SHANDONG CHENMING PAPER HOLDINGS LIMITED
Annual Report 2023
March 2024I Important Notice Table of Contents and Definitions
The board of directors (the “Board”) the supervisory committee (the “Supervisory Committee”) and the directors (the
“Directors”) supervisors (the “Supervisors”) and senior management (the “Senior Management”) of the Company hereby
warrant the truthfulness accuracy and completeness of the contents of the annual report guarantee that there are no false
representations misleading statements or material omissions contained in this annual report and are jointly and severally
responsible for the liabilities of the Company.Chen Hongguo head of the Company Dong Lianming head in charge of accounting and Zhang Bo head of the accounting
department (Accounting Officer) declare that they warrant the truthfulness accuracy and completeness of the financial report
in the annual report.All Directors have attended the board meeting to review this report.Forward-looking statements such as future plans and operating targets contained in this annual report do not represent
earnings forecasts of the Company nor constitute substantive commitments to investors by the Company. Investors and
relevant persons shall maintain a sufficient risk awareness hereto and understand the differences among plans forecasts and
commitments.The Company is exposed to various risk factors such as macro-economic fluctuation state policies and regulations and
competition in the industry. Investor should be aware of investment risks. For further details please refer to the risk factors
likely to be faced and the measures to be taken to address them as set out in the outlook on the future development of the
Company in Management Discussion and Analysis.The Company does not propose distribution of cash dividends or bonus shares and there will be no increase of share capital
from reserves.
2023 ANNUAL REPORT 1I Important Notice Table of Contents and Definitions
Table of Contents
I Important Notice Table of Contents and Definitio... 1
II Company Profile and Key Financial Indicators ..... 6
III Chairman’s Report .............................. 11
IV Management Discussion and Analysis .............. 12
V Directors’ Report ................................ 42
VI Corporate Governance ............................ 52
VII Environment and Social Responsibility .......... 95
VIII Material Matters ............................. 104
IX Changes in Share Capital and Shareholders ...... 139
X Preference Shares ............................... 150
XI Bonds .......................................... 151
XII Financial Report .............................. 152
2 SHANDONG CHENMING PAPER HOLDINGS LIMITEDI Important Notice Table of Contents and Definitions
Documents Available for Inspection
I. The financial statements signed and sealed by the legal representative financial representative and head of the financial
department of the Company.II. The original copy of the auditor’s report which is sealed by the accounting firm and signed and sealed by the certified public
accountants.III. The original copies of the documents and announcements of the Company disclosed in the designated newspaper and on
the website as approved by the CSRC during the reporting period.IV. The annual report disclosed on the website of The Stock Exchange of Hong Kong Limited.V. Other related information.
2023 ANNUAL REPORT 3I Important Notice Table of Contents and Definitions
Definitions
Item Definition
Company Group Chenming Group Chenming means Shandong Chenming Paper Holdings Limited and its subsidiaries
Paper or Chenming Paper Company
Parent Company or Shouguang Headquarters means Shandong Chenming Paper Holdings Limited
Chenming Holdings means Chenming Holdings Company Limited
Shenzhen Stock Exchange means Shenzhen Stock Exchange
Stock Exchange means The Stock Exchange of Hong Kong Limited
CSRC means China Securities Regulatory Commission
Shandong CSRC means Shandong branch of China Securities Regulatory Commission
Zhanjiang Chenming means Zhanjiang Chenming Pulp & Paper Co. Ltd.Jiangxi Chenming means Jiangxi Chenming Paper Co. Ltd.Wuhan Chenming means Wuhan Chenming Hanyang Paper Holdings Co. Ltd.Shanghai Chenming means Shanghai Chenming Industry Co. Ltd.Huanggang Chenming means Huanggang Chenming Pulp & Paper Co. Ltd.Chenming (HK) means Chenming (HK) Limited
Jilin Chenming means Jilin Chenming Paper Co. Ltd.Shouguang Meilun means Shouguang Meilun Paper Co. Ltd.Shouguang Art Paper means Shouguang Chenming Art Paper Co. Ltd.Finance Company means Shandong Chenming Group Finance Co. Ltd.
4 SHANDONG CHENMING PAPER HOLDINGS LIMITEDI Important Notice Table of Contents and Definitions
Item Definition
Chenming Investment means Shandong Chenming Investment Limited
Chenming Leasing means Shandong Chenming Financial Leasing Co. Ltd. and its
subsidiaries
Chenrong Fund means Weifang Chenrong Growth Driver Replacement Equity Investment
Fund Partnership (Limited Partnership)
Jiangxi Port means Jiangxi Chenming Port Co. Ltd.Chongqing Trust means Chongqing International Trust Co. Ltd.Chenming Asset Management means Chenming (Qingdao) Asset Management Co. Ltd.Corporate Bonds means 18 Chenming Bond 01
Perpetual Bonds means 17 Lu Chenming MTN001
the reporting period or the year means The period from 1 January 2023 to 31 December 2023
the beginning of the year or the period means 1 January 2023
the end of the year or the period means 31 December 2023
the prior year means The period from 1 January 2022 to 31 December 2022
2023 ANNUAL REPORT 5II Company Profile and Key Financial Indicators
I. Company profile
Stock abbreviation 晨鳴紙業 Stock code 000488
晨鳴 B 200488
Stock exchanges on which the shares are listed Shenzhen Stock Exchange
Stock abbreviation Chenming Paper Stock code 01812
Stock exchanges on which the shares are listed The Stock Exchange of Hong Kong Limited
Name in Chinese of the Company 山東晨鳴紙業集團股份有限公司
Short name in Chinese of the Company 晨鳴紙業
Name in English of the Company (if any) SHANDONG CHENMING PAPER HOLDINGS LIMITED
Short name in English of the Company (if any) SCPH
Legal representative of the Company Chen Hongguo
Registered address No. 595 Shengcheng Road Shouguang City Shandong Province
Postal code of registered address 262700
Changes of the registered address of the Company Nil
Office address No.2199 Nongsheng East Road Shouguang City Shandong Province
Postal code of office address 262705
Website of the Company http://www.chenmingpaper.com
Email address chenmmingpaper@163.com
II. Contact persons and contact methods
Secretary to the Board Hong Kong Company Secretary
Name Yuan Xikun Chu Hon Leung
Correspondence Address No. 2199 Nongsheng East Road 22nd Floor World Wide House Central
Shouguang City Shandong Province Hong Kong
Telephone 0536-2158008 00852-21629600
Facsimile 0536-2158977 00852-25010028
Email address chenmmingpaper@163.com liamchu@li-partners.com
III. Information disclosure and places for inspection
Websites of the stock exchanges where the Company Domestic: http://www.szse.cn; overseas: http://www.hkex.com.hk
discloses its annual report
Names and websites of the media where the Company China Securities Journal Shanghai Securities News Securities
discloses its annual report Times Securities Daily Hong Kong Commercial Daily and
CNINFO (http://www.cinifo.com.cn)
Places for inspection of the Company’s annual report Securities investment department of the Company
IV. Change in registration
Organisation registration code 913700006135889860
Change of principal activities since its listing (if any) No
Change of the controlling shareholder (if any) No
6 SHANDONG CHENMING PAPER HOLDINGS LIMITEDII Company Profile and Key Financial Indicators
V. Other relevant information
CPAs engaged by the Company
Name of CPAs Grant Thornton (Special General Partnership)
CPAs’ Office Address Floor 11 Building No. 4 HuaChuang GuanLi Center 219 Shunhai
Road Lixia District Jinan
Name of the Signing Certified Public Accountants Jiang Tao and Guo Dongmei
Sponsors engaged by the Company to continuously perform its supervisory function during the reporting period
□ Applicable □ Not applicable
Financial advisors engaged by the Company to continuously perform its supervisory function during the reporting period
□ Applicable □ Not applicable
VI. Major accounting data and financial indicators
Retrospective adjustment to or restatement of the accounting data for prior years by the Company
□ Yes □ No
Increase/decrease
for the year as
compared to the
2023 2022 prior year 2021
Revenue (RMB) 26608570228.20 32004367320.91 -16.86% 33019812294.14
Net profit attributable to shareholders
of the Company (RMB) -1281289649.82 189290120.82 -776.89% 2065513108.71
Net profit after extraordinary gains or losses
attributable to shareholders of the Company (RMB) -1942120184.70 -361459377.16 -437.30% 1743876537.12
Net cash flows from operating activities (RMB) 4389949308.82 3449824242.37 27.25% 8581888192.64
Basic earnings per share (RMB per share) -0.45 0.03 -1600.00% 0.56
Diluted earnings per share (RMB per share) -0.45 0.03 -1600.00% 0.56
Decreased by 8.2
Rate of return on weighted average net assets -7.65% 0.55% percentage points 9.56%
Increase/decrease
as at the end of
the year compared
to the end of the
As at the end of 2023 As at the end of 2022 prior year As at the end of 2021
Total assets (RMB) 79487052953.58 84301017409.62 -5.71% 82869661681.08
Net assets attributable to shareholders of the
Company (RMB) 16692175196.53 19084565494.92 -12.54% 19117985306.48
2023 ANNUAL REPORT 7II Company Profile and Key Financial Indicators
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 RMB47430410.96 during the reporting period is deducted.The lower of the Company’s net profit before or after extraordinary gains or losses in the last three accounting years is
negative and the audit report for the last year shows that the Company’s ability to continue as a going concern is uncertain
□ Yes □ No
The lower of net profit before or after extraordinary gains or losses is negative
□ Yes □ No
Item 2023 2022 Remark
Revenue (RMB) 26608570228.20 32004367320.91 Revenue from sales of
Deduction to revenue (RMB) 986216965.96 1030770460.26 materials of
Revenue after deduction (RMB) 25622353262.24 30973596860.65 RMB900376053.88
and other revenue of
RMB85840912.08.VII. Differences in accounting data under domestic and overseas accounting standards
1. Differences between the net profit and net assets disclosed in accordance with international
accounting standards and China accounting standards in the financial report
□ Applicable □ Not applicable
There was no difference between the net profit and net assets disclosed in accordance with international accounting
standards and China accounting standards in the financial report during the reporting period.
2. Differences between the net profit and net assets disclosed in accordance with overseas accounting
standards and China accounting standards in the financial report
□ Applicable □ Not applicable
There was no difference between the net profit and net assets disclosed in accordance with overseas accounting
standards and China accounting standards in the financial report during the reporting period.
