 – 5124308464.42 226860000.00 – – 1199819528.06 718245947.72 – 15273222140.20
II. Balance as at the beginning of the year 2984208200.00 4477500000.00 996000000.00 – 5124308464.42 226860000.00 – – 1199819528.06 718245947.72 – 15273222140.20
III. Changes in the period
(“-” denotes decrease) – -2238750000.00 – – 15080034.89 – – – – 2483369461.71 – 259699496.60
(I) Total comprehensive income – – – – – – – – – 3242513947.37 – 3242513947.37
(II) Capital paid in and reduced by owners – -2238750000.00 – – 15080034.89 – – – – – – -2223669965.11
1. Capital paid by holders of other
equity instruments – -2238750000.00 – – -11250000.00 – – – – – – -2250000000.00
2. Amount of share-based payments
recognised in owners’ equity – – – – 26330034.89 – – – – – – 26330034.89
(III) Profit distribution – – – – – – – – – -759144485.66 – -759144485.66
1. Distribution to owners (or
shareholders) – – – – – – – – – -759144485.66 – -759144485.66
IV. Balance as at the end of the period 2984208200.00 2238750000.00 996000000.00 – 5139388499.31 226860000.00 – – 1199819528.06 3201615409.43 – 15532921636.80I Financial Report
III. General Information of the Company
1. Company overview
The predecessor of Shandong Chenming Paper Holdings Limited (hereinafter referred to as the “Company”) was
Shandong Shouguang Paper Mill Corporation which was changed as a joint stock company with limited liability through
offering to specific investors in May 1993. In December 1996 with approval by Lu Gai Zi [1996] No. 270 issued by the
People’s Government of Shandong Province and Zheng Wei [1996] No. 59 of the Securities Committee of the State
Council the Company was changed as a joint stock company with limited liability established by share offer.In May 1997 with approval by Zheng Wei Fa [1997] No. 26 issued by the Securities Committee of the State Council
the Company issued 115000000 domestic listed foreign shares (B shares) under public offering which were listed and
traded on Shenzhen Stock Exchange from 26 May 1997.In September 2000 with approval by Zheng Jian Gong Si Zi [2000] No. 151 issued by the China Securities Regulatory
Commission the Company issued an additional 70000000 RMB ordinary shares (A shares) which were listed and
traded on Shenzhen Stock Exchange from 20 November 2000.In June 2008 with approval by the Stock Exchange of Hong Kong Limited the Company issued 355700000 H shares.At the same time 35570000 H shares were allocated to the National Council for Social Security Fund by our relevant
state-owned shareholder and converted into overseas listed foreign shares (H shares) for the purpose of reducing the
number of state-owned shares. The additionally issued H shares were listed and traded on Hong Kong Stock Exchange
on 18 June 2008.As at 30 June 2022 the total share capital of the Company was changed to 2984208200 shares. For details please
refer to Note VII. 39.The Company has established a corporate governance structure comprising the general meeting the board of directors
and the supervisory committee and has manufacturing business centre supply chain management centre business
department marketing department financial capital management centre enterprise management centre public utilities
centre securities investment department audit department and other departments.The Company and its subsidiaries are principally engaged in among other things processing and sale of paper
products (including machine-made paper and paper board) paper making raw materials and machinery; generation
and sale of electric power and thermal power; forestry saplings growing processing and sale of timber; manufacturing
processing and sale of wood products; and hotel service and equipment financial and operating leasing investment
properties and property service.The financial statements and notes thereto were approved at the second meeting of the tenth session of the board of
directors of the Company (the “Board”) on 30 August 2022.
2. Scope of consolidation
Subsidiaries of the Company included in the scope of consolidation in 2022 totalled 75. For details please refer to
Note IX “Equity in other entities”. The scope of consolidation of the Company during the year had one more companyincluded and one company less compared to the prior year. For details please refer to Note VIII “Changes in the scopeof consolidation”.
16 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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IV. Basis of Preparation of the Financial Statements
1. Basis of preparation
These financial statements are prepared in accordance with the accounting standards for business enterprises the
application guidelines thereof interpretations and other related rules (hereinafter referred to as “ASBEs”) promulgated
by the Ministry of Finance. In addition the Company also discloses relevant financial information in accordance with the
Preparation Rules for Information Disclosure by Companies Offering Securities to the Public No. 15 - General Provisions
on Financial Reports (revised in 2014) of the CSRC.The financial statements are presented on a going concern.The Company’s financial statements have been prepared on an accrual basis. Except for certain financial instruments
the financial statements are prepared under the historical cost convention. In the event that depreciation of assets
occurs a provision for impairment is made accordingly in accordance with the relevant regulations
2. Going concern
No facts or circumstances comprise a material uncertainty about the Company’s going concern basis within 12 months
since the end of the reporting period.V. Significant Accounting Policies and Accounting Estimates
Specific accounting policies and accounting estimates are indicated as follows:
The Company and its subsidiaries are principally engaged in machine-made paper electricity and heat construction materials
paper making chemical products financial leasing hotel management and other operations. The Company and its subsidiaries
formulated certain specific accounting policies and accounting estimates for the transactions and matters such as revenue
recognition determination of performance progress and R&D expenses based on their actual production and operation
characteristics pursuant to the requirements under the relevant accounting standards for business enterprises. For details
please refer to this Note V. 36 “Revenue”. For the critical accounting judgments and estimates made by the management
please refer to Note V. 40 “Change of Significant accounting policies and accounting estimates”.
1. Statement of compliance with the Accounting Standards for Business Enterprises
These financial statements have been prepared in conformity with the ASBEs which truly and fully reflect the financial
position of the consolidated entity and the Company as at 30 June 2022 and relevant information such as the operating
results and cash flows of the consolidated entity and the Company for the first half of 2022.
2. Accounting period
The accounting period of the Company is from 1 January to 31 December of each calendar year.
3. Operating cycle
The operating cycle of the Company lasts for 12 months.SHANDONG CHENMING PAPER HOLDINGS LIMITED 17
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
4. Functional currency
The functional currency of the Company and its domestic subsidiaries is Renminbi (“RMB”). Overseas subsidiaries of the
Company recognise U.S. dollar (“USD” or “US$”) Japanese yen (“JPY”) Euro (“EUR”) and South Korean Won (“KRW”)
as their respective functional currency according to the general economic environment in which these subsidiaries
operate. The Company prepares the financial statements in RMB.
5. 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 except for the adjustments of different accounting policies. The difference between the carrying amount
of the consideration paid for the combination (or the aggregate nominal value of shares issued as consideration)
and the carrying amount of the net assets obtained in the combination is charged to the capital reserve (share
capital premium/capital premium). If the capital reserve (share capital premium/capital premium) is not sufficient to
absorb the difference any excess shall be adjusted against retained earnings.Business combinations involving entities under common control and achieved in stages
In the separate financial statements the initial investment cost is calculated based on the shareholding portion
of the assets and liabilities obtained and are measured at the carrying amounts as recorded by the party being
merged at the combination date. The difference between the initial investment cost and the sum of the carrying
amount of the original investment cost prior to the combination and the carrying amount of consideration paid for
the combination is adjusted to the capital reserve (share capital premium/capital premium) if the capital reserve is
not sufficient to absorb the difference the excess difference shall be adjusted to retained earnings.In the consolidated financial statements the assets and liabilities of the party being merged that are 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 except for adjustments of different
accounting policies. 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 (share capital premium/capital premium) 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.
18 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
5. Accounting treatment of business combinations under common control and not under common control
(Cont’d)
(2) Business combination not under common control (Cont’d)
Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable 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
In the separate financial statements the initial investment cost of the investment is the sum of the carrying amount
of the equity investment held by the entity prior to the acquisition date and the additional investment cost at the
acquisition date. The disposal accounting policy of other comprehensive income related with equity investment
prior to the acquisition date recognised under equity method shall be compliance with the method when the
acquiree disposes the related assets or liabilities. Owners’ equity due to the changes of other owners’ equity other
than the changes of net profit other comprehensive income and profit distribution shall be transferred to profit or
loss for current period when disposed of. If the equity investment held by the entity prior to the acquisition date is
measured at fair value the cumulative changes in fair value recognised in other comprehensive income shall be
transferred to retained earnings for current period when accounted for using cost method.In the consolidation financial statements the combination cost is the sum of consideration paid at acquisition 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 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 investment 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.
(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.SHANDONG CHENMING PAPER HOLDINGS LIMITED 19
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
6. Preparation of consolidated financial statements
(1) Scope of consolidation
The scope of consolidation of the consolidated financial statements is determined on the basis of control. The
term “control” refers to the fact that the Company has power over the investee and is entitled to variable returns
from its involvement with the investee and the ability to use its power over the investee to affect the amount of
those returns. A subsidiary is an entity controlled by the Company (including an enterprise a separable part of an
investee a structured entity etc.).
(2) Basis for preparation of the consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial statements of the
Company and its subsidiaries and other relevant information. In preparing the consolidated financial statements
the accounting policies and accounting periods of the Company and its subsidiaries shall be consistent and
intracompany 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 profit or loss 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 profit or loss
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 (share capital premium) if the capital reserve is not sufficient
any excess is adjusted to retained earnings.
(4) Accounting treatment for loss of control over subsidiaries
For the loss of control over a subsidiary due to disposal of a portion of the equity investment or other reasons
the remaining equity is measured at fair value on the date when the control is lost. The difference arising from
the sum of consideration received for disposal of equity interest and the fair value of remaining equity interest
over the sun of the share of the carrying amount of net assets of the former subsidiary calculated continuously
from the purchase date based on the shareholding percentage before disposal and the goodwill is recognised as
investment income in the period when the control is lost.Other comprehensive income related to equity investment in the former subsidiary shall be transferred to current
profit or loss at the time when the control is lost except for other comprehensive income arising from changes in
net assets or net liabilities due to remeasurement of defined benefit plan by the investee.
20 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
7. Classification of joint arrangements and accounting treatment for joint ventures
A joint arrangement refers to an arrangement of two or more parties have joint control. The joint arrangements of 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.
8. Standards for recognising cash and cash equivalents
Cash refers to cash on hand and deposits readily available for payment purpose. Cash equivalents refer to short-term
and highly liquid investments held by the Company which are readily convertible into known amount of cash and which
are subject to insignificant risk of value change.SHANDONG CHENMING PAPER HOLDINGS LIMITED 21
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
9. Foreign currency operations and translation of statements denominated in foreign currency
(1) Foreign currency operations
The foreign currency operations of the Company are translated into the functional currency at the prevailing 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 profit or loss statement are translated at the prevailing spot exchange rate on
the transaction date.All items in the cash flow statements shall be translated at the prevailing spot exchange rate on the date that
the cash flow transaction occurred. Effects arising from changes of exchange rate on cash shall be presented
separately as the “effect of foreign exchange rate changes on cash and cash equivalents” item in the cash flow
statements.The differences arising from translation of financial statements shall be included in the “other comprehensiveincome” item in owners’ equity in the balance sheet.On disposal of foreign operations and loss of control exchange differences arising from the translation of financial
statements denominated in foreign currencies related to the disposed foreign operations which has been included
in 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.
22 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments
A financial instrument is a contract that gives rise to a financial asset of one party and a financial liability or equity 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 measured at amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated
at fair value through other comprehensive income:
The 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.SHANDONG CHENMING PAPER HOLDINGS LIMITED 23
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(2) Classification and measurement of financial assets (Cont’d)
Financial assets measured at fair value through other comprehensive income
A financial asset is classified as measured at fair value through other comprehensive income if it meets both of the
following conditions and is not designated at fair value through profit or loss:
The Company’s business model for managing such financial assets is achieved both by collecting collect
contractual cash flows and selling such financial assets;
The contractual terms of the financial asset stipulate that cash flows generated on specific dates are solely
payments of principal and interest on the principal amount outstanding.Subsequent to initial recognition such financial assets are subsequently measured at fair value. Interest calculated
using the effective interest method impairment losses or gains and foreign exchange gains and losses are
recognised in profit or loss for the current period and other gains or losses are recognised in other comprehensive
income. On derecognition the cumulative gain or loss previously recognised in other comprehensive income is
reclassified from other comprehensive income to profit or loss.Financial assets measured at fair value through profit or loss
The Company classifies the financial assets other than those measured at amortised cost and measured at fair
value through other comprehensive income as financial assets measured at fair value through profit or loss. Upon
initial recognition the Company irrevocably designates certain financial assets that are required to be measured
at amortised cost or at fair value through other comprehensive income as financial assets measured at fair value
through profit or loss in order to eliminate or significantly reduce accounting mismatch.Upon initial recognition such financial assets are measured at fair value. Except for those held for hedging
purposes gains or losses (including interests and dividend income) arising from such financial assets are
recognised in the profit or loss for the current period.The business model for managing financial assets refers to how the Company manages its financial assets in
order to generate cash flows. That is the Company’s business model determines whether cash flows will result
from collecting contractual cash flows selling financial assets or both. The Company determines the business
model for managing financial assets on the basis of objective facts and specific business objectives for managing
financial assets determined by key management personnel.The Company assesses the characteristics of the contractual cash flows of financial assets to determine whether
the contractual cash flows generated by the relevant financial assets on a specific date are solely payments of
principal and interest on the principal amount outstanding. The principal refers to the fair value of the financial
assets at the initial recognition. Interest includes consideration for the time value of money for the credit risk
associated with the principal amount outstanding during a particular period of time and for other basic lending
risks costs and profits. In addition the Company evaluates the contractual terms that may result in a change in
the time distribution or amount of contractual cash flows from a financial asset to determine whether it meets the
requirements of the above contractual cash flow characteristics.
24 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(2) Classification and measurement of financial assets (Cont’d)
Financial assets measured at fair value through profit or loss (Cont’d)
All affected financial assets are reclassified on the first day of the first reporting period following the change in
the business model where the Company changes its business model for managing financial assets; otherwise
financial assets shall not be reclassified after initial recognition.Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair value
through profit or loss relevant transaction costs are directly recognised in profit or loss for the current period.For other categories of financial assets relevant transaction costs are included in the amount initially recognised.Accounts receivable or notes receivable arising from sales of goods or rendering services without significant
financing component are initially recognised based on the transaction price expected to be entitled by the
Company.
(3) Classification and measurement of financial liabilities
At initial recognition financial liabilities of the Company are classified as financial liabilities measured at fair value
through profit or loss and financial liabilities measured at amortised cost. For financial liabilities not classified
as measured at fair value through profit or loss relevant transaction costs are included in the amount initially
recognised.Financial liabilities measured at fair value through profit or loss
Financial liabilities measured at fair value through profit or loss comprise held-for-trading financial liabilities and
financial liabilities designated at fair value through profit or loss upon initial recognition. Such financial liabilities
are subsequently measured at fair value and the gains or losses from the change in fair value and the dividend or
interest expenses related to the financial liabilities are included in the profit or loss of the current period.Financial liabilities measured at amortised cost
Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method
and the gains or losses arising from derecognition or amortisation are recognised in profit or loss for the current
period.Classification between financial liabilities and equity instruments
A financial liability is a liability if:
* it has a contractual obligation to pay in cash or other financial assets to other parties.* it has a contractual obligation to exchange financial assets or financial liabilities under potential adverse
condition with other parties.* it is a non-derivative instrument contract which will or may be settled with the entity’s own equity
instruments and the entity will deliver a variable number of its own equity instruments according to such
contract.* it is a derivative instrument contract which will or may be settled with the entity’s own equity instruments
except for a derivative instrument contract that exchanges a fixed amount of cash or other financial asset
with a fixed number of its own equity instruments.SHANDONG CHENMING PAPER HOLDINGS LIMITED 25
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(3) Classification and measurement of financial liabilities (Cont’d)
Classification between financial liabilities and equity instruments (Cont’d)
Equity instruments are any contract that evidences a residual interest in the assets of an entity after deducting all
of its liabilities.If the 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. 41.
(5) Impairment of financial assets
The Company makes provision for impairment based on expected credit losses (ECLs) on the following items:
Financial assets measured at amortised cost;
Receivables and debt investments measured at fair value through other comprehensive income;
Contract assets as defined in the Accounting Standards for Business Enterprises No. 14 – 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).
26 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(5) Impairment of financial assets (Cont’d)
Measurement of ECLs
ECLs are the weighted average of credit losses of financial instruments weighted by the risk of default. Credit
losses refer to the difference between all contractual cash flows receivable according to the contract and
discounted according to the original effective interest rate and all cash flows expected to be received i.e. the
present value of all cash shortages.The Company takes into account reasonable and well-founded information such as past events current conditions
and forecasts of future economic conditions and calculates the probability-weighted amount of the present value
of the difference between the cash flows receivable from the contract and the cash flows expected to be received
weighted by the risk of default.The Company measures ECLs of financial instruments at different stages. If the credit risk of the financial
instrument did not increase significantly upon initial recognition it is at the first stage and the Company makes
provision for impairment based on the ECLs within the next 12 months; if the credit risk of a financial instrument
increased significantly upon initial recognition but has not yet incurred credit impairment it is at the second stage
and the Company makes provision for impairment based on the lifetime ECLs of the instrument; if the financial
instrument incurred credit impairment upon initial recognition it is at the third stage and the Company makes
provision for impairment based on the lifetime ECLs of the instrument.For financial instruments with low credit risk on the balance sheet date the Company assumes that the credit
risk did not increase significantly upon initial recognition and makes provision for impairment based on the ECLs
within the next 12 months.Lifetime ECLs represent the ECLs resulting from all possible default events over the expected life of a financial
instrument. The 12-month ECLs are the ECLs resulting from possible default events on a financial instrument
within 12 months (or a shorter period if the expected life of the financial instrument is less than 12 months) after
the balance sheet date and is a portion of lifetime ECLs.The maximum period to be considered when estimating ECLs is the maximum contractual period over which the
Company is exposed to credit risk including renewal options.For the financial instruments at the first and second stages and with low credit risks the Company calculates
the interest income based on the book balance and the effective interest rate before deducting the impairment
provisions. For financial instruments at the third stage interest income is calculated based on the amortised cost
after deducting impairment provisions made from the book balance and the effective interest rate.SHANDONG CHENMING PAPER HOLDINGS LIMITED 27
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(5) Impairment of financial assets (Cont’d)
Bills receivable and accounts receivable
For bills receivable and accounts receivable regardless of whether there is a significant financing component the
Company always makes provision for impairment at an amount equal to lifetime ECLs.When the Company is unable to assess the information of ECLs for an individual financial asset at a reasonable
cost it classifies bills receivable and accounts receivable into portfolios based on the credit risk characteristics
and calculates the ECLs on a portfolio basis. The basis for determining the portfolios is as follows:
A. Bills receivable
Bills receivable portfolio 1: Bank acceptance bills
Bills receivable portfolio 2: Commercial acceptance bills
B. Accounts receivable
Accounts receivable portfolio 1: Due from related party customers
Accounts receivable portfolio 2: Receivables from non-related party customers
Accounts receivable portfolio 3: Factoring receivables
For bills receivable and contract assets classified as a portfolio the Company refers to the historical credit loss
experience combined with the current situation and the forecast of future economic conditions to calculate the
ECLs based on default risk exposure and lifetime ECL rate.For accounts receivable classified as a portfolio the Company refers to the historical credit loss experience
combined with the current situation and the forecast of future economic conditions to prepare a comparison table
of the ageing/overdue days of accounts receivable and the lifetime ECL rate to calculate the ECLs.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.
28 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(5) Impairment of financial assets (Cont’d)
Long-term receivables
The Company’s long-term receivables include finance lease receivables and deposits receivable.The Company classifies the finance lease receivables deposits receivable and other receivables into portfolios
based on the credit risk characteristics and calculates the ECLs on a portfolio basis. The basis for determining
the portfolios is as follows:
A. Finance lease receivables
Finance lease receivables portfolio 1: Receivables not past due
Finance lease receivables portfolio 2: Overdue receivables
B. Other long-term receivables
Other long-term receivables portfolio 1: Deposits receivable
Other long-term receivables portfolio 2: Other receivables
For deposits receivable and receivables for construction projects the Company refers to the historical credit loss
experience combined with the current situation and the forecast of future economic conditions and calculates
the ECLs based on default risk exposure and lifetime ECL rate.Except for those of finance lease receivables and deposits receivable the ECLs of other receivables and long-term
receivables classified as a portfolio are measured based on default risk exposure and ECL rate over the next 12
months or the entire lifetime.Debt investments and other debt investments
For debt investments and other debt investments the Company measures the ECLs based on the nature of the
investment the types of counterparty and risk exposure and default risk exposure and ECL rate within the next
12 months or the entire lifetime.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 29
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(5) Impairment of financial assets (Cont’d)
Assessment of significant increase in credit risk
In assessing whether the credit risk of a financial instrument has increased significantly upon initial recognition the
Company compares the risk of default of the financial instrument at the balance sheet date with that at the date
of initial recognition to determine the relative change in risk of default within the expected lifetime of the financial
instrument.In determining whether the credit risk has increased significantly upon initial recognition the Company considers
reasonable and well-founded information including forward-looking information which can be obtained without
unnecessary extra costs or efforts. Information considered by the Company includes:
The debtor’s failure to make payments of principal and interest on their contractually due dates;
An actual or expected significant deterioration in a financial instrument’s external or internal credit rating (if any);
An actual or expected significant deterioration in the operating results of the debtor;
Existing or expected changes in the technological market economic or legal environment that have a significant
adverse effect on the debtor’s ability to meet its obligation to the Company.Depending on the nature of the financial instruments the Company assesses whether there has been a significant
increase in credit risk on either an individual basis or a collective basis. When the assessment is performed on a
collective basis the financial instruments are grouped based on their common credit risk characteristics such as
past due information and credit risk ratings.The Company determines that the credit risk on a financial asset has increased significantly if it is more than 30
days past due.Credit-impaired financial assets
At balance sheet date the Company assesses whether financial assets measured at amortised cost and debt
investments measured at fair value through other comprehensive income are credit-impaired. A financial asset is
credit-impaired when one or more events that have an adverse effect on the estimated future cash flows of the
financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable
events:
Significant financial difficulty of the issuer or debtor;
A breach of contract by the debtor such as a default or delinquency in interest or principal payments;
For economic or contractual reasons relating to the debtor’s financial difficulty the Company having granted to
the debtor a concession that would not otherwise consider;
It becoming probable that the debtor will enter bankruptcy or other financial reorganisation;
The disappearance of an active market for that financial asset because of financial difficulties of the issuer or
debtor.
30 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(5) Impairment of financial assets (Cont’d)
Presentation of provisions for ECLs
ECLs are remeasured at each balance sheet date to reflect changes in the financial instrument’s credit risk upon
initial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit or loss for
the current period. For financial assets measured at amortised cost the provisions of impairment is deducted
from the carrying amount of the financial assets presented in the balance sheet; for debt investments at fair value
through other comprehensive income the Company makes provisions of impairment in other comprehensive
income without reducing the carrying amount of the financial asset.Write-offs
The book balance of a financial asset is directly written off to the extent that there is no realistic prospect of
recovery of the contractual cash flows of the financial asset (either partially or in full). Such write-off constitutes
derecognition of such financial asset. This is generally the case when the Company determines that the debtor
does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject
to the write-off. However financial assets that are written off could still be subject to enforcement activities in
order to comply with the Company’s procedures for recovery of amounts due.If a write-off of financial assets is subsequently recovered the recovery is credited to profit or loss in the period in
which the recovery occurs.
(6) Transfer of financial assets
Transfer of financial assets refers to the transfer or delivery of financial assets to another party other than the
issuer of such financial assets (the transferee).If the Company transfers substantially all the risks and rewards of ownership of the financial asset to the
transferee the financial asset shall be derecognised. If the Company retains substantially all the risks and rewards
of ownership of a financial asset the financial asset shall not be derecognised.If the Company neither transfers nor retains substantially all the risks and rewards of ownership of the financial
asset it accounts for the transaction as follows: if the Company does not retain control it derecognises the
financial asset and recognises any resulting assets or liabilities; if the control over the financial asset is not waived
the relevant financial asset is recognised according to the extent of its continuing involvement in the transferred
financial asset and the relevant liability is recognised accordingly.
(7) Offset of financial assets and financial liabilities
If the Company owns the legitimate rights of offsetting the recognised financial assets and financial liabilities
which are enforceable currently and the Company plans to realise the financial assets or to clear off the financial
liabilities on a net amount basis or simultaneously the net amount of financial assets and financial liabilities shall
be presented in the balance sheet upon offsetting. Otherwise financial assets and financial liabilities are presented
separately in the balance sheet without offsetting.SHANDONG CHENMING PAPER HOLDINGS LIMITED 31
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. Bills receivable
Method for determining the ECLs of bills receivable
The Company measures the loss provisions for bills receivable in accordance with the ECLs amount for the entire
period. Based on the credit risk characteristics of bills receivable bills receivable are divided into different groups:
Item Basis for determining the groups
Bank acceptance bills The acceptance party is a bank with less credit risk
Commercial acceptance bills The acceptance party is a company with higher credit risk
12. Accounts receivable
Method for determining the ECLs of accounts receivable
For receivables and contract assets that do not contain significant financing components the Company measures loss
provisions based on the ECL amount for the entire period.For receivables contract assets and lease receivables that contain significant financing components the Company
chooses to always measure the loss provision based on the ECL amount for the entire period.In addition to accounts receivable and contract assets which are individually assessed for credit risk they are also
classified into different groups based on their credit risk characteristics:
Item Basis for determining the groups
Amount due from related parties This group comprises amounts due from related parties with lower risks.Factoring receivables This group comprises factoring receivables with special risks.Amount due from distributor customers This group comprises receivables with their ageing as credit risk
characteristics.
32 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
13. Accounts receivable financing
As for notes receivable and Accounts receivable that classified as measured at fair value through other comprehensive
income the portion within one year (inclusive) from the date of acquisition is presented as financing receivables. For
relevant accounting policies please refer to note V. 10. Financial instruments.
14. Other receivables
Determination and accounting treatment of ECLs of other receivables
The Company measures impairment losses using the ECL amount in the next 12 months or the entire duration based
on whether the credit risk of other receivables has increased significantly upon initial recognition. In addition to other
receivables which are individually assessed for credit risk they are also classified into different groups based on their
credit risk characteristics:
Item Basis for determining the groups
Dividends receivable This group comprises dividends receivable.Interest receivable This group comprises interest due from financial institutions.Amount due from government agencies This group comprises amount due from government agencies with less
risks.Amount due from related parties This group comprises amount due from related parties with less risks.Other receivables This group comprises for all types of deposits advances and premiums
receivable during daily and recurring activities.
15. Inventories
(1) Classification of inventories
Inventories of the Company mainly include raw materials work in progress goods in stock development products
and consumable biological assets etc.