8 SHANDONG CHENMING PAPER HOLDINGS LIMITEDII Company Profile and Key Financial Indicators
VIII. Key Financial Indicators by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Revenue 6155915692.16 6409047089.15 7156893450.74 6886713996.15
Net profit attributable to shareholders of
the Company -275409967.37 -412670196.73 -80213259.42 -512996226.30
Net profit after extraordinary gains or losses
attributable to shareholders of the Company -327893189.14 -483946028.35 -439773872.12 -690507095.09
Net cash flows from operating activities 916852965.06 866234782.53 1858270213.08 748591348.15
Whether the above indicators or their aggregated amounts have any material difference with the respective amounts as
disclosed in the quarterly report or interim report
□ Yes □ No
IX. Five-year financial summary under paragraph 19 of appendix D2 of the Hong Kong Listing
Rules
Unit: RMB’0000
For the year ended 31 December
20232022202120202019年
Revenue 2660857 3200437 3301981 3073652 3039543
Profit before tax -170970 18227 230618 217227 204848
Tax -38306 -13509 21650 26606 29518
Profit for the current period attributable to shareholders of the Company -128129 18929 206551 171203 165657
Minority interests -4535 12807 2417 19418 9673
Basic earnings per share (RMB/share) -0.45 0.03 0.56 0.36 0.33
Rate of return on weighted average net assets (%) -7.65 0.55% 9.56% 5.84% 5.57%
Unit: RMB’0000
For the year ended 31 December
20232022202120202019
Total assets 7948705 8430102 8286966 9157546 9795891
Total liabilities 5838920 6057276 6029463 6577519 7161914
Minority interests 440568 464369 345705 152329 117003
Equity attributable to shareholders of the Company 1669218 1908457 1911799 2427697 2516974
Net current assets (liabilities) -2121186 -1917930 -1766446 -1516398 -774633
Total assets less current liabilities 2970931 3240227 3233471 4052922 4526014
2023 ANNUAL REPORT 9II Company Profile and Key Financial Indicators
X. Items and amounts of extraordinary gains or losses
□ Applicable □ Not applicable
Unit: RMB
Item Amount for 2023 Amount for 2022 Amount for 2021 Description
Profit or loss from disposal of non-current assets
(including write-off of provision for assets impairment) 431805592.54 161509859.17 162163302.50
Government grants (except for the government grants
closely related to the normal operation of the Company
granted in accordance with an established standard
and having an ongoing effect on the Company’s
profit or loss in compliance with national policies and
regulations) accounted for in profit or loss for the
current period 117211489.25 314934315.62 261974874.53
Except for effective hedging business conducted in the
ordinary course of business of the Company gain or
loss arising from the change in fair value of financial
assets and financial liabilities held by a non-financial
company as well as gain or loss arising from disposal
of its financial assets and financial liabilities 58579398.48 -35178162.53 -54802461.29
Reversal of provision for impairment of receivables
individually tested for impairment 99483459.63 275585463.86
Profit or loss from debt restructuring 55297346.06 967464.91 24593731.72
Profit or loss from changes in the fair value of consumable
biological assets subsequently measured at fair value 6775808.38 9924233.72 -41899.05
Other non-operating income and expenses other than the
above items -11642079.10 -37391130.09 -15461704.28
Less: Effect of income tax 89176973.22 137333913.66 60135956.19
Effect of minority interests (after tax) 7503507.14 2268633.02 -3346683.65
Total 660830534.88 550749497.98 321636571.59 －
Details of other gain or loss items that fall within the definition of extraordinary gain or loss:
□ Applicable □ Not applicable
The Company did not have details of other gain or loss items that fall within the definition of extraordinary gain or loss.Explanation on the extraordinary gain or loss items as illustrated in the Explanatory Announcement on Information
Disclosure for Companies Offering Their Securities to the Public No.1 – Extraordinary Gains or Losses defined as its
recurring gain or loss items
□ Applicable □ Not applicable
Item Amount involved (RMB) Reason
Other income 52766790.28 Government grants related to assets and closely related to the normal
operation of the Company as extraordinary gain or loss due to the
inclusion of their subsequent amortisation in other income and their
ongoing effect on the Company’s profit or loss
10 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIII Chairman’s Report
Dear shareholders
The 2023 financial year has passed. On behalf of the Board of Directors I would like to report to you what we have done what we
have encountered and what we look forward to in the future.Tortuous road but improving momentum
In 2023 the global economic recovery was bumpy and the pandemic geopolitics and hyperinflation had aggravated the market
uncertainty. Under the conflict the major economies showed clear differentiated trends and economic development faced many
challenges. The world is an organic whole. Every internal and external policy adjustment the changes of the regional situation and
the inflation fluctuation affect the companies as market micro-subjects. Each company as a market micro-subject is constantly
enduring and trying to adapt to the changing market environment.In 2023 papermaking enterprises suffered from both the high upstream cost squeeze and the weak downstream demand. Facing
the unprecedented complex situation the Company further consolidated its self-pulping supply advantage retained existing
customers while developed new customers improved its product system and optimised its product structure and explored
overseas markets and expanded sales coverage. Although the Company incurred a loss it had a solid foundation and its
development momentum was improving.Confident about forging ahead
In recent years the Company has followed the policy and market trend eliminated a number of backward production capacities
built multiple new large-scale pulp and paper production lines and gradually established a circular development model. Relying
on the market and targeting the demand the Company has taken initial shape in the “pulp-paper integration” layout linking
northern and southern China. The Company has divested and reduced non-principal activities and focused on the pulp and paper
industry. For example the relocation of Wuhan Chenming has been completed. The Company has transferred its equity interest in
Goldtrust Futures and reduced the financial leasing business size by more than RMB20 billion compared with the peak level. The
Company has introduced high quality strategic investors such as CCB Investment Chuanfa Investment BOCOM Investment and
Xiamen International Trade to optimise its capital structure. In addition with a foreign trade recovery the Company has reached
strategic cooperation with major clients from Korea Sweden and other countries to further expand overseas markets.Innovation is the source of corporate development and we never stop innovation. In 2023 the Company applied for 33 patents
and obtained 42 authorised patents which laid the foundation for its long-term development.Keeping working for a promising future
Despite many uncertainties China’s economy has not changed its upside trend and its belief to make the real economy bigger
and stronger never changes.I believe that as long as we keep working and make progress we will have a promising road ahead. In the future Chenming
will further focus on its major operation of pulp and paper making put greater efforts in the disposal of assets in non-major
operations enhance asset utilisation efficiency consolidate its supply chain advantages research and develop new products
develop new customers scientifically manage operating costs and continue to strengthen the profitability of the Company.On behalf of the Board of the Company I would like to hereby express my sincere respect to the Company’s partners suppliers
customers and all shareholders and my heartfelt thanks to the departments at all levels and all employees of the Company!
Chen Hongguo
Chairman
28 March 2024
2023 ANNUAL REPORT 11IV Management Discussion and Analysis
I. Industry Situation of the Company during the Reporting Period
The industry in which the Company operates is paper making and paper product industry.As an important basic raw material industry the paper industry plays an important role in various fields of the national
economy. After nearly 30 years of accelerated progress China’s paper industry has made remarkable results and achieved
landmark development but is also facing new challenges in its new journey.During the reporting period the overall profitability of the paper industry improved but its momentum was slightly weaker
due to the sluggish downstream demand raw material price fluctuation increased supply and other factors. According to
the data of the Ministry of Industry and Information Technology from January to December 2023 revenue of papermaking
and paper product enterprises above designated size was RMB1392.6 billion down 2.4% year on year; their operating
costs were RMB1222.8 billion down 3.1% year on year; and their total profit was RMB50.84 billion up 4.4% year on year
On the supply side the domestic and overseas supply growth had a great effect on paper price fluctuation. Domestically
new paper production capacity in China had been drastically high in the past two years. Overseas the import volume
of machine-made paper and paperboard increased year on year as a result of the “zero tariff” policy. The domestic and
overseas factors boosted the machine-made paper supply. According to the data of the National Bureau of Statistics the
national output of machine-made paper and paperboard was 144055300 tonnes from January to December 2023 which
exceeded the 140 million tonnes mark for the first time and reached a record high.During the reporting period the prices of cultural paper and white cardboard prices were mixed. In terms of price the white
cardboard price rebounded slightly in October and November and showed an overall fluctuating downward trend. The
cultural paper price had a “V”-shaped trend that fluctuated downward in the first half of the year and floated upward in the
second half.In terms of cost the paper raw material prices and energy prices had fluctuated downward since 2023. However due to
a higher price base and the cost transmission delay the paper enterprise production cost was still at a high level in 2023.Coupled with the weak product demand enterprises faced a greater pressure to realise profit.In the short term the paper product prices still face some upside resistance under the sufficient supply. However the fierce
competition will prompt leading enterprises to exploit the scale and cost advantages and will facilitate the liquidation of
small and medium-sized enterprises to improve the industry operational efficiency thus further enhancing the industry
concentration. In the long run China’s paper industry concentration is still at a low level. The data shows that the CR10 in
China’s paper industry remained at about 45% in 2022 compared with about 90% for the CR10 in the United States which
means much room for improvement.
12 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
II. Principal activity of the Company during the Reporting Period
The Company is a large modern conglomerate principally engaged in pulp production and paper making and committed
itself to implementing a pulp and paper integration strategy. At present the Company has production bases in Shandong
Guangdong Hubei Jiangxi Jilin and other places with annual pulp and paper production capacity of 11 million tonnes
including pulp production capacity of 4.3 million tonnes. It is the first domestic paper making enterprise that achieves a
balance between pulp production and paper making capacity in general. During the reporting period the Company realised
revenue of RMB26609 million. The machine-made paper business is the major source of revenue of the Company. There
was no significant change in the principal activity and the business model of the Company.
1. Products
As a leading player in the domestic paper making industry in China the Company attaches great importance to
technology research and development and brand benefits. The Company has research institutions such as a national
enterprise technology centre a post-doctoral working station a collaborative innovation center for cleaner production
and refinery of light industry bio-based products the Shandong Pulp and Paper Making Engineering Lab and the
Guangdong Pulp and Paper Production Technology Research Centre. It has introduced internationally advanced pulp
and paper production technologies and equipment for the production of machine-made paper products covering
more than 200 types in seven series including culture paper coated paper white cardboard copy paper industrial
paper special paper and household paper. The Company owns “CHENMING CLOUDY MIRROR” “CHENMINGCLOUDLY LION” “CHENMING SNOW SHARK” “CHENMING EAGLE” “CHENMING GONGHAO” “XINGZHILIAN”
and other famous brands with each major product ranking among the highest in terms of market share in China. It
is the enterprise with the largest variety of products and the most complete products in the domestic paper making
industry.During the reporting period the 70g and 80g CLOUDY MIRROR and CLOUDY LEOPARD electrostatic copy paper of
the Company were successfully selected as the 2023 “Made in Shandong * Qilu Premium Products”. The “embossedpremium napkin” and the “high grade coated paper surface enhancement technology development” were awarded
2023 Shandong Province Technology Innovation Awards. As one of the brands which were selected as the first 223
“Shandong’s Good Product” brands the Company was awarded the “Shandong’s Good Product” logo authorisation.Customers recognised the product quality of the Company. The Company built up strategic cooperation relationship
with famous companies such as Daehan Paper CellMark AB in Sweden and Deli Group.
2023 ANNUAL REPORT 13IV Management Discussion and Analysis
II. Principal activity of the Company during the Reporting Period (Continued)
1. Products (Continued)
Category Major brands and types Major manufacturing companies Range of application
Culture paper series 1. “BIYUNTIAN” “CLOUDY MIRROR” “CLOUDY Shouguang Headquarters Printing publications textbooks magazines covers illustrationsLEOPARD” and “YUNJIN” all-wood pulp offset paper Shouguang Meilun notebooks test papers teaching materials reference books etc.and electrostatic base paper Zhanjiang Chenming
2. “CLOUDY LION” and “CLOUDY CRANE” original white Jiangxi Chenming
offset paper Jilin Chenming
3. “CLOUDY PINE” and “GREEN PINE” light weight paper
4. Blueprint paper colour offset paper pure texture paper
non-fluorescent offset paper PE offset paper
5. Beige and high white book paper
6. Light weight coated paper
Coated paper series 1. “SNOW SHARK” and “EAGLE” one-sided coated paper Shouguang Headquarters Double-sided coated paper is suitable for high quality printing such
2. “SNOW SHARK” “EAGLE” and “RABBIT” double-sided Shouguang Meilun as high-grade picture albums picture magazines and so on
coated paper promotional materials such as interior pages of high-end books
3. “EAGLE” and “RABBIT” matte coated paper wall calendars posters and so on and suitable for suitable for
high-speed sheet printing and high-speed rotary printing;
One-sided coated paper is suitable for upscale tobacco package
paper adhesive sticker shopping bags slipcases envelopes
gift wrapping and so on and suitable for large format printing and
commercial printing.White cardboard series 1. White cardboard of “LIYA” series white cardboard Shouguang Headquarters High-end gift boxes cosmetics boxes tags shopping bags publicity
and ivory cardboard of “LIPIN” and “POPLAR” series Jiangxi Chenming pamphlets high-end postcards; cigarette package printing of
high bulk cardboard and ivory cardboard of “LIZZY” Zhanjiang Chenming medium and high quality; milk package beverage package
and “BAIYU” series and super high bulk cardboard of disposable paper cups milk tea cups and noodle bowls.“LIYING” and “BAIYU” series
2. Food package board of “LIYA” and “LIZZY” series
3. Coated cattle card and LIYA book card
4. Playcard paper board
5. Chenming cigarette cardboard
Copy paper series “GOLDEN MINGYANG” and “GOLDEN CHENMING” Shouguang Headquarters Printing and copying business documents training materials and
copy paper “BOYA” and “BIYUNTIAN” copy paper Shouguang Meilun writing.“MINGYANG” “LUCKY CLOUDS” “BOYANG” and Zhanjiang Chenming
“SHANYIN” copy paper and “GONGHAO” and
“TIANJIAN” copy paper
Industrial paper series High-grade yellow anti-sticking base paper ordinary yellow/ Shouguang Headquarters Anti-stick base paper is mainly used for producing the paper base of
white anti-sticking base paper and PE paper Jiangxi Chenming stripping paper or anti-sticking base paper;
Zhanjiang Chenming Cast coated base paper is suitable for producing adhesive paper or
playcard compound paper after coating.Special paper series Thermal paper and glassine paper Shouguang Art Paper High-grade adhesive backing paper for electronics medicine food
washing supplies supermarket labels double-sided tapes etc.Household paper series Toilet paper facial tissue pocket tissue napkin paper Shouguang Meilun Daily toilet supplies; used in restaurants and other catering industries
towels and “XINGZHILIAN” and used in public toilets in hotels guesthouses and office
buildings and also suitable for home and other environment.
14 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
II. Principal activity of the Company during the Reporting Period (Continued)
2. Operation model
(1) Purchase model
The Company has established a supply chain management centre which adopts a supply chain managementmodel of “centralised procurement by the Group source as the first priority hierarchical separation and one-vote veto”. Through continuous improvement of the procurement information system the Company has
fully realised machine control management and optimised the authorisation approval process effectively
standardising the procurement management system. Based on the needs of production bases the Group
integrates the resources of related parties and implements centralised procurement. The Company seeks
sources and high-quality suppliers through industry exhibitions on-site inspections and competitive factory
research to strengthen procurement at source and reduce procurement costs; and introduces a supplier
competition mechanism by establishing a three-level joint review mechanism for suppliers and implementing a
system of eliminating substandard suppliers so as to improve supply quality. Meanwhile the Company actively
cooperates with financial institutions and third parties in the supply chain financial business and fully utilises the
funds from contributing parties to lower procurement costs deepen strategic cooperation and enhance supply
chain competitiveness.
(2) Production model
The Company has committed itself to implementing a pulp and paper integration strategy. Adhering to the
concept of “placing green development and environmental protection as its priority” the Company has actively
promoted clean production and vigorously carried out energy conservation and emission reduction aiming to be
a resource-saving and environmentally friendly model enterprise. It is innovating an integrated use of resources
and a circular industrial development mode and an “ecological chain” featuring resources products and
recycled resources has been established. As for production process the Company takes planned management
as the focus and implements a hierarchical planned management model for the Group the Company
factories and workshops. Its production volume is determined based on the sales its production is arranged
scientifically and its inventories are under strict control. The Group has set up a production scheduling centre
to monitor the operation of the production lines of each subsidiary around the clock on a real-time basis so as
to ensure normal production. It has actively built and promoted the MES management system and realised the
timely information transfer between the management and the production control unit through bridging the gap
between the ERP and DCS systems.
(3) Marketing model
The Company has always adhered to the marketing concept of “Good faith Win-Win and Sharing” while
wholeheartedly serving its customers. The Company has a relatively mature sales network and has set up
specialised sales companies responsible for the development of domestic and overseas markets product
sales and formulation of sales policies. The sales companies’ management systems are divided into product
lines product companies management areas and branches to achieve matrix management. The sales
companies are divided into product companies of culture paper series coated paper series white cardboard
series electrostatic paper series special paper series and household paper series according to product line.Each product company has its administrative district. A regional general manager is responsible for his/her
administrative district under which branch companies are set up. The chief representatives of the branch
companies have full authority to deal with branch business.
2023 ANNUAL REPORT 15IV Management Discussion and Analysis
II. Principal activity of the Company during the Reporting Period (Continued)
2. Operation model (Continued)
(3) Marketing model (Continued)
The Company has implemented a three-level scheduling mechanism. Branch companies administrative
districts and sales companies schedule task indicators daily to ensure the effective implementation of the plans.It sticks to a “four-level visit mechanism” to gain deep market insights and meet customer needs. Meanwhile
by leveraging its comprehensive information systems the Company has realised It-based management. It has
also established and improved the complaint handling system and customer satisfaction system to enhance the
Company’s marketing management level.
(4) R&D Mode
The Company is market-oriented and innovation is it driving force. It highly values technological R&D and has
formed a variety of R&D modes such as independent R&D technology introduction and industry university
research cooperation. At present the Company has a number of domestically leading innovative R&D platforms
including a national enterprise technology centre a post-doctoral working station a collaborative innovation
center for cleaner production and refinery of light industry bio-based products Shandong Pulp and Paper
Making Engineering Lab and the Guangdong Pulp and Paper Production Technology Research Centre which
have enhanced its independent innovation capabilities. Meanwhile on the basis of introducing internationally
advanced pulp and paper production lines and advanced technologies the Company has made technological
improvements and re-innovations and established new standards for processes and product quality forming
distinctive core technologies. The Company also works hard on the following aspects: carrying out academic
research with colleges and universities and R&D institutions such as Qilu University of Technology Qingdao
University of Science and Technology Tianjin University of Science and Technology and Institute of Chemical
Industry of Forest Products of the Chinese Academy of Forestry introducing digesting and absorbing scientific
research and innovation achievements accelerating the industrialisation of new and high technologies
optimising product mix and improving the competitiveness of its products in the market.III. Analysis of Core Competitiveness
After innovation and development for more than 60 years the Company has created a strong brand influence and cultivated
a solid comprehensive competitiveness. It promotes product upgrades enhances R&D strength and improves core
competitiveness by creating competitive advantages in industry chain featured with pulp and paper integration. The core
competitiveness of the Company did not underwent major changes during the reporting period. The details of the core
competitiveness of the Company are as follows:
1. Advantages of pulp and paper integration
The Company has unwaveringly implemented a pulp and paper integration strategy. At present its major production
bases located in Shouguang Zhanjiang and Huanggang are equipped with chemical pulp production lines with
total production capacity of wood pulp reaching 4.30 million tonnes. It is the first modern large-scale paper making
company that basically realises wood pulp self-sufficiency in China. A complete supply chain not only creates cost
advantage for the Company but also safeguards the safety stability and quality of upstream raw materials and
renders strong support for the Company to maintain its long-term competitiveness.
2. Scale advantages
The paper making industry is a typical capital-intensive and technology-intensive industry that follows the laws of
economies of scale. The Company is a leading player in the paper making industry in China. Its large-scale production
bases can be found in the major markets in Southern Central Northern and Northeast China with annual pulp and
paper production capacity reaching 11 million tonnes where reasonable production scale creates the marginal cost
advantage. Meanwhile by leveraging the scale advantages the Company has built an international logistics centre
and railway dedicated lines and docks and constructed a comprehensive logistics service platform covering container
shipping bonded warehousing transfer and storage at stations and terminals realising the improvement of logistics
efficiency and the stability of logistics costs.
16 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
III. Analysis of Core Competitiveness (Continued)
3. Product advantages
The Company is an enterprise that offers the widest and the most complete product range in the paper making
industry in China. The product series include culture paper white cardboard coated paper copy paper household
paper thermal paper etc. with each major product ranking among the best in terms of market share. The Company
has attached great importance to technology research and development. By introducing the most advanced pulping
and paper making technology and equipment in the world it persists in technological innovation and work process
optimisation so as to help improve product quality and structure upgrade continuously improve the brand value of
Chenming and enhance brand benefits.
4. Industry layout advantages
Closely centring on the pulp and paper integration strategy the Company has integrated resources and established
its production bases in the core target market to promote the coordinated development of all regions. Currently the
Company adopts the market-oriented approach and has production bases in Shandong Guangdong Hubei Jiangxi
Jilin and other places. With all products sold at close distances the Company substantially reduces transportation
costs while improving service efficiency achieving a “win-win” between the Company and its users.
5. Advantages in technical equipment
The Company highly values the introduction and upgrades of technical equipment actively push equipment and
technology upgrade forward and boasts the largest and most advanced pulping and paper making production
line in the world. The Company’s major production equipment has been imported from internationally renowned
manufacturers including Metso and Valmet of Finland Voith of Germany Andritz of Austria etc. and reached the
advanced international level thus ensuring production efficiency and product quality.
6. Advantages in research and innovation
The Company has scientific research institutions including a national enterprise technology centre a post-doctoral
working station and a collaborative innovation center for cleaner production and refinery of light industry bio-based
products. At the same time the Company actively carries out in-depth industry-university-research cooperation with
prestigious domestic universities and research institutes continuously improves technical innovation capabilities and
scientific research and development levels and develops a series of new products with high technology contents
and high added value as well as proprietary technologies. The Company and its subsidiaries Zhanjiang Chenming
Shouguang Meilun Jiangxi Chenming Jilin Chenming and Huanggang Chenming are high and new technology
enterprises. As at the end of the reporting period the Company had obtained over 400 national patents including 41
invention patents 7 national new products 16 scientific and technological progress awards above the provincial level
5 national scientific and technological projects and 75 provincial technological innovation projects. The Company
took the lead in obtaining the ISO9001 quality system certification the ISO14001 environmental protection system
certification and the FSC-COC international forest system certification among domestic peers.
7. Team management advantages
The Company possesses a complete and reasonable talent structure consisting of experienced personnel including
high-end talents specialising in production technology sales finance laws etc. In the course of business operations
the stable core team has developed a corporate culture that ties in with the Company’s development summarised
management experience with industry characteristics and formed a team advantage integrating management and
culture allowing it to accurately grasp the industry development trend. At the same time the Company has paid
attention to the construction of a talent reserve and cultivation mechanism. With advanced business concepts and
enormous development space the Company has attracted an array of high-calibre professionals and improved the
level of human capital construction providing solid guarantee for the Company’s long-term sustainable development.
2023 ANNUAL REPORT 17IV Management Discussion and Analysis
III. Analysis of Core Competitiveness (Continued)
8. Advantages in environmental governance capacity
The Company has actively upheld the concept of “lucid waters and lush mountains are invaluable assets” adhered to
the development idea of “placing green development and environmental protection as its priority” always regarded
environmental protection as the “life project” clung to the green development model of clean production and resource
recycling and earnestly shouldered the corporate responsibility for environmental protection. In recent years the
Company and its subsidiaries have invested more than RMB8 billion in total in environmental protection and have
constructed the pollution treatment facilities including the alkali recovery system reclaimed water treatment system
reclaimed water reuse system white water recovery system and black liquor comprehensive utilisation system. The
environmental protection indicators rank high in China and in the world. At present the Company adopts the world’s
most advanced “ultrafiltration membrane + reverse osmosis membrane” technology to complete the reclaimed water
recycling membrane treatment project which is the largest reclaimed water reuse project in the domestic paper
industry. The reclaimed water recycle rate attains the industry-leading level. The reclaimed water quality meets
drinking water standards which can save hundreds of thousands cubic metres of fresh water every day. Meanwhile
in response to the “dual carbon” policy the Company actively introduces photovoltaic power generation and biomass
power generation continuously optimises the energy structure and improves the level of low-carbon production.IV. Analysis of principal operations
1. Overview
During the reporting period the sales volume of the Company’s machine-made paper decreased year on year due to
the weak downstream demand in the paper industry. At the same time the prices of machine-made paper especially
that of white cardboard fell sharply year on year due to the concentration of new production capacity. The prices of
raw materials such as wood chips raw coal and chemicals were still running at a high level which seriously squeezed
the Company’s profitability. In 2023 the Company completed machine-made paper output of 4.78 million tonnes and
sales volume of 4.74 million tonnes realised revenue of RMB26609 million and net profit attributable to owners of
the Company of RMB-1281 million. As a typical pro-cyclical industry the paper industry has a positive correlation
with the macroeconomic trend. At present China economy is in a good development trend. With the continuous
national macroeconomic policy efforts the paper industry downstream demand will gradually pick up the short-term
supply and demand imbalance will be alleviated and the industry prosperity is expected to improve. Meanwhile the
Company will actively improve quality and efficiency by adjusting product structure expanding exports improving
production efficiency controlling production costs and disposing of non-principal activities so as to further improve
the Company’s profitability.