(2) Pricing of inventories dispatched
Inventories of the Company are measured at their actual cost when obtained. Cost of raw materials goods in
stock and others will be calculated with weighted average method when being dispatched.Consumable biological assets refer to biological assets held-for-sale which include growing timber. Consumable
biological assets without a stock are stated at historical cost at initial recognition and subsequently measured
at fair value when there is a stock. Changes in fair values shall be recognised as profit or loss in the current
period. The cost of self-planting self-cultivating consumable biological assets is the necessary expenses
directly attributable to such assets prior to canopy closure including borrowing costs eligible for capitalisation.Subsequent expenses such as maintenance cost incurred after canopy closure shall be included in profit or loss
for the current period.The cost of consumable biological assets shall at the time of harvest or disposal be carried forward at carrying
amount using the stock volume proportion method.SHANDONG CHENMING PAPER HOLDINGS LIMITED 33
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
15. Inventories (Cont’d)
(3) Recognition of net realisable value of inventories and provision for inventory impairment
Net realisable value of inventories refers to the amount of the estimated price of inventories less the estimated cost
incurred upon completion estimated sales expenses and taxes and levies. The realisable value of inventories shall
be determined on the basis of definite evidence purpose of holding the inventories and effect of after-balance-
sheet-date events.At the balance sheet date provision for inventory impairment is made when the cost is higher than the net
realisable value. The Company usually make provision for inventory impairment based on categories of inventories.At the balance sheet date in case the factors causing inventory impairment no longer exists the original provision
for inventory impairment shall be reversed.
(4) Inventory stock taking system
The Company implements permanent inventory system as its inventory stock taking system.
(5) Amortisation of low-value consumables and packaging materials
The low-value consumables of the Group are amortised when issued for use.Packaging materials for turnover are amortised when issued for use.
16. Contract assets
Contract assets are the Company’s right to consideration in exchange for goods that the Company has transferred to
customers when that right is conditioned on something other than the passage of time. The Company’s unconditional
right to receive consideration from customers (only the passage of time is required) is accounted for as accounts
receivable.The methods for determination and accounting treatment of the ECLs on contract assets are detailed in Note V. 10
Financial instruments.
17. Contract costs
Contract costs are either the incremental costs of obtaining a contract with a customer or the costs to fulfil a contract
with a customer.Incremental costs of obtaining a contract are those costs that the Company incurs to obtain a contract with a customer
that it would not have incurred if the contract had not been obtained e.g. an incremental sales commission. The
Company recognises as an asset the incremental costs of obtaining a contract with a customer if it expects to recover
those costs. Other costs of obtaining a contract are expensed when incurred.If the costs to fulfil a contract with a customer are not within the scope of inventories or other accounting standards
the Company recognises an asset from the costs incurred to fulfil a contract only if those costs meet all of the following
criteria:
* the costs relate directly to an existing contract or to a specifically identifiable anticipated contract including direct
labour direct materials allocations of overheads (or similar costs) costs that are explicitly chargeable to the
customer and other costs that are incurred only because the Group entered into the contract;
* the costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy)
performance obligations in the future;
* the costs are expected to be recovered.
34 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Contract costs (Cont’d)
Assets recognised for the incremental costs of obtaining a contract and assets recognised for the costs to fulfil a
contract (the “assets related to contract costs”) are amortised on a systematic basis that is consistent with the transfer
to the customer of the goods or services to which the assets relate and recognised in profit or loss for the current
period. An expense is recognised when incurred if the amortisation period is less than one year.The Company recognises an impairment loss in profit or loss to the extent that the carrying amount of an asset related
to contract costs exceeds:
* 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.The costs of contract performance recognised as assets if the amortisation period is less than one year or a normal
operating cycle upon the initial recognition are presented as “Inventories” item and if the amortisation period is more
than one year or a normal operating cycle upon the initial recognition are presented as “Other non-current assets” item.The contract obtaining costs recognised as assets if the amortisation period is less than one year or a normal operating
cycle upon the initial recognition are presented as “Other current assets” item and if the amortisation period is more
than one year or a normal operating cycle upon the initial recognition are presented as “Other non-current assets” item.
18. Assets held for sale
A non-current asset or disposal group is classified as held for sale if its carrying amount will be recovered principally
through a sale transaction (including a non-monetary asset exchange with commercial substance) rather than through
continuing use.The aforesaid non-current asset does not include the investment property subsequently measured at fair value the
biological assets measured at the net amount of the fair value deducting the sales expense the assets generated from
remuneration financial assets deferred income tax assets and rights from insurance contract.A disposal group is a group of assets to be disposed of together as a whole by sale or other means in a transaction and
liabilities directly associated with those assets that will be transferred in the transaction. In certain circumstances the
disposal group includes the goodwill acquired in the business combination.A non-current asset or a disposal group is classified as held for sale if it meets all of the following conditions: the
noncurrent asset or disposal group is available for immediate sale in its present condition subject only to terms that
are usual and customary for sales of such asset or disposal group; the sale is highly probable i.e. a sale plan has been
resolved and a firm purchase commitment has been obtained and the sale is expected to be completed within one year.When the Group loses control of a subsidiary due to reasons such as disposal of investment in a subsidiary regardless
of whether the Group retains part of the equity investment after the disposal when the investment in a subsidiary
intended to be disposed of meets the conditions for classification as held for sale the investment in a subsidiary is
classified as held for sale as a whole in the separate financial statements and all assets and liabilities of the subsidiary
are classified as held for sale in the consolidated financial statements.When the non-current assets or disposal groups held for sale are initially measured or remeasured at the balance sheet
date the excess of the carrying amount over the net amount of the fair value less selling expenses is recognised as
asset impairment loss. For the amount of impairment loss recognised on disposal groups held for sale the carrying
amount of the goodwill of the disposal group shall be offset against first and then be offset against the carrying amount
of non-current assets according to the proportion of the carrying amount of non-current assets.SHANDONG CHENMING PAPER HOLDINGS LIMITED 35
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
18. Assets held for sale (Cont’d)
If the net amount of the fair value of the non-current assets or disposal groups held for sale less the selling expenses
increases on the subsequent balance sheet date the amount previously written down shall be recovered and reversed
in the amount of asset impairment loss recognised after be classified as held for sale and the reversed amount shall be
included in the current profit and loss. The carrying amount of goodwill written off shall not be reversed.Non-current assets held for sale and assets in disposal group held for sale are not depreciated or amortised. Interest
and other expenses of a disposal group classified as held for sale continue to be recognised. For all or part of an
investment in an associate or a joint venture that is classified as held for sale the part of being classified as held for sale
shall cease to be accounted for using the equity method while any retained portion (not classified as held for sale) shall
continue to be accounted for using the equity method; The Group ceases to use the equity method from the date when
the Group ceases to have significant influence over an associate or a joint venture.If a non-current asset or disposal group is classified as held for sale but subsequently no longer meets the criteria for
being classified as held for sale the Group shall cease to classify it as held for sale and measure it at the lower of:
(1) the carrying amount of the asset or disposal group before being classified as held for sale is adjusted by the
depreciation amortisation or impairment that would have been recognised if the asset or disposal group had not
been classified as held for sale;
(2) recoverable amount.
19. Long-term receivables
The Company measures the impairment loss of long-term receivables at an amount equal to the ECLs in the next 12
months or the lifetime ECLs depending on whether its credit risk has significantly increased upon initial recognition.Other than the long-term receivables assessed individually for credit risks long-term receivables are classified into
different groups based on their credit risk characteristics:
Item Basis for determining the groups
Long-term receivables not yet past due The group is comprised of long-term receivables not yet past due with
normal exposures.Long-term receivables overdue This group is comprised of long-term receivables with higher past due
exposures.
36 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
20. Long-term equity investments
Long-term equity investments include the equity investments in subsidiaries joint ventures and associates. Associates
of the 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.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 Company’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 Company 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.SHANDONG CHENMING PAPER HOLDINGS LIMITED 37
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
20. Long-term equity investments (Cont’d)
(2) Subsequent measurement and method for profit or loss recognition (Cont’d)
For additional equity investment made in order to obtain significant influence or common control over investee
without resulted in control the initial investment cost under the equity method shall be the aggregate of fair value
of previously held equity investment and additional investment cost on the date of transfer. For investments
in non-trading equity instruments that were previously classified as at fair value through other comprehensive
income the cumulative fair value changes associated with them that were previously included in other
comprehensive income are transferred to retained earnings upon the change to the equity method of accounting.In the event of loss of common control or significant influence over investee due to partial disposal of equity
investment the remaining equity interest after disposal shall be accounted for according to the Accounting
Standard for Business Enterprises No. 22 – Recognition and measurement of Financial Instruments. The difference
between its fair value and carrying amount shall be included in profit or loss for the current period. In respect
of other comprehensive income recognised under previous equity investment using equity method it shall be
accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability by
investee at the time when equity method was ceased to be used. Movement of other owners’ equity related to the
previous equity investment shall be transferred to profit or loss for the current period.In the event of loss of control over investee due to partial disposal of equity investment the remaining equity
interest which can apply common control or impose significant influence over the investee after disposal shall be
accounted for using equity method. Such remaining equity interest shall be treated as accounting for using equity
method since it is obtained and adjustment was made accordingly. For the remaining equity interest which cannot
apply common control or impose significant influence over the investee after disposal it shall be accounted for
using the Accounting Standard for Business Enterprises No. 22 – Recognition and measurement of Financial
Instruments. The difference between its fair value and carrying amount as at the date of losing control shall be
included in profit or loss for the current period.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.
38 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
20. Long-term equity investments (Cont’d)
(3) Basis for determining the common control and significant influence on the investee
Common control is the contractually agreed sharing of control over an arrangement which relevant activities of
such arrangement must be decided by unanimously agreement from parties who share control. When determining
if there is any common control it should first be identified if the arrangement is controlled by all the participants
or the group consisting of the participants and then determined if the decision on the arranged activity can be
made only with the unanimous consent of the participants sharing the control. If all the participants or a group
of participants can only decide the relevant activities of certain arrangement through concerted action it can
be considered that all the participants or a group of participants share common control on the arrangement. If
there are two or more participant groups that can collectively control certain arrangement it does not constitute
common control. When determining if there is any common control the relevant protection rights will not be taken
into account.Significant influence is the power of the investor to participate in the financial and operating policy decisions of
an investee but to fail to control or joint control the formulation of such policies together with other parties. When
determining if there is any significant influence on the investee the influence of the voting shares of the investee
held by the investor directly and indirectly and the potential voting rights held by the investor and other parties
which are exercisable in the current period and converted to the equity of the investee including the warrants
stock options and convertible bonds that are issued by the investee and can be converted in the current period
shall be taken into account.When the Company holds directly or indirectly through the subsidiary 20% (inclusive) to 50% of the voting shares
of the investee it is generally considered to have significant influence on the investee unless there is concrete
evidence to prove that it cannot participate in the production and operation decision-making of the investee and
cannot pose significant influence in this situation. When the Company owns less than 20% of the voting shares
of the investee it is generally considered that it has not significantly influenced on the investee unless there is
concrete evidence to prove that it can participate in the production and operation decision-making of the investee
and cannot pose significant influence in this situation.
(4) Held-for-sale equity investments
The equity investments to associates or joint ventures are all or partially classified as assets held for sale.The remaining equity investments that are not classified as assets held for sale shall be accounted for using equity
method.The equity investments to associates or joint ventures already classified as held for sale no longer meet the
conditions of assets held for sale shall be adjusted retroactively using equity method from the date of being
classified as assets held for sale.
(5) Impairment test method and Impairment provision
For the method for making impairment provision for the investment in subsidiaries associates and joint ventures
please refer to Note V. 28.
21. Investment property
Investment property refers to real estate held to earn rentals or for capital appreciation or both. The investment 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. 28.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.SHANDONG CHENMING PAPER HOLDINGS LIMITED 39
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
22. Fixed assets
(1) Conditions for recognition
Fixed assets represent the tangible assets held by the Company using in the production of goods rendering of
services and for operation and administrative purposes with useful life over one year.Fixed assets are recognised when it is probable that the related economic benefits will flow to the Company and
the costs can be reliably measured.The Company’s fixed assets are initially measured at the actual cost at the time of acquisition.Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probable
that the associated economic benefits will flow to the Company and the related cost can be reliably measured.The cost of routine repairs of fixed assets that do not qualify as capitalised subsequent expenditure is charged to
current profit or loss or included in the cost of the related assets in accordance with the beneficiary object when
incurred. The carrying amount of the replaced part is derecognised.
(2) Depreciation method
The Company adopts the straight-line method for depreciation. Provision for depreciation will be started when the
fixed asset reaches its expected usable state and stopped when the fixed asset is derecognised or classified as a
non-current asset held for sale. Without regard to the depreciation provision the Company determines the annual
depreciation rate by category estimated useful lives and estimated residual value of the fixed assets as below:
Useful lives Estimated Annual
Depreciation of depreciation residual depreciation
Category method (Year) value (%) rate (%)
Housing and building structure Straight-line 20-40 5-10 2.25-4.75
method
Machinery and equipment Straight-line 8-20 5-10 4.50-11.88
method
Transportation equipment Straight-line 5-8 5-10 11.25-19.00
method
Electronic equipment and others Straight-line 5 5-10 18.00-19.00
method
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. 28.
(4) The Company will re-check the useful lives estimated net residual value and depreciation method of the fixed
assets at the end of each year.When there is any difference between the useful lives estimate and the originally estimated value the 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.
40 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
23. 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.The method for impairment provision of construction in progress is set out in Note V. 28.
24. Borrowing costs
(1) Recognition principle for the capitalisation of the borrowing costs
The borrowing costs incurred by the Company directly attributable to the acquisition construction or 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;
* The acquisition construction or production activity necessary for the asset to be ready for its intended use
or sale has been started.
(2) Capitalisation period of borrowing costs
When a qualifying asset acquired constructed or produced by the Company is ready for its intended use or sale
the capitalisation of the borrowing costs shall discontinue. The borrowing costs incurred after a qualifying asset
is ready for its intended use or sale shall be recognised as expenses when incurred according to the incurred
amount and included in the profit or loss for the current period.Capitalisation of borrowing costs shall be suspended during periods in which the acquisition construction or
production of a qualifying asset is interrupted abnormally when the interruption is for a continuous period of more
than 3 months. The capitalisation of the borrowing costs shall be continued in the normal interruption period.
(3) Calculation methods for capitalisation rate and capitalised amount of the borrowing costs
Where funds are borrowed for a specific purpose the amount of interest to be capitalised shall be the actual
interest expense incurred on that borrowing for the period less any bank interest earned from depositing the
borrowed funds before being used into banks or any investment income on the temporary investment of those
funds. Where funds are borrowed for general purpose the Company shall determine the amount of interest
to be capitalised on such borrowings by applying a capitalisation rate to the weighted average of the excess
amounts of cumulative expenditures on the asset over and above the amounts of specific-purpose borrowings.The capitalisation rate shall be the weighted average of the interest rates applicable to the general-purpose
borrowings.During the capitalisation period exchange differences on a specific purpose borrowing denominated in foreign
currency shall be capitalised. Exchange differences related to general-purpose borrowings denominated in foreign
currency shall be included in profit or loss for the current period.SHANDONG CHENMING PAPER HOLDINGS LIMITED 41
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
25. Biological assets
Bearer biological assets refer to biological assets held for the purpose of producing agricultural products providing
labour services or renting including economic forests firewood forests productive livestock and draught animals.Bearer biological assets are initially measured at cost. The cost of a planted or propagated bearer biological 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.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.
26. Right-of-use assets
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.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.For the methods of impairment test and impairment provision of right-of-use assets please refer to Note V. 28.
42 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
27. Intangible assets
The intangible assets of the Company include land use rights software and certificates of third party right.The intangible asset is initially measured at cost and its useful life is determined upon acquisition. If the useful life is
finite the intangible asset will be amortised over the estimated useful life using the amortisation method that can reflect
the estimated realisation of the economic benefits related to the asset starting from the time when it is available for use.If it is unable to reliably determine the estimated realisation straight-line method shall be adopted for amortisation. The
intangible assets with uncertain useful life will not be amortised.The amortisation methods for the intangible assets with finite useful life are as follows:
Type Useful life (year) Method of amortisation Remark
Land use rights 50-70 Straight-line method
Software 5-10 Straight-line method
Certificates of third party right 3 Straight-line method
The 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. 28.
28. Asset impairment
Impairment of long-term equity investments in subsidiaries associates and joint ventures asset impairment on
investment property fixed assets construction in progress materials for project right-of-use assets intangible assets
goodwill and others (excluding inventories deferred tax assets and financial assets) subsequently measured at cost is
determined as follows:
The Company determines if there is any indication of asset impairment as at the balance sheet date. If there is any
evidence indicating that an asset may be impaired recoverable amount shall be estimated for impairment test. Goodwill
arising from business combinations intangible assets with an indefinite useful life and intangible assets not ready for
use will be tested for impairment annually regardless of whether there is any indication of impairment.The recoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of the
future cash flows expected to be derived from the asset. The Company estimates the recoverable amount of an
individual asset. If it is not possible to estimate the recoverable amount of the individual asset the Company shall
determine the recoverable amount of the asset group to which the asset belongs. The determination of an asset group
is based on whether major cash inflows generated by the asset group are independent of the cash inflows from other
assets or asset groups.SHANDONG CHENMING PAPER HOLDINGS LIMITED 43
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
28. Asset impairment (Cont’d)
When the recoverable amount of an asset or an asset group is less than its carrying amount the carrying amount 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 Group first tests the asset group or set of asset groups excluding goodwill for impairment
calculates the recoverable amount and recognises the corresponding impairment loss. An impairment test is then carried
out on the asset group or combination of asset groups containing goodwill by comparing its carrying amount with its
recoverable amount. If the recoverable amount is lower than the carrying amount an impairment loss is recognised for
goodwill.An impairment loss recognised shall not be reversed in a subsequent period.
29. 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.
30. Contract liabilities
A contract liability represents the Company’s obligation to transfer goods to a customer for which the Company has
received consideration (or an amount of consideration is due) from the customer. If the customer has already paid
the contract consideration before the Company transfers goods to the customer or the Company has obtained the
unconditional collection right the Company will recognise such amount received or receivable as contract liabilities
at earlier of the actual payment by the customer or the amount payable becoming due. Contract assets and contract
liabilities under the same contract are presented on a net basis and contract assets and contract liabilities under
different contracts are not offset.
44 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
31. Employee benefits
(1) Scope of employee benefits
Employee benefits are all forms of considerations or compensation given by an entity in exchange for services
rendered by employees or for the termination of employment. Employee benefits include short-term staff
remuneration post-employment benefits termination benefits and other long-term employee benefits. Employee
benefits include benefits provided to employees’ spouses children other dependants survivors of the deceased
employees or to other beneficiaries.Employee benefits are presented as “employee benefits payable” and “long-term employee benefits payable” in
the balance sheet respectively according to liquidity.
(2) Short-term staff remuneration
Employee wages or salaries actually incurred bonuses and social insurance contributions such as medical
insurance work injury insurance maternity insurance and housing fund contributed at the applicable benchmarks
and rates are recognised by the Company as a liability during the accounting period when the employees render
services with a corresponding charge to profit or loss or included in the cost of assets where appropriate. Where
the payment of liability is expected not to be fully settled within 12 months after the end of the annual reporting
period in which the employees render the related services and the financial impact would be material these
liabilities are measured at their discounted values.
(3) Post-employment benefits
Post-employment benefit plans include defined contribution plans and defined benefit plans. A defined
contribution plan is a post-employment benefit plan under which the Group pays fixed contributions into a
separate fund and the Group has no further obligations for payment. A defined benefit plan is a postemployment
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 when an employee renders services 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.SHANDONG CHENMING PAPER HOLDINGS LIMITED 45
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
32. Lease liabilities
(1) Initial measurement
At the commencement date of a lease term the Company shall initially measure the lease liabilities at the present
value of the lease payments that are not paid at that date.
1) Lease payments
The lease payments mean the payments made by the Company to a lessor for the right to use the leased
assets during the lease term including: * fixed payments and in-substance fixed payments less any lease
incentives receivable; * variable lease payments that depend on an index or a rate initially measured using
the index or rate as at the commencement date of the lease term; * the exercise price of a purchase option
if the Company is reasonably certain to exercise that option; * payments for terminating the lease if the
lease term reflects the Company exercising an option to terminate the lease; * amounts expected to be
payable by the Company under residual value guarantees.
2) Discount rate
The present value of the lease payments shall be calculated using the Company’s incremental borrowing
rate.
(2) Subsequent measurement
After the commencement date of a lease term the Company shall subsequently measure the lease liabilities by: *
increasing the carrying amount to reflect interest on the lease liabilities; * reducing the carrying amount to reflect
the lease payments made; * remeasuring the carrying amount to reflect the change in the lease payments due to
any reassessment or lease modifications.The interest expense on the lease liabilities in each period during the lease term is calculated using a constant
periodic rate of interest and is recognised in profit or loss for the current period except for the interest expense to
be capitalised. The periodic rate of interest is the discount rate used by the Company in the initial measurement of
lease liabilities or the revised discount rate used by the Company when the Company has to remeasure the lease
liabilities based on a revised discount rate due to a change in the lease payments or lease modifications.
(3) Remeasurement
After the commencement date of a lease term the Company shall remeasure the lease liabilities using the
changes to the lease payments and the revised discount rate and adjust the carrying amount of the right-of-use
assets accordingly in the circumstances set out below. If the carrying amount of the right-of-use assets is reduced
to zero and there is a further reduction in the measurement of the lease liabilities the Company shall recognise
any remaining amount of the remeasurement in profit or loss: * there is any change in the amount of in-substance
fixed payments; * there is any change in the amounts expected to be payable under a residual value guarantee;
* there is any change in the index or rate used to determine the lease payments; * there is any change in the
assessment results in the purchase option; and * there is any change in the assessment results or the exercise of
the extension option or termination option.
46 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
33. Provisions
Obligations pertinent to the contingencies which satisfy the following conditions are recognised by the Company 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.
34. Share-based payments
(1) Category of share-based payment
The Company’s share-based payment is either equity-settled or cash-settled.
(2) Determination of fair value of equity instruments
For the existence of an active market for options and other equity instruments granted by the Company the fair
value is determined at the quoted price in the active market. For options and other equity instruments with no
active market option pricing model shall be used to estimate the fair value of the equity instruments. The following
factors shall be taken into account using option pricing models: A. the exercise price of the option; B. the validity
period of the option; C. the current market price of the share; D. the expected volatility of the share price; E.predicted dividend of the share; and F. risk-free rate of the option within the validity period.
(3) Recognition of vesting of equity instruments based on the best estimate
On each balance sheet date within the vesting period the estimated number of equity instruments expected to
vest is revised based on the best estimate made by the Company according to the latest available subsequent
information as to changes in the number of employees with exercisable rights. On the vesting date the final
estimated number of equity instruments expected to vest should equal the actual number of equity instruments
expected to vest.SHANDONG CHENMING PAPER HOLDINGS LIMITED 47
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
34. Share-based payments (Cont’d)
(4) Accounting treatment of implementation modification and termination of share-based payment
Equity-settled share-based payment shall be measured at the fair value of the equity instruments granted to
employees. For those may immediately vest after the grant the fair value of equity instrument at the grant date
shall be included in the relevant costs or expenses and the capital reserve shall be increased accordingly. If the
right may not be exercised until the vesting period comes to an end or until the specified performance conditions
are met within the vesting period the services obtained in the current period shall based on the best estimate of
the number of vested equity instruments be included in the relevant costs or expenses and the capital reserve at
the fair value of the equity instrument at the grant date. After the vesting period relevant costs or expenses and
total shareholders’ equity which have been recognised will not be adjusted.Cash-settled share-based payment shall be measured in accordance with the fair value of liability calculated
and recognised based on the shares or other equity instruments undertaken by the Company. For those may
immediately vest after the grant the fair value of the liability undertaken by the Company shall on the date of the
grant be included in the relevant costs or expenses and the liabilities shall be increased accordingly. If the right
may not be exercised until the vesting period comes to an end or until the specified performance conditions are
met within the vesting period the services obtained in the current period shall based on the best estimate of
the information about the exercisable right be included in the relevant costs or expenses and the corresponding
liabilities at the fair value of the liability undertaken by the Company. For each of the balance sheet date and
settlement date before the settlement of the relevant liabilities fair value of the liabilities shall be remeasured and
the changes will be included in the profit or loss for the current period.When there are changes in Company’s share-based payment plans if the modification increases the fair value of
the equity instruments granted corresponding recognition of service increase in accordance with the increase in
the fair value of the equity instruments; if the modification increases the number of equity instruments granted
the increase in fair value of the equity instruments is recognised as a corresponding increase in service achieved.Increase in the fair value of equity instruments refer to the difference between the fair values of the modified date.If the modification reduces the total fair value of shares paid or not conductive to the use of other employees
share-based payment plans to modify the terms and conditions of service it will continue to be accounted for in
the accounting treatment as if the change had not occurred unless the Company cancelled some or all of the
equity instruments granted.During the vesting period if the cancelled equity instruments (except for failure to meet the conditions of the
non-market vesting conditions) granted by the Company to cancel the equity instruments granted amount
treated as accelerated vesting of the remaining period should be recognised immediately in profit or loss while
recognising capital reserves. If employees or other parties can choose to meet non-vesting conditions but they are
not met in the vesting period the Company will treat them as cancelled equity instruments granted.
48 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
35. Preference shares Perpetual Bonds and other financial instruments
(1) Classification of financial liabilities and equity instruments
Financial instruments issued by the Company are classified into financial assets financial liabilities or equity
instruments on the basis of the substance of the contractual arrangements and the economic nature not only
its legal form together with the definition of financial asset financial liability and equity instruments on initial
recognition.
(2) Accounting treatment of preference shares Perpetual Bonds and other financial instruments
Financial instruments issued by the Company are initially recognised and measured in accordance with the
financial instrument standards; thereafter interest or dividends are accrued on each balance sheet date and
accounted for in accordance with relevant specific ASBEs i.e. to determine the accounting treatment for interest
expenditure or dividend distribution of the instrument based on the classification of the financial instrument issued.For financial instruments classified as equity instruments their interest expenses or dividend distributions are
treated as profit distribution of the Company and their repurchases and cancellations are treated as changes in
equity; for financial instruments classified as financial liabilities their interest expenses or dividend distribution are
in principle accounted for with reference to borrowing costs and the gains or losses arising from their repurchases
or redemption are included in the profit or loss for the current period.For the transaction costs such as fees and commissions incurred by the Company for issuing financial
instruments if such financial instruments are classified as debt instruments and measured at amortised cost they
are included in the initial measured amount of the instruments issued; if such financial instruments are classified
as equity instruments they are deducted from equity.