18 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
2. Revenue and cost
(1) Components of revenue
Unit: RMB
20232022
Amount % of revenue Amount % of revenue Increase/decrease
Total revenue 26608570228.20 100% 32004367320.91 100% -16.86%
By industry
Machine-made paper 23892883773.10 89.79% 28398850766.51 88.73% -15.87%
Chemical pulp 551886319.48 2.07% 1043284411.27 3.26% -47.10%
Electricity and steam 223450300.54 0.84% 288447315.51 0.90% -22.53%
Construction materials 222788884.78 0.84% 265496913.56 0.83% -16.09%
Hotel and property rentals 212364573.64 0.80% 238020274.82 0.74% -10.78%
Mould processing 204029538.47 0.77% 308596084.40 0.96% -33.88%
Chemicals 128495469.03 0.48% 169232476.00 0.53% -24.07%
Others 1172671369.16 4.41% 1292439078.84 4.04% -9.27%
By product
Duplex press paper 7702426452.75 28.95% 8449759248.92 26.40% -8.84%
White cardboard 5477558929.56 20.59% 9061724789.41 28.31% -39.55%
Electrostatic paper 4005559008.36 15.05% 4077351284.38 12.74% -1.76%
Coated paper 3925663395.23 14.75% 4149820827.47 12.97% -5.40%
Anti-sticking raw paper 1127626969.18 4.24% 973542096.46 3.04% 15.83%
Thermal paper 553666757.69 2.08% 582687847.45 1.82% -4.98%
Other machine-made paper 1100382260.33 4.14% 1103964672.42 3.45% -0.32%
Chemical pulp 551886319.48 2.07% 1043284411.27 3.26% -47.10%
Electricity and steam 223450300.54 0.84% 288447315.51 0.90% -22.53%
Construction materials 222788884.78 0.84% 265496913.56 0.83% -16.09%
Hotel and property rentals 212364573.64 0.80% 238020274.82 0.74% -10.78%
Mould processing 204029538.47 0.77% 308596084.40 0.96% -33.88%
Chemicals 128495469.03 0.48% 169232476.00 0.53% -24.07%
Others 1172671369.16 4.41% 1292439078.84 4.04% -9.27%
By geographical segment
Mainland China 20082348032.36 75.47% 23860251349.91 74.55% -15.83%
Other countries and regions 6526222195.84 24.53% 8144115971.00 25.45% -19.87%
By sales mode
Distribution 18126061624.64 68.12% 20430260632.51 63.84% -11.28%
Direct sales 8482508603.56 31.88% 11574106688.40 36.16% -26.71%
2023 ANNUAL REPORT 19IV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
2. Revenue and cost (Continued)
(2) Industries products regions and sales model accounting for over 10% of revenue or operating profit of the
Company
□ Applicable □ Not applicable
Unit: RMB
Increase/ Increase/
Increase/ decrease of decrease of
decrease of operating gross profit
revenue as costs as margin as
compared compared compared
to the to the to the
corresponding corresponding corresponding
Gross profit period of the period of the period of the
Revenue Operating costs margin prior year prior year prior year
By industry
Machine-made paper 23892883773.10 22038839089.61 7.76% -15.87% -9.85% -6.15%
By product
Duplex press paper 7702426452.75 6929011543.24 10.04% -8.84% -6.46% -2.29%
White cardboard 5477558929.56 5673086405.12 -3.57% -39.55% -27.52% -17.20%
Electrostatic paper 4005559008.36 3410527141.51 14.86% -1.76% -2.48% 0.63%
Coated paper 3925663395.23 3389639629.49 13.65% -5.40% -1.97% -3.03%
By geographical segment
Mainland China 20082348032.36 18322497941.41 8.76% -15.83% -9.65% -6.24%
Other countries and regions 6526222195.84 6122988358.52 6.18% -19.87% -13.68% -6.72%
By sales mode
Distribution 18126061624.64 16782843186.05 7.41% -11.28% -4.69% -6.40%
Direct sales 8482508603.56 7662643113.88 9.67% -26.71% -21.53% -5.96%
Under the circumstances that the statistics specification for the Company’s principal operations data
experienced adjustment in the reporting period the principal activity data upon adjustment of the statistics
specification as at the end of the reporting period in the latest year
□ Applicable □ Not applicable
20 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
2. Revenue and cost (Continued)
(3) Whether revenue from sales in kind is higher than revenue from services
□ Yes □ No
Increase/
By industry Item Unit 2023 2022 decrease
Machine-made paper Sales ’0000 tonnes 474 515 -7.96%
Production output ’0000 tonnes 478 502 -4.79%
Inventories ’0000 tonnes 36 32 12.50%
Explanation on why the related data varied by more than 30%
□ Applicable □ Not applicable
(4) Performance of material sales contracts and material procurement contracts of the Company during the
reporting period
□ Applicable □ Not applicable
2023 ANNUAL REPORT 21IV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
2. Revenue and cost (Continued)
(5) Composition of operating costs
By industry
Unit: RMB
20232022
% of % of
operating operating Increase/
By industry Item Amount costs Amount costs decrease
Machine-made paper Raw materials 12570191697.45 57.04% 13880562601.16 56.78% -9.44%
Energy and power 3035894899.73 13.78% 3551871417.54 14.53% -14.53%
Chemicals 2971091082.48 13.48% 3219278883.07 13.17% -7.71%
Depreciation 974858417.49 4.42% 1015882589.52 4.16% -4.04%
Freight 879576446.70 3.99% 991532365.83 4.06% -11.29%
Labour costs 273486536.00 1.24% 300586979.17 1.23% -9.02%
Other production costs 1333740009.76 6.05% 1488310143.03 6.09% -10.39%
Subtotal 22038839089.61 100.00% 24448024979.32 100.00% -9.85%
Chemical pulp Raw materials 326385778.01 59.41% 483207371.49 59.18% -32.45%
Energy and power 78827192.35 14.35% 123647038.01 15.14% -36.25%
Chemicals 77144557.36 14.04% 112068893.16 13.72% -31.16%
Accumulated depreciation 25312257.02 4.61% 35364701.70 4.33% -28.43%
Labour costs 7101094.24 1.29% 10463973.85 1.28% -32.14%
Other production costs 34630638.99 6.30% 51810755.29 6.34% -33.16%
Subtotal 549401517.97 100.00% 816562733.50 100.00% -32.72%
Electricity and heat Raw materials 161991982.35 76.38% 214274012.48 79.34% -24.40%
Depreciation 16818943.23 7.93% 26624446.17 9.86% -36.83%
Labour costs 7859289.01 3.71% 8596817.64 3.18% -8.58%
Energy and power 4983704.94 2.35% 6245631.23 2.31% -20.20%
Chemicals 387301.28 0.18% 470492.88 0.17% -17.68%
Other production costs 20048349.41 9.45% 13862506.91 5.13% 44.62%
Subtotal 212089570.22 100.00% 270073907.31 100.00% -21.47%
Construction materials Raw materials 161288633.91 74.50% 158431654.76 69.34% 1.80%
Energy and power 20858840.97 9.64% 22399396.93 9.80% -6.88%
Freight 5718100.50 2.64% 16755150.18 7.33% -65.87%
Labour costs 7205420.78 3.33% 8353153.12 3.66% -13.74%
Depreciation 5941206.01 2.74% 6753081.28 2.96% -12.02%
Other production costs 15469301.87 7.15% 15800412.81 6.92% -2.10%
Subtotal 216481504.04 100.00% 228492849.08 100.00% -5.26%
22 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
2. Revenue and cost (Continued)
(6) Change of scope of consolidation during the reporting period
□ Yes □ No
During the year 1 subsidiary was newly established namely Shouguang Kunhe Trading Co. Ltd. 1 subsidiary
was deregistered namely Beijing Chenming Financial Leasing Co. Ltd. 2 subsidiaries were disposed of partial
equity interest namely Wuhan Chenming Hanyang Paper Holdings Co. Ltd. and Wuhan Chenming Qianneng
Electric Power Co. Ltd. 1 subsidiary was merged and acquired namely Jiangxi Chenming Port Co. Ltd.
(7) Significant change in or adjustment of the businesses products or services of the Company during the
reporting period
□ Applicable □ Not applicable
(8) Sales to major customers and major suppliers
Sales to major customers of the Company
Total sales to top 5 customers (RMB) 5966203769.14
Total sales to top 5 customers as a percentage of the total sales for the year 22.42%
Sales to top 5 customers who are related parties as a percentage of
the total sales for the year 0.00%
Information on top 5 customers of the Company
As a percentage of the
No. Name of customer Sales (RMB) total sales for the year (%)
1 Customer A 2246619932.87 8.44%
2 Customer B 1223279810.02 4.60%
3 Customer C 1013493101.24 3.81%
4 Customer D 854121755.87 3.21%
5 Customer E 628689169.14 2.36%
Total － 5966203769.14 22.42%
Other explanation of the major customers
□ Applicable □ Not applicable
2023 ANNUAL REPORT 23IV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
2. Revenue and cost (Continued)
(8) Sales to major customers and major suppliers (Continued)
Major suppliers of the Company
Total purchases from top 5 suppliers (RMB) 5966203769.14
Total purchases from top 5 suppliers as a percentage of the total purchases for the year 22.33%
Total purchases from top 5 suppliers who are related parties as a percentage of
the total purchases for the year 0.00%
Information on top 5 suppliers of the Company
As a percentage of the total
No. Name of supplier Purchases (RMB) purchases for the year (%)
1 Supplier A 2489770843.69 10.18%
2 Supplier B 1137232840.66 4.65%
3 Supplier C 655558321.92 2.68%
4 Supplier D 609513026.78 2.49%
5 Supplier E 566015190.95 2.32%
Total － 5458090224.00 22.33%
Other explanation of the major suppliers
□ Applicable □ Not applicable
3. Expenses
Unit: RMB
Increase/
2023 2022 decrease Reasons for material changes
Selling and distribution expenses 230999637.43 242181274.09 -4.62% Wages or salaries of sales personnel
decreased year on year during the
reporting period.General and administrative expenses 690319782.01 750546703.34 -8.02% Reversal of expenses recognised
in prior period as the remaining
restricted shares unable to meet
the unlocking conditions during
the reporting period.Finance expenses 2009666708.14 2146556149.06 -6.38% Interest expenses of the Company
decreased year on year during the
reporting period.
24 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
4. Research and development expenditure
□ Applicable □ Not applicable
Objectives to be Expected impact on the future
Name of major R&D project Project purpose Project progress Achieved development of the Company
Technological development of white Enhancing product Trial production To become Improving customer satisfaction with
cardboard for handbags functionality or improving stage domestically products and increasing market
performance leading share.Non-fluorescent white cardboard Enhancing product Small testing stage To become Improving customer satisfaction with
technology development functionality or improving domestically products and increasing market
performance leading share.Thermal paper colour sensitivity key Enhancing product Pilot testing stage To become Improving customer satisfaction with
technology development functionality or improving domestically products and increasing market
performance leading share.High bonding coating formulation Enhancing product Trial production To become Improving customer satisfaction with
technology research and development functionality or improving stage domestically products and increasing market
performance leading share.Culture paper wet part filling new Enhancing product Trial production To become Improving customer satisfaction with
technology development functionality or improving stage domestically products and increasing market
performance leading share.Research on low-temperature cooking Reducing energy Pilot testing stage To become Improving product quality lowering
technology for sulfate pulping consumption or domestically production costs and improving
improving energy leading the Company’s economic
efficiency benefits.Research on deep delignification Saving raw materials Pilot testing stage To become Improving product quality lowering
technology for broadleaf wood sulfate domestically production costs and improving
pulping leading the Company’s economic
benefits.
2023 ANNUAL REPORT 25IV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
4. Research and development expenditure (Continued)
R&D personnel of the Company
Percentage
2023 2022 of change
R&D headcount 1502 1370 9.64%
Ratio of R&D personnel 14.16% 12.62% 1.54%
Academic background of R&D personnel
Bachelor’s degree 154 135 14.07%
Master’s degree 3 3 0.00%
Age composition of R&D personnel
Under 30 319 305 4.59%
30~40 years old 853 717 18.97%
R&D expenditure of the Company
Percentage
2023 2022 of change
R&D expenditure (RMB) 1164419698.13 1290281540.10 -9.75%
R&D expenditure to revenue 4.38% 4.03% 0.35%
Amount of R&D expenditure capitalised (RMB) 0.00 0.00 0.00
Capitalised R&D expenditure to R&D expenditure 0.00% 0.00% 0.00%
Reasons for and effects of significant changes in the composition of the Company’s R&D personnel
□ Applicable □ Not applicable
Reasons for significant change in total R&D expenditure to revenue
□ Applicable □ Not applicable
Reasons for and reasonableness of the significant change of the capitalisation rate of R&D expenditure
□ Applicable □ Not applicable
26 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
5. Cash flows
Unit: RMB
Increase/
Item 2023 2022 decrease
Subtotal of cash inflows from operating activities 29165118764.19 36218528896.13 -19.47%
Subtotal of cash outflows from operating activities 24775169455.37 32768704653.76 -24.39%
Net cash flows from operating activities 4389949308.82 3449824242.37 27.25%
Subtotal of cash inflows from investing activities 377601853.11 271463678.75 39.10%
Subtotal of cash outflows from investing activities 319310876.89 2716434567.72 -88.25%
Net cash flows from investing activities 58290976.22 -2444970888.97 102.38%
Subtotal of cash inflows from financing activities 35277274955.07 37596224354.35 -6.17%
Subtotal of cash outflows from financing activities 41061017053.99 39577284434.80 3.75%
Net cash flows from financing activities -5783742098.92 -1981060080.45 -191.95%
Net increase in cash and cash equivalents -1395226406.90 -1009455697.51 -38.22%
Explanation on main effects of material changes in relevant data year on year
□ Applicable □ Not applicable
(1) Net cash flows from investment activities increased by 102.38% as compared to the same period of the prior
year mainly due to the increase in cash outflows from investing activities as a result of the participation in the
establishment of joint ventures by Jiangxi Chenming a subsidiary during the prior period for the purpose of
revitalising the assets of the financial lease business and consolidating and optimising the resource allocation.
(2) Net cash flows from financing activities decreased by 191.95% as compared to the corresponding period of the
prior year mainly due to the payment of due debts to reduce debt size during the reporting period.Explanation on reasons leading to the material difference between net cash flows from operating activities during the
reporting period and net profit for the year
□ Applicable □ Not applicable
2023 ANNUAL REPORT 27IV Management Discussion and Analysis
V. Analysis of non-principal operations
□ Applicable □ Not applicable
Unit: RMB
As a percentage
Amount of total profit Reason Is it sustainable
Other income 337324331.43 -19.73% Receipt of government grants Including RMB101 million which
related to daily business activities is the annual amortisation amount
of government grants received in
prior periods which is sustainable.Investment income 505067035.78 -29.54% Recognition of external investment No
income and dividends as well as
income from equity disposal and
derecognition of financial assets
during the reporting period
Gain or loss arising from -25555304.50 1.49% Fluctuations of fair values of the No
the change in fair value shares of China Bohai Bank as
well as forestry assets and other
non-current financial assets
Credit impairment loss -319956249.39 18.71% Bad debt provisions for receivables No
VI. Analysis of assets and liabilities
1. Material changes of asset items
Unit: RMB
As at the end of 2023 As at the beginning of 2023
As a percentage As a percentage Percentage
Amount of total assets Amount of total assets change Description
Monetary funds 12124832831.30 15.25% 14000434986.08 16.61% -1.36% Mainly due to a decrease in bank deposits as
at the end of the reporting period.Accounts 2528507059.83 3.18% 3212260445.96 3.81% -0.63% Mainly due to a decrease in receivables from
receivables customers as at the end of the reporting
period.Other receivables 2224904557.88 2.80% 1717445443.44 2.04% 0.76% Mainly due to partial equity disposal of Wuhan
Chenming and an increase in equity
receivables during the reporting period.Inventories 4958178000.36 6.24% 6821916159.95 8.09% -1.85% Mainly due to the transfer of development
costs to fixed assets from inventories as at
the end of the reporting period.
28 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
VI. Analysis of assets and liabilities (Continued)
1. Material changes of asset items (Continued)
As at the end of 2023 As at the beginning of 2023
As a percentage As a percentage Percentage
Amount of total assets Amount of total assets change Description
Construction in 859617965.16 1.08% 558866880.36 0.66% 0.42% Mainly due to an increase in the investment
progress in the Zhanjiang Chenming special paper
project during the reporting period.Short-term 33475479021.62 42.11% 36385048295.02 43.16% -1.05% Mainly due to the decrease in short-term debts
borrowings as at the end of the reporting period.Bills payable 4618986463.95 5.81% 3128595835.04 3.71% 2.10% Mainly due to the increase in proportion of
payment for goods using bills during the
reporting period.Non-current 3631937677.82 4.57% 4673505241.86 5.54% -0.97% Mainly due to the repayment of long-term
liabilities due borrowings due within one year and bonds
within one year payable by the Company during the
reporting period.Long-term 4681014489.64 5.89% 3982236251.08 4.72% 1.17% Mainly due to an increase of the long-term
borrowings borrowings of the Company during the
reporting period.Long-term 2541095217.66 3.20% 3160771126.31 3.75% -0.55% Mainly due to the repayment of some
payables equipment finance leases by the Company
during the reporting period.A higher proportion of overseas assets
□ Applicable □ Not applicable
2023 ANNUAL REPORT 29IV Management Discussion and Analysis
VI. Analysis of assets and liabilities (Continued)
2. Assets and liabilities measured at fair value
□ Applicable □ Not applicable
Unit: RMB
Profit or loss Cumulative Amount Amount
from change fair value Impairment increased/ recovered/
in fair value change provided acquired disposed of
during the charged to during the during the during the
Item Opening balance period equity period period period Other changes Closing balance
Financial assets
1. Held-for-trading financial assets
(excluding derivative financial assets) 74708444.88 -28740129.26 -149716501.53 325976.09 46294291.71
2. Other non-current financial assets 786750761.62 -3590983.62 59269016.38 1598737.43 781561040.57
3. Consumable biological assets
measured at fair value 1496607818.84 6775808.38 36760805.03 26595279.22 46000816.83 1483978089.61
Total 2358067025.34 -25555304.50 -53686680.12 26595279.22 47599554.26 325976.09 2311833421.89
Whether there were any material changes on the measurement attributes of major assets of the Company during the
reporting period
□ Yes □ No
3. Restriction on asset rights as at the end of the reporting period
Unit: RMB
As at the end of the period As at the beginning of the period
Type of Type of
Item Book balance Book value restriction Restriction Book balance Book value restriction Restriction
Monetary funds 11360599088.69 11360599088.69 Pledged As deposits for bank 11840974836.57 11840974836.57 Pledged As deposits for bank
acceptance bills letter of acceptance bills letter of
credit letter of guarantee credit letter of guarantee
loans deposit reserves and loans deposit reserves and
interest receivable interest receivable
Fixed assets 9411111670.62 6303095864.20 Charged As collateral for bank 15651057538.84 10063641052.69 Charged As collateral for bank
borrowings and long-term borrowings and long-term
payables payables
Investment properties 5941741699.60 5004776921.76 Charged As collateral for bank 5650386492.30 4895514630.65 Charged As collateral for bank
borrowings borrowings
Intangible assets 865105844.99 665784045.39 Charged As collateral for bank 1367006629.88 1033897418.27 Charged As collateral for bank
borrowings and long-term borrowings and long-term
payables payables
Accounts receivable 403349324.55 398710807.32 Pledged As collateral for borrowings 100563153.66 100000000.00 Pledged As collateral for borrowings
Accounts receivable financing 90551168.01 90551168.01 Pledged As collateral for obtaining 8497931.30 8497931.30 Pledged As collateral for obtaining
letters of credit letters of credit
Total 28072458796.46 23823517895.37 34618486582.55 27942525869.48
30 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
VII. Analysis of investments
1. Overview
□ Applicable □ Not applicable
Investments during the
corresponding period of
Investments during the reporting period (RMB) prior year (RMB) Change
582400000.003362620040.00-82.68%
2. Material equity investments acquired during the reporting period
□ Applicable □ Not applicable
Unit: RMB
Progress Profit or
as at the loss from Date of
Form of Investment Source Period of date of Estimated investment Involvement disclosure Disclosure
Name of investee Principal activities investment Amount Shareholding of fund Partner(s) Investment Product type balance sheet return for the period in lawsuit if any Index if any
Shouguang Kunhe Sales of pulp Newly 10000000.00 100% Self-owned Subsidiary Long-term Trading Completed N/A -56105.04 No N/A N/A
Trading Co. Ltd. established funds
Jiangxi Chenming Cargo handling and Acquisition 5400000.00 100% Self-owned Subsidiary Long-term Freight Completed N/A -1234456.79 No N/A N/A
Port Co. Ltd. warehouse operations funds transport
Shouguang Chenming Sale of paper products Capital 417000000.00 100% Self-owned Subsidiary Long-term Trading Completed N/A 10452698.14 No N/A N/A
Import and Export and paper production increase funds
Trade Co. Ltd. materials
Hainan Chenming Sale of paper pulp Capital 150000000.00 100% Self-owned Subsidiary Long-term Trading Completed N/A 1227492.53 No N/A N/A
Technology wood and chemical injection funds
Co. Ltd. products etc.Total － － 582400000.00 － － － － － － 10389628.84 － － －
2023 ANNUAL REPORT 31IV Management Discussion and Analysis
VII. Analysis of investments (Continued)
3. Material non-equity investments during the reporting period
□ Applicable □ Not applicable
4. Financial asset investment
(1) Security investments
□ Applicable □ Not applicable
Unit: RMB
Book value
Book value at Profit or loss Accumulated Acquisition Disposal as at the
Accounting the beginning from changes in changes in fair amount amount Profit or loss end of the
Abbreviation of Initial measurement of the reporting fair value in the value included during the during the during the reporting Classification
Type of security Stock code stock name investment cost model period current period in equity period period reporting period period in account Source of fund
Domestic and foreign 09668 China Bohai Bank 195684817.15 Measured at 74708444.88 -28740129.26 -149716501.53 0 0 -28414153.17 46294291.71 Held-for-trading Self-owned
shares fair value financial assets funds
Total 195684817.15 － 74708444.88 -28740129.26 -149716501.53 0.00 0.00 -28414153.17 46294291.71 － －
Disclosure date of announcement in relation to the 20 June 2020
consideration and approval of securities investments by
the Board
Disclosure date of announcement in relation to the N/A
consideration and approval of securities investments by
the shareholders’ general meeting (if any)
(2) Derivative investments
□ Applicable □ Not applicable
The Company did not have any derivative investments during the reporting period.
5. Use of proceeds
□ Applicable □ Not applicable
The Company did not use any proceeds during the reporting period.
32 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
VIII. Disposal of material assets and equity interest
1. Disposal of material assets
□ Applicable □ Not applicable
During the reporting period the Company did not dispose of material assets.
2. Disposal of material equity interest
□ Applicable □ Not applicable
Net profit
contribution Net profit
to the contribution
Company to the Carried out
from the Company on schedule
beginning of on equity Pricing or not if not
the period disposal as a basis of Related Relevant the reasons
Transaction up to the Effect of percentage disposal of party equity title fully and measures
Equity interest consideration disposal date disposal on of total net equity transaction Relationship with transferred taken by the Disclosure Disclosure
Counterparty(ies) disposed of Disposal date (RMB’0000) (RMB’0000) the Company profit interest or not counterparty(ies) or not Company Date index
Wuhan Yuanfeng Yinhu Wuhan Chenming 30 September 48000.00 -950.61 Partial equity disposal -27.07% Assessed No N/A Yes Yes 9 September http://www.Industrial Investment Hanyang Paper 2023 of Wuhan Chenming value 2023 cninfo.com.cn
Partnership (Limited Holdings Co. a subsidiary did not
Partnership) Ltd. affect the normal
operation of the
Company and the
cash realised from the
equity disposal also
replenished liquidity.IX. Analysis of major subsidiaries and investees
□ Applicable □ Not applicable
Major subsidiary and investees accounting for over 10% of the net profit of the Company
Unit: RMB
Name of company Type of company Principal activities Registered capital Total assets Net assets Revenue Operating profit Net profit
Zhanjiang Chenming Subsidiary Production and sale of duplex 6913572423.00 25679469765.94 8608929563.69 11000808231.98 -671077694.93 -541888245.61
Pulp & Paper Co. press paper electrostatic
Ltd. paper and white cardboard
etc.Shouguang Meilun Subsidiary Production and sale of coated 4801045519.00 15630774179.12 8460429693.18 9084559413.98 139886154.62 153008366.72
Paper Co. Ltd. paper culture paper
household paper and
chemical pulp
Huanggang Chenming Subsidiary Production and sale of 3350000000.00 8450563071.62 3298440947.12 4946196163.77 -327507366.27 -260740821.94
Pulp & Paper Co. chemical pulp
Ltd.
2023 ANNUAL REPORT 33IV Management Discussion and Analysis
IX. Analysis of major subsidiaries and investees (Continued)
Acquisition and disposal of subsidiaries during the reporting period
□ Applicable □ Not applicable
Methods to acquire and dispose
of subsidiaries during the Impact on overall production and
Name of company reporting period operation and results
Shouguang Kunhe Trading Co. Ltd. Newly established Net profit decreased by RMB56100.Jiangxi Chenming Port Co. Ltd. Acquisition Net profit decreased by RMB1234500.Beijing Chenming Financial Leasing Co. Ltd. deregistered Net profit decreased by RMB3900.Wuhan Chenming Hanyang Paper Holdings
Co. Ltd. Loss of control due to partial Net profit increased by RMB359 million.Wuhan Chenming Qianneng Electric Power equity transfer
Co. Ltd.Particulars of major subsidiaries and investees
1. During the reporting period the price of white paper board declined significantly due to an increase in supply and
insufficient demand and profit margins of Zhanjiang Chenming were squeezed.
2. The demand for cultural paper and coated paper the major products of Shouguang Meilun was rigid and they are
less affected by the macroeconomic environment during the reporting period.
3. The price of chemical pulp the major product of Huanggang Chenming declined due to an increase in supply and
Huanggang Chenming’s profitability decreased year on year.The Company enjoys the advantages of pulp and paper integration large scale comprehensive products reasonable
industrial layout and advanced technical equipment. With the gradual rise in the selling prices of machine-made paper and
the continuous optimisation of the cost side the Company’s profitability will be effectively restored.