36. Revenue
(1) General principles
The Company recognises revenue when it satisfies a performance obligation in the contract i.e. when the
customer obtains control of the relevant goods or services.Where a contract has two or more performance obligations the Company allocates the transaction price to each
performance obligation based on the percentage of respective unit price of goods or services guaranteed by
each performance obligation and recognises as revenue based on the transaction price that is allocated to each
performance obligation.If one of the following conditions is fulfilled the Company performs its performance obligation within a certain
period; otherwise it performs its performance obligation at a point of time:
* when the customer simultaneously receives and consumes the benefits provided by the Company when the
Company performs its obligations under the contract;
* when the customer is able to control the goods in progress in the course of performance by the Company
under the contract;
* when the goods produced by the Company under the contract are irreplaceable and the Company has the
right to payment for performance completed to date during the whole contract term.For performance obligations performed within a certain period the Company recognises revenue by measuring
the progress towards complete of that performance obligation within that certain period. When the progress
of performance cannot be reasonably determined if the costs incurred by the Company are expected to be
compensated the revenue shall be recognised at the amount of costs incurred until the progress of performance
can be reasonably determined.SHANDONG CHENMING PAPER HOLDINGS LIMITED 49
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
36. Revenue (Cont’d)
(1) General principles (Cont’d)
For performance obligation performed at a point of time the Company recognises revenue at the point of time at
which the customer obtains control of relevant goods or services. To determine whether a customer has obtained
control of goods or services the Company considers the following indications:
* The Company has the current right to receive payment for the goods which is when the customer has the
current payment obligations for the goods.* The Company has transferred the legal title of the goods to the customer which is when the client
possesses the legal title of the goods.* The Company has transferred the physical possession of goods to the customer which is when the
customer obtains physical possession of the goods.* The Company has transferred all of the substantial risks and rewards of ownership of the goods to the
customer which is when the customer obtain all of the substantial risks and rewards of ownership of the
goods to the customer.* The customer has accepted the goods.* Other information indicates that the customer has obtained control of the goods.The Company’s right to consideration in exchange for goods or services that the Company has transferred to
customers (and such right depends on factors other than passage of time) is accounted for as contract assets
and contract assets are subject to impairment based on ECLs (Note V. 10). The Company’s unconditional right to
receive consideration from customers (only depends on passage of time) is accounted for as accounts receivable.The Company’s obligation to transfer goods or services to customers for which the Company has received or
should receive consideration from customers is accounted for as contract liabilities.Contract assets and contract liabilities under the same contract are presented on a net basis. Where the net
amount has a debit balance it is presented in “contract assets” or “other non-current assets” according to its
liquidity. Where the net amount has a credit balance it is presented in “contract liabilities” or “other non-currentliabilities” according to its liquidity.
(2) Specific methods
Specific method for revenue recognition of machine-made paper business of the Company: in terms of domestic
sales of machine-made paper revenue is recognised when goods are delivered to the customers and such
deliveries are confirmed; while in terms of overseas sales of machine-made paper revenue is recognised on the
day when goods are loaded on board and declared.Specific method for recognition of finance lease income of the Company: according to the repayment schedule
the income is recognised by instalments according to the effective interest rate.Specific method for recognition of revenue from real estate of the Company: revenue is recognised by amortising
the rental income on a straight-line basis over the lease term.
50 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
37. Government grants
A government grant is recognised when the grant will be received and that the Company will comply with the 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; if the grant is a compensation for related costs expenses or losses to be incurred in subsequent
periods the grant shall be recognised as deferred income and recognised in profit or loss over the periods in which the
related costs expenses or losses are recognised. A government grant measured at nominal amount is directly included
in profit or loss for the current period. The Company adopts a consistent approach to the same or similar government
grants.A government grant related to daily activities is recognised in other gains relying on the essence of economic business;
otherwise recognised in non-operating income or non-operating expenses.For the repayment of a government grant already recognised if there is any related deferred income the repayment
shall be off set against the carrying amount of the deferred income and any excess shall be recognised in profit or loss
for the current period; otherwise the repayment shall be recognised immediately in profit or loss for the current period.For the policy preferential interest subsidy if it is provided by the financial authority through banks it is recognised
at the amount of borrowings actually received and the borrowings costs are calculated based on the principal of the
borrowings and the policy preferential interest rate; if it is provided by the financial authority directly the corresponding
interest will be used to offset the relevant borrowing expenses.SHANDONG CHENMING PAPER HOLDINGS LIMITED 51
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
38. Deferred income tax assets/deferred income tax liabilities
Income tax comprises current income tax expense and deferred income tax expense which are included in profit or
loss for the current period as income tax expenses except for deferred tax related to transactions or events that are
directly recognised in owners’ equity which are recognised in owners’ equity and deferred tax arising from a business
combination which is adjusted against the carrying amount of goodwill.Temporary differences arising from the difference between the carrying amount of an asset or liability and its tax base
at the balance sheet date of the Company shall be recognised as deferred income tax using the balance sheet liability
method.All the taxable temporary differences are recognised as deferred income tax liabilities except for those incurred in the
following transactions:
(1) The initial recognition of goodwill and the initial recognition of an asset or liability in a transaction which is neither
a business combination nor affects accounting profit or taxable profit (or deductible loss) when the transaction
occurs;
(2) The taxable temporary differences associated with investments in subsidiaries associates and joint ventures and
the Company is able to control the timing of the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.The Company recognises a deferred income tax asset for the carry forward of deductible temporary differences
deductible losses and tax credits to subsequent periods to the extent that it is probable that future taxable profits
will be available against which the deductible temporary differences deductible losses and tax credits can be utilised
except for those incurred in the following transactions:
(1) The transaction is neither a business combination nor affects accounting profit or taxable profit (or deductible loss)
when the transaction occurs;
(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.
52 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
39. Lease
(1) Identification of leases
On the beginning date of the contract the Company (as a lessee or lessor) assesses whether the customer 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. 26.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 charged to profit or loss in the period in which they actually
arise. The Company calculates the interest expense of the lease liability for each period of the lease term based
on the fixed periodic interest rate and is included in the current profit and loss. The variable lease payments that
are not included in the measurement of the lease liability are recognised in profit or loss when incurred.Short-term lease
Short-term leases refer to leases with a lease term of less than 12 months from the commencement date except
for those with a purchase option.Lease payments on short-term leases are recognised in the cost of related assets or current profit or loss on a
straight-line basis over the lease term.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
SHANDONG CHENMING PAPER HOLDINGS LIMITED 53
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
39. Lease (Cont’d)
(2) The Company as lessee (Cont’d)
Low-value asset lease
A low-value asset lease is a lease that the value of a single leased asset is below 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 re-determines 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.
54 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
39. Lease (Cont’d)
(3) The Company as lessor
When the Company is a lessor a lease is classified as a finance lease whenever the terms of the lease transfer
substantially all the risks and rewards of asset ownership to the lessee. All leases other than financial leases are
classified as operating leases.Finance leases
Under finance leases the Company accounts for finance lease receivables at the beginning of the lease term at
the net lease investment which is the sum of the unsecured residual value and the present value of the lease
receipts outstanding at the commencement date of the lease discounted at the interest rate implicit in the lease.The Company as lessor calculates and recognises interest income for each period of the lease term based on
a fixed periodic interest rate. Variable lease payments acquired by the Company as lessor that are not included
in the net measurement of lease investments are included in profit or loss for the period when they are actually
incurred.Derecognition and impairment of finance lease receivables are accounted for in accordance with the requirements
under the Accounting Standard for Business Enterprises No. 22 – Recognition and Measurement of Financial
Instruments and the Accounting Standards for Business Enterprises No. 23 – Transfer of Financial Assets.Operating lease
Lease payments under operating leases are recognised in profit or loss on a straight-line basis over the lease term.Initial direct costs incurred in relation to operating leases are capitalised and amortised over the lease term on the
same basis as rental income and recognised in profit or loss for the current period. The variable lease payments
obtained in relation to operating leases that are not included in the lease payments are recognised in profit or loss
in the period in which they actually incurred.Lease modification
The Company accounts for a modification in an operating lease as a new lease from the effective date of the
modification and the amount of lease receipts received in advance or receivable in respect of the lease prior to the
modification is treated as a receipt under the new lease.The Company accounts for a modification in a finance lease as a separate lease when the change occurs and
the following conditions are met: * the modification expands the scope of lease by adding the right to use one
or more of the leased assets; and * the increase in consideration is equivalent to the separate price for the
expanded scope of lease adjusted for that contractual situation.Where a finance lease is modified and not accounted for as a separate lease the Company accounts for the
modified lease in the following circumstances: * If the modification takes effect on the lease commencement
date the lease will be classified as an operating lease the Company will account for it as a new lease from the
effective date of the lease modification and use the net lease investment before the effective date of the lease
modification; * If the modification takes effect on the lease commencement date the lease will be classified as a
finance lease and the Company will conduct accounting treatment in accordance with the Accounting Standards
for Business Enterprises No. 22 – Recognition and Measurement of Financial Instruments on modifying or
renegotiating contracts.SHANDONG CHENMING PAPER HOLDINGS LIMITED 55
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
39. Lease (Cont’d)
(4) Sublease
When the Company is an intermediate lessor the sublease is classified with reference to the right-of-use assets
arising from the head lease. If the head lease is a short-term lease for which the Company adopts a simplified
approach then the Company classifies the sublease as an operating lease.
(5) Sale and leaseback
The lessee and the lessor shall assess and determine whether the transfer of assets in a sale and leaseback
transaction is a sale in accordance with the requirements of the Accounting Standard for Business Enterprises No.
14 – Revenue.
Where asset transfer under the sale and leaseback transactions is a sale the lessee shall measure the right-of-use
assets created by the sale and leaseback based on the portion of carrying amount of the original assets related
to right of use obtained upon leaseback and only recognise relevant profit or loss for the right transferred to
the lessor. The lessor shall account for the purchase of assets in accordance with other applicable ASBEs and
account for the lease of assets in accordance with this standard.Where asset transfer under the sale and leaseback transactions is not a sale the lessee shall continue to
recognise the transferred assets while recognising a financial liability equal to the transfer income and account
for such liability according to the Accounting Standard for Business Enterprises No. 22 – Recognition and
Measurement of Financial Instruments; or not to recognise the transferred assets but recognise a financial asset
equal to the transfer income and account for such asset according to the Accounting Standard for Business
Enterprises No. 22 – Recognition and Measurement of Financial Instruments.
40. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
□ Applicable √ Not Applicable
(2) Changes in significant accounting estimates
□ Applicable √ Not Applicable
56 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
41. Others
The fair value refers to the price that will be received when selling an asset or the price to be paid to transfer a liability in
an orderly transaction between market participants on the date of measurement.The Group measures the relevant assets or liabilities at fair value assuming that the orderly transaction of selling the
assets or transferring the liabilities is conducted in the main market of the relevant assets or liabilities; in the absence of
the main market the Group assumes that the transaction is conducted in the most advantageous market for the relevant
asset or liability. The main (or the most advantageous) market must be accessible to by the Group on the measurement
date. The Group uses assumptions that market participants would use when pricing the asset or liability assuming that
market participants act in their economic best interest.For financial assets or financial liabilities exist in an active market fair value is determined based on the quoted price
in such market. While financial instruments do not exist in an active market the fair value is determined using valuation
techniques.Fair value measurement for a non-financial asset takes into account a market participant’s ability to generate economic
benefits by using the asset in its best use or by selling it to another market participant that would use the asset in its
best use.The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value and gives priority to relevant observable inputs. Unobservable inputs are used only when
relevant observable inputs are not accessible or the access to which is impracticable.All assets and liabilities measured at fair value or disclosed in the financial statements are categorised within the fair
value hierarchy described as follows based on the lowest level input that is significant to the fair value measurement
as a whole: Level 1 inputs are available quoted prices (unadjusted) in active markets for identical assets or liabilities at
the measurement date; Level 2 inputs are inputs other than Level 1 inputs that are observable for the asset or liability
either directly or indirectly; Level 3 inputs are unobservable inputs for the asset or liability.For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis the Group
reassess them at each balance sheet date to determine whether transfers have occurred between levels in the hierarchy.SHANDONG CHENMING PAPER HOLDINGS LIMITED 57
INTERIM REPORT 2022I Financial Report
VI. Taxation
1. Main tax types and tax rates
Tax type Tax Base Tax rate (%)
Value added tax (VAT) Taxable income 13/9/6
Property tax Rental income and property price 12/1.2
Urban maintenance and construction tax Turnover tax payable 7
Enterprise income tax (EIT) Taxable income 25
Disclosure of taxable entities subject to different EIT tax rates
Name of taxable entity EIT tax rate (%)
Shandong Chenming Paper Holdings Limited 15
Shouguang Meilun Paper Co. Ltd. 15
Jilin Chenming Paper Co. Ltd. 15
Jiangxi Chenming Paper Co. Ltd. 15
Zhanjiang Chenming Pulp & Paper Co. Ltd. 15
Wuhan Chenming Hanyang Paper Holdings Co. Ltd. 15
Huanggang Chenming Pulp & Paper Co. Ltd. 15
Kunshan Tuoan Plastic Products Co. Ltd. 15
Shouguang Shun Da Customs Declaration Co. Ltd. 20
Shouguang Chenming Papermaking Machine Co. Ltd. 20
Shouguang Wei Yuan Logistics Company Limited 20
Jiangxi Chenming Tea Co. Ltd. 20
Zhanjiang Chenming Arboriculture Development Co. Ltd. Exempt from EIT
Nanchang Chenming Arboriculture Development Co. Ltd. Exempt from EIT
Chenming Arboriculture Co. Ltd. Exempt from EIT
Yangjiang Chenming Arboriculture Development Co. Ltd. Exempt from EIT
2. Tax incentives
(1) Enterprise income tax
On 15 December 2021 the Company received a high and new technology enterprise certificate with a certification
number of GR202137005666. Pursuant to the requirements under the Law of the People’s Republic of China on
Enterprise Income Tax and the relevant policies the Company is subject to a corporate income tax rate of 15% of
taxable income and is entitled to the preferential treatment from 2021 to 2023.Shouguang Meilun Paper Co. Ltd. a subsidiary of the Company received a high and new technology enterprise
certificate with a certification number of GR202137005468 on 15 December 2021. Pursuant to the requirements
under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies Shouguang
Meilun is subject to an enterprise income tax rate of 15% of taxable income and is entitled to the preferential
treatment from 2021 to 2023.Jilin Chenming Paper Co. Ltd. a subsidiary of the Company received a high and new technology enterprise
certificate with a certification number of GR201922000658 on 2 September 2019. Pursuant to the requirements
under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies Jilin
Chenming is subject to an enterprise income tax rate of 15% of taxable income and is entitled to the preferential
treatment from 2019 to 2021.
58 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VI. Taxation (Cont’d)
2. Tax incentives (Cont’d)
(1) Enterprise income tax (Cont’d)
Jiangxi Chenming Paper Co. Ltd. a subsidiary of the Company received a high and new technology enterprise
certificate with a certification number of GR201936002184 on 3 December 2019. Pursuant to the requirements
under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies Jiangxi
Chenming is subject to an enterprise income tax rate of 15% of taxable income and is entitled to the preferential
treatment from 2019 to 2021.Zhanjiang Chenming Pulp & Paper Co. Ltd. a subsidiary of the Company received a high and new technology
enterprise certificate with a certification number of GR202144001212 on 20 December 2021. Pursuant to the
requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies
Zhanjiang Chenming is subject to an enterprise income tax rate of 15% of taxable income and is entitled to the
preferential treatment from 2021 to 2023.Wuhan Chenming Hanyang Paper Holdings Co. Ltd. a subsidiary of the Company received a high and new
technology enterprise certificate with a certification number of GR202042001502 on 1 December 2020. Pursuant
to the requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant
policies Wuhan Chenming is subject to an enterprise income tax rate of 15% of taxable income and is entitled to
the preferential treatment from 2020 to 2022.Huanggang Chenming Pulp & Paper Co. Ltd. a subsidiary of the Company received a high and new technology
enterprise certificate with a certification number of GR202042001471 on 1 December 2020. Pursuant to the
requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies
Huanggang Chenming is subject to an enterprise income tax rate of 15% of taxable income and is entitled to the
preferential treatment from 2020 to 2022.Kunshan Tuoan Plastic Products Co. Ltd. a subsidiary of the Company received a high and new technology
enterprise certificate with a certification number of GR202032004526 on 2 December 2020. Pursuant to the
requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies
Kunshan Tuoan is subject to an enterprise income tax rate of 15% of taxable income and is entitled to the
preferential treatment from 2020 to 2022.Pursuant to the requirements of Rule 27(1) of Law of the People’s Republic of China on Enterprise Income Tax and
Rule 86(1) of regulations for the Implementation of Law of the People’s Republic of China on Enterprise Income
Tax Zhanjiang Chenming Arboriculture Development Co. Ltd. Yangjiang Chenming Arboriculture Development
Co. Ltd. Nanchang Chenming Arboriculture Development Co. Ltd. and Chenming Arboriculture Co. Ltd. which
are the subsidiaries of the Company have completed the filings for EIT reduction for exemption from EIT.Shouguang Shun Da Customs Declaration Co. Ltd. Shouguang Chenming Papermaking Machine Co. Ltd.Shouguang Wei Yuan Logistics Company Limited and Jiangxi Chenming Tea Co. Ltd. subsidiaries of the
Company is a small and micro enterprise. Pursuant to the Notice on Implementing the Inclusive Tax Deduction
and Exemption Policies for Micro and Small Enterprises (Cai Shui [2019] No. 13) the annual taxable income of a
small low-profit enterprise that is less than RMB1 million shall be included in its taxable income at a reduced rate
of 12.5% with the applicable enterprise income tax rate of 20%. The annual taxable income of a small low-profit
enterprise that is more than RMB1 million but not exceeding RMB3 million shall be included in its taxable income
at a reduced rate of 50% with the applicable enterprise income tax rate of 20%.SHANDONG CHENMING PAPER HOLDINGS LIMITED 59
INTERIM REPORT 2022I Financial Report
VI. Taxation (Cont’d)
2. Tax incentives (Cont’d)
(1) Enterprise income tax (Cont’d)
Guangdong Chenming Panels Co. Ltd. a subsidiary of the Company meets the requirements of Rule 99 of the
Regulations for the Implementation of Law of the People’s Republic of China on Enterprise Income Tax (Decree
No. 512 of the State Council of the People’s Republic of China) and the Notice of the Ministry of Finance and
the State Taxation Administration on Issues Concerning the Implementation of the Catalogue of Preferential Tax
Treatments for Comprehensive Resource Utilisation Enterprises (Cai Shui [2008] No. 47): since 1 January 2008
for enterprises that derive income from the products listed in the Catalogue which are in line with related national
or industry standards by making use of the resources listed in the Catalogue as the main raw materials taxable
income will be calculated at a reduced rate of 90% of the total revenue for that year. To be entitled to the above
tax benefits the ratio of the resources listed in the Catalogue and the raw materials used for the product shall be
consistent with the required technical standards stated in the Catalogue.
(2) Value-added Tax (“VAT”)
Pursuant to Rule 10 of the Interim Regulation of the People’s Republic of China on Value Added Tax Zhanjiang
Chenming Arboriculture Development Co. Ltd. Yangjiang Chenming Arboriculture Development Co. Ltd.Nanchang Chenming Arboriculture Development Co. Ltd. and Chenming Arboriculture Co. Ltd. which are
subsidiaries of the Company are exempt from VAT and have completed the filings for VAT reduction for
exemption from VAT.Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use of
Resources (Cai Shui [2015] No. 78) taxpayers who sell self-produced products and services applying integrated
use of resources may enjoy the immediate VAT refund policy. Guangdong Chenming Panels Co. Ltd. a subsidiary
of the Company produces products applying integrated use of resources and is therefore subject to the
immediate VAT refund policy in 2022.
60 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements
1. Monetary funds
Unit: RMB
Item Closing balance Opening balance
Treasury cash 3313516.53 2926080.68
Bank deposit 3139292575.43 3166431843.70
Other monetary funds 11816075269.95 10950425015.28
Total 14958681361.91 14119782939.66
Of which: Total deposits in overseas banks 505963325.58 462952909.20
Total restricted amount due to mortgages pledges or freezes 11749299176.80 10756936714.59
Other explanations:
* Other monetary funds of RMB8944327842.85 were the guarantee deposit for the application for bank
acceptance bills with the banks by the Company.* Other monetary funds of RMB2240431110.52 were the guarantee deposit for the application for letter of credit
with the banks by the Company.* Other monetary funds of RMB219580223.43 were the guarantee deposit for the application for bank guarantees
with the banks by the Company.* Other monetary funds of RMB184100000.00 were the guarantee deposit for the application for bank loans with
the banks by the Company.* Other monetary funds of RMB160860000.00 were the Company’s statutory reserve deposits at the banks.* Other monetary funds included interest receivable of RMB66776093.15.
2. Financial assets held for trading
Unit: RMB
Item Closing balance Opening balance
Financial assets measured at fair value through profit or loss 51033051.57 110886182.88
Of which:
Equity instrument investments 51033051.57 110886182.88
Total 51033051.57 110886182.88
Other explanation: Financial assets held for trading were shares of China Bohai Bank subscribed by the Group.SHANDONG CHENMING PAPER HOLDINGS LIMITED 61
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
3. Bill receivable
Unit: RMB
Closing balance Opening balance
Bad debt Bad debt
Bill type Book balance provision Book value Book balance provision Book value
Commercial acceptance bills 742590000.00 742590000.00
Total 742590000.00 742590000.00
4. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMB
Closing balance
Book balance Bad debt provision
Percentage ECL rate Carrying
Category Amount (%) Amount (%) amount
Accounts receivable assessed
individually for impairment 208785301.74 5.53 208785301.74 100.00 0.00
Accounts receivable assessed
collectively for impairment 3565457344.06 94.47 220583318.92 6.19 3344874025.14
Of which:
Accounts receivable from related
party customers 7158599.98 0.19 49344.50 0.69 7109255.48
Accounts receivable from non-related
party customers 2344160892.81 62.11 82782886.75 3.53 2261378006.06
Factoring receivables 1214137851.27 32.17 137751087.67 11.35 1076386763.60
Total 3774242645.80 100.00 429368620.66 11.38 3344874025.14
62 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
4. Accounts receivable (Cont’d)
(1) Disclosure of accounts receivable by category (Cont’d)
Continued:
Unit: RMB
Opening balance
Book balance Bad debt provision
Percentage ECL rate
Category Amount (%) Amount (%) Carrying amount
Accounts receivable assessed
individually for impairment 224831742.24 7.24 224831742.24 100.00 0.00
Accounts receivable assessed
collectively for impairment 2880986860.24 92.76 224469709.78 7.79 2656517150.46
Of which:
Accounts receivable from related
party customers 109385.42 0.004 109385.42
Accounts receivable from non-related
party customers 1855021764.82 59.73 84870622.11 4.58 1770151142.71
Factoring receivables 1025855710.00 33.03 139599087.67 13.61 886256622.33
Total 3105818602.48 100.00 449301452.02 14.47 2656517150.46
Items assessed individually for bad debt provision:
Unit: RMB
Closing balance
Bad debt Provision
Name Book balance provision percentage Provision reason
Hengfeng Hongyuan Real Estate Holdings
Co. Ltd. 45493811.40 45493811.40 100.00% Long outstanding
Ningxia Lingwu Baota Dagu Storage and
Transportation Co. Ltd. 27600000.00 27600000.00 100.00% Long outstanding
Foshan Shunde Xingchen Paper Co. Ltd. 26236528.70 26236528.70 100.00% Long outstanding
Zhengzhou Hongyang Paper Products
Co. Ltd. 15293432.93 15293432.93 100.00% Long outstanding
Shandong Bisheng Printing Materials Co.Ltd. 14813369.27 14813369.27 100.00% Long outstanding
Henan Yibang Technology Trading Co.Ltd. 13396601.22 13396601.22 100.00% Long outstanding
92 companies including Shandong Yiming
New Material Technology Corp Co. Ltd. 65951558.22 65951558.22 100.00% Long outstanding
Total 208785301.74 208785301.74
SHANDONG CHENMING PAPER HOLDINGS LIMITED 63
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
4. Accounts receivable (Cont’d)
(1) Disclosure of accounts receivable by category (Cont’d)
Items assessed collectively for impairment:
Accounts receivable with collective provision for bad debts based on receivables from related parties
Unit: RMB
Closing balance
Bad debt Provision
Name Book balance provision percentage (%)
Within 1 year 7158599.98 49344.50 0.69
Total 7158599.98 49344.50
Accounts receivable with collective provision for bad debts based on receivables from non-related party
customers
Unit: RMB
Closing balance
Accounts Bad debt Provision
Type receivable provision percentage (%)
Within 1 year 2148202427.14 14981402.81 0.70
1 to 2 years 92569331.04 12882446.17 13.92
2 to 3 years 6643408.49 1634371.19 24.60
Over 3 years 96745726.14 53284666.58 55.08
Total 2344160892.81 82782886.75 3.53
Accounts receivable with collective provision for bad debts based on factoring receivables
Unit: RMB
Closing balance
Name Book balance Bad debt provision Book balance
Within 1 year 1008798807.91 98200166.66 9.73%
1 to 2 years 148138960.00 23565896.00 15.91%
2 to 3 years 33486237.90 8748229.36 26.12%
Over 3 years 23713845.46 7236795.65 30.52%
Total 1214137851.27 137751087.67 11.35%
64 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
4. Accounts receivable (Cont’d)
(1) Disclosure of accounts receivable by category (Cont’d)
Disclosure by ageing
Unit: RMB
Ageing Closing balance
Within 1 year (including 1 year) 3164159835.03
1 to 2 years 240708291.04
2 to 3 years 40129646.39
Over 3 years 329244873.34
Subtotal 3774242645.80
Bad debt provision 429368620.66
Total 3344874025.14
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 3-4 years 4-5 years and over 5
years.