34 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
X. Structured entities controlled by the Company
□ Applicable □ Not applicable
XI. Outlook on the future development of the Company
(i) Overview and trend of the industry
Paper industry is a typical pro-cyclical industry. During the reporting period the paper product price faced greater
downward pressure due to the production capacity expansion weak demand and other factors. Coupled with the raw
material prices and energy cost increase year on year the paper enterprises’ profit margin faced squeezing. When we
step into 2024 the wood pulp price has fell the paper product demand has recovered and corporate profitability has
shown obvious signs of gradual improvement. Due to the strong expectation of new capacity release the major raw
material prices and energy prices still have downward pressure which may further ease the cost pressure and the
industry is expected to continue its recovery.From an industry structure perspective China’s paper industry is expected to increase its concentration ratio. Driven
by market competition and environmental protection policies the mid– to low-end production capacity in the industry
will accelerate to be phased out and the paper industry market concentration has steadily increased but there is still
a considerable gap compared with developed countries. According to public data the CR10 in China’s paper industry
remained at about 45% in 2022 compared with about 90% for the CR10 in the United States indicating much room
for industry concentration improvement.According to the national “double circulation” strategy and the goal of China’s GDP per capita heading for the level
of a medium-level developed country by 2035 China’s paper market demand in the future will still grow greatly
indicating market potential. The industry has continuously improved the resource utilisation rate and transformed
towards the use of clean renewable high energy density and low emission resources. It is inevitable for large
companies to enhance their comprehensive competitiveness through the whole industrial chain development. The
leading player have the advantages such as industrial chain scale and production management efficiency and will
undoubtedly become long-term beneficiaries under the trend of sustainable and healthy development.
2023 ANNUAL REPORT 35IV Management Discussion and Analysis
XI. Outlook on the future development of the Company (Continued)
(ii) Development strategy of the Company
In the future Chenming Group will adhere to the general tone of green low-carbon circular and sustainable
development take the Made in China 2025 Plan as the guide and scientific development as the theme quality and
efficiency improvement as its focus and the promotion of the integration of manufacturing and financial services
and the deep integration of industrialisation and intelligence as the main line. The Group will further switch its mode
and adjust its structure to comprehensively improve its quality efficiency management level technological content
and happiness index and fully enhance its brand image and advance to become stronger better and bigger striving
to achieve over RMB10 billion in profit before tax during the 14th Five-Year Plan period and build a world-class
enterprise group with the highest growth momentum.Transformation and upgrade strategy: The Group will comprehensively optimise the industrial structure and regional
layout focus on developing pulp and paper industries and build a coordinated and efficient industrial system.Green development strategy: The Group will adhere to the “forestry pulp and paper integration” management idea
rely on technological progress advanced equipment and stringent management to ensure clean production and
develop circular economy. The Group will build a resource-saving and environment-friendly enterprise benchmark
seek development while protecting the environment improve environmental protection level in scientific development
and achieve both economic and environmental benefits.Internationalisation strategy: The Group will take root in China expand into the world rely on China’s “Belt and Road”
initiative accelerate the “going out” pace deepen international exchanges and cooperation and gradually expand
into overseas markets.Operational excellence strategy: With the management policy of “Construct a learning atmosphere and standardiseeverything resolutely implement to seek practical results” the Group will continuously strengthen the whole process
management of production and operation marketing financial costs and project construction effectively integrate
system resources and continuously improve the management level and profitability.Talent strengthening strategy: The Group will improve the talent training introduction use and encouragement
mechanism and actively cultivate a high-end compound innovative and international talent team to support the
Company to become a world-class enterprise with the highest growth momentum;
Harmonious development strategy: The Group will comprehensively strengthen the corporate culture construction
wholeheartedly care for employees actively fulfil corporate social responsibilities enhance the ability to create
comprehensive economic social and environmental values shape the image and strive to build a harmonious
enterprise.
36 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
XI. Outlook on the future development of the Company (Continued)
(iii) Operation plans for 2024
The year 2024 is a crucial year to achieve the 14th Five-Year Plan targets and tasks. In this year opportunities and
challenges coexist. The National Development and Reform Commission proposes to pay more attention to expanding
effective demand developing and expanding the real economy and improving the macro policy effectiveness.Expanding domestic demand is the “highlight” of China’s economic development in 2024. The paper industry is
closely related to the national economy development. As a leading player in the industry the Company will adhere to
the general tone of striving for progress while maintaining stability in the new year pay close attention to the national
macro policy orientation take advantage of the domestic economic recovery to expand sales channels seize market
opportunities adjust product structure improve production efficiency control production costs optimise financing
structure fully tap potential and increase efficiency and improve the profitability of the Company.
1. Strengthen sales management and seize the market to increase profits
In 2024 the Company will seize market opportunities strengthen channel construction increase direct
customer development reinforce overseas contract management closely maintain customer relationships and
further expand domestic and overseas markets. The Company will take market orientation actively look for
profit growth points closely connect with production departments to develop and produce high-grade and high
value-added new products and ensure the promotion and increase of key products especially liquid package
cardboard food package board and coated cardboard. The Company will optimise business processes
increase risk control points conduct quarterly sorting out processes and strengthen risk management and
control. In addition the Company will ensure team building strictly implement the sales leadership contracting
mechanism and timely optimise the assessment and incentive scheme according to market changes and key
work requirements to improve work enthusiasm and build an efficient sales team.
2. Improve financial management and take multiple measures to reduce liability scaleIn December 2023 the Central Working Economy Conference proposed to “continue to implement a proactivefiscal policy and a prudent monetary policy” and “implement a structural tax reduction and fee reductionpolicy and focus on supporting scientific and technological innovation and manufacturing development”. In
2024 the Company will take this as an opportunity to adjust its long-term and short-term financing structure
determine the best financing scheme broaden financing channels further deepen cooperation with large banks
and implement project loans equipment financing debt-to-equity swap financing and equity financing. The
Company will pay close attention to the interpretation of national macroeconomic policies make reasonable tax
planning and implement policy dividends and continue to reduce the financial leasing business size actively
dispose of idle and inefficient assets revitalise existing assets and increase cash inflows.
2023 ANNUAL REPORT 37IV Management Discussion and Analysis
XI. Outlook on the future development of the Company (Continued)
(iii) Operation plans for 2024 (Continued)
3. Optimise procurement management to stabilise supply and realise cost reduction and efficiency growth
In 2024 the Company will further broaden its raw material procurement channels deepen the long-term
cooperation in wood pulp wood chips coal and other bulk materials improve the cooperation mode with
suppliers focus on developing suppliers with solid financial strength innovate payment methods and reduce
financial costs. The Company will continue to learn new technologies and processes introduce highly cost-
effective raw materials and optimise the raw material structure. In addition the Company will reasonably
control the inventories arrange the procurement plans according to the monthly production scheduling plan
and reduce capital appropriation; and strengthen the management of electricity purchase and use management
on behalf of subsidiaries and reduce the cost of electricity purchase and use.
4. Focus on safety and technological transformation to escort production and ensure quality and efficiency
In 2024 the Company will continue to adhere to the concept of safety first and prevention first increase the
publicity and education of safety and environmentally friendly production and standardise outsourcing units’
safety management. The Company will strengthen the safety supervision of dangerous operation processes
continue to strictly implement the mechanical control management of equipment optimise the early warning
mode of mechanical control of equipment investigate equipment hidden dangers every ten days reduce
equipment accidents and ensure the safe and stable production. The Company will fully promote technological
innovation adjust product structure according to market conditions focus on developing and producing high
value-added products and improve product quality. In addition the Company will continue to proceed with the
Zhanjiang Chenming Special Paper Project with annual production capacity of 180000 tonnes and the upgrade
of some pulp and paper production lines in Shouguang Zhanjiang and Jiangxi.(iv) Future capital requirements and source of funds
Future capital requirements of the Company will mainly focus on: the continuous investment in existing production
facilities due to technology upgrade or production expansion; and capital requirement for business expansion and
daily operation. The phase II whole industry chain project of Huanggang Chenming the softwood bleached chemical
pulp project with annual production capacity of 300000 tonnes and the special paper project with annual production
capacity of 180000 tonnes of Zhanjiang Chenming planned and constructed by the Company will be partly funded by
self-owned funds of the Company as well as government guide funds policy support funds and syndicated loans.While focusing on the development of its main business of pulp and paper making improving its operating
performance and increasing its operating cash flow the Company will expand its financing channels and optimise
financing structure through well planned long and short-term bank loans introduction of third-party strategic
investors refinancing and other means thus providing stable financial support for the operation and development of
the Company.(v) Risk factors likely to be faced and measures to be taken
1. Macroeconomic and policy risk
Paper making industry is a basic raw materials industry thus is being supported by national industry policies.Over the years relevant competent departments issued a series of relevant policies and regulations including
the Policy on the Development of Papermaking Industry aiming to improve industry structure enhance product
technology standard energy saving and emission reduction as well as eliminate outdated production capacity.With the continuous economic development the policies on the papermaking industry may further adjust in
the future. In addition the fiscal and financial policies bank interest rate import and export policy and other
policies may be adjusted in the future. All the above industrial policies and related policy adjustments will have
an impact on the Company’s operation and development.
38 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
XI. Outlook on the future development of the Company (Continued)
(v) Risk factors likely to be faced and measures to be taken (Continued)
1. Macroeconomic and policy risk (Continued)
In response to the above risks the Company will pay close attention to the national industrial policy and focus
on its principal activities of pulp production and papermaking. The Company will strive to its innovation-driven
strategy comprehensively optimise industrial structure and regional layout and establish coordinated and
efficient industry system to respond to the risks arising from industrial policy adjustments. At the same time
the Company will continuously improve its lean management broaden financing channels control costs and
optimise its capital structure thus improving its operating quality to cope with the risks arising from adjustments
of other macroeconomic policies such as fiscal and financial policies.
2. Environmental protection risk
Establishing a green paper industry is the strategic direction of industry development. In recent years
environmental protection requirements have become increasingly stringent. Relevant authorities have
successively issued the White Paper on Sustainable Development of Papermaking Industry in China the
Guiding Opinions on Accelerating the Establishment and Improvement of a Green Low-Carbon and Cyclical
Economic System the Opinions on Accelerating the High-Quality Development of the Manufacturing Services
Industry the “14th Five-Year Plan” and Medium and Long-term High-quality Development Outline of the
Papermaking Industry and other policies which advocate cyclical low-carbon green economy to achieve high-
quality development of the industry. Such higher national environmental protection standards further increase
the investment in pollution control by enterprises in the industry and increase the operating costs of the
Company in the short term.In response to the aforesaid risks the Company actively implements the national “double carbon” policy. TheCompany adheres to the development idea of “placing green development and environmental protection as itspriority”. The Company widely adopts new technologies for energy saving and emission reduction conducts
clean production and strives to achieve its waste emission target. At present the Company adopts the world’s
most advanced “ultrafiltration membrane+reverse osmosis membrane” technology to complete the reclaimed
water recycling membrane treatment project. The reclaimed water recycle rate reaches more than 75%. The
reclaimed water quality meets drinking water standards which can save fresh water of hundreds of thousands
of cubic meters of per day. At the same time the Company actively explores the comprehensive utilisation
of innovative resources and industrial recycling development models and built a circular economy ecological
chain of “resources-products-renewable resources”.
3. Risk of price fluctuation of raw materials
The major raw materials of the papermaking industry are wood pulp and wood chips. China’s wood resources
are relatively limited and the dependence on wood pulp and wood chips is high which makes the development
of the papermaking industry subject to fluctuations in the international price of wood pulp and wood chips.If the price of raw materials fluctuates sharply it will bring uncertainty to the control of production costs of
papermaking enterprises which will affect the operating performance of enterprises.In response to the aforesaid risks the Company adheres to the strategic layout of the whole pulp and paper
integrated industry chain and has wood pulp production lines in Shouguang Zhanjiang Huanggang and
other production bases ensuring the stability of upstream raw materials. At the same time the Company has
established a more comprehensive supply chain management mechanism practiced source procurement
closely followed the price trends of the raw materials market and improved its market research and judgment
ability in order to minimise the impact of fluctuations in raw material prices on the Company.
2023 ANNUAL REPORT 39IV Management Discussion and Analysis
XI. Outlook on the future development of the Company (Continued)
(v) Risk factors likely to be faced and measures to be taken (Continued)
4. Risk of intensifying market competition
Although the papermaking industry has accelerated the elimination of outdated production capacity after several
rounds of environmental protection policies the industry structure has been optimised with a further improved
concentration. However there remains the phenomena of a large number of enterprises structural and staged
overcapacity of some products a large number of mid- and low-end products and product homogeneity.During the reporting period affected by factors such as the sluggish macroeconomic environment supply
shocks and weak demand the prices of machine-made paper especially white cardboard declined year on
year and market competition further intensified.In response to the aforesaid risks the Company continues to promote technological innovation and
continuously improves its production equipment processing design and process levels in order to realise
lean production improve product quality and create brand benefits. At the same time based on the market
conditions the Company produces marketable products to meet the diverse needs striving to form a high-
quality refined special differentiated and personalised product structure increase the added value of products
and improve the level of corporate profitability.