(2) Provision recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMB
Changes in the period
Opening Recovery Closing
Category balance Provision or reversal Write-off Others balance
Accounts receivable with provision for
bad debts 449301452.02 24272047.17 44204878.53 429368620.66
Total 449301452.02 24272047.17 44204878.53 429368620.66
SHANDONG CHENMING PAPER HOLDINGS LIMITED 65
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
4. Accounts receivable (Cont’d)
(3) Top five accounts receivable based on closing balance of debtors
The total amount of the Company’s top five accounts receivable based on closing balance of debtors for the
period was RMB993954677.24 which accounted for 26.34% of the closing balance of the total accounts
receivable. The closing balance of corresponding bad debt provision amounted to RMB84278220.02.Unit: RMB
Closing balance Percentage to Closing
of accounts closing balance of balance of bad
Name of entity receivable other receivables debt provision
Customer I 362603555.55 9.61 36260355.56
Customer II 216616666.63 5.74 21661666.66
Customer III 162551050.61 4.31 1137857.35
Customer IV 148138960.00 3.92 14813896.00
Customer V 104044444.45 2.76 10404444.45
Total 993954677.24 26.34 84278220.02
5. Accounts receivable financing
Unit: RMB
Item Closing balance Opening balance
Bills receivable 912727537.75 435459341.76
Total 912727537.75 435459341.76
Changes (increase or decrease) during the period and change in fair value of accounts receivable financing
□ Applicable √ Not applicable
If the provision for impairment of accounts receivable financing is made in accordance with the general model of
ECLs please disclose the information about provision for impairment with reference to the way of disclosure of other
receivables:
□ Applicable √ Not applicable
66 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
6. Prepayments
(1) Disclosure of prepayments stated according to ageing analysis
Unit: RMB
Closing balance Opening balance
Ageing Amount Percentage Amount Percentage
Within 1 year 930868811.43 90.42% 803771958.81 90.16%
1 to 2 years 98594004.20 9.58% 87713119.65 9.84%
Total 1029462815.63 100.00% 891485078.46 100.00%
(2) Top five prepayments according to closing balance of prepaid units
The total amount of the Company’s top five prepayments according to closing balance of prepaid units for
the period amounted to RMB414189015.01 which accounted for 40.24% of the closing balance of the total
accounts payable.Unit: RMB
Percentage to
the closing
Closing balance balance of the
Name of entity of prepayments total prepayments
Customer I 135575807.48 13.17%
Customer II 81192939.57 7.89%
Customer III 69416290.74 6.74%
Customer IV 66168628.32 6.43%
Customer V 61835348.90 6.01%
Total 414189015.01 40.24%
SHANDONG CHENMING PAPER HOLDINGS LIMITED 67
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
7. Other receivables
Unit: RMB
Item Closing balance Opening balance
Dividend receivables 3501220.33
Other receivables 2207843920.89 2252864083.00
Total 2211345141.22 2252864083.00
(1) Dividends receivable
1) Classification of dividends receivable
Unit: RMB
Item (or investee) Closing balance Opening balance
China Bohai Bank 3501220.33
Total 3501220.33
(2) Other receivables
1) Other receivables by nature
Unit: RMB
Closing Opening
Nature book balance book balance
Open credit 2705407288.82 2692253554.58
Guarantee deposit 11961247.35 5125826.96
Reserve and borrowings 16402849.49 11980522.29
Others 15821988.16 80560739.46
Total 2749593373.82 2789920643.29
68 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
7. Other receivables (Cont’d)
(2) Other receivables (Cont’d)
2) Particulars of bad debt provision
Unit: RMB
Stage 1 Stage 2 Stage 3
ECLs for Lifetime ECLs Lifetime
the next (not credit- ECLs (credit-
Bad debt provision 12 months impaired) impaired) Total
Balance as at 1 January 2022 65083288.44 471973271.85 537056560.29
Balance as at 1 January 2022 for
the period
Provision during the period 10373371.22 4214604.41 14587975.63
Reversal during the period 7277542.09 2244712.90 9522254.99
Transfer during the period
Write-off during the period 372828.00 372828.00
Other changes
Balance as at 30 June 2022 68179117.57 473570335.36 541749452.93
Disclosed by ageing
Unit: RMB
Ageing Closing balance Opening balance
Within 1 year (including 1 year) 367852664.64 797531460.41
1 to 2 years 1375315037.38 1344225352.93
2 to 3 years 840340601.74 484647394.76
Over 3 years 166085070.06 163516435.19
Total 2749593373.82 2789920643.29
SHANDONG CHENMING PAPER HOLDINGS LIMITED 69
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
7. Other receivables (Cont’d)
(2) Other receivables (Cont’d)
3) Provision recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMB
Changes in the period
Opening Recovery Closing
Category balance Provision or reversal Write-off Others balance
Bad debt provision for other
receivables 537056560.29 14587975.63 9522254.99 372828.00 541749452.93
Total 537056560.29 14587975.63 9522254.99 372828.00 541749452.93
4) Top five other receivables according to closing balance of debtors
The total amount of the Company’s top five other receivables based on closing balance of debtors
for the period amounted to RMB2048197406.04 in total accounting for 74.49% of the total closing
balance of other receivables. The closing balance of the corresponding bad debt provision amounted to
RMB349073379.24 in total.Unit: RMB
Percentage to Closing
closing balance balance
of other of bad debt
Name of entity Nature Closing balance Maturity receivables provision
Customer I Open credit 684000000.00 1-2 years 24.88% 102600000.00
Customer II Open credit 533800000.00 1-2 years and 2-3 19.41% 53380000.00
years
Customer III Open credit 467402316.85 2-3 years 17.00% 121524602.38
Customer IV Open credit 219054783.56 2-3 years 7.97% 21905478.36
Customer V Open credit 143940305.63 Within 1 year and 5.23% 49663298.50
1-2 years
Total 2048197406.04 74.49% 349073379.24
70 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
8. Inventories
Whether the Company needs to comply with the disclosure requirements for real estate industries
No
(1) Categories of inventories
Unit: RMB
Closing balance Opening balance
Impairment Impairment
provision for provision for
inventories or inventories or
performance Carrying performance
Item Book balance costs amount Book balance costs Carrying amount
Raw materials 2230492487.71 22724323.23 2207768164.48 1734387984.21 24660967.32 1709727016.89
Work-in-process products 256923076.05 256923076.05 148489098.95 148489098.95
Goods in stock 1428278746.93 4941686.65 1423337060.28 1910051642.16 4941686.65 1905109955.51
Consumable biological assets 1500540144.47 1500540144.47 1519305850.77 1519305850.77
Total 5416234455.16 27666009.88 5388568445.28 5312234576.09 29602653.97 5282631922.12
(2) Impairment provision for inventories or performance costs
Unit: RMB
Increase during the period Decrease during the period
Reversal or
Item Opening balance Provision Others transfer Others Closing balance
Raw materials 24660967.32 1936644.09 22724323.23
Goods in stock 4941686.65 4941686.65
Total 29602653.97 1936644.09 27666009.88
Basis for recognition of net realisable value: Ageing spare part inventories were provided for full impairment and
household paper with negative gross profit and ageing household paper inventories were provided for partial
impairment.Reversal or transfer of impairment provision for inventories during the period was due to: Transfer of impaired
spare parts sold to impairment provision for inventories during the period.SHANDONG CHENMING PAPER HOLDINGS LIMITED 71
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
9. Non-current assets due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term receivables due within one year 5216044182.27 5216934172.61
Total 5216044182.27 5216934172.61
Notes: * Long-term receivables due within one year amounting to RMB5190934992.72 (amount for the prior year:
RMB5188103553.61) were financial lease receivables;
* Long-term receivables due within one year amounting to RMB25109189.55 (amount for the prior year: RMB28830619.00)
were deposits receivable.
10. Other current assets
Unit: RMB
Item Closing balance Opening balance
Prepaid expenses 560638082.42 195453994.69
Factoring receivables due within one year 319166361.74 303281361.74
Receivables under financial lease due within one year 301173453.77 388156667.35
Prepaid tax 131125749.80 132297740.90
Input tax amount to be deducted 36815815.92 807004437.68
Other payments 66667806.98 77735290.49
Total 1415587270.63 1903929492.85
72 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
11. Long-term receivables
(1) Particulars of long-term receivables
Unit: RMB
Closing balance Opening balance
Carrying Bad debt Carrying Carrying Bad debt Carrying Discount
Item balance provision amount balance provision amount rate range
Finance lease payments 8305095187.79 1277639823.58 7027455364.21 8344107765.88 1211551549.72 7132556216.16 4%-12%
Less: Unrealised financing income 386924782.60 386924782.60 366945292.53 366945292.53
Deposit for equipment lease
financing 339646696.64 339646696.64 272996696.64 272996696.64
Less: Unrealised financing income 36559819.83 36559819.83 32913472.31 32913472.31
Subtotal 8221257282.00 1277639823.58 6943617458.42 8217245697.68 1211551549.72 7005694147.96
Less: lo ng-term receivables due
within one year 6322849988.47 1106805806.20 5216044182.27 6244230790.74 1027296618.13 5216934172.61
Total 1898407293.53 170834017.38 1727573276.15 1973014906.94 184254931.59 1788759975.35
Particulars of bad debt impairment provision
Unit: RMB
Stage 1 Stage 2 Stage 3
ECLs for Lifetime ECLs Lifetime ECLs
the next (not credit- (credit-
Bad debt provision 12 months impaired) impaired) Total
Balance as at 1 January 2022 453675.00 183801256.59 184254931.59
Balance as at 1 January 2022 during the period
Provisions during the period
Other changes -13420914.21 -13420914.21
Balance as at 30 June 2022 453675.00 170380342.38 170834017.38
Note: Other changes represented the transfer of the bad debt provision for long-term financing lease payments
due within one year from long-term receivables to non-current assets due within one year during the period.Changes in carrying book balances with significant changes in loss provision for the period
□ Applicable √ Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITED 73
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
12. Long-term equity investments
Unit: RMB
Change for the period
Investment Adjustment of Closing
gain or loss other Other changes Distribution of balance of
Opening balance Additional Withdrawn recognised under comprehensive in equity cash dividend or Impairment Closing balance impairment
Investee (carrying amount) contribution contribution equity method income interest profit declared provision Others (carrying amount) provision
I. Joint ventures
Shouguang Chenming Huisen New-
style Construction Materials Co.Ltd. 6902869.87 -215525.03 1000000.00 5687344.84
Weifang Sime Darby West Port
Co. Ltd. 77370998.75 -3008474.82 74362523.93
Shouguang Meite Environmental
Technology Co. Ltd. 14616124.71 -2841259.42 11774865.29
Weifang Xingxing United Chemical
Co. Ltd. 84623787.74 7250597.38 91874385.12
Subtotal 183513781.07 1185338.11 1000000.00 183699119.18
II. Associates
Zhuhai Dechen New Third Board
Equity Investment Fund Company
(Limited Partnership) 36967896.31 -2003052.15 34964844.16
Ningbo Kaichen Huamei Equity
Investment Fund Partnership
(Limited Partnership) 197297485.59 -3217.73 197294267.86
Jiangxi Chenming Port Co. Ltd. 554582.45 -61479.47 493102.98
Goldtrust Futures Co. Ltd. 185452462.50 -2317934.80 183134527.70
Chenming (Qingdao) Asset
Management Co. Ltd. 6933668.14 -107419.58 940000.00 5886248.56
Guangdong Nanyue Bank Co. Ltd. 1255867809.29 29924322.20 4743150.54 -55547014.21 83754093.05 1318742360.87
Subtotal 1683073904.28 25431218.47 4743150.54 -55547014.21 940000.00 83754093.05 1740515352.13
Total 1866587685.35 26616556.58 4743150.54 -55547014.21 1940000.00 83754093.05 1924214471.31
Explanation: For other changes of Guangdong Nanyue Bank Co. Ltd. please refer to VII. 46. Retained profit.
74 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
13. Other non-current financial assets
Unit: RMB
Item Closing balance Opening balance
Investment in debt instruments 400000000.00 400000000.00
Investment in equity instruments 119927003.25 119927003.25
Total 519927003.25 519927003.25
14. Investment property
(1) Investment property under the cost method
√ Applicable □ Not applicable
Unit: RMB
Buildings and
Item structures Total
I. Original carrying value
1. Opening balance 7196809856.62 7196809856.62
2. Increase during the period
3. Decrease during the period 34204125.58 34204125.58
(1) Disposal 34204125.58 34204125.58
4. Closing balance 7162605731.04 7162605731.04
II. Accumulated depreciation and accumulated amortisation
1. Opening balance 723271424.71 723271424.71
2. Increase during the period 97852182.59 97852182.59
(1) Provision or amortisation 97852182.59 97852182.59
3. Decrease during the period 16514383.58 16514383.58
(1) Disposal 16514383.58 16514383.58
4. Closing balance 804609223.72 804609223.72
III. Impairment provision
IV. Carrying amount
1. Closing carrying amount 6357996507.32 6357996507.32
2. Opening carrying amount 6473538431.91 6473538431.91
Note: Investment properties under the Company primarily include:
* Pujiang International Finance Plaza located at No. 1098 Dongdaming Road Hongkou District Shanghai is a long-term held office
property of Shanghai Hongtai Real Estate Co. Ltd. a subsidiary of the Company mainly used for external rental or office purposes;
* Jinan Chenming Finance Building (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 mainly used for external rental or office purposes;
* Fatum Apartment (法朶公寓) located at No. 463 Anbo Road No. 22 Lane 467 Anbo Road Yangpu District Shanghai is a
long-term held apartment property of Shanghai Herui Investment Co. Ltd. a subsidiary of the Company 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 Financial Leasing Co. Ltd. a subsidiary of the Company mainly used
for external rental purposes;
* Shenzhen Zhuoyue Baozhong Times Square (深圳卓越寶中時代廣場) located at Room 3201-3210 Building C Zhuoyue Baozhong
Times Square (Phase 2) Xin’an Sub-district Bao’an District Shenzhen is a long-term held office property of Guangzhou Chenming
Financial Leasing Co. Ltd. a subsidiary of the Company mainly used for external rental purposes.SHANDONG CHENMING PAPER HOLDINGS LIMITED 75
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
14. Investment property (Cont’d)
(2) Investment property under the fair value method
□ Applicable √ Not applicable
15. Fixed assets
Unit: RMB
Item Closing balance Opening balance
Fixed assets 34234454423.74 35653492676.15
Disposal of fixed assets 156159044.44
Total 34390613468.18 35653492676.15
(1) Particulars of fixed assets
Unit: RMB
Housing and Electronic
building Machinery and equipment and
Item structure equipment Vehicles others Total
I. Original carrying amount:
1. Opening balance 10673297551.11 43798170683.63 296201440.65 457044021.47 55224713696.86
2. Increase during the period 13020952.59 199719424.32 4390603.45 2238220.64 219369201.00
(1) Acquisition 10631731.64 182387984.58 4390603.45 2238220.64 199648540.31
(2) Transferred from construction in
progress 2389220.95 17331439.74 19720660.69
3. Decrease during the period 285863638.92 976732568.64 13779612.55 59767224.05 1336143044.16
(1) Disposal or retirement 285863638.92 103807390.96 6949954.65 5394800.07 402015784.60
(2) Transfer to construction in progress 872925177.68 6829657.90 54372423.98 934127259.56
4. Closing balance 10400454864.78 43021157539.31 286812431.55 399515018.06 54107939853.70
II. Accumulated depreciation
1. Opening balance 2302130749.09 16572843548.56 190913517.71 300377759.61 19366265574.97
2. Increase during the period 139516595.65 882260896.51 12239386.69 6311342.20 1040328221.05
(1) Provision 139516595.65 882260896.51 12239386.69 6311342.20 1040328221.05
3. Decrease during the period 127122561.19 546256740.86 12042168.41 52642341.34 738063811.80
(1) Disposal or retirement 127122561.19 56609567.13 6206488.67 4937781.19 194876398.18
(2) Transfer to construction in progress 489647173.73 5835679.74 47704560.15 543187413.62
4. Closing balance 2314524783.55 16908847704.21 191110735.99 254046760.47 19668529984.22
III. Impairment provision
1. Opening balance 27808852.79 169697469.90 13889.13 7435233.92 204955445.74
2. Increase during the period
3. Decrease during the period
4. Closing balance 27808852.79 169697469.90 13889.13 7435233.92 204955445.74
IV. Carrying amount
1. Closing carrying amount 8058121228.44 25942612365.20 95687806.43 138033023.67 34234454423.74
2. Opening carrying amount 8343357949.23 27055629665.17 105274033.81 149231027.94 35653492676.15
Other explanation: The fixed assets transferred to construction in progress during the period were mainly the
equipment relocation of Wuhan Chenming.
76 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
15. Fixed assets (Cont’d)
(2) Particulars of temporarily idle fixed assets
Unit: RMB
Original Accumulated Impairment Carrying
Item carrying value depreciation provision amount Remark
Housing and building structure 72585434.37 23096137.95 3093008.64 46396287.78
Machinery and equipment 913076851.75 545378538.71 150706985.59 216991327.45
Electronic equipment and others 754860.94 704151.45 7187.27 43522.22
Total 986417147.06 569178828.11 153807181.50 263431137.45
(3) Particulars of fixed assets without obtaining property right certificates
Unit: RMB
Reason for not yet
obtaining property
Item Carrying amount right certificates
Housing and building structure (Zhanjiang Chenming Pulp & Paper 1053074557.83 Under application
Co. Ltd.)
Housing and building structure (Huanggang Chenming Pulp & Paper 644514086.42 Under application
Co. Ltd.)
Housing and building structure (Shouguang Meilun Paper Co. Ltd.) 470055885.46 Under application
Housing and building structure (Jilin Chenming Paper Co. Ltd.) 380384086.36 Under application
Housing and building structure (Jiangxi Chenming Paper Co. Ltd.) 202694998.89 Under application
Housing and building structure (Shandong Chenming Paper Holdings 109652457.94 Under application
Limited)
(4) Disposal of fixed assets
Unit: RMB
Item Closing balance Opening balance
Housing and building structure 156159044.44
Total 156159044.44
SHANDONG CHENMING PAPER HOLDINGS LIMITED 77
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
16. Construction in progress
Unit: RMB
Item Closing balance Opening balance
Construction in progress 794536482.04 189818292.48
Materials for project 7871202.97 7931233.57
Total 802407685.01 197749526.05
(1) Particulars of construction in progress
Unit: RMB
Closing balance Opening balance
Carrying Impairment Carrying Carrying Impairment Carrying
Item balance provision amount balance provision amount
Wuhan relocation project 331878795.25 331878795.25
Technological transformation project 247802083.62 247802083.62 50534096.04 50534096.04
Fly ash cement ceramsite production
project (Shandong Chenming) 54246139.19 54246139.19 54246139.19 54246139.19
Relocation of Wuhan household
paper project (Phase II) (Meilun) 74442135.96 74442135.96 28705483.25 28705483.25
Integrated forestry pulp and paper
project (Huanggang Pulp & Paper) 27288850.20 27288850.20 16687683.29 16687683.29
Others 80017149.58 21138671.76 58878477.82 60783562.47 21138671.76 39644890.71
Total 815675153.80 21138671.76 794536482.04 210956964.24 21138671.76 189818292.48
(2) Changes in material construction in progress projects for the period
Unit: RMB
Of which:
Transfer to Capitalised Capitalisation
fixed Others Project Interest rate of the
Increase assets deductions accumulated Accumulated amount interest
Opening during during during Closing investment Project capitalised during the amount for Sources
Project name Budget balance the period the period the period balance to budget progress interest period the period of fund
Relocation of Wuhan 109000000.00 28705483.25 45736652.71 74442135.96 68.30% 90.00% Self-owned funds
household paper and borrowings
project (Phase II)
(Meilun)
Integrated forestry pulp 70000000.00 16687683.29 10601166.91 27288850.20 95.00% 99.00% Self-owned funds
and paper project
(Huanggang Pulp
and Paper)
Total 179000000.00 45393166.54 56337819.62 101730986.16
78 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
16. Construction in progress (Cont’d)
(3) Project materials
Unit: RMB
Closing balance Opening balance
Carrying Impairment Carrying Carrying Impairment Carrying
Item balance provision amount balance provision amount
Special materials 7871202.97 7871202.97 7931233.57 7931233.57
Total 7871202.97 7871202.97 7931233.57 7931233.57
17. Bearer biological assets
(1) Bearer biological assets under the cost method
√ Applicable □ Not applicable
Unit: RMB
Item Tea industries Total
I. Original carrying amount:
1. Opening balance
2. Increase during the period 10398523.90 10398523.90
(1) Purchase 10398523.90 10398523.90
3. Decrease during the period
4. Closing balance 10398523.90 10398523.90
II. Accumulated depreciation
III. Impairment provision
IV. Carrying amount
1. Closing carrying amount 10398523.90 10398523.90
2. Opening carrying amount
SHANDONG CHENMING PAPER HOLDINGS LIMITED 79
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
18. Right-of-use assets
Unit: RMB
Land Buildings and
Item use rights structures Total
I. Original carrying value
1. Opening balance 218097859.06 5571378.54 223669237.60
2. Increase during the period
3. Decrease during the period 7855845.81 12385.32 7868231.13
(1) Sublease to finance lease
(2) Transfer or held for sale
(3) Other deductions 7855845.81 12385.32 7868231.13
4. Closing balance 210242013.25 5558993.22 215801006.47
II. Accumulated depreciation
1. Opening balance 25467932.29 772128.87 26240061.16
2. Increase during the period 3777115.05 139064.74 3916179.79
(1) Provision 3777115.05 139064.74 3916179.79
3. Decrease during the period 3185888.24 3185888.24
(1) Sublease to finance lease
(2) Transfer or held for sale
(3) Other deductions 3185888.24 3185888.24
4. Closing balance 26059159.10 911193.61 26970352.71
III. Impairment provision
IV. Carrying amount
1. Closing carrying amount 184182854.15 4647799.61 188830653.76
2. Opening carrying amount 192629926.77 4799249.67 197429176.44
Other explanation: Other deductions during the period were mainly the termination of certain lease contracts of
Zhanjiang Arboriculture and Yangjiang Arboriculture.
80 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
19. Intangible assets
(1) Particulars of intangible assets
Unit: RMB
Certificates of
Item Land use rights Software Patents third party right Total
I. Original carrying value
1. Opening balance 2040126983.35 21946825.64 27358613.05 15908674.87 2105341096.91
2. Increase during the period 305847919.65 107606.09 305955525.74
(1) Acquisition 305847919.65 107606.09 305955525.74
3. Decrease during the period
4. Closing balance 2345974903.00 22054431.73 27358613.05 15908674.87 2411296622.65
II. Accumulated amortisation
1. Opening balance 474004742.76 21814590.97 940153.77 15908674.87 512668162.37
2. Increase during the period 22827920.24 239840.76 5059845.73 28127606.73
(1) Provision 22827920.24 239840.76 5059845.73 28127606.73
3. Decrease during the period
4. Closing balance 496832663.00 22054431.73 5999999.50 15908674.87 540795769.10
III. Impairment provision
IV. Carrying amount
1. Closing carrying amount 1849142240.00 21358613.55 1870500853.55
2. Opening carrying amount 1566122240.59 132234.67 26418459.28 1592672934.54
20. Goodwill
(1) Original carrying amount of goodwill
Unit: RMB
Additions Deductions
Opening during during Closing
Name of investee or event generating goodwill balance the period the period balance
Jilin Chenming Paper Co. Ltd. 14314160.60 14314160.60
Kunshan Tuoan Plastic Products Co. Ltd. 26946905.38 26946905.38
Total 41261065.98 41261065.98
SHANDONG CHENMING PAPER HOLDINGS LIMITED 81
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
20. Goodwill (Cont’d)
(2) Provision for impairment of goodwill
Unit: RMB
Additions Deductions
Opening during during Closing
Name of investee or event generating goodwill balance the period the period balance
Jilin Chenming Paper Co. Ltd. 14314160.60 14314160.60
Total 14314160.60 14314160.60
Note: The Company assessed the recoverable amount of goodwill and determined that the goodwill related to the Company’s plastic
business was not impaired. The Company determines the reporting segments based on the category of the principal activities
and categorises Kunshan Tuoan Plastic Products Co. Ltd. as an asset group. The recoverable amount is determined based on
the current value of the estimated future cash flows. Future cash flows are determined based on the financial budget for 2022 to
2026 as approved by the management and adopts a discount rate of 7.28% the interest rate of the 5-year bonds issued by the
Company in 2018. The cash flows for more than 5 years are calculated based on the growth rate of 5%. Other key assumptions
used in estimating future cash flows include the estimated sales and gross profit based on the performance of such asset group in
the past and the expectation to market development by the management. The management believed that any reasonable change
in the above assumptions will not result in the total carrying value of the asset group Kunshan Tuoan Plastic Products Co. Ltd.exceeding its recoverable amount.
21. Long-term prepaid expenses
Unit: RMB
Increase Amortisation
Opening during during Others Closing
Item balance the period the period deductions balance
Woodland expenses 8387048.73 330907.01 8056141.72
Others 40754724.41 327354.38 1724989.22 39357089.57
Total 49141773.14 327354.38 2055896.23 47413231.29
82 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
22. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before offsetting
Unit: RMB
Closing balance Opening balance
Deductible Deductible
temporary Deferred temporary Deferred
Item differences tax assets differences tax assets
Provision for asset impairment 2455477182.77 563980277.58 2323311804.03 544452793.22
Unrealised profit arising from intra-group
transactions 12642619.20 3160654.80 110621031.60 27655257.90
Outstanding payables 538978299.84 81648513.55 646596211.53 97758308.63
Deferred income 95262644.06 14289396.61 202273476.76 30341021.50
Deductible losses 3035129439.03 496416204.06 2508683883.40 409890367.80
Debt reconstructing 18734830.91 4683707.73 18734830.91 4683707.73
Total 6156225015.81 1164178754.33 5810221238.23 1114781456.78
(2) Deferred income tax liabilities before offsetting
Unit: RMB
Closing balance Opening balance
Taxable Deferred Taxable Deferred
temporary income tax temporary income tax
Item differences liabilities differences liabilities
Asset valuation increment from business
combinations involving entities not under
common control 20900574.28 5225143.57 22697097.44 5674274.36
Debt reconstructing 30145021.52 7536255.38 30145021.52 7536255.38
Total 51045595.80 12761398.95 52842118.96 13210529.74
SHANDONG CHENMING PAPER HOLDINGS LIMITED 83
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
22. Deferred income tax assets/deferred income tax liabilities (Cont’d)
(3) Breakdown of unrecognised deferred income tax assets
Unit: RMB
Item Closing balance Opening balance
Deductible temporary differences 1813440.18 1671856.52
Deductible losses 562971551.27 730122476.10
Total 564784991.45 731794332.62
(4) Expiry of deductible loss of unrecognised deferred income tax assets falls in the periods as follows
Unit: RMB
Year Closing amount Opening amount Remark
2022166532843.73
2023129503478.05129523478.05
202483139688.1990461838.25
2025249241618.81249242062.93
202691781165.8094362253.14
20279305600.42
Total 562971551.27 730122476.10
23. Other non-current assets
Unit: RMB
Closing balance Opening balance
Carrying Impairment Carrying Carrying Impairment Carrying
Item balance provision amount balance provision amount
Land transfer fees 2612250.68 2612250.68 298072250.68 298072250.68
Consideration for acquisition of
companies 127500000.00 127500000.00 127500000.00 127500000.00
Payments for engineering and
equipment 754553629.73 754553629.73 64364443.42 64364443.42
Total 884665880.41 884665880.41 489936694.10 489936694.10
84 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
24. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMB
Item Closing balance Opening balance
Discounted borrowings 16105340000.00 16194790000.00
Credit borrowings 10398695390.93 8847850884.15
Guaranteed borrowings 9290708673.83 7734756765.41
Pledged borrowings 494919879.81 675627536.66
Mortgage borrowings 70000000.00 70000000.00
Total 36359663944.57 33523025186.22
Explanation of the classification of short-term borrowings: * For classification and amount of mortgage
borrowings and mortgage assets please see 1. Monetary funds and 65. Assets with restricted ownerships or
right to use in Note VII. * For classification and amount of pledged borrowings and mortgage assets please see
1. Monetary funds and 65. Assets with restricted ownerships or right to use in Note VII. * Overdue outstanding
short-term borrowings: total outstanding short-term borrowings overdue as at the end of the period amounted to
RMB0.00. * Short-term borrowings included interest payable of RMB20223803.64.
25. Accounts payable
(1) Particulars of accounts payable
Unit: RMB
Item Closing balance Opening balance
Payment for goods 2914753971.61 3074700464.48
Payment for engineering 157856765.00 307195168.83
Payment for equipment 149196495.80 249371719.69
Others 47179699.25 239863992.34
Total 3268986931.66 3871131345.34
SHANDONG CHENMING PAPER HOLDINGS LIMITED 85
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
25. Accounts payable (Cont’d)
(2) Disclosure by ageing
Unit: RMB
Ageing Closing balance Opening balance
Within 1 year (including 1 year) 2758073611.38 3282236529.52
1-2 years 209075559.49 229465372.73
2-3 years 99325225.63 164915158.41
Over 3 years 202512535.16 194514284.68
Total 3268986931.66 3871131345.34
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 3-4 years 4-5 years and over 5 years.
(3) Significant accounts payable aged over 1 year
Unit: RMB
Reason for
outstanding or
Item Closing balance not transfer
Weifang Xingxing United Chemical Co. Ltd. 26905494.34 Not due for payment
Omya Haiming (Nanchang) Chemical Co. Ltd. 16000000.00 Not due for payment
Fujian Jingyun Development Co. Ltd. 13939237.55 Not due for payment
Jiangsu Ronghai International Logistics Co. Ltd. 11159904.40 Not due for payment
Zhejiang Jndia Pipeline Industry Co. Ltd. 10556896.91 Not due for payment
Total 78561533.20
86 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
26. Bills payable
Unit: RMB
Category Closing balance Opening balance
Commercial acceptance bills 2201811787.06 1398922636.21
Bank acceptance bills 1833269491.79 1690589691.19
Total 4035081278.85 3089512327.40
27. Receipts in advance
(1) Particulars of receipts in advance
Unit: RMB
Item Closing balance Opening balance
Prepaid property rents 26735329.19 38274028.20
Total 26735329.19 38274028.20
28. Contract liabilities
Unit: RMB
Item Closing balance Opening balance
Payment for goods in advance 1334133746.95 1382289597.54
Total 1334133746.95 1382289597.54
SHANDONG CHENMING PAPER HOLDINGS LIMITED 87
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
29. Staff remuneration payables
(1) Particulars of staff remuneration payables
Unit: RMB
Additions Deductions
Opening during during Closing
Item balance the period the period balance
I. Short-term remuneration 169854249.70 576356055.71 620357407.71 125852897.70
II. Retirement benefit plan-defined
contribution scheme 44758.31 103813852.43 99083756.91 4774853.83
III. Termination benefits 266898.58 266898.58
Total 169899008.01 680436806.72 719708063.20 130627751.53
(2) Particulars of short-term remuneration
Unit: RMB
Additions Deductions
Opening during during Closing
Item balance the period the period balance
1. Salaries bonuses allowances and
subsidies 160186039.82 460654365.60 509443300.19 111397105.23
2. Staff welfare 22624020.73 22624020.73
3. Social insurance premiums 346948.68 47034549.71 47123115.79 258382.60
Of which: Medical insurance
premium 344352.16 42514565.07 42648640.07 210277.16
Work-related injury
insurance premium 98.44 2814757.90 2766750.90 48105.44
Maternity insurance 2498.08 1705226.74 1707724.82
4. Housing provident funds 5094807.67 36592873.38 35777051.48 5910629.57
5. Union funds and staff education
expenses 1488335.51 7402901.61 3130084.56 5761152.56
6. Short-term paid holiday 2738118.02 2047344.68 2259834.96 2525627.74
Total 169854249.70 576356055.71 620357407.71 125852897.70
88 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
29. Staff remuneration payables (Cont’d)
(3) Defined contribution plan
Unit: RMB
Additions Deductions
Opening during during Closing
Item balance the period the period balance
1. Basic pension insurance 43609.94 99150737.46 94576886.30 4617461.10
2. Unemployment insurance 1148.37 4663114.97 4506870.61 157392.73
Total 44758.31 103813852.43 99083756.91 4774853.83
30. Taxes payable
Unit: RMB
Item Closing balance Opening balance
Value added tax 84803146.51 125522336.03
Enterprise income tax 33920551.32 89597918.41
Property tax 24095481.04 13083934.41
Land use tax 9411113.14 9240921.98
Urban maintenance and construction tax 4251472.39 3748576.77
Resource tax 4000000.00 4500000.00
Environmental protection tax 3906160.20 3959856.45
Stamp duty 3890115.11 3456472.38
Educational surcharges and others 3761962.18 2931140.78
Land appreciation tax 2024028.20 4076160.22
Individual income tax 1998018.59 61378163.24
Total 176062048.68 321495480.67
31. Other payables
Unit: RMB
Item Closing balance Opening balance
Interest payable 65975461.61 55437777.80
Other payables 1478440073.13 1482575808.13
Total 1544415534.74 1538013585.93
Note: Other payables in the above table refer to other payables net of interest payable and dividends payable.SHANDONG CHENMING PAPER HOLDINGS LIMITED 89
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
31. Other payables (Cont’d)
(1) Interest payable
Unit: RMB
Item Closing balance Opening balance
Interest on Corporate Bonds 4268152.77 21132222.24
Interest on medium-term notes 61707308.84 34305555.56
Total 65975461.61 55437777.80
(2) Other payables
1) Other payables by nature
Unit: RMB
Item Closing balance Opening balance
Payments 389694955.91 550223956.81
Deposit 351639653.97 261990665.03
Accrued expenses 386192674.26 341923505.85
The obligation to repurchase shares under the share incentive
scheme 226860000.00 226860000.00
Others 124052788.99 101577680.44
Total 1478440073.13 1482575808.13
2) Significant other payables aged over 1 year
Unit: RMB
Reason for outstanding
Item Closing balance or not transfer
Zhanjiang Runbao Trading Co. Ltd. 160000000.00 Not due for payment
Shanghai Shuilan Property Management Co. Ltd. 136000000.00 Not due for payment
Nine Dragons Dawei Holdings Co. Ltd. 30000000.00 Not due for payment
Weifang Xingxing United Chemical Co. Ltd. 16860000.00 Not due for payment
Wuhan Tianrui Paper Co. Ltd. 7941708.00 Not due for payment
Total 350801708.00
90 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
32. Non-current liabilities due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term payables due within one year 1729422560.82 1543620543.60
Long-term borrowings due within one year 1469717511.11 2583730366.67
Other non-current liabilities due within one year 1004483257.04 1198716666.67
Bonds payable due within one year 350000000.00 1270636933.46
Lease liabilities due within one year 4728345.21 4606717.58
Total 4558351674.18 6601311227.98
33. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMB
Item Closing balance Opening balance
Mortgage borrowings 3571078975.82 3921048883.74
Guaranteed borrowings 2187641710.38 2028979800.00
Credit borrowings 1074231881.94 1910041837.91
Less: Long-term borrowings due within one year 1469717511.11 2583730366.67
Total 5363235057.03 5276340154.98
Other explanation:
* For classification and amount of pledged assets of pledged borrowings please see 1. Monetary funds and
65. Assets with restricted ownerships or right to use in Note VII.
* Long-term borrowings included interest payable of RMB15766964.86.
34. Bonds payable
Unit: RMB
Item Closing balance Opening balance
18 Chenming Bond 01 – Chenming Group 155000000.00
Chenming USD Bonds
Total 155000000.00
SHANDONG CHENMING PAPER HOLDINGS LIMITED 91
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
34. Bonds payable (Cont’d)
(1) Increase/decrease in bonds payable
Unit: RMB
Bond name Par value Date of issue Term Issue amount
18 Chenming Bond 01 – Chenming Group 350000000.00 2 April 2018 5 years 350000000.00
Chenming USD Bonds 1137120600.00 6 August 2019 2.6 years 1125276863.46
Total 1487120600.00 1475276863.46
Unit: RMB
Issuance Amortisation of Repayment Changes in gains
during Interest at premium/ during and losses from
Bond name Opening balance the period par value discount the period foreign exchange Closing balance
18 Chenming Bond 01 – Chenming Group 350000000.00 8627597.22 8627597.22 350000000.00
Chenming USD Bonds 1075636933.46 30847102.56 1019717.03 1109532202.56 4067883.57
Subtotal 1425636933.46 39474699.78 1019717.03 1118159799.78 4067883.57 350000000.00
Less: Bonds payable due within one year 1270636933.46 350000000.00
Total 155000000.00 39474699.78 1019717.03 1118159799.78 4067883.57
35. Lease liabilities
Unit: RMB
Item Closing balance Opening balance
Lease payments payable 77669999.53 81362458.45
Less: Unrecognised financing expenses 18190037.27 19474535.06
Subtotal 59479962.26 61887923.39
Less: Lease liabilities due within one year 4728345.21 4606717.58
Total 54751617.05 57281205.81
92 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
36. Long-term payables
Unit: RMB
Item Closing balance Opening balance
Long-term payables 3383399934.07 2358901022.99
Total 3383399934.07 2358901022.99
(1) Long-term payables by nature
Unit: RMB
Item Closing balance Opening balance
Financial leasing 4426322494.89 3188521566.59
China Development Bank Special Funds 460500000.00 488000000.00
Contributions by other partners 225000000.00 225000000.00
Retention for the financial leasing operations 1000000.00 1000000.00
Subtotal 5172822494.89 3902521566.59
Less: Long-term payables due within one year 1729422560.82 1543620543.60
Total 3383399934.07 2358901022.99
37. Provisions
Unit: RMB
Item Closing balance Opening balance Reason
Pending litigation 325259082.28 325259082.28 Losses from Arjo’s lawsuit
Total 325259082.28 325259082.28
Explanation: In February 2017 Arjowiggins HKK2 Limited (“HKK2 Company”) submitted a H share winding-up petition
against the Company to Hong Kong High Court due to a joint venture dispute which required a compensation for
economic loss of RMB167 million and interest thereon and legal costs of USD3.54 million and arbitration fee of HK$3.3
million and interest thereon to HKK2. The Company made provision of RMB320 million for such pending litigation in
2017. On 5 August 2020 Hong Kong High Court rejected the Company’s appeal. On 14 June 2022 Hong Kong Court
of Final Appeal rejected the Company’s appeal and directed that the sum of HK$389112432.44 together with interest
accrued thereon previously deposited with the Court as a stay of the conditions of the winding up petition filed by HKK2
against the Company pursuant to the order of the Judge of the Court of First Instance Mr. HARRIS Jonathan Russell
shall be paid to HKK2.SHANDONG CHENMING PAPER HOLDINGS LIMITED 93
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
38. Deferred income
Unit: RMB
Opening Increase during Decrease during Closing
Item balance the period the period balance Reason
Government grants 1573681684.25 52355943.37 1521325740.88 Financial provision
Total 1573681684.25 52355943.37 1521325740.88
Items in respect of government grants:
Unit: RMB
Include in other
Opening New grants for income for Closing Asset-related/
Liabilities item balance the period the period Other changes balance income-related
Project fund for National technological 1123125.00 82350.00 1040775.00 Asset-related government
support scheme grants
Infrastructure and environmental 219273225.52 6019465.67 213253759.85 Asset-related government
protection projects grants
Huanggang forestry-pulp paper project 496846742.41 12513108.90 484333633.51 Asset-related government
grants
Zhanjiang forestry-pulp paper project 50806597.19 2047316.46 48759280.73 Asset-related government
grants
Financial subsidies for technological 144150333.36 5767903.86 138382429.50 Asset-related government
transformation project grants
Funding for environmental protection 627047425.68 25296070.94 601751354.74 Asset-related government
grants
Others 34434235.09 629727.54 33804507.55 Asset-related government
grants
Total 1573681684.25 52355943.37 1521325740.88
39. Share capital
Unit: RMB
Increase/decrease during the year (+/-)
Shares
converted from Closing
Opening balance New issue Bonus issue reserves Others Subtotal balance
Total number of shares 2984208200.00 2984208200.00
94 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
40. Other equity instruments
(1) Perpetual Bonds outstanding at the end of the period
Unit: RMB
Dividend Maturity date Condition
Outstanding financial Year of Accounting or interest Issue Amount or renewal for
instruments issuance classification rate price Issue size (RMB) status conversion Conversion
17 Lu Chenming MTN001 2017 Equity 8.97% 100.00 10000000.00 1000000000.00 No defined None Non-convertible
instrument maturity date
Total 10000000.00 1000000000.00
(2) Changes in Perpetual Bonds outstanding at the end of the period
Unit: RMB
Beginning of the period Increase during the period Decrease during the period End of the period
Outstanding financial Carrying Carrying Carrying Carrying
instruments Number amount Number amount Number amount Number amount
17 Lu Chenming MTN001 10000000.00 996000000.00 10000000.00 996000000.00
Total 10000000.00 996000000.00 10000000.00 996000000.00
Changes (increase or decrease) in other equity instruments during the period the reasons for such changes and
the basis for relevant accounting treatment:
The Company issued medium-term notes amounting to RMB1000 million on 12 July 2017 at a coupon rate of
6.80%. The proceeds net of issue costs amounted to RMB996.00 million. The notes are debts without a defined
maturity date and will continue indefinitely until the exercise of the right of redemption by the Company. The
interest rate of the bills is determined by the basic interest rate + the initial interest rate + 300BP. It has the feature
of capped interest rates and the capped interest rate does not exceed the average interest rate level of the same
type of instruments in the same industry in the same period; The Company has the right to defer any payment of
interest. The right of redemption of the notes is vested in the Company so that it is up to the Company to decide
whether to redeem or not; the priority of repayment of the principal and interest of medium-term notes for the
period is the same as other outstanding debt financing instruments of the issuers in the event of winding up
because there is low probability of bankruptcy that the Company will not be liable for contractual obligations to
deliver cash or other financial assets expected.Based on the above the notes do not contain any term giving rise to any contractual obligation to deliver cash
or other financial assets to any other entity or to exchange any financial asset or financial liability with any other
entity under potential adverse circumstances. Consequently they are eligible to be recognised and accounted for
as equity instruments and included under other equity instruments – Perpetual Bonds.SHANDONG CHENMING PAPER HOLDINGS LIMITED 95
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
41. Capital reserves
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance
Capital premium (share premium) 4471891796.08 29676814.69 4501568610.77
Other capital reserves 755366304.33 6850012.78 748516291.55
Total 5227258100.41 29676814.69 6850012.78 5250084902.32
Other explanations including changes (increase or decrease) during the period and reasons for such changes:
* The Company estimated that due to the second batch of 30% restricted shares the capital surplus recognised in
previous years was eliminated in the current period and the final share-based payment was recognised as a reduction
of capital surplus of RMB6850012.78; * a capital increase of Zhanjiang Chenming Pulp & Paper Co. Ltd. a subsidiary
of the Company was contributed on the part of other investors causing a decrease in the Company’s shareholding
without loss of control and an increase of capital reserves of RMB29676814.69; * in 2021 Guangdong Nanyue
Bank Co. Ltd. an associate of the Company introduced investment on the part of other investors which diluted the
Company’s equity interest and as the 2021 annual report of Guangdong Nanyue Bank Co. Ltd. was disclosed later
than the Company the Company reduced the capital reserves by RMB55547014.21 based on the audited amount in
the 2021 annual report of Guangdong Nanyue Bank Co. Ltd.
42. Treasury shares
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance
Share incentive 226860000.00 226860000.00
Total 226860000.00 226860000.00
96 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
43. Other comprehensive income
Unit: RMB
During the period
Less: Less:
Transferred Transferred
from other from other
comprehensive comprehensive
income in prior income in prior
Incurred periods to periods to Attributable to Attributable
before income profit or loss retained parent to minority
tax for during earnings during Less: Income company shareholders
Item Opening balance the period the period the period tax expenses after tax after tax Closing balance
I. Other comprehensive income that cannot be
reclassified to profit or loss in subsequent periods
II. Other comprehensive income that will be reclassified -445582729.36 -150398727.06 -150576277.41 177550.35 -596159006.77
to profit and loss in subsequent periods
Of which: O ther comprehensive income that may be
reclassified to profit or loss under the
equity method -10512532.56 4743150.54 4565600.19 177550.35 -5946932.37
Translation differences of financial statements
denominated in foreign currency -435070196.80 -155141877.60 -155141877.60 -590212074.40
Total other comprehensive income -445582729.36 -150398727.06 -150576277.41 177550.35 -596159006.77
44. General risk reserves
Unit: RMB
Opening Increase during Decrease during Closing
Item balance the period the period balance
General risk reserves 76825918.60 76825918.60
Total 76825918.60 76825918.60
45. Surplus reserves
Unit: RMB
Opening Increase during Decrease during Closing
Item balance the period the period balance
Statutory surplus reserves 1212009109.97 1212009109.97
Total 1212009109.97 1212009109.97
SHANDONG CHENMING PAPER HOLDINGS LIMITED 97
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
46. Retained profit
Unit: RMB
Item The period The prior period
Retained profit as at the end of the prior year before adjustment 9210372613.81 9999764028.74
Adjustment to opening balance of retained earnings (increase + decrease -) 83754093.05 -1887031763.57
Opening balance of retained profit after adjustment 9294126706.86 8112732265.17
Plus: Net profit for the period attributable to shareholders of the parent
company 230141463.76 2065513108.71
Less: Transfer of statutory surplus reserves
Transfer of discretionary surplus reserves
Transfer of general risk reserves 2703274.40
Ordinary dividend payable 552078517.01
Perpetual Bonds interest payable 89700000.00
Preference shares interest payable 323390968.66
Retained profit as at the end of the period 9524268170.62 9210372613.81
Breakdown of adjustments to opening balance of retained earnings:
The Company implemented the new financial instrument standard earlier than the Company’s associate Guangdong
Nanyue Bank Co. Ltd. but during the period in which the associate had yet to implement the new standard the
Company did not adjust the financial statements of associates or joint ventures in accordance with the new standard
when it adopted the equity method of accounting due to objective limitations. The associate adjusted the opening
balances of the financial statements in accordance with the convergence requirements of the new standard since
1 January 2021 and pursuant to the Fifth Batch of Questions and Answers on the Implementation of Accounting
Standards for Enterprises for 2021 – (I) Questions and Answers on the Implementation of Long-term Equity Investment
Standards of the Accounting Department of the Ministry of Finance the Company should adjust the opening balances
of its 2021 financial statements accordingly when adopting the equity method of accounting. As the Company’s 2021
annual report was disclosed earlier than that of Guangdong Nanyue Bank Co. Ltd. the Company adjusted the opening
balance of retained earnings based on the unaudited data of Guangdong Nanyue Bank Co. Ltd. in its 2021 annual
report and adjust the opening balance for the period based on the difference in the opening net assets after Guangdong
Nanyue Bank Co. Ltd. had issued the official auditors’ report.
98 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
47. Revenue and operating costs
Unit: RMB
Item Amount for the period Amount for the prior period
Revenue Costs Revenue Costs
Principal activities 16170535559.24 13622445474.80 16368937751.59 11107531244.57
Other activities 505892806.59 432503804.40 803878602.94 753529733.35
Total 16676428365.83 14054949279.20 17172816354.53 11861060977.92
Information related to revenue:
Unit: RMB
Machine-made Hotel and
Category of contract paper Financial services property rentals Others Total
Type of goods 16091824702.93 125629976.14 108076112.11 350897574.65 16676428365.83
Including:
Machine-made paper 14440493130.31 14440493130.31
Pulp 239810290.10 239810290.10
Financial leasing 84916541.08 84916541.08
Electricity and steam 195203273.89 195203273.89
Construction materials 128912692.24 128912692.24
Paper chemicals 70973693.13 70973693.13
Hotel and property rentals 104267757.09 104267757.09
Others 1145344315.50 40713435.06 3808355.02 221984882.41 1411850987.99
By geographical area 16091824702.93 125629976.14 108076112.11 350897574.65 16676428365.83
Including:
Mainland China 12207917878.75 125629976.14 108076112.11 350897574.65 12792521541.65
Other countries and regions 3883906824.18 3883906824.18
By the timing of delivery 16091824702.93 125629976.14 108076112.11 350897574.65 16676428365.83
Including:
Goods (at a point in time) 15885198027.99 5870305.78 350897574.65 16241965908.42
Services (within a certain period) 195203273.89 125481352.28 24330678.09 345015304.26
Leasing income 11423401.05 148623.86 77875128.24 89447153.15
SHANDONG CHENMING PAPER HOLDINGS LIMITED 99
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
48. Taxes and surcharges
Unit: RMB
Amount for Amount for
Item the period the prior period
Property tax 41715466.80 37450589.35
Stamp duty 24637949.80 18130742.66
Urban maintenance and construction tax 17218814.49 27858367.33
Educational surcharges and local education surcharge 11612306.79 19989461.94
Environmental protection Tax 6793722.79 10751303.03
Water resource tax 5678351.10 15486250.50
Land use tax 4547575.80 24349448.93
Vehicle and vessel tax 1998845.57 85669.29
Cultural undertaking development tax 1528301.88
Water conservation funds 350123.53 516687.03
Land appreciation tax 27432.00 9175506.88
Total 116108890.55 163794026.94
49. Selling and distribution expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Wages and surcharges 72692606.41 70949714.14
Business hospitality expenses 22786567.81 25673227.63
Travel expenses 8535839.64 9694437.71
Selling commissions 6883405.06 7029390.00
Depreciation expenses 5541590.42 5712298.99
Rental expenses 2478458.25 5295433.81
Office expenses 1108123.52 1299490.73
Warehouse expenses 503789.82 252549.57
Others 17525382.72 21716196.16
Total 138055763.65 147622738.74
100 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
50. General and administrative expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Wages and surcharges 113861878.26 169081336.44
Production interruption loss 69598970.31 48338437.27
Depreciation expenses 47710740.44 51326963.11
Hospitality expenses 38886989.85 27155232.97
Welfare expenses 35507840.57 34628571.86
Amortisation of intangible assets 25828580.24 25323097.56
Repair fees 9615210.77 13610506.54
Insurance premium 9449472.17 14955132.42
Others 72306683.24 107629277.32
Total 422766365.85 492048555.49
51. R&D expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Consumption of raw materials 264700948.65 366439019.85
Utilities 105357973.18 86755891.97
Consumption of semi-finished products 98638775.67 66656701.37
Consumption of auxiliary materials 89924013.81 100156151.93
Wages and surcharges 76633329.10 83767837.01
Depreciation expenses 23781607.53 27969754.45
Insurance premium 15220882.81 15104675.76
Welfare expenses 4712671.38 5060144.67
Housing provident funds 2698047.92 2786507.56
Union funds 625136.54 815212.59
Installation expenses 513779.36 372517.00
Other expenses 707394.98 1136940.41
Total 683514560.93 757021354.57
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VII. Notes to items of the consolidated financial statements (Cont’d)
52. Finance expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Interest expenses 991475816.56 1399107777.11
Less: capitalised interest amount
Interest income 150582370.85 221507514.16
Foreign exchange gains and losses -21746160.65 -35419357.17
Bank charges and others 201887319.60 176761250.38
Total 1021034604.66 1318942156.16
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 52355943.37 52913447.76
Government grants – directly included in profit or loss 96908668.31 70185300.82
Total 149264611.68 123098748.58
54. Investment income
Unit: RMB
Amount for Amount for
Item the period the prior period
Income from long-term equity investments accounted for using
the equity method 26616556.58 82955115.52
Investment income on holding financial assets held for trading and
other non-current financial assets 6301220.33 15000000.00
Investment gain on disposal of long-term equity investments 6812.52 676586.27
Gain on debt restructuring -754806.87
Investment gain on derecognition of financial assets -56307959.46
Total -24138176.90 98631701.79
102 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
55. 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 -62122863.58 -89980570.69
Of which: Gain on change in fair value from derivative financial instruments
Gain on change in fair value of consumable biological assets measured
at fair value 3309448.09 -9139121.20
Total -58813415.49 -99119691.89
56. Credit impairment loss
Unit: RMB
Amount for Amount for
Item the period the prior period
Bad debt loss of accounts receivable -25363341.17 -279757983.46
Total -25363341.17 -279757983.46
57. Loss on impairment of assets
Unit: RMB
Amount for Amount for
Item the period the prior period
Loss on inventory impairment and loss on impairment of costs of
contract performance 1936644.09
Total 1936644.09
58. Asset disposal income
Unit: RMB
Amount for Amount for
Source of asset disposal income the period the prior period
Gain on disposal of non-current assets 1605314.49 6731452.88
Gain on disposal of intangible assets 42188905.24
Total 1605314.49 48920358.12
SHANDONG CHENMING PAPER HOLDINGS LIMITED 103
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VII. Notes to items of the consolidated financial statements (Cont’d)
59. Non-operating income
Unit: RMB
Amount included in
extraordinary gains
Amount for Amount for or losses for
Item the period the prior period the period
Fine income 215595.32 215595.32
Gain on damage and retirement of non-current
assets 23874.29 1255005.76 23874.29
Exempted debts 11345.80 4275104.92 11345.80
Government grants 2045973.21
Others 842613.92 11145199.75 842613.92
Total 1093429.33 18721283.64 1093429.33
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
Loss on damage and retirement of non-current
assets 5557464.33 2177197.00 5557464.33
Default penalty 4626610.27 – 4626610.27
Donation 5000.00 80000.00 5000.00
Others 13665.00 75333.96 13665.00
Total 10202739.60 2332530.96 10202739.60
61. Income tax expenses
(1) Particulars of income tax expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Income tax expenses for the period 51225155.03 283824021.53
Deferred income tax expenses -49846428.34 -9766242.33
Total 1378726.69 274057779.20
104 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
61. Income tax expenses (Cont’d)
(2) Reconciliation between accounting profit and income tax expenses
Unit: RMB
Amount for
Item the period
Total profit 275381227.42
Income tax expenses calculated at statutory/applicable tax rates 41307184.11
Effect of different tax rates applicable to subsidiaries 57264569.19
Effect of adjustments for income tax for prior periods -15518260.26
Profit and loss of joint ventures and associates accounted for using the equity method -3992483.50
Effect of income not subject to tax -25462500.00
Non-deductible costs expenses and losses 4592825.70
Effect of utilisation of previously unrecognised deductible loss on deferred income
tax assets -12954253.46
Effect of current unrecognised deductible temporary difference or deductible loss
arising from deferred tax income assets 24390555.43
Tax effect of R & D fee deduction -68248910.52
Income tax expense 1378726.69
62. Items on statements of cash flow
(1) Cash received relating to other operating activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Interest income 147503480.13 208877644.50
Net proceedings from the financial leasing business 125816344.91 616398096.59
Government support fund 94023387.98 111501713.53
Open credit and other income 466613154.78 99723258.86
Total 833956367.80 1036500713.48
(2) Cash paid relating to other operating activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Expenses and open credit 998576421.97 999490395.09
Total 998576421.97 999490395.09
SHANDONG CHENMING PAPER HOLDINGS LIMITED 105
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VII. Notes to items of the consolidated financial statements (Cont’d)
62. Items on statements of cash flow (Cont’d)
(3) Cash received relating to other investing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Receipt of consideration for equity transfer 251414794.52
Total 251414794.52
(4) Cash received relating to other financing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Equipment financing 2068410644.82 574665920.24
Recovery of deposit for financial leasing 10500000.00
Decrease in restricted bank deposits during the period 1526876431.27
Resale of medium-term notes 400000000.00
Contribution from government platforms to GDR Fund and
Chendu Fund 232790000.00
Total 2078910644.82 2734332351.51
(5) Cash paid relating to other financing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Purchase or repayment of short-term commercial paper and MTNs 200000000.00 2145000000.00
Repayment of equipment sale and leaseback 961427794.77 996692287.81
Redemption of Preference shares 2250000000.00
Payment of Preference shares dividend 98100000.00
Payment for equity in China Development Bank funds 27500000.00 29500000.00
Repayment of USD Bonds 1078685100.00
Increase of restricted bank deposits 992161166.63
Payment for finance lease deposits 51000000.00
Total 3310774061.40 5519292287.81
106 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
63. Supplementary information on cash flow statement
(1) Supplementary information on cash flow statement
Unit: RMB
Amount for Amount for
Supplementary information the period the prior period
1. Reconciliation of net profit as cash flows from operating activities:
Net profit 274002500.73 2066430651.33
Plus: Provision for impairment of assets 23426697.08 279757983.46
Depreciation of fixed assets depletion of oil and gas
assets and depreciation of bearer biological assets and
investment property 1138180403.64 1164573912.37
Depreciation of right-of-use assets 3916179.79 3959539.44
Amortisation of intangible assets 28127606.73 27645672.10
Amortisation of long-term prepaid expenses 2055896.23 1793632.06
Loss on disposal of fixed assets intangible assets and
other long-term assets (“-” denotes gain) -1605314.49 -47998166.88
Loss on retirement of fixed assets (“-” denotes gain) 5533590.04
Loss on changes in fair value (“-” denotes gain) 58813415.49 99119691.89
Finance expenses (“-” denotes gain) 991475816.56 1399107777.11
Investment loss (“-” denotes gain) 24138176.90 -98631701.79
Decrease in deferred income tax assets
(“-” denotes increase) -49397297.55 9766242.33
Increase in deferred income tax liabilities
(“-” denotes decrease) -449130.79 -449130.80
Decrease in inventories (“-” denotes increase) -105936523.16 -1766629170.47
Decrease in operating receivables (“-” denotes increase) -1497590484.79 1272002689.91
Increase in operating payables (“-” denotes decrease) 103572677.04 336735899.88
Others
Net cash flows from operating activities 998264209.45 4747185521.94
2. Major investing and financing activities not involving cash
settlements:
3. Net change in cash and cash equivalents:
Closing balance of cash 3142606091.96 4625780176.57
Less: Opening balance of cash 3168915847.02 4389169963.79
Plus: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -26309755.06 236610212.78
SHANDONG CHENMING PAPER HOLDINGS LIMITED 107
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VII. Notes to items of the consolidated financial statements (Cont’d)
63. Supplementary information on cash flow statement (Cont’d)
(2) Cash and cash equivalents composition
Unit: RMB
Item Closing balance Opening balance
I. Cash 3142606091.96 4625780176.57
Of which: Treasury cash 3313516.53 2903620.96
Bank deposit that can be used for payment at any time 3139292575.43 4622876555.61
II. Cash equivalents
Of which: Bond investment with maturity within 3 months
III. Balance of cash and cash equivalent at end of period 3142606091.96 4625780176.57
64. Notes to items of statements of changes in owners’ equity
The Company implemented the new financial instrument standard earlier than the Company’s associate Guangdong
Nanyue Bank Co. Ltd. but during the period in which the associate had yet to implement the new standard the
Company did not adjust the financial statements of associates or joint ventures in accordance with the new standard
when it adopted the equity method of accounting due to objective limitations. The associate adjusted the opening
balances of the financial statements in accordance with the convergence requirements of the new standard since
1 January 2021 and pursuant to the Fifth Batch of Questions and Answers on the Implementation of Accounting
Standards for Enterprises for 2021 – (I) Questions and Answers on the Implementation of Long-term Equity Investment
Standards of the Accounting Department of the Ministry of Finance the Company should adjust the opening balances
of its 2021 financial statements accordingly when adopting the equity method of accounting. As the Company’s
2021 annual report was disclosed earlier than that of Guangdong Nanyue Bank Co. Ltd. the Company adjusted the
opening balance of retained earnings based on the unaudited data of Guangdong Nanyue Bank Co. Ltd. in its 2021
annual report and adjusted the opening balance for the period based on the difference in the opening net assets after
Guangdong Nanyue Bank Co. Ltd. had issued the official auditors’ report.