5. Risk of the financial leasing business
The Company may suffer from loss if the lessees of its financial leasing business cannot make full rental
payment on time due to any reason and there are abuses on equipment or any other short-term behaviour.Although the risk of such rental being unrecoverable is minimal the Company will also make bad debt provision
as required under its accounting policy. If such amounts cannot be recovered on time the Company may be
exposed to risk of bad debts.To this end Chenming Leasing has comprehensive risk prevention and control measures for the financial
leasing business with strong risk resistance and low risk of default. At present the Company focuses on the
development of its principal activities i.e. pulp production and paper making and continues to reduce the
size of the financial leasing business. As at the end of the reporting period the balance of financial leases of
Chenming Leasing decreased to RMB4800 million with the overall risks under control.
40 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV Management Discussion and Analysis
XII. Reception of research investigations communications and interviews during the reporting
period
□ Applicable □ Not applicable
Major discussion
points and information Index of the basic
Date of reception Site of reception Way of reception Type of recipient Recipient provided particulars of the survey
10 April 2023 Panorama * Interactive Others Individuals and Investors participating in Industry overview the For details please refer to
Platform for Investors institutions the 2022 annual results Company’s financial the Investor Relations
Relationship briefing of the Company position operating Activity Record Sheet on
online results and project CNINFO ( www.cninfo.progress in 2022 com.cn)
future prospects etc.XIII. Implementation of the “Quality and Return Enhancement” action plan
Whether the Company has disclosed its “Quality and Return Enhancement” action plan
□ Yes □ No
2023 ANNUAL REPORT 41V Directors’ Report
The Directors (the “Directors”) of the Company hereby present the annual report and the audited consolidated financial statements
of the Company and the Group for the year ended 31 December 2023.I. Principal activities
Please refer to “II. Principal operations of the Company during the Reporting Period” and “IV. Analysis of principaloperations” under section IV “Management Discussion and Analysis” for details of principal activities of the Company.II. Results and profit distribution
Please refer to section XII “Financial Report” for the results of the Group for the year ended 31 December 2023.III. Dividends
During the reporting period the sales volume of machine-made paper decreased year on year due to the weak downstream
demand in the paper industry. At the same time the prices of machine-made paper especially that of white cardboard fell
sharply year on year due to the concentration of new production capacity. The prices of raw materials such as wood chips
raw coal and chemicals were still running at a high level which seriously squeezed the Company’s profitability and net
profit attributable to shareholders of the Company for 2023 was RMB-1281 million. At the same time considering factors
such as the Company’s overall development planning for 2024 the Board proposed not to pay cash dividend issue bonus
shares and increase share capital from reserves for 2023 to further reduce its debt size satisfy the capital needs for among
other things day-to-day production and operation and project construction thereby enhancing risk resistance of the
Company realising the sustainable steady and healthy development of the pulp production and paper making business
the principal business of the Company and better safeguarding the interests of all shareholders in the long run subject to
approval of shareholders at the forthcoming annual general meeting of the Company held on 14 May 2024 (the “AGM”).IV. Closure of register of members
The register of members of the Company will be closed from 9 May 2024 (Thursday) to 14 May 2024 (Tuesday) (both
days inclusive) during which no transfer of shares of the Company will be registered. In order to be eligible to attend and
vote at the annual general meeting to be held on 14 May 2024 (Tuesday) all share transfer documents accompanied by
the corresponding share certificates must be lodged with the Company’s Hong Kong share registrar and transfer office
Computershare Hong Kong Investor Services Limited at shops 1712-1716 17th Floor Hopewell Centre 183 Queen’s Road
East Wan Chai Hong Kong for registration not later than 4:30 p.m. on 8 May 2024 (Wednesday).
42 SHANDONG CHENMING PAPER HOLDINGS LIMITEDV Directors’ Report
V. Five-year financial summary
Please refer to “IX. Five-year financial summary under paragraph 19 of appendix D2 of the Hong Kong Listing Rules”
under section II “Company Profile and Key Financial Indicators” for the financial summary of the Company for the past five
financial years.VI. Donations
During the year the Company donated RMB505280.00 (2022: RMB805000.00) to non-profit making organisations.VII. Subsidiaries
Please refer to “IX. Analysis of major subsidiaries and investees” under section IV “Management Discussion and Analysis”
and “XVII. Matters of significant of subsidiaries of the Company” under section VIII “Material Matters” for the details of
acquisition and disposal of subsidiaries by the Company during the year.VIII. Property plant and equipment
Please refer to “II. Financial Statements 1. Consolidated Balance Sheet” under section XII “Financial Report” for the details
of changes in property plant and equipment of the Group for the year ended 31 December 2023.IX. Share capital
Please refer to “I. Changes in shares” under section IX “Changes in Share Capital and Shareholders” for details of changes
in share capital of the Company for the year ended 31 December 2023.X. Pre-emptive rights
In accordance with the Articles of Association and the PRC laws there are no rules requiring the Company to grant existing
shareholders pre-emptive rights on newly issued shares of the Company in proportion to their shareholdings.XI. Transfer into reserves
The Company’s contributed surplus is distributable to shareholders in accordance with the Company Law. As at 31
December 2023 the Company’s reserves available for cash distribution and/or distribution in specie including contributedsurplus of the Company amounted to RMB8492988611.52 (2022: RMB9857716037.54) as set out in “II. FinancialStatements 1. Consolidated Balance Sheet” under section XII “Financial Report”.
2023 ANNUAL REPORT 43V Directors’ Report
XII. Directors
As at 31 December 2023 the Directors of the Company were:
1. Executive Directors
Mr. Chen Hongguo
Mr. Hu Changqing
Mr. Li Xingchun
Mr. Li Feng
Mr. Li Weixian
2. Non-executive Directors
Mr. Han Tingde
Mr. Li Chuanxuan
3. Independent Non-executive Directors
Ms. Yin Meiqun
Mr. Yang Biao
Mr. Sun Jianfei
Mr. Li Zhihui
According to the Articles of Association of the Company all Directors including non-executive Directors have been
elected at the general meetings with a term of three years from June 2022 to June 2025. They may be re-elected for
another term upon expiry of tenure. The term of office of independent non-executive Directors is the same as that of
other Directors. They may be re-elected for consecutive terms but the consecutive terms shall not be more than six
years.XIII. Directors’ and Supervisors’ service contracts
All Directors and Supervisors have entered into service contracts with the Company for a term from 15 June 2022 to 15
June 2025.None of the Directors and Supervisors who have offered themselves for re-election at the forthcoming AGM have entered
into any service contract with the Company or any of its subsidiaries which cannot be terminated by the Group within one
year without payment of compensation other than statutory compensation.
44 SHANDONG CHENMING PAPER HOLDINGS LIMITEDV Directors’ Report
XIV. Directors and Senior Management’s remuneration and the five highest paid individuals
Details of Directors and the Senior Management’s remuneration and the five highest paid individuals of the Company or/and
its subsidiaries are set out in “V. Directors Supervisors and Senior Management” in section VI “Corporate Governance” and
“XIV. Related parties and related party transactions” in section XII “Financial Report”.In 2023 the Company had 23 Senior Management members in total which included Directors Supervisors and the Senior
Management. The remuneration of the Senior Management falls within the following ranges:
Range of remuneration (RMB) Person(s)
4.8 million to 5.2 million
4.0 million to 4.8 million 1
3.6 million to 4.0 million
3.2 million to 3.6 million
2.8 million to 3.2 million 1
2.4 million to 2.8 million
2.0 million to 2.4 million 2
1.6 million to 2.0 million 1
1.2 million to 1.6 million 4
0.8 million to 1.2 million 2
Below 0.8 million 12
XV. Independent non-executive Directors
The Company has received from each of the independent non-executive Directors a confirmation of independence for the
year pursuant to Rule 3.13 of the Hong Kong Listing Rules and considered all of the independent non-executive Directors to
be independent.
2023 ANNUAL REPORT 45V Directors’ Report
XVI. Securities interests held by Directors Supervisors and chief executives
As at 31 December 2023 interests of the Company or its associated corporations (within the meaning of Part XV of SFO)
held by each of the Directors Supervisors and Chief Executives of the Company under section 352 of the SFO are set out
as follows:
The Company
Number of shares
(A shares) held As a percentage
as at the end of of the total share
the reporting capital of the
Name Position period (shares) Company
Directors
Chen Hongguo (Note 1) Chairman 25080044 0.85%
Hu Changqing Executive Director and vice chairman 2292857 0.08%
Li Xingchun Executive Director and vice chairman 3500000 0.12%
Li Feng Executive Director and deputy general manager 2256027 0.08%
Li Weixian Executive Director and general manager 962100 0.03%
Han Tingde Non-executive Director – –
Li Chuanxuan Non-executive Director – –
Sun Jianfei Independent non-executive Director – –
Yin Meiqun Independent non-executive Director – –
Yang Biao Independent non-executive Director – –
Li Zhihui Independent non-executive Director – –
Supervisors
Li Kang Chairman of the Supervisory Committee 149300 0.01%
Pan Ailing Supervisor – –
Zhang Hong Supervisor – –
Sang Ailing Supervisor – –
Qiu Lanju Supervisor – –
Associated corporation(s)
Number of shares held at Number of shares held As a percentage of the
Name of associated the beginning of the Change during at the end of the total share capital of
Name Position corporation(s) reporting period (shares) the period (+/-) reporting period (shares) Chenming Holdings
Chen Hongguo Chairman Shouguang Henglian Enterprise 231000000 – 231000000 18.65%
Investment Co. Ltd. (Note 2)
Note 1: Save for the 25080044 A shares held personally Chen Hongguo is deemed to be interested in the 2961322 A shares held by his spouse Li
Xueqin.Note 2: Chen Hongguo and his spouse Li Xueqin collectively hold 76.79% equity interests in Shouguang Henglian Enterprise Investment Co.Ltd. (hereinafter referred to as “Shouguang Henglian”). As a result Shouguang Henglian is deemed to be controlled by Chen Hongguo.Accordingly the 231000000 shares in Chenming Holdings (approximately 18.65% of the total share capital of Chenming Holdings) held by
Shouguang Henglian are also deemed to be held by Chen Hongguo.
46 SHANDONG CHENMING PAPER HOLDINGS LIMITEDV Directors’ Report
XVI. Securities interests held by Directors Supervisors and chief executives (Continued)
Save as disclosed above as at 31 December 2023 none of the Directors Supervisors or chief executives of the Company
had any interests or short positions in the shares underlying shares or debentures of the Company or any of its associated
corporations which were required to be filed in the register of the Company required to be maintained pursuant to section
352 of the SFO or which were required to be notified to the Company and the Hong Kong Stock Exchange pursuant to the
Model Code for Securities Transactions by Directors of Listed Issuers as contained in Appendix C3 to the Rules Governing
the Listing of Securities on Hong Kong Stock Exchange (hereinafter referred to as the “Hong Kong Listing Rules”).As at 31 December 2023 none of the Directors Supervisors or chief executives or their respective spouses or children
under the age of 18 held or exercised any rights to subscribe for the share capital or debentures of the Company or its
associated corporations.XVII. Interests and short position of substantial shareholders in shares and underlying shares
As at 31 December 2023 the following shareholders (other than the Directors Supervisors or chief executives of the
Company) had interests or short positions in the Company’s shares and underlying shares as shown in the share register
maintained by the Company in accordance with Section 336 of the SFO (Chapter 571 of the Laws of Hong Kong):
Approximate shareholding as
a percentage of
Number of shares Total share Class of
Name held (shares) capital (%) shares (%)
Chenming Holdings Co. Ltd. 457322919 A shares (L) 15.47 26.56
Chenming Holdings (Hong Kong) Limited 210717563 B shares (L) 7.13 29.83
Chenming Holdings (Hong Kong) Limited 153414000 H shares (L) 5.19 29.04
(L) – Long position (S) – Short position (P) – Lending pool
Save as disclosed above as at 31 December 2023 no other person had interests or short positions in the Company’s
shares or underlying shares as recorded in the register maintained under section 336 of the SFO.XVIII. Relationship with employees customers and suppliers
Please refer to “IX. Personnel of the Company” under section VI “Corporate Governance” and “2. (8) Sales to majorcustomers and major suppliers” of “IV. Analysis of principal operations” under section IV “Management Discussion andAnalysis” for details of the relationship between the Company and its employees customers and suppliers.XIX. Directors’ interests in material contracts and indemnity provision
None of the Company or any of its subsidiaries entered into any material contracts in which Directors or Supervisors had
significant interests (either directly or indirectly) that subsisted at the end of the financial year or at any time during the
reporting period. The Company did not have any indemnity provision in favour of any Director and Supervisor.