65. Assets with restricted ownerships or right to use
Unit: RMB
Closing
Item carrying amount Reasons for such restriction
Monetary funds 11749299176.80 As deposits for bank acceptance bills and letters of credit
deposit reserves etc. (Note VII. 1)
Accounts receivable financing 10925711.40 As collateral for letters of guarantee and letters of credit (Note
VII. 5)
Accounts receivable 250000000.00 As collateral for borrowings (Note VII. 4)
Fixed assets 12634559687.51 As collateral for bank borrowings and long-term payables
(Note VII. 15)
Intangible assets 1184321483.40 As collateral for bank borrowings and long-term payables
(Note VII. 19)
Investment property 4964639998.32 As collateral for bank borrowings (Note VII. 14)
Total 30793746057.43
108 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
66. Foreign currency items
(1) Foreign currency items
Unit: RMB
Closing foreign Closing balance
Item currency balance Exchange rate in RMB
Monetary funds
Of which: USD 60330919.53 6.7114 404904933.33
EUR 7227874.60 7.0084 50655836.35
HKD 191298.30 0.8552 163598.31
GBP 8886.64 8.1365 72306.15
JPY 1197.00 0.0491 58.77
Accounts receivables
Of which: USD 47107957.83 6.7114 316160348.18
EUR 11881530.35 7.0084 83270517.30
JPY 146734998.00 0.0491 7204688.40
Other receivables
Of which: USD 2144521.60 6.7114 14392742.27
EUR 45880.07 7.0084 321545.88
Accounts payable
Of which: USD 54043508.06 6.7114 362707599.99
EUR 398021.67 7.0084 2789495.07
JPY 187909.00 0.0491 9226.33
Other payables
Of which: USD 489888.04 6.7114 3287834.59
EUR 1695629.89 7.0084 11883652.52
JPY 8800.00 0.0491 432.08
Short-term borrowings
Of which: USD 142725968.19 6.7114 957891062.91
Non-current liabilities due within one year
Of which: USD 119000000.00 6.7114 798656600.00
(2) Explanation on overseas operating entities (including major overseas operating entities) which shall disclose
their overseas principal places of business functional currency and basis. Reasons shall be disclosed if there
is any change in the functional currency.□ Applicable √ Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITED 109
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VII. Notes to items of the consolidated financial statements (Cont’d)
67. Government grants
(1) General information of government grants
Unit: RMB
Amount included
in the current
Type Amount Reporting item profit and loss
Project funding for National Key Technology 1040775.00 Deferred income 82350.00
Research and Development Program
Infrastructure and environmental protection 213253759.85 Deferred income 6019465.67
projects
Huanggang forestry-pulp-paper project 484333633.51 Deferred income 12513108.90
Zhanjiang forestry-pulp-paper project 48759280.73 Deferred income 2047316.46
Financial subsidies for technological transformation 138382429.50 Deferred income 5767903.86
project
Funding for environmental protection 601751354.74 Deferred income 25296070.94
Others 33804507.55 Deferred income 629727.54
Enterprise reform and development subsidies 35694431.07 Other income 35694431.07
Financial subsidies for technological transformation 39864749.67 Other income 39864749.67
project
Refund of VAT upon assessment 2882861.67 Other income 2882861.67
Employment stabilisation subsidies 1139637.40 Other income 1139637.40
Subsidies for social insurance 320.34 Other income 320.34
Refund of tax 3786175.32 Other income 3786175.32
Government rewards 1070000.00 Other income 1070000.00
Subsidies for the pandemic 1500.00 Other income 1500.00
Subsidies for forestation 1651396.64 Other income 1651396.64
Others 10817596.20 Other income 10817596.20
Total 1618234409.19 149264611.68
110 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VIII. Change in scope of consolidation
During the period the scope of consolidation had 1 newly established subsidiary namely Jiangxi Chenming Tea Co. Ltd. (江
西晨鳴茶業有限公司) and 1 deregistered subsidiary namely Qingdao Chenming Pulp & Paper Electronic Commodity Spot
Trading Co. Ltd.IX. Interest in other entities
1. Interest in subsidiaries
(1) Constitution of the Group
Shareholding
Principle place Place of Nature of Type of legal Issued debt Issued share
Name of subsidiary of business incorporation business person Direct Indirect Acquisition securities capital
Zhanjiang Chenming Pulp & Zhanjiang Zhanjiang Paper making For-profit 91.77% Establishment 0
Paper Co. Ltd. corporation
Shouguang Meilun Paper Shouguang Shouguang Paper making For-profit 62.4864% Establishment 0 0
Co. Ltd. corporation
Jilin Chenming Paper Co. Jilin Jilin Paper making For-profit 100.00% Acquisition 0 0
Ltd. corporation
Huanggang Chenming Pulp Huanggang Huanggang Paper making For-profit 70.15% 29.85% Establishment 0 0
& Paper Co. Ltd. corporation
Shandong Chenming Paper Shouguang Shouguang Sales of paper For-profit 100.00% Establishment 0 0
Sales Co. Ltd. product corporation
Shouguang Chenming Shouguang Shouguang Trading For-profit 100.00% Establishment 0 0
Import and Export Trade corporation
Co. Ltd
Jiangxi Chenming Supply Jiangxi Jiangxi Trading For-profit 70.00% Establishment 0 0
Chain Management Co. corporation
Ltd
Chenming GmbH Germany Germany Trading For-profit 100.00% Establishment 0 0
corporation
Shouguang Chenming Shouguang Shouguang Machinery For-profit 100.00% Establishment 0 0
Papermaking Machine manufacturing corporation
Co. Ltd.Shouguang Hongxin Printing Shouguang Shouguang Printing and For-profit 100.00% Acquisition 0 0
and Packaging Co. Ltd packaging corporation
Shouguang Chenming Shouguang Shouguang Logistics For-profit 100.00% Establishment 0 0
Modern Logistic Co. Ltd. corporation
Jinan Chenming Paper Sales Jinan Jinan Investment For-profit 100.00% Establishment 0 0
Co. Ltd. management/ corporation
Paper product
trading
Huanggang Chenming Huanggang Huanggang Arboriculture For-profit 100.00% Establishment 0 0
Arboriculture corporation
Development Co. Ltd.Chenming Arboriculture Co. Wuhan Wuhan Arboriculture For-profit 100.00% Establishment 0 0
Ltd. corporation
Chenming Paper Korea Co. Korea Korea Paper product For-profit 100.00% Establishment 0 0
Ltd. trading corporation
Shouguang Shun Da Shouguang Shouguang Customs For-profit 100.00% Establishment 0 0
Customs Declaration Co. declaration corporation
Ltd.Shanghai Chenming Industry Shanghai Shanghai Property For-profit 100.00% Establishment 0 0
Co. Ltd. investment and corporation
management
SHANDONG CHENMING PAPER HOLDINGS LIMITED 111
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IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(1) Constitution of the Group (Cont’d)
Shareholding
Principle place Place of Nature of Type of legal Issued debt Issued share
Name of subsidiary of business incorporation business person Direct Indirect Acquisition securities capital
Shanghai Chenyin Trading Shanghai Shanghai Trading For-profit 51.00% Establishment 0 0
Co. Ltd. corporation
Shandong Chenming Group Jinan Jinan Finance For-profit 80.00% 20.00% Establishment 0 0
Finance Co. Ltd. corporation
Jiangxi Chenming Paper Nanchang Nanchang Paper making For-profit 100.00% Establishment 0 0
Co. Ltd. corporation
Nanchang Shengheng Nanchang Nanchang Trading For-profit 100.00% Establishment 0 0
Trading Co. Ltd. corporation
Nanchang Kunheng Trading Nanchang Nanchang Trading For-profit 100.00% Establishment 0 0
Co. Ltd. corporation
Shouguang Chenming Art Shouguang Shouguang Paper making For-profit 75.00% Establishment 0 0
Paper Co. Ltd. corporation
Hailaer Chenming Paper Hailaer Hailaer Paper making For-profit 75.00% Establishment 0 0
Co. Ltd. corporation
Shandong Grand View Hotel Shouguang Shouguang Catering For-profit 70.00% Establishment 0 0
Co. Ltd. corporation
Wuhan Chenming Hanyang Wuhan Wuhan Paper making For-profit 65.21% 34.64% Establishment 0 0
Paper Holdings Co. Ltd. corporation
Shanghai Chenming Jinan Jinan Financial leasing For-profit 100.00% Establishment 0 0
Financial Leasing Co. corporation
Ltd.Qingdao Chenming Nonghai Qingdao Qingdao Financial leasing For-profit 100.00% Establishment 0 0
Financial Leasing Co. Ltd corporation
Chenming (HK) Limited Hong Kong Hong Kong Paper product For-profit 100.00% Establishment 0 0
trading corporation
Shouguang Hongyi Shouguang Shouguang Packaging For-profit 100.00% Merger and 0 0
Decorative Packaging corporation acquisition
Co. Ltd.Shouguang Xinyuan Coal Shouguang Shouguang Coal For-profit 100.00% Merger and 0 0
Co. Ltd. corporation acquisition
Shouguang City Run Sheng Shouguang Shouguang Purchase and sale For-profit 100.00% Merger and 0 0
Wasted Paper Recycle of waste corporation acquisition
Co. Ltd.Shouguang Wei Yuan Shouguang Shouguang Logistics For-profit 100.00% Merger and 0 0
Logistics Company corporation acquisition
Limited
Wuhan Chenming Qianneng Wuhan Wuhan Thermal power For-profit 51.00% Establishment 0 0
Electric Power Co. Ltd corporation
Shandong Chenming Jinan Jinan Investment For-profit 100.00% Establishment 0 0
Investment Limited corporation
Japan Chenming Paper Co. Japan Japan Paper product For-profit 100.00% Establishment 0 0
Ltd. trading corporation
Chenming International Co. the United States the United States Paper product For-profit 100.00% Establishment 0 0
Ltd. trading corporation
Zhanjiang Chenming Zhanjiang Zhanjiang Forestry For-profit 100.00% Establishment 0 0
Arboriculture corporation
Development Co. Ltd.Yangjiang Chenming Yangjiang Yangjiang Arboriculture For-profit 100.00% Establishment 0 0
Arboriculture corporation
Development Co. Ltd.
112 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(1) Constitution of the Group (Cont’d)
Shareholding
Principle place Place of Nature of Type of legal Issued debt Issued share
Name of subsidiary of business incorporation business person Direct Indirect Acquisition securities capital
Nanchang Chenming Nanchang Nanchang Arboriculture For-profit 100.00% Establishment 0 0
Arboriculture corporation
Development Co. Ltd.Guangdong Huirui Zhanjiang Zhanjiang Investment For-profit 100.00% Establishment 0 0
Investment Co. Ltd corporation
Jilin Chenming New-style Jilin Jilin Wall materials For-profit 100.00% Establishment 0 0
Wall Materials Co. Ltd corporation
Jilin Chenming Logistics Jilin Jilin Logistics For-profit 100.00% Establishment 0 0
Co. Ltd. corporation
Jiangxi Chenming Logistics Nanchang Nanchang Logistics For-profit 100.00% Establishment 0 0
Co. Ltd. corporation
Fuyu Chenming Paper Co. Fuyu Fuyu Paper making For-profit 100.00% Establishment 0 0
Ltd. corporation
Zhanjiang Meilun Pulp & Zhanjiang Zhanjiang Paper making For-profit 100.00% Establishment 0 0
Paper Co. Ltd. corporation
Shandong Chenming Shanghai Shanghai Financial leasing For-profit 100.00% Establishment 0 0
Financial Leasing Co. corporation
Ltd.Wuhan Junheng Property Wuhan Wuhan Property For-profit 100.00% Merger and 0 0
Management Co. Ltd. corporation acquisition
Guangzhou Chenming Guangzhou Guangzhou Financial leasing For-profit 100.00% Establishment 0 0
Financial Leasing Co. corporation
Ltd.Shanghai Hongtai Real Shanghai Shanghai Real estate For-profit 100.00% Merger and 0 0
Estate Co. Ltd. corporation acquisition
Shanghai Hongtai Property Shanghai Shanghai Property For-profit 100.00% Merger and 0 0
Management Co. Ltd. corporation acquisition
Shandong Chenming Jinan Jinan Business factoring For-profit 100.00% Establishment 0 0
Commercial Factoring corporation
Co. Ltd.Guangzhou Chenming Guangzhou Guangzhou Business factoring For-profit 51.00% Establishment 0 0
Commercial Factoring corporation
Co. Ltd
Jiangxi Chenming Tea Co. Jiangxi Jiangxi Tea For-profit 100.00% Establishment 0 0
Ltd. corporation
Zhanjiang Chenming Port Zhanjiang Zhanjiang Port For-profit 100.00% Establishment 0 0
Co. Ltd. corporation
Beijing Chenming Financial Beijing Beijing Financial leasing For-profit 100.00% Establishment 0 0
Leasing Co. Ltd. corporation
Chenming Paper USA Inc. the United States the United States Paper product For-profit 100.00% Establishment 0 0
trading corporation
Guangdong Chenming Guangdong Guangdong Panels For-profit 100.00% Establishment 0 0
Panels Co. Ltd. corporation
Shanghai Chenming Pulp & Shanghai Shanghai Paper product For-profit 100.00% Establishment 0 0
Paper Sales Co. Ltd. trading corporation
Meilun (BVI) Limited Cayman Cayman Commerce For-profit 100.00% Establishment 0 0
corporation
Weifang Chenming Growth Weifang Weifang Fund For-profit 79.00% Establishment 0 0
Driver Replacement corporation
Equity Investment Fund
Partnership (Limited
Partnership)
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IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(1) Constitution of the Group (Cont’d)
Shareholding
Principle place Place of Nature of Type of legal Issued debt Issued share
Name of subsidiary of business incorporation business person Direct Indirect Acquisition securities capital
Nanjing Chenming Culture Nanjing Nanjing Marketing For-profit 100.00% Establishment 0 0
Communication Co. Ltd. corporation
Chenming (Overseas) Co. Hong Kong Hong Kong Paper product For-profit 100.00% Establishment 0 0
Ltd. trading corporation
Chenming (Singapore) Co. Singapore Singapore Paper product For-profit 100.00% Establishment 0 0
Ltd. trading corporation
Kunshan Tuoan Plastic Kunshan Kunshan Rubber and For-profit 100.00% Merger and 0 0
Products Co. Ltd. plastic corporation acquisition
Hubei Changjiang Huanggang Huanggang Fund For-profit 59.97% Establishment 0 0
Chenming Huanggang corporation
Equity Investment Fund
Partnership (Limited
Partnership)
Hainan Chenming Haikou Haikou Wholesale and For-profit 100.00% Establishment 0 0
Technology Co. Ltd. retail corporation
Qingdao Chenming Import Qingdao Qingdao Trading For-profit 100.00% Establishment 0 0
and Export Trade Co. corporation
Ltd.Shanghai Herui Investment Shanghai Shanghai Business services For-profit 100.00% Merger and 0 0
Co. Ltd. corporation acquisition
Hubei Huanggang Chenming Huanggang Huanggang Capital market For-profit 60.00% Establishment 0 0
Equity Investment Fund services corporation
Management Co. Ltd.Shandong Dingkun Asset Shouguang Shouguang Business services For-profit 99.90% Establishment 0 0
Management Partnership corporation
(Limited Partnership)
Huanggang Chenming Huanggang Huanggang Paper making For-profit 100.00% Establishment 0 0
Paper Technology Co. corporation
Ltd.Huanggang Chenming Port Huanggang Huanggang Port services For-profit 51.00% Establishment 0 0
Co. Ltd. corporation
Weifang Chendu Equity Shouguang Shouguang Capital market For-profit 79.75% Establishment 0 0
Investment Partnership services corporation
(Limited Partnership)
Huanggang Chenming Pulp Huanggang Huanggang Trading For-profit 100.00% Establishment 0 0
& Fiber Trading Co. Ltd. corporation
(2) Major non-wholly owned subsidiaries
Unit: RMB
Gain or loss Dividend to
attributable to minority interest Closing
Minority minority interest declared during balance of
Name of subsidiary interest during the period the period minority interest
Shouguang Chenming Art Paper Co. Ltd. 25.00% -335609.74 94958580.73
Shouguang Meilun Paper Co. Ltd. 37.5136% 49134340.15 2608632811.11
Zhanjiang Chenming Pulp & Paper Co. Ltd. 8.23% 6806334.65 660942447.96
114 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
SHANDONG CHENMING PAPER HOLDINGS LIMITED 115
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IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(3) Key financial information of major non-wholly owned subsidiaries
Unit: RMB
Closing balance Opening balance
Non-current Non-current Non-current Non-current
Name of subsidiary Current assets assets Total assets Current liabilities liabilities Total liabilities Current assets assets Total assets Current liabilities liabilities Total liabilities
Shouguang Chenming
Art Paper Co. Ltd. 483938164.98 480442349.41 964380514.39 584546191.52 584546191.52 664927705.80 499632230.38 1164559936.18 783383174.36 783383174.36
Shouguang Meilun
Paper Co. Ltd. 5728525683.04 10704658938.61 16433184621.65 6260233659.44 1750609977.41 8010843636.85 7009260465.11 10720308671.13 17729569136.24 7685982114.28 1735507997.61 9421490111.89
Zhanjiang Chenming
Pulp & Paper Co. Ltd. 15287252786.92 13176976140.87 28464228927.79 17406654158.30 2371674359.87 19778328518.17 11650935934.57 12965150000.41 24616085934.98 14550859440.02 1994649794.03 16545509234.05
Unit: RMB
Amount for the period Amount for the prior period
Total Cash flows Total Cash flows
comprehensive from operating comprehensive from operating
Name of subsidiary Revenue Net profit income activities Revenue Net profit income activities
Shouguang Chenming Art Paper Co. Ltd. 322720534.36 -1342438.95 -1342438.95 133667925.23 344898772.34 12205171.20 12205171.20 3726791.43
Shouguang Meilun Paper Co. Ltd. 3956822454.56 114261960.45 114261960.45 1167059642.56 4447905629.92 232335249.64 232335249.64 542602634.96
Zhanjiang Chenming Pulp & Paper Co. Ltd. 5841511419.81 181827121.84 181827121.84 1308835701.84 6537009866.50 1063189798.93 1063189798.93 1751078279.88I Financial Report
IX. Interest in other entities (Cont’d)
2. Transaction changing shareholding in but not causing to loss of control over subsidiaries
(1) Changing in shareholding in subsidiaries
The Company previously held 96.26% equity interest in Zhanjiang Chenming Pulp & Paper Co. Ltd. In June 2022
Xiamen International Trade Industry Development Equity Investment Fund Partnership (Limited Partnership) made
a unilateral capital contribution to Zhanjiang Chenming Pulp & Paper Co. Ltd. Upon completion of the capital
increase its equity interest in Zhanjiang Chenming Pulp & Paper Co. Ltd. was 4.40% and the transaction did not
result in the loss of control over Zhanjiang Chenming Pulp & Paper Co. Ltd. by the Company. The transaction
resulted in an increase in capital reserves of RMB29.6768 million.
(2) Effect of transactions on minority interest and equity attributable to the owners of the parent company
Unit: RMB
Unilateral capital contribution into
Zhanjiang Chenming Pulp & Paper
Co. Ltd. by Xiamen International
Trade Industry Development
Equity Investment Fund Partnership
(Limited Partnership)
Amount of capital increase 400000000.00
Share of net assets of the Company after the capital increase 7262988678.16
Share of net assets of the Company before the capital increase 7233311863.47
Difference 29676814.69
Of which: capital reserve adjustment 29676814.69
3. Interest in joint arrangements or associates
(1) Major joint ventures and associates
Accounting method
for investment in
Principle place Place of Nature of Shareholding joint ventures or
Name of joint venture and associate of business incorporation business Direct Indirect associates
Weifang Sime Darby West Port Co. Ltd. Weifang Weifang Port construction 50.00% Equity method
Ningbo Kaichen Huamei Equity Investment Fund Ningbo Ningbo Investment 40.00% Equity method
Partnership (Limited Partnership) management
Weifang Xingxing United Chemical Co. Ltd. Weifang Weifang Chemical 50.00% Equity method
Zhuhai Dechen New Third Board Equity Zhuhai Zhuhai Investment 50.00% Equity method
Investment Fund Company (Limited Partnership) management
Goldtrust Futures Co. Ltd. Changsha Changsha Futures 35.43% Equity method
Guangdong Nanyue Bank Co. Ltd. Guangdong Guangdong Bank 6.76% Equity method
116 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont’d)
(2) Key financial information of major joint ventures
Unit: RMB
Closing balance/ Opening balance/
amount for amount for the
Weifang Sime Darby West Port Co. Ltd. the period prior period
Current assets 25297253.82 21774345.85
Of which: Cash and cash equivalents 5881297.45 7054019.11
Non-current assets 499047444.00 507959459.20
Total assets 524344697.82 529733805.05
Current liabilities 28199178.16 12094403.33
Non-current liabilities 362562252.51 377812252.49
Total liabilities 390761430.67 389906655.82
Equity interest attributable to shareholders of the parent company 133583267.15 139827149.23
Share of net assets based on shareholding 66791633.58 69913574.62
Adjustments
– Unrealised profit arising from intra-group transactions 7570890.35 7457424.14
Carrying amount of equity investment in joint ventures 74362523.93 77370998.75
Fair value of equity investment in joint ventures where publicly
quoted prices exist
Revenue 31433562.91 37344708.25
Finance expenses 10778949.56 10648523.23
Income tax expenses
Net profit -6013863.17 -181542.45
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income -6013863.17 -181542.45
Dividends received from joint ventures during the year
SHANDONG CHENMING PAPER HOLDINGS LIMITED 117
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IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont’d)
(2) Key financial information of major joint ventures (Cont’d)
Closing balance/ Opening balance/
amount for amount for the
Weifang Xingxing United Chemical Co. Ltd. the period prior period
Current assets 114838677.84 100024598.36
Of which: Cash and cash equivalents 47230710.07 10187071.60
Non-current assets 15936927.61 20299403.19
Total assets 130775605.45 120324001.55
Current liabilities 29133526.39 27883399.22
Non-current liabilities 7272868.96 12417862.06
Total liabilities 36406395.35 40301261.28
Minority interest
Equity interest attributable to shareholders of the parent company 94369210.10 80022740.27
Share of net assets based on shareholding 47184605.05 40011370.14
Adjustments
– Others 44689780.07 44612417.61
Carrying amount of equity investment in joint ventures 91874385.12 84623787.74
Fair value of equity investment in joint ventures where publicly
quoted prices exist
Revenue 9070496.70 404300.88
Finance expenses -374801.93 -121109.94
Income tax expenses
Net profit 7126354.85 -1450118.81
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income 7126354.85 -1450118.81
Dividends received from joint ventures during the year
(3) Key financial information of major associates
Unit: RMB
Closing balance/ Opening balance/
Ningbo Kaichen Huamei Equity Investment Fund Partnership amount for amount for the
(Limited Partnership) the period prior period
Current assets 4370525.23 4378938.81
Non-current assets 189276814.94 189276706.00
Total assets 193647340.17 193655644.81
Current liabilities
Total liabilities
Equity interest attributable to shareholders of the parent company 193647600.17 193655644.81
Share of net assets based on shareholding 77455941.70 77459159.43
Adjustments
– Others 119838326.16 119838326.16
Carrying amount of equity investment in associates 197294267.86 197297485.59
Net profit -8044.64 858903.93
Total comprehensive income -8044.64 858903.93
118 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont’d)
(3) Key financial information of major associates (Cont’d)
Closing balance/ Opening balance/
Zhuhai Dechen New Third Board Equity Investment Fund Company amount for amount for the
(Limited Partnership) the period prior period
Current assets 9149573.99 7991295.94
Non-current assets 60792108.00 65956891.00
Total assets 69941681.99 73948186.94
Current liabilities 5000.00 5000.00
Total liabilities
Equity interest attributable to shareholders of the parent company 69936681.99 73943186.94
Share of net assets based on shareholding 34964844.16 36967896.31
Carrying amount of equity investment in associates 34964844.16 36967896.31
Net profit -4006504.95 -12211392.16
Total comprehensive income -4006504.95 -12211392.16
Closing balance/ Opening balance/
amount for amount for the
Goldtrust Futures Co. Ltd. the period prior period
Current assets 737682309.63 764880728.01
Non-current assets 21605294.08 20791974.11
Total assets 759287603.71 785672702.12
Current liabilities 532162303.07 556373303.71
Non-current liabilities 39771231.87 34269041.10
Total liabilities 571933534.94 590642344.81
Equity interest attributable to shareholders of the parent company 187354068.77 195030357.31
Share of net assets based on shareholding 66379546.57 69099255.59
Adjustments
– Goodwill 104073292.25 104073292.25
– Others 12681688.88 12279914.66
Carrying amount of equity investment in associates 183134527.70 185452462.50
Revenue 27108619.25 9407419.49
Net profit -7109291.31 -17089018.40
Total comprehensive income -7109291.31 -17089018.40
SHANDONG CHENMING PAPER HOLDINGS LIMITED 119
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IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont’d)
(3) Key financial information of major associates (Cont’d)
Closing balance/ Opening balance/
amount for amount for the
Guangdong Nanyue Bank Co. Ltd. the period prior period
Current assets 198800828582.08 146917546535.28
Non-current assets 9025487530.37 58633124899.89
Total assets 207826316112.45 205550671435.17
Current liabilities 159787424749.38 163449937524.03
Non-current liabilities 28880840271.32 23509056497.47
Total liabilities 188668265020.70 186958994021.50
Equity interest attributable to shareholders of the parent company 19158051091.75 18591677413.67
Share of net assets based on shareholding 1294126351.25 1255867809.29
Adjustments
－Others 24616009.62
Carrying amount of equity investment in associates 1318742360.87 1255867809.29
Revenue 13809608464.83 2009057538.56
Net profit 365449485.74 734646824.76
Other comprehensive income 70787018.40
Total comprehensive income 436236504.14
Dividends received from associates during the year 21000000.00
(4) Summary financial information of non-major joint ventures and associates
Unit: RMB
Closing balance/ Opening balance/
amount for amount for the
the period prior period
Joint ventures:
Total carrying amount of investment 17462210.13 21518994.58
Total amount of the following items based on shareholding
– Net profit -3056784.45 791377.16
Associates:
Total carrying amount of investment 6379351.54 7488250.59
Total amount of the following items based on shareholding
– Net profit -168899.05 -223836.86
(5) Excess loss of joint ventures or associates
Unit: RMB
Accumulated Unrecognised Accumulated
unrecognised loss (or share of unrecognised
loss incurred net profit) for loss as at the
Name of joint ventures or associates for prior periods the period end of the period
Arjo Wiggins Chenming Specialty Paper Co. Ltd. 7308869.16 7308869.16
Xuchang Chenming Paper Co. Ltd. 79793370.43 31161297.89 110954668.32
120 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X. Risk relating to financial instruments
The main financial instruments of the Company include monetary funds accounts receivable accounts receivable financing
other receivables non-current assets due within one year other current assets financial assets held for trading other
non-current financial assets long-term receivables bills payable accounts payable other payables short-term borrowings
non-current liabilities due within one year long-term borrowings lease liabilities and long-term payables. Details of each
financial instrument have been disclosed in the relevant notes to the financial statements. 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. Goal and policies of risk management
The Company aims to seek the appropriate balance between the risks and benefits in order to mitigate the adverse
effects on the Company’s financial performance from financial risk. Based on such objectives the Company’s risk
management policies are established to identify and analyse the risks faced by the Company to set appropriate risk
limits and devise corresponding internal control procedures and to monitor risks faced by the Company. Such risk
management policies and internal control systems are reviewed regularly to adapt to changes in market conditions
and the Company’s activities. The internal audit department of the Company also undertakes both regular and ad-hoc
reviews of the implementation of internal control systems in compliance with risk management policies.Risks associated with the financial instruments of the Company mainly include credit risk liquidity risk and market risk
(including exchange rate risk interest rate risk and commodity price risk).The Board is responsible for planning and establishing the risk management structure of the Company formulating risk
management policies and related guidelines and supervising the implementation of risk management. The Company
has already formulated risk management policies to identify and analyse risks that the Company face. These policies
mentioned specific risks covering market risk credit risk liquidity risk etc. The Company regularly assesses the market
environment and the changes of the operating activities of the Company to determine as to making alteration to the
risk management policies and systems. The Company’s risk management is implemented by the Risk Management
Committee according to the policies approved by the Board. The Risk Management Committee works closely with other
business department of the Company to identify assessing and avoiding certain risks. The internal audit department of
the Company undertakes regular reviews of risk management controls and procedures and report the audit results to
the audit committee of the Company.The Company spreads the risks from financial instruments by diversified investment and business portfolio and
develops risk management policies accordingly to mitigate the risk of over-concentration on any single industry
particular region or particular counterparties
(1) Credit risk
Credit risk is the risk that a counterparty will cause a financial loss for the Company by failing to discharge a
contractual obligation.The Company manages credit risk by collective classification. Credit risks are mainly attributable to bank deposit
bills receivable accounts receivable other receivables and long-term receivables etc.The Company’s bank deposit is mainly held with state-owned banks and other large and medium-sized listed
banks. The Company anticipates that the bank deposit does not have significant credit risk.SHANDONG CHENMING PAPER HOLDINGS LIMITED 121
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X. Risk relating to financial instruments (Cont’d)
1. Goal and policies of risk management (Cont’d)
(1) Credit risk (Cont’d)
For bill receivable accounts receivables other receivables and long-term receivables the Company sets related
policies to control exposure of credit risks. The Company assesses its clients’ credit quality and sets the related
credit periods based on its clients’ financial position credit records and other factors such as the current market
conditions. The Company monitors the credit record of its clients. For the clients with poor credit record the
Company ensure the credit risk of the Company in general is under control by means of written notice of payment
collection reducing credit periods or cancelling credit periods.The Company’s debtors of accounts receivable are the customers across different industries and regions.The Company continuously conducts credit assessment on the financial position of accounts receivable and
purchases credit guarantee insurance if necessary.The maximum credit risk exposure of the Company is the carrying amount of each financial asset in the balance
sheet. The Company do not provide any other financial guarantee which may result in credit risks.Among the accounts receivable of the Company the accounts receivable attributable to the top five customers
accounted for 26.34% (2021: 24.95%) of the Company’s total accounts receivables. Among the other receivables
of the Company the other receivables attributable to the top five customers accounted for 74.49% (2021: 72.71%)
of the Company’s total other receivables.
(2) Liquidity risk
Liquidity risk is the risk that the Company may encounter deficiency of funds in meeting obligations settled with
cash or other financial assets delivery.In managing liquidity risk the Company ensures to monitor the cash and cash equivalent the management
considered as sufficient in order to meet the Company’s needs for operation and lower the effects from
fluctuation of cash flow. The management of the Company monitors the usage of bank borrowings and ensures
compliance with the borrowing agreements. In the meantime the Company obtains commitments from major
financial institutions to provide sufficient standby funds to meet short-term and long-term funding needs.The Company finances its working capital with capital generated from operating activities and bank and other
borrowings. As at 30 June 2022 the Company’s unutilised bank loan facility was RMB40650.0 million (31
December 2021: RMB42832.1880 million).
122 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X. Risk relating to financial instruments (Cont’d)
1. Goal and policies of risk management (Cont’d)
(2) Liquidity risk (Cont’d)
As at the end of the period the financial assets financial liabilities and off-balance sheet guarantee held by the
Company are analysed by their maturity date as below at their remaining undiscounted contractual cash flows (in
ten thousand RMB):
2022.06.30
Item Within 1 year 1-2 years 2-3 years 3-4 years Over 4 years Total
Financial assets:
Monetary funds 1489190.53 1489190.53
Accounts receivable 377424.26 377424.26
Accounts receivable financing 91272.75 91272.75
Other receivables 274959.34 274959.34
Long-term receivables 175087.96 8519.67 7000.00 1500.00 192107.63
Other current assets 141558.73 141558.73
Non-current assets due within one year 521604.42 521604.42
Total financial assets 2896010.03 175087.96 8519.67 7000.00 1500.00 3088117.66
Financial liabilities:
Short-term borrowings 3635966.39 3635966.39
Bills payable 403508.13 403508.13
Accounts payable 326898.69 326898.69
Other payables 147844.01 147844.01
Non-current liabilities due within one year 455835.17 455835.17
Long-term borrowings 206515.51 30929.00 20675.00 278204.00 536323.51
Lease liabilities 623.41 659.67 659.67 5351.41 7294.16
Long-term payables 184070.43 127498.73 42560.18 15207.33 369336.68
Total financial liabilities and contingent
liabilities 4970052.39 391209.35 159087.40 63894.85 298762.74 5883006.74
SHANDONG CHENMING PAPER HOLDINGS LIMITED 123
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X. Risk relating to financial instruments (Cont’d)
1. Goal and policies of risk management (Cont’d)
(2) Liquidity risk (Cont’d)
As at the beginning of the period the financial assets financial liabilities and off balance sheet guarantee held by
the Company are analysed by their maturity date as below at their remaining undiscounted contractual cash flows
(in ten thousand RMB):
2021.12.31
Item Within 1 year 1-2 years 2-3 years 3-4 years Over 4 years Total
Financial assets:
Monetary funds 1411978.29 1411978.29
Accounts receivable 310581.86 310581.86
Accounts receivable financing 43545.93 43545.93
Other receivables 278992.06 278992.06
Long-term receivables 201047.51 8329.67 5600.00 214977.18
Other current assets 124691.54 124691.54
Non-current assets due within one year 684643.44 684643.44
Total financial assets 2854433.12 201047.51 8329.67 5600.00 3069410.30
Financial liabilities:
Short-term borrowings 3352302.52 3352302.52
Bills payable 308951.23 308951.23
Accounts payable 387113.13 387113.13
Other payables 148257.58 148257.58
Non-current liabilities due within one year 694976.96 694976.96
Bonds payable 15500.00 15500.00
Long-term borrowings 124525.02 88929.00 10929.00 303251.00 527634.02
Lease liabilities 472.83 1312.99 1312.99 4594.13 7692.94
Long-term payables 119406.55 89244.16 18273.94 22500.00 249424.65
Total financial liabilities and contingent
liabilities 4891601.42 259904.40 179486.15 30515.93 330345.13 5691853.03
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.
(3) Market risk
Market risk of financial instruments is the risk of fluctuation in the fair value of financial instruments or future cash
flow arising from changes in market price. Market risk includes interest rate risk exchange risk and other price
risk.Interest rate risk
Interest rate risk is the risk of fluctuation in the fair value of financial asset or future cash flow arising from changes
in market interest rate. Interest rate risk may arise in the recognised interest-bearing financial instruments and
unrecognised financial instruments (e.g. some loan commitments).
124 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X. Risk relating to financial instruments (Cont’d)
1. Goal and policies of risk management (Cont’d)
(3) Market risk (Cont’d)
Interest rate risk (Cont’d)
The Company’s interest rate risk arises from long-term interest-bearing liabilities including long-term 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 risk due to changes in interest rate. At present the Company does
not adopt any interest rate hedging policies. However the management is responsible for monitoring interest rate
risk and considers hedging significant interest rate risk as necessary. Interest rate hikes will increase the cost of
new interest-bearing borrowings 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 interest swap arrangements to mitigate its exposure to the interest rate risk.Interest-bearing financial instruments held by the Company are as follows (in ten thousand RMB):
Balance for Balance for
Item the year the prior year
Financial instrument with fixed interest rate
Financial liabilities
Of which: Short-term borrowings 3633944.01 3350170.45
Long-term borrowings 534746.81 526438.53
Bonds payable 15500.00
Long-term borrowings due within one year 146971.75 258373.04
Bonds payable due within one year 35000.00 127063.69
Total 4350662.57 4277545.71
Financial instrument with float interest rate
Financial assets
Of which: Monetary funds 313929.26 316598.98
Total 313929.26 316598.98
The sensitivity analysis above indicates the instantaneous change in the net profit and equity that would arise
assuming that the change in interest rates had occurred at the balance sheet date and had been applied to
remeasure those financial instruments held by the Company which expose the Company to fair value interest
rate risk at the balance sheet date. In respect of the exposure to cash flow interest rate risk arising from floating
rate non-derivative instruments held by the Company at the balance sheet date the impact on the net profit and
equity is estimated as an annualised impact on interest expense or income of such a change in interest rates. The
analysis is performed on the same basis for the previous year.SHANDONG CHENMING PAPER HOLDINGS LIMITED 125
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X. Risk relating to financial instruments (Cont’d)
1. Goal and policies of risk management (Cont’d)
(3) Market risk (Cont’d)
Exchange rate risk
Exchange rate risk refers to the risk that the fair value or future cash flow of a financial instrument will fluctuate
due to changes in foreign exchange rates. Exchange rate risk may arise from financial instruments denominated in
foreign currencies other than the functional currency.The principal business of the Company is situated within the PRC and is denominated in RMB. However foreign
exchange risks still exist for the assets and liabilities in foreign currencies and future foreign currency transactions
as recognised by the Company (assets and liabilities in foreign currencies and foreign currency transactions are
mainly denominated in US dollar Japanese yen South Korean Won Euro Hong Kong dollar and British pound).The following table details the financial assets and liabilities held by the Company which denominated in foreign
currencies and amounted to RMB as at 30 June 2022 are as follows (in RMB ten thousands):
Liabilities denominated in Assets denominated in
foreign currency foreign currency
As at As at the As at As at the
the end of beginning of the end of beginning of
Item the period the period the period the period
USD 212254.31 361192.84 73545.80 67590.57
EUR 1467.31 1910.41 13424.79 3929.49
HKD 4055.52 16.36 69.89
KRW 7.04
YEN 0.97 720.47 812.91
GBP 7.23
Total 213722.59 367158.77 87714.65 72409.90
The Company closely monitors the impact of exchange rate changes on the Company’s foreign exchange
risk. The Company has not taken any measures to avoid foreign exchange risks. However the management is
responsible for monitoring exchange rate risks and will consider hedging significant exchange rate risks when
necessary.With other variables unchanged the after-tax effect of the possible reasonable changes in the exchange rate of
foreign currency to RMB on the current profit and loss of the Company is as follows (in RMB ten thousands):
Increase (decrease) in after-tax profits Balance for the year Balance for the prior year
Increase in exchange rate of USD 5% -14290.01 5% -14680.11
Decrease in exchange rate of USD -5% 14290.01 -5% 14680.11
Increase in exchange rate of Euro 5% 744.61 5% 100.95
Decrease in exchange rate of Euro -5% -744.61 -5% -100.95
126 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X. Risk relating to financial instruments (Cont’d)
2. Capital management
The objective of the Company’s capital risk management is to safeguard the Company’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.In order to maintain or adjust the capital structure the Company may adjust its financing methods adjust the number
of dividends paid to shareholders return capital to shareholders issue new shares or disposes assets to reduce its
liabilities.The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net liabilities divided by total
capital. As at 30 June 2022 the Company’s gearing ratio is 72.89% (31 December 2021: 72.78%).XI. Fair value disclosure
Based on the inputs of the lowest level that are of great significance to the measurement as a whole in the fair 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. Fair value of assets and liabilities measured at fair value as at the end of the period
As at 30 June 2022 assets and liabilities measured at fair value are listed as follows based on the three hierarchies as
set out above:
Unit: RMB
Fair value measurements categorised into
Item Level 1 Level 2 Level 3 Total
I. Continuous measurement of fair value
(i) Financial assets held for trading 51033051.57 51033051.57
1. Equity instrument investments 51033051.57 51033051.57
(ii) Accounts receivable financing 912727537.75 912727537.75
(iii) Other non-current financial assets 519927003.25 519927003.25
(iv) Biological assets 1500540144.47 1500540144.47
1. Consumable biological assets 1500540144.47 1500540144.47
Total assets continuously measured at fair value 51033051.57 2933194685.47 2984227737.04
In the current year there were no transfers between Level 1 and Level 2 or transfers into or out of Level 3 for the fair
value measurements of the Company’s financial assets and financial liabilities.SHANDONG CHENMING PAPER HOLDINGS LIMITED 127
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XI. Fair value disclosure (Cont’d)
2. Quantitative information about significant unobservable inputs used in the level 3 fair value
measurement that are significant
Unit: RMB
Fair value as at
the end of Valuation
Item the period techniques Unobservable inputs Range
Equity instrument investments:
Shandong Hongqiao Venture 72510000.00 Cost method
Capital Co. Ltd.Consumable biological assets:
Forestry 1500540144.47 Replacement cost Cost per mu for the first 806.00
method year of Eucalyptus (RMB/tonne)
Cost per mu for the first 590.00
year of Pines (RMB/tonne)
Roll back method of Unit price per tonne of 590.00
market price Eucalyptus wood (RMB/tonne)
Unit price per tonne of 525.00
wet pine (RMB/tonne)
Unit price per tonne of 800.00
China fir (RMB/tonne)
XII. Related parties and related party transactions
1. Parent company of the Company
Shareholding Voting right
Registered of the parent of the parent
Place of capital company in company in
Name of parent company incorporation Business nature (RMB’0000) the Company the Company
Chenming Holdings Co. Ltd. Shouguang Investment in manufacture of 123878.77 27.53% 27.53%
paper electricity steam and
arboriculture
The ultimate controller of the Company is Shouguang State-owned Assets Supervision and Administration Office.
2. Subsidiaries of the Company
For details of the Company’s subsidiaries please refer to Note IX. 1.
128 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
XII. Related parties and related party transactions (Cont’d)
3. Joint ventures and associates of the Company
For details of material joint ventures and associates please refer to Note IX. 3.Balance of related party transaction between the Company and its joint ventures or associates during the period or prior
periods are as follows:
Name of joint ventures or associates Relation
Weifang Sime Darby West Port 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 Materials Co. Ltd. A joint venture of the Company
Anhui Time Source Corporation An associate of the Company
Lide Technology Co. Ltd. An associate of the Company
Chenming (Qingdao) Asset Management Co. Ltd. An associate of the Company
Jiangxi Chenming Port Co. Ltd. An associate of the Company
Guangdong Nanyue Bank 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
Chen Hongguo Hu Changqing Li Xingchun Li Feng Li Key management personnel of the Company
Chuanxuan Yuan Xikun Li Xueqin Li Zhenzhong Li Weixian
and Dong Lianming
5. Related party transactions
(1) Purchase and sales of goods and rendering and receiving services
Table on purchase of goods/receiving of services
Unit: RMB
Whether the
Transaction Transaction
Details of related party Amount for facility facility is Amount for the
Related party transaction the period approved exceeded prior period
Weifang Sime Darby
West Port Co. Ltd. Port miscellaneous expenses 32355133.76 100000000.00 No 38373133.21
SHANDONG CHENMING PAPER HOLDINGS LIMITED 129
INTERIM REPORT 2022I Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(1) Purchase and sales of goods and rendering and receiving services (Cont’d)
Table on sales of goods/providing of services
Unit: RMB
Details of related Amount for Amount for
Related party party transaction the period the prior period
Shouguang Chenming Huisen New-style
Construction Materials Co. Ltd. Sales of electricity and steam 8581891.97 4489589.98
Shouguang Huixin Construction Materials
Co. Ltd. Sales of cement coal oil etc. 26377.86 1183941.17
(2) Related party guarantee
The Company as guarantor
Unit: RMB
Whether
Commencement performance
Amount date of Expiry date of guarantee
Party being guaranteed under guarantee guarantee of guarantee is completed
Weifang Sime Darby West Port Co. Ltd. 117400000.00 2017-12-20 2027-12-20 No
Chenming (HK) Limited 105330858.44 2022-3-28 2022-9-23 No
Chenming (HK) Limited 19043008.17 2022-5-6 2022-8-31 No
Chenming (HK) Limited 21876110.04 2022-4-1 2022-9-28 No
Chenming (HK) Limited 8339395.51 2022-4-3 2022-9-30 No
Chenming (HK) Limited 22083177.27 2022-4-6 2022-10-3 No
Chenming (HK) Limited 10155458.74 2022-4-12 2022-10-9 No
Chenming (HK) Limited 24836747.91 2022-4-25 2022-7-20 No
Chenming (HK) Limited 23392524.43 2022-4-22 2022-10-19 No
Chenming (HK) Limited 23114885.89 2022-5-30 2022-8-19 No
Chenming (HK) Limited 22023296.55 2022-5-27 2022-11-23 No
Chenming (HK) Limited 5625130.92 2022-5-31 2022-8-29 No
Chenming (HK) Limited 8513110.77 2022-5-31 2022-8-29 No
Chenming (HK) Limited 5887724.91 2022-5-31 2022-8-29 No
Chenming (HK) Limited 19702993.69 2022-6-10 2022-7-29 No
Chenming (HK) Limited 24598900.86 2022-6-13 2022-8-5 No
Chenming (HK) Limited 5699846.92 2022-6-6 2022-9-6 No
Chenming (HK) Limited 8685381.80 2022-6-6 2022-9-6 No
Chenming (HK) Limited 9807185.20 2022-6-8 2022-9-6 No
Wuhan Chenming Hanyang Paper Holdings 30000000.00 2021/12/17 2022/10/16 No
Co. Ltd.Huanggang Chenming Pulp & Paper Co. Ltd. 200000000.00 2021-8-30 2022-8-25 No
Huanggang Chenming Pulp & Paper Co. Ltd. 300000000.00 2021-12-23 2022/12/22 No
Huanggang Chenming Pulp & Paper Co. Ltd. 30000000.00 2021/7/19 2022/7/18 No
Huanggang Chenming Pulp & Paper Co. Ltd. 45000000.00 2021/8/9 2022/8/8 No
Huanggang Chenming Pulp & Paper Co. Ltd. 90000000.00 2022-5-19 2023-5-18 No
Huanggang Chenming Pulp & Paper Co. Ltd. 20000000.00 2022-4-22 2023-4-21 No
130 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Related party guarantee (Cont’d)
Whether
Commencement performance
Amount date of Expiry date of guarantee
Party being guaranteed under guarantee guarantee of guarantee is completed
Huanggang Chenming Pulp & Paper Co. Ltd. 30000000.00 2021/7/28 2022/7/27 No
Jilin Chenming Paper Co. Ltd. 98580000.00 2022-1-13 2022-7-11 No
Jilin Chenming Paper Co. Ltd. 18000000.00 2022-5-23 2023-5-8 No
Jiangxi Chenming Paper Co. Ltd. 10000000.00 2021-8-31 2022-8-24 No
Jiangxi Chenming Paper Co. Ltd. 10000000.00 2021-9-1 2022-8-24 No
Jiangxi Chenming Paper Co. Ltd. 20000000.00 2021-10-9 2022-9-28 No
Jiangxi Chenming Paper Co. Ltd. 150000000.00 2021-12-16 2022-12-15 No
Jiangxi Chenming Paper Co. Ltd. 27000000.00 2021-12-31 2022-12-23 No
Jiangxi Chenming Paper Co. Ltd. 2000000.00 2022-1-19 2023-1-18 No
Jiangxi Chenming Paper Co. Ltd. 28000000.00 2022-2-14 2023-1-18 No
Jiangxi Chenming Paper Co. Ltd. 150000000.00 2022-2-22 2023-2-21 No
Jiangxi Chenming Paper Co. Ltd. 94450000.00 2022-3-16 2023-3-15 No
Jiangxi Chenming Paper Co. Ltd. 99000000.00 2022-3-19 2023-3-18 No
Jiangxi Chenming Paper Co. Ltd. 12500000.00 2022-3-30 2022-9-26 No
Jiangxi Chenming Paper Co. Ltd. 10000000.00 2022-3-31 2023-3-31 No
Jiangxi Chenming Paper Co. Ltd. 20134200.00 2022-1-12 2022-7-11 No
Jiangxi Chenming Paper Co. Ltd. 70000000.00 2022/4/25 2023/4/24 No
Jiangxi Chenming Paper Co. Ltd. 49000000.00 2022/4/25 2023/4/24 No
Jiangxi Chenming Paper Co. Ltd. 270000000.00 2022/5/19 2023/5/17 No
Jiangxi Chenming Paper Co. Ltd. 73000000.00 2022/5/27 2023/5/26 No
Jiangxi Chenming Paper Co. Ltd. 80000000.00 2022/6/17 2023/6/16 No
Jiangxi Chenming Paper Co. Ltd. 10000000.00 2022/6/14 2023/6/12 No
Jiangxi Chenming Paper Co. Ltd. 20000000.00 2022/6/21 2023/6/16 No
Jiangxi Chenming Paper Co. Ltd. 28317695.39 2022/6/24 2023/6/20 No
Jiangxi Chenming Paper Co. Ltd. 12000000.00 2022/6/24 2022/12/20 No