2023 ANNUAL REPORT 47V Directors’ Report
XX. Interests in competing business
None of the Directors or controlling shareholders of the Company was interested in any business which competes or is
likely to compete with the businesses of the Company and any of its subsidiaries.XXI. Directors’ rights to purchase shares or debentures
As considered and approved at the 2020 second extraordinary general meeting the 2020 first class meeting for holders
of domestic-listed shares and the 2020 first class meeting for holders of overseas-listed shares of the Company held on
15 May 2020 the Company implemented the 2020 restricted A share incentive scheme. As 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 held on 29 May 2020 an aggregate of 79.6 million restricted A shares were granted
to 111 participants. In particular Mr. Chen Hongguo Mr. Hu Changqing Mr. Li Xingchun Mr. Li Feng and Mr. Li Weixian
all being Directors were granted 20 million shares 5 million shares 5 million shares 3 million shares and 2 million shares
respectively. In view of the fact that the results for 2022 of the Company failed to pass the performance appraisal targets at
company level set for the second Unlocking Period as set out in the 2020 Restricted A Share Incentive Scheme (Draft) the
Board of the Company repurchased and cancelled the Restricted Shares that had been granted to Participants but not yet
unlocked for the second Unlocking Period under the authorisation. In particular 6.00 million Restricted Shares of Director
Chen Hongguo 1.50 million Restricted Shares of Director Hu Changqing 1.50 million Restricted Shares of Director Li
Xingchun 0.90 million Restricted Shares of Director Li Feng and 0.60 million Restricted Shares of Director Li Weixian were
repurchased and cancelled.Save for the above neither was the Company nor any of its subsidiaries a party to any arrangements to enable any Director
to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.XXII. Management contracts
No contracts concerning the management and administration of the whole or any substantial part of the business of the
Company were entered into or existed in 2023.XXIII. Major risk factors
Please refer to “(V) Risk factors likely to be faced and the measures to be taken” of “XI. Outlook on the future developmentof the Company” under section IV “Management Discussion and Analysis” for details of major risk factors of the Company.XXIV. Material matters
Please refer to section VIII “Material Matters” for details of material matters of the Company.XXV. Future development
Please refer to (I) Overview and trends of the industry (II) Development strategy of the Company (III) Operating plan for
2024 and (IV) Future capital requirements and source of funds of “XI. Outlook on the future development of the Company”
under section IV “Management Discussion and Analysis” for details of future development of the Company.XXVI. Environment social and governance report and social responsibility
Please refer to section VII “Environment and social responsibility” for details of fulfilment of social responsibility. The
Company will publish the environment social and governance report as required by the Hong Kong Listing Rules on the
website of CNINFO and the website of the Hong Kong Stock Exchange on the same date as the 2023 annual report.
48 SHANDONG CHENMING PAPER HOLDINGS LIMITEDV Directors’ Report
XXVII. Purchase sale and redemption of shares
1. Repurchase and cancellation of some restricted shares granted under the 2020 A-share Restricted
Stock Incentive Scheme
On 17 July 2023 the Company convened the ninth extraordinary meeting of the tenth session of the Board and the
fifth extraordinary meeting of the tenth session of the Supervisory Committee at which the Resolution on the Failure
Fulfilment of the Unlocking Conditions for the Second Unlocking Period under the 2020 Restricted A Share Incentive
Scheme and Repurchase and Cancellation of Certain Restricted Shares was considered and approved. The results for
2022 of the Company failed to pass the performance appraisal targets at company level set for the second unlocking
period as set out in the 2020 Restricted A Share Incentive Scheme (Draft) and the Assessment Management Measures
for the 2020 Restricted A Shares Incentive Scheme. Meanwhile 5 participants lost their incentive qualification due to
their resignation. According to the authorisation granted at the 2020 second extraordinary general meeting the 2020
first class meeting for holders of domestic-listed shares and the 2020 first class meeting for holders of overseas-
listed shares of the Company the Board of the Company repurchased and cancelled 22929000 restricted A shares
which had been granted to participants but not yet unlocked for the second unlocking period at a repurchase price
of RMB2.5184172 per share (excluding the bank loan interest rate for the same term). The total amount for the funds
required for the repurchase amounted to RMB66.2288 million when the bank loan interest rate for the same term
was included. On 20 November 2023 the Company completed the repurchase and cancellation procedures of the
22929000 restricted A shares at the Shenzhen Branch of China Securities Depository and Clearing Corporation
Limited.Save for the above the Company and its subsidiaries did not purchase sell or redeem any listed securities of the
Company during the reporting period.XXVIII. Sufficiency of public float
During the reporting period based on the information that is publicly available to the Company and within the knowledge
of the Directors the Company maintained a sufficient prescribed amount of public float as required under the Hong Kong
Listing Rules.XXIX. Review of the Audit Committee
The audited consolidated financial statements of the Company for the year ended 31 December 2023 have been reviewed
by the Audit Committee of the Company.XXX. Gearing ratio
As at 31 December 2023 the Company’s gearing ratio (including minority interest) was 61.70% representing an increase of
0.82% from 60.88% for 2022.
The ratio was calculated as: total borrowings/total assets (whereas total borrowings represent borrowings due within one
year borrowings due after one year short-term commercial paper and medium and long-term notes and others).
2023 ANNUAL REPORT 49V Directors’ Report
XXXI. Going concern basis
Established in 1958 the Company is a leading paper making enterprise in China and one of the top 500 Chinese
enterprises. It is also a modern large-scale comprehensive conglomerate mainly engaged in pulp production and paper
making. It has production bases in Shandong Guangdong Hubei Jiangxi Jilin and others which deliver annual pulp and
paper production capacity of over 11000000 tonnes. As the first large integrated pulp and paper enterprise in China that
achieves basically balanced pulp production and paper making capacity the Company have maintained a leading position
among its industry peers for over 20 consecutive years in terms of its main indicators of corporate economic efficiency.The Company has good sustainable profitability. The Company realised revenue of RMB26609 million and net cash inflows
from operating activities of RMB4390 million for 2023. In compiling the accounts for the year ended 31 December 2023
the Directors have chosen and thoroughly applied the appropriate accounting policies with due and reasonable judgement
and estimates having been made and prepared the accounts on a going concern basis. The auditor of the Company has
prepared the 2023 annual financial report on a going concern basis and has issued a standard unqualified audit opinion
(please refer to “Financial Report” in section XII).Therefore the Board believes the Company has the ability to continue as a going concern.XXXII. Connected transactions
During the reporting period the Group did not enter into any connected transaction required under the Listing Rules of the
Stock Exchange. The related party transactions entered into by the Group during the year ended 31 December 2023 are
set out in Note XIV to the financial statements. Save as disclosed above these related party transactions do not constitute
connected transactions or continuing connected transactions (as defined in the Listing Rules of the Stock Exchange) of the
Group.XXXIII. Major investment acquisition and disposal
During the year ended 31 December 2023 the Group entered into the following major transaction agreements.
1. Agreement on the Recovery of State-owned Construction Land Use Right signed by Wuhan Chenming
On 28 April 2023 the Company convened the fifth meeting of the tenth session of the Board to consider and approve
the Proposal on Signing the Agreement on the Recovery of State-owned Construction Land Use Right by Wuhan
Chenming. In order to further optimise resource allocation and promote industrial upgrading the major equipment of
Wuhan Chenming’s household paper production line and special paper production line were relocated to Shouguang
production base and Zhanjiang production base respectively. Wuhan Chenming reached an agreement with the
Wuhan Economic & Technological Development Zone Branch of the Wuhan Land Arranging Storage Centre on land
recovery and storage and signed the Agreement on the Recovery of State-owned Construction Land Use Right. The
Wuhan Land Arranging Storage Centre proposed to recover the land parcel with an area of 368624.21㎡and the
buildings (structures) and ancillary facilities erected thereon from Wuhan Chenming and pay Wuhan Chenming a total
of RMB732.0776 million as compensation for the recovery and storage.For details please refer to the announcement disclosed by the Company on CNINFO on 29 April 2023 (announcement
number: 2023-042) and the relevant announcement disclosed by the Company on the website of Hong Kong Stock
Exchange on 28 April 2023.
50 SHANDONG CHENMING PAPER HOLDINGS LIMITEDV Directors’ Report
XXXIII. Major investment acquisition and disposal (Continued)
2. Termination of asset purchase through the issuance of consideration shares and cash payments
On 27 February 2023 the Company convened the 2023 first extraordinary general meeting the 2023 first class
meeting for holders of domestic-listed shares and the 2023 first class meeting for holders of overseas-listed shares
at which the Company considered and approved relevant resolutions including the Report on the Agreement on Asset
Purchase through Issuance of Shares and Cash Payments and Connected Transactions (Draft) of the Company. The
Company intended to acquire 1.19% equity interests in Shouguang Meilun held by Dongxing Securities Investment
Co. Ltd. 44.44% limited partnership share in Chenrong Fund held by Chongqing International Trust Inc. through
issuance of shares. Chenming Investment a wholly-owned subsidiary of the Company intended to acquire 0.22%
general partnership interest in Chenrong Fund held by Chenming (Qingdao) Asset Management Co. Ltd. through
cash payment. The type of shares to be issued by the Company is A shares the price of the shares to be issued is
RMB4.42 per share and the number of shares to be issued is 71841345 shares.On 14 March 2023 the Company received the Notice on the Acceptance of Application Documents for Asset
Purchase through the Issuance of Shares of Shandong Chenming Paper Holdings Limited (Shen Zheng Shang Shen
[2023] No. 259)《 (關於受理山東晨鳴紙業集團股份有限公司發行股份購買資產申請文件的通知》(深證上審[2023]259 號))
from the Shenzhen Stock Exchange.On 29 June 2023 the Company convened the eighth extraordinary general meeting of the tenth session of the
Board and the fourth extraordinary general meeting of the tenth session of the Supervisory Committee at which the
Company considered and approved the Resolution on the Termination of the Asset Purchase through Issuance of
Shares and Cash Payments and Connected Transactions and Withdrawal of the Application Documents and agreed
to terminate the transaction sign the relevant termination agreement with the counterparty if needed and apply to the
Shenzhen Stock Exchange for relevant application documents for the withdrawal of the transaction.For details please refer to the relevant announcements disclosed by the Company on CNINFO on 28 February
2023 16 March 2023 and 30 June 2023 (announcement number: 2023-010 2023-014 2023-048) and the relevant
announcements disclosed by the Company on the website of Hong Kong Stock Exchange on 27 February 2023 15
March 2023 and 29 June 2023.XXXIV. Tax relief
The Company is not aware of any tax relief available to shareholders as a result of holding securities of the Company.
2023 ANNUAL REPORT 51VI Corporate Governance
I. Corporate governance in practice
The Company continuously improved its legal person governance structure renamed the Strategic Committee as the
Strategic and Sustainable Development Committee under the Board proactively organised Directors Supervisors and
the Senior Management of the Company to attend the special training sessions of the regulatory departments to enhance
their competence and continuously strengthened its information disclosure in strict compliance with the requirements of
the Company Law 《( 公司法》) the Securities Law 《( 證券法》) the Code of Corporate Governance for Listed Companies 《( 上市公司治理準則》) the Rules Governing Listing of Stocks on Shenzhen Stock Exchange 《( 深圳證券交易所股票上市規則》)
the Listing Rules of Hong Kong Stock Exchange and the related requirements as required by the CSRC thereby further
enhancing the standardised operation level of the Company.As of the end of the reporting period the actual practice of corporate governance complied with the requirements of
the regulatory documents issued by the CSRC the Shenzhen Stock Exchange and the Stock Exchange regarding the
governance of listed companies.(i) Shareholders and general meeting
During the reporting period the Board of the Company convened and held 1 annual general meeting 3 extraordinary
general meetings 1 class meeting for holders of domestic-listed shares and 1 class meeting for holders of overseas-
listed shares. The Company regulated the convening holding and proceedings of shareholder meetings in strict
compliance with the requirements of the Rules Governing Shareholders’ General Meetings of Listed Companies the
Articles of Association and the Company’s Rules of Procedure of the General Meeting of Shareholders and both on-
site voting and online voting were provided as channels to participate in each general meeting to ensure that the
minority shareholders enjoyed equal status and all shareholders could exercise their rights in full. Meanwhile the
Company proactively disclosed the voting status of minority investors on each of the resolutions considered at the
general meetings to effectively safeguard the legitimate rights and interests of the Company and all shareholders
especially the minority shareholders.(ii) Controlling shareholder and the Company
During the reporting