Jiangxi Chenming Paper Co. Ltd. 250000000.00 2022/6/27 2023/6/24 No
Jiangxi Chenming Paper Co. Ltd. 13000000.00 2022/6/29 2022/12/26 No
Jiangxi Chenming Paper Co. Ltd. 100000000.00 2022/6/30 2023/6/30 No
Jiangxi Chenming Paper Co. Ltd. 1532212.62 2022-6-24 2022-12-21 No
Shandong Chenming Paper Sales Co. Ltd. 254349948.22 2022-2-15 2022-8-15 No
Shandong Chenming Paper Sales Co. Ltd. 459968037.61 2022-4-7 2023-4-3 No
Shandong Chenming Paper Sales Co. Ltd. 419643848.45 2022-4-21 2022-10-19 No
Shandong Chenming Paper Sales Co. Ltd. 126012917.62 2022-4-21 2022-10-19 No
Shanghai Chenming Pulp & Paper Sales Co. Ltd. 30000000.00 2022-1-26 2022-7-27 No
Shanghai Chenming Pulp & Paper Sales Co. Ltd. 10000000.00 2022-5-31 2023-5-31 No
Shanghai Chenming Pulp & Paper Sales Co. Ltd. 80000000.00 2022-6-1 2023-5-22 No
Shanghai Chenming Pulp & Paper Sales Co. Ltd. 10000000.00 2022-6-2 2023-5-22 No
Shanghai Chenming Pulp & Paper Sales Co. Ltd. 20000000.00 2022-6-21 2022-12-24 No
Shouguang Meilun Paper Co. Ltd. 124867323.20 2021-7-7 2022-7-4 No
Shouguang Meilun Paper Co. Ltd. 125175008.56 2022-1-25 2022-7-25 No
Shouguang Meilun Paper Co. Ltd. 131454694.19 2022-6-10 2022-12-7 No
Shouguang Meilun Paper Co. Ltd. 197262262.31 2022-1-7 2022-7-6 No
Shouguang Meilun Paper Co. Ltd. 69076521.58 2022-1-18 2022-7-18 No
Shouguang Meilun Paper Co. Ltd. 49000000.00 2022-4-30 2023-4-18 No
SHANDONG CHENMING PAPER HOLDINGS LIMITED 131
INTERIM REPORT 2022I Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Related party guarantee (Cont’d)
Whether
Commencement performance
Amount date of Expiry date of guarantee
Party being guaranteed under guarantee guarantee of guarantee is completed
Shouguang Meilun Paper Co. Ltd. 162136733.49 2022-6-16 2022-12-13 No
Shouguang Meilun Paper Co. Ltd. 285000000.00 2022-1-29 2022-7-28 No
Shouguang Meilun Paper Co. Ltd. 100000000.00 2021-10-12 2022-10-11 No
Shouguang Meilun Paper Co. Ltd. 30000000.00 2021-8-31 2022-8-31 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2021-7-13 2022-7-12 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 49500000.00 2021-8-12 2022-8-8 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 67000000.00 2021-9-15 2022-9-14 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2021-9-26 2022-9-25 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 60000000.00 2021-10-18 2022-10-17 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 60000000.00 2021-11-12 2022-11-11 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 90000000.00 2021-11-16 2022-11-15 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 60000000.00 2021-11-17 2022-11-16 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 90000000.00 2021-11-23 2022-11-22 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 30000000.00 2021-11-24 2022-11-23 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2021-12-15 2022-12-14 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 9000000.00 2021-12-20 2022-12-19 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 81200000.00 2021-12-22 2022-7-17 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 36912700.00 2021-11-16 2022-11-15 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 90000000.00 2022-1-6 2022-7-6 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 89900100.00 2022-1-6 2022-7-6 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 80000000.00 2022-1-13 2023-1-12 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 63000000.00 2022-1-20 2023-1-20 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 125000000.00 2022-1-21 2023-1-20 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2022-1-26 2023-12-22 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 5000000.00 2022-1-27 2023-1-26 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 40000000.00 2022-1-30 2023-1-26 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 200000000.00 2022-2-18 2022-8-18 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 200000000.00 2022-2-15 2023-2-14 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 70000000.00 2022-2-22 2023-2-21 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 20000000.00 2022-3-3 2023-3-2 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 30000000.00 2022-3-22 2023-3-10 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2022-3-16 2023-3-15 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2022-3-7 2023-3-2 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 26845600.00 2022-3-21 2023-3-3 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2022-4-8 2022-10-7 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 20000000.00 2022-4-21 2023-4-11 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 43000000.00 2022-4-27 2023-4-21 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2022-5-7 2023-4-28 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 26000000.00 2022-5-13 2023-5-10 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 80000000.00 2022-5-13 2022-11-18 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 167000000.00 2022-5-12 2023-5-12 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2022-5-31 2024-5-30 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 47000000.00 2022-6-22 2022-12-16 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 70000000.00 2022-6-24 2023-6-23 No
132 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Related party guarantee (Cont’d)
Whether
Commencement performance
Amount date of Expiry date of guarantee
Party being guaranteed under guarantee guarantee of guarantee is completed
Zhanjiang Chenming Pulp & Paper Co. Ltd. 48500000.00 2022-6-28 2023-6-10 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 41403000.00 2022-6-29 2022-12-23 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 67000000.00 2022-6-24 2023-6-23 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 200000000.00 2022-6-28 2022-12-23 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 31543580.00 2022-4-28 2023-4-21 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 22818760.00 2022-5-13 2023-5-10 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 49664360.00 2022-4-29 2022-7-28 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 58334709.41 2022-5-10 2022-9-9 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 664428600.00 2019-12-27 2022-12-27 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 78500000.00 2020-10-16 2023-10-15 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 113500000.00 2020-11-11 2023-11-10 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 98500000.00 2020-12-10 2023-12-9 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 99500000.00 2021-1-5 2024-1-4 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 140000000.00 2021-12-23 2023-12-23 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2022-6-17 2025-6-16 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2022-6-17 2025-6-16 No
Hainan Chenming Technology Co. Ltd. 50000000.00 2022-5-13 2022-11-14 No
Shouguang Chenming Import and Export Trade 100000000.00 2022-1-14 2023-1-13 No
Co. Ltd
Chenming (Singapore) Limited 26861649.64 2022-6-17 2022-9-15 No
Chenming (Singapore) Limited 25820502.58 2022-6-24 2022-9-24 No
Chenming (Singapore) Limited 26043881.19 2022-6-29 2022-9-27 No
Chenming (Singapore) Limited 31885261.33 2022-6-14 2022-9-8 No
Chenming (HK) Limited 134228000.00 2021-11-19 2022-11-4 No
Chenming (HK) Limited 93489802.00 2022-3-17 2023-3-7 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 120000000.00 2021-8-16 2022-8-15 No
Shouguang Meilun Paper Co. Ltd. 364000000.00 2020-12-4 2023-10-30 No
Wuhan Chenming Hanyang Paper Holdings Co. 6000000.00 2020-12-4 2023-10-30 No
Ltd.Huanggang Chenming Pulp & Paper Co. Ltd. 200000000.00 2020-12-4 2023-10-30 No
Zhanjiang Runbao Trading Co. Ltd. 160000000.00 2022-4-25 2024-4-25 No
Zhanjiang Dingjin Trading Co. Ltd. 135581900.00 2020-12-4 2022-11-22 No
(3) Related party lending and borrowing
Unit: RMB
Borrowing
Related party amount Starting date Expiry date Description
Borrowing from
Chenming Holdings Co. Ltd. 155000000.00 2022-1-6 2022-4-26 Controlling
shareholder
Guangdong Nanyue Bank Co. Ltd. 425000000.00 2022-1-20 2023-1-20 Associate
SHANDONG CHENMING PAPER HOLDINGS LIMITED 133
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XII. Related parties and related party transactions (Cont’d)
6. Related party accounts receivable and accounts payable
(1) Accounts receivables
Unit: RMB
Closing balance Opening balance
Item Related party Book balance Bad debt provision Book balance Bad debt provision
Accounts receivable Shouguang Chenming Huisen
New-style Construction Materials
Co. Ltd. 2047252.00 14330.76
Accounts receivable Shouguang Meite Environmental
Technology Co. Ltd. 5001962.56 35013.74
Accounts receivable Jiangxi Chenming Port Co. Ltd 109385.42 109385.42
Other receivables Weifang Sime Darby West Port
Co. Ltd. 69747294.59 3785041.96 80667961.32 7423984.26
Other receivables Shouguang Meite Environmental
Technology Co. Ltd. 19025633.68 1803768.91 22740159.32 21348.69
Payments in advance Shouguang Meite Environmental
Technology Co. Ltd. 5370726.99
(2) Accounts payable
Unit: RMB
Closing book Opening book
Item Related party balance balance
Accounts payable Weifang Xingxing United Chemical Co. Ltd. 26905494.34 26905494.34
Other payables Weifang Xingxing United Chemical Co. Ltd. 16860000.00 16860000.00
Accounts payable Weifang Sime Darby West Port Co. Ltd. 11378405.32 7609782.51
Accounts payable Jiangxi Chenming Port Co. Ltd. 2324708.87
Other payables Jiangxi Chenming Port Co. Ltd. 6630800.00
Contract liabilities Anhui Time Source Corporation 1570.10 1570.10
Other payables Lide Technology Co. Ltd. 508619.46 508619.46
Other payables Chenming (Qingdao) Asset Management Co. Ltd. 116656.55 115633.42
Receipts in advance Chenming (Qingdao) Asset Management Co. Ltd. 49539.63
134 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
XIII. Share-based payment
1. General information of share-based payment
√ Applicable □ Not applicable
Unit: RMB
Total exercised equity instruments of the Company during the period 0.00
Total invalid equity instruments of the Company during the period 24176200.00
Range of strike price and remaining periods of contracts of stock options excluding of which the See explanation
Company issues at the end of the period for details
Other explanation: On 29 May 2020 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 were considered and approved at the tenth extraordinary meeting of ninth session of the Board and the
fifth extraordinary meeting of the ninth session of the Supervisory Committee of the Company by which 79.60 million
restricted shares were granted. The grant date was 29 May 2020 and the fair value of the restricted shares was the
ex-rights price of the shares on the grant date. The Restricted Shares to be granted under the Incentive Scheme were
“granted once and unlocked in batches”. For the period commencing from the first trading day after expiry of the
24-month period from the date on which the registration of the grant of the Restricted Shares is completed and ending
on the last trading day of the 36-month period from the date on which the registration of the grant of the Restricted
Shares is completed 40% of the Restricted Shares will be unlocked; for the period commencing from the first trading
day after expiry of the 36-month period from the date on which the registration of the grant of the Restricted Shares
is completed and ending on the last trading day of the 48-month period from the date on which the registration of the
grant of the Restricted Shares is completed 30% of the Restricted Shares will be unlocked; for the period commencing
from the first trading day after expiry of the 48-month period from the date on which the registration of the grant of
the Restricted Shares is completed and ending on the last trading day of the 60-month period from the date on which
the registration of the grant of the Restricted Shares is completed 30% of the Restricted Shares will be unlocked.Meanwhile during the three accounting years from 2021 to 2023 the Restricted Shares granted under the Incentive
Scheme shall be subject to annual performance appraisal for unlocking (for details of specific performance evaluation
conditions please refer to the announcement of the Company). The Company estimated that the performance indicators
for 2022 cannot be fulfilled and the corresponding second batch of the 30% Restricted Shares cannot be unlocked. In
addition 27006200 shares lapsed due to the resignation of some Senior Management members.
2. Equity-settled share-based payment
√ Applicable □ Not applicable
Unit: RMB
The method of determining the fair value of equity instrument on the grant date Ex-right price of
grant of shares
Basis for determining the quantity of exercisable equity instruments See explanation
for details
Reasons for significant difference between the current estimate and previous estimate See explanation
for details
Accumulated amount of equity-settled share-based payment included in the capital reserve 78193784.34
Total amount of equity-settled share-based payment recognised in the current period -6850012.78
SHANDONG CHENMING PAPER HOLDINGS LIMITED 135
INTERIM REPORT 2022I Financial Report
XIV. Undertaking and contingency
1. Significant commitments
Significant commitments as at the balance sheet date
Unit: RMB
Capital commitments contracted for but not yet
necessary to be recognised on the balance sheet Closing balance Opening balance
Commitments in relation to acquisition and construction of
long-term assets 285099655.45 181254971.61
2. Contingency
(1) Significant contingency as at the balance sheet date
The Company had no material contingency as at the balance sheet date.
(2) To state that the company has no material contingency that needs to be disclosed
The Company had no material contingency that needs to be disclosed.XV. Post-balance sheet event
As of 30 June 2022 the Company has no other events that should be disclosed after the balance sheet date.XVI. Other material matters
1. Segment information
(1) Basis for determination and accounting policies
According to the Company’s internal organisational structure management requirements and internal reporting
system the Group’s operating business is divided into 4 reporting segments. These report segments are
determined based on the financial information required by the company’s daily internal management. The
management of the Group regularly evaluates the operating results of these reporting segments to determine the
allocation of resources to them and evaluate their performance.The Company’s reporting segments include:
(1) Machine-made paper and pulp segment which is responsible for production and sales of machine-made
paper and pulp;
(2) Financial services segment which provides financial services;
(3) Hotels and property rentals segment which engages in property leasing;
(4) Other segments which is responsible for the above segments otherwise.
Segment report information is disclosed in accordance with the accounting policies and measurement standards
adopted by each segment when reporting to management. These accounting policies and measurement basis are
consistent with the accounting policies and measurement basis used in preparing the financial statements.
136 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
XVI. Other material matters (Cont’d)
1. Segment information (Cont’d)
(2) Financial Information of Reporting Segment
Unit: RMB
Current period or end Machine-made Hotels and
of current period paper and pulp Financial services property rentals Others Elimination Total
Revenue 33293149611.73 313686272.81 236294775.54 2283741250.50 19450443544.75 16676428365.83
Of which: revenue from
external transactions 16091824702.93 125629976.14 108076112.11 350897574.65 16676428365.83
Revenue from inter-segment
transactions 17201324908.80 188056296.67 128218663.43 1932843675.85 19450443544.75
Of which: Revenue from
principal activities 32655617824.79 313686272.81 125577301.79 1020944232.40 17945290072.55 16170535559.24
Operating costs 32033269370.91 133101515.13 117317417.16 701400250.00 18930139274.00 14054949279.20
Of which: Costs of principal
activities 31805102552.96 133101515.13 86078159.49 542878138.76 18944714891.54 13622445474.80
Operating expenses 224701509.79 1147736.39 10424163.11 3838184.36 102055830.00 138055763.65
Of which: salaries 68341155.74 594088.97 2360658.64 1396703.06 72692606.41
Depreciation expenses 3658064.86 20589.15 1854394.08 8542.33 5541590.42
Office expenses 1105011.63 3111.89 1108123.52
Travel expenses 8263434.15 133127.96 139277.53 8535839.64
Selling commissions 3043011.69 3521573.18 318820.19 6883405.06
Rental expenses 2433614.84 44843.41 2478458.25
Hospitality expenses 22109421.79 399930.31 18718.00 427535.26 169037.55 22786567.81
Warehouse expenses 297908.54 205881.28 503789.82
Others 115449886.55 2665707.32 1296581.30 101886792.45 17525382.72
Operating profit/(loss) 393913359.61 120593852.35 6604072.62 16318802.39 252939549.28 284490537.69
Total cost of construction in
progress incurred during
the period 618300337.33 20617.48 618320954.81
Fixed assets acquired in the
current period 196803355.58 711110.44 410171.64 1723902.65 199648540.31
Intangible assets acquired
during the period 305955525.74 305955525.74
Total assets 131047372405.39 21036519263.19 8008176271.16 7256995196.55 82162482091.05 85186581045.24
Total liabilities 86963296560.71 8872476560.12 3728407230.32 2036422737.56 39505812018.10 62094791070.61
Basis of accounting: The transfer prices between the Company's segments are based on market prices.SHANDONG CHENMING PAPER HOLDINGS LIMITED 137
INTERIM REPORT 2022I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements
1. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Provision Provision
Type Amount Percentage Amount proportion Carrying value Amount Percentage Amount proportion Carrying value
Accounts receivable assessed
individually for bad debt
provision
Of which:
Accounts receivable assessed
collectively for bad debt
provision 1219841113.33 100.00% 4911757.18 0.40% 1214929356.15 146213282.74 100.00% 4612037.23 3.15% 141601245.51
Of which:
Receivables from related party
customers 1156918862.10 94.84% 1156918862.10 126108166.75 86.25% 126108166.75
Receivables from non-related
party customers 62922251.23 5.16% 4911757.18 7.81% 58010494.05 20105115.99 13.75% 4612037.23 22.94% 15493078.76
Total 1219841113.33 100.00% 4911757.18 0.40% 1214929356.15 146213282.74 100.00% 4612037.23 3.15% 141601245.51
138 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
1. Accounts receivable (Cont’d)
(1) Disclosure of accounts receivable by category (Cont’d)
Items assessed collectively for impairment:
Accounts receivable with collective provision for bad debts based on receivables from related parties
Unit: RMB
Closing balance
Bad debt Provision
Name Book balance provision percentage
Within 1 year 1156918862.10
Total 1156918862.10
Accounts receivable with collective provision for bad debts based on receivables from non-related parties
Unit: RMB
Closing balance
Bad debt Provision
Name Book balance provision percentage
Within 1 year 58419430.06 408936.01 0.70%
1 to 2 years
2 to 3 years
Over 3 years 4502821.17 4502821.17 100.00%
Total 62922251.23 4911757.18 7.81%
Disclosure by ageing
Unit: RMB
Ageing Closing balance
Within 1 year (including 1 year) 1215338292.16
1 to 2 years
2 to 3 years
Over 3 years 4502821.17
Subtotal 1219841113.33
Bad debt provision 4911757.18
Total 1214929356.15
SHANDONG CHENMING PAPER HOLDINGS LIMITED 139
INTERIM REPORT 2022I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
1. Accounts receivable (Cont’d)
(2) Provision recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMB
Changes in the period
Opening Recovery Closing
Category balance Provision or reversal Write-off Others balance
Accounts receivable with
provision for bad debts 4612037.23 2047859.77 1748139.82 4911757.18
Total 4612037.23 2047859.77 1748139.82 4911757.18
(3) Top five accounts receivable based on closing balance of debtors
The total amount of top five accounts receivable based on closing balance of debtors for the period amounted
to RMB1219357493.76 in total accounting for 99.96% of the total closing balance of accounts receivable. The
closing balance of the corresponding bad debt provision amounted to RMB4828712.22 in total.Unit: RMB
Percentage to
total closing
Closing balance balance of Closing balance
of accounts accounts of bad debt
Name of entity receivable receivable provision
Customer I 960997446.28 78.78%
Customer II 190921415.82 15.65%
Customer III 58016031.66 4.76% 406112.22
Customer IV 5000000.00 0.41%
Customer V 4422600.00 0.36% 4422600.00
Total 1219357493.76 99.96% 4828712.22
140 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
2. Other receivables
Unit: RMB
Item Closing balance Opening balance
Interest receivable
Dividends receivable 126325018.50
Other receivables 8021857221.76 8773854244.04
Total 8021857221.76 8900179262.54
(1) Dividends receivable
1) Classification of dividends receivable
Unit: RMB
Item (or investee) Closing balance Opening balance
Jiangxi Chenming Paper Co. Ltd. 72896218.50
Zhanjiang Chenming Pulp & Paper Co. Ltd. 53428800.00
Total 126325018.50
(2) Other receivables
1) Classification of other receivables by nature
Unit: RMB
Closing book Opening book
Nature balance balance
Open credit 8100301136.29 8849264265.13
Guarantee deposit 1467526.34 240000.00
Reserve and borrowings 8738534.42 6103279.46
Others 5487933.49 11961652.43
Total 8115995130.54 8867569197.02
SHANDONG CHENMING PAPER HOLDINGS LIMITED 141
INTERIM REPORT 2022I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
2. Other receivables (Cont’d)
(2) Other receivables (Cont’d)
2) Particulars of bad debt provision
Unit: RMB
Stage 1 Stage 2 Stage 3
Lifetime ECLs Lifetime ECLs
ECLs for the (not credit- (credit-
Bad debt provision next 12 months impaired) impaired) Total
Balance as at 1 January 2022 41288305.23 52426647.75 93714952.98
Balance as at 1 January 2022 for the period
– Transferred to stage 2
– Transferred to stage 3
– Reversed to stage 2
– Reversed to stage 1
Provision for the period 4214604.81 4214604.81
Reversal for the period 3791649.01 3791649.01
Transfer for the period
Write-off for the period
Other changes
Balance as at 30 June 2022 37496656.22 56641252.56 94137908.78
Changes in carrying book balances with significant changes in loss provision for the period
□ Applicable √ Not applicable
Disclosed by ageing
Unit: RMB
Ageing Closing balance
Within 1 year (including 1 year) 8016966084.12
1 to 2 years 6278479.37
2 to 3 years 10499017.28
Over 3 years 82251549.77
Total 8115995130.54
142 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
2. Other receivables (Cont’d)
(2) Other receivables (Cont’d)
3) Provision recovery or reversal of bad debt provision for the period
Provision of bad debt provision for the period
Unit: RMB
Changes in the period
Opening Recovery Closing
Category balance Provision or reversal Write-off Others balance
Bad debt provision for other
receivables 93714952.98 4214604.81 3791649.01 94137908.78
Total 93714952.98 4214604.81 3791649.01 94137908.78
4) Top five other receivables according to closing balance of debtors
The top five other receivables based on closing balance of debtors for the period amounted to
RMB5329828506.01 in total accounting for 65.67% 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 Closing
total closing balance
balance of other of bad debt
Name of entity Nature Closing balance Maturity receivables provision
Customer I Open credit 2005200000.00 Within 1 year 24.71% 0.00
Customer II Open credit 1223803000.00 Within 1 year 15.08% 0.00
Customer III Open credit 865510075.00 Within 1 year 10.66% 0.00
Customer IV Open credit 857550893.00 Within 1 year 10.57% 0.00
Customer V Open credit 377764538.01 Within 1 year 4.65% 0.00
Total 5329828506.01 65.67% 0.00
3. Long-term equity investments
Unit: RMB
Closing balance Opening balance
Impairment Impairment
Item Book balance provision Carrying amount Book balance provision Carrying amount
Investment in subsidiaries 18508056896.52 18508056896.52 18480556896.52 18480556896.52
Investment in associates and joint ventures 324189775.31 5994545.96 318195229.35 331467464.62 5994545.96 325472918.66
Total 18832246671.83 5994545.96 18826252125.87 18812024361.14 5994545.96 18806029815.18
SHANDONG CHENMING PAPER HOLDINGS LIMITED 143
INTERIM REPORT 2022I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
3. Long-term equity investments (Cont’d)
(1) Investment in subsidiaries
Unit: RMB
Change for the period
Closing balance
Opening balance Additional Withdrawn Impairment Closing balance of impairment
Investee (Carrying amount) contribution contribution provision Others (Carrying amount) provision
Chenming Paper Korea Co. Ltd. 6143400.00 6143400.00
Chenming GmbH 4083235.00 4083235.00
Hailaer Chenming Paper Co. Ltd 12000000.00 12000000.00
Huanggang Chenming Pulp & Paper Co. Ltd. 2302000000.00 2302000000.00
Huanggang Chenming Arboriculture Development Co. Ltd. 70000000.00 70000000.00
Jinan Chenming Paper Sales Co. Ltd. 100000000.00 100000000.00
Wuhan Chenming Hanyang Paper Holdings Co. Ltd. 264493210.21 264493210.21
Shandong Grand View Hotel Co. Ltd. 80500000.00 80500000.00
Zhanjiang Chenming Pulp & Paper Co. Ltd. 5110000000.00 27500000.00 5137500000.00
Shouguang Chenming Modern Logistic Co. Ltd. 10000000.00 10000000.00
Shouguang Chenming Art Paper Co. Ltd. 113616063.80 113616063.80
Shouguang Meilun Paper Co. Ltd. 4449441979.31 4449441979.31
Shouguang Shun Da Customs Declaration Co. Ltd. 1500000.00 1500000.00
Shandong Chenming Paper Sales Co. Ltd. 762641208.20 762641208.20
Shouguang Chenming Import and Export Trade Co. Ltd 250000000.00 250000000.00
Shouguang Chenming Papermaking Machine Co. Ltd. 2000000.00 2000000.00
Shouguang Hongxin 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 USA Inc. 6407800.00 6407800.00
Weifang Chenming Growth Driver Replacement Equity
Investment Fund Partnership (Limited Partnership) 632000000.00 632000000.00
Weifang Chendu Equity Investment Partnership (Limited
Partnership) 255000000.00 255000000.00
Total 18480556896.52 27500000.00 18508056896.52
144 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
3. Long-term equity investments (Cont’d)
(2) Investment in associates and joint ventures
Unit: RMB
Change for the period
Investment Distribution
Opening gain or loss Adjustment Other of cash Closing Closing
balance recognised of other change dividend balance balance of
(Carrying Additional Withdrawn under equity comprehensive in equity or profit Impairment (Carrying impairment
Investee amount) contribution contribution method income interest declared provision Others amount) provision
I. Associates
Shouguang Chenming Huisen
New-style Construction
Materials Co. Ltd. 6902869.87 -215525.03 1000000.00 5687344.84
Weifang Sime Darby West
Port Co. Ltd. 77370998.75 -3008474.82 74362523.93
Subtotal 84273868.62 -3223999.85 1000000.00 80049868.77
II. Joint ventures
Zhuhai Dechen New Third
Board Equity Investment
Fund Company (Limited
Partnership) 36967896.31 -2003052.15 34964844.16
Ningbo Kaichen Huamei
Equity Investment Fund
Partnership (Limited
Partnership) 197297485.59 -3217.73 197294267.86
Chenming (Qingdao) Asset
Management Co. Ltd. 6933668.14 -107419.58 940000.00 5886248.56
Xuchang Chenming Paper
Co. Ltd. 5994545.96
Subtotal 241199050.04 -2113689.46 940000.00 238145360.58 5994545.96
Total 325472918.66 -5337689.31 1940000.00 318195229.35 5994545.96
SHANDONG CHENMING PAPER HOLDINGS LIMITED 145
INTERIM REPORT 2022I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
4. Revenue and operating costs
Unit: RMB
Amount for the period Amount for the prior period
Item Revenue Costs Revenue Costs
Principal activities 3140980202.71 2884740920.89 4032722509.28 2973878062.69
Other activities 605682653.79 496489124.84 650730956.36 537196013.25
Total 3746662856.50 3381230045.73 4683453465.64 3511074075.94
Information related to revenue:
Unit: RMB
Category of contract Machine-made paper Others Total
Type of goods 3140980202.71 605682653.79 3746662856.50
Including:
Machine-made paper 2740277450.49 2740277450.49
Material sales 364976994.36 364976994.36
Leasing 8724715.35 8724715.35
Others 400702752.22 231980944.08 632683696.30
By geographical area
Including:
Mainland China 3140980202.71 605682653.79 3746662856.50
Other countries and regions
By the timing of delivery
Including:
Goods (at a point in time) 3140980202.71 596957938.44 3737938141.15
Services (within a certain period)
Leasing income 8724715.35 8724715.35
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 270000000.00 2669260273.97
Income from long-term equity investments accounted for using the
equity method -5337689.31 -4587981.17
Investment gain on disposal of long-term equity investments 751679.56
Investment gain on holding other non-current financial assets 2800000.00 15000000.00
Investment gain on derecognition of financial assets -30954557.50
Total 237259432.75 2679672292.80
146 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022I Financial Report
XVIII. 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 asset impairment) -3921463.03
Government grants (except for the government grants closely related to
the normal operation of the Company and granted constantly at a fixed
amount or quantity in accordance with a certain standard in compliance
with national policies and regulations) accounted for in profit or loss for
the current period 149264611.68
Profit or loss from debt restructuring -754806.87
Except for effective hedging business conducted in the ordinary course
of business of the Company gain or loss arising from the change in fair
value of financial assets held for trading and financial liabilities held for
trading as well as investment gains from disposal of financial assets
held for trading financial liabilities held for trading and financial assets
available for sale -62122863.58
Consumable biological assets measured at fair value 3309448.09
Other gain or loss items within the definition of extraordinary gain or loss -3575720.23
Less: Effect of income tax 24569100.79
Effect of minority interest (after tax) 896568.64
Total 56733536.63
Details of other gain or loss items falling within the definition of extraordinary gain or loss:
□ Applicable √ Not applicable
The Company did not have details of other gain or loss items falling within the definition of extraordinary gain or loss.Explanation on the extraordinary gain or loss items as illustrated in the Explanatory Announcement on Information
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
SHANDONG CHENMING PAPER HOLDINGS LIMITED 147
INTERIM REPORT 2022I Financial Report
XVIII. Supplementary information (Cont’d)
2. Return on net assets and earnings per share
Earnings per share
Rate of return
on net assets Basic Diluted
on weighted (RMB (RMB
Profit for the reporting period average basis per share) per share)
Net profit attributable to ordinary shareholders of the Company 1.02% 0.064 0.064
Net profit after extraordinary gains or losses attributable to
ordinary shareholders of the Company 0.71% 0.044 0.044
Data specification: When calculating financial indicators such as earnings per share and rate of return on weighted
average net assets the interest on Perpetual Bonds of RMB44481369.86 from 1 January 2022 to 30 June 2022 are
deducted.
3. Differences in accounting data under domestic and overseas accounting standards
(1) Differences between the net profit and net assets disclosed in accordance with international accounting
standards and China accounting standards in the financial report
□ Applicable √ Not applicable
(2) Differences between the net profit and net assets disclosed in accordance with overseas accounting
standards and China accounting standards in the financial report
□ Applicable √ Not applicable
The Board of Shandong Chenming Paper Holdings Limited
30 August 2022
148 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
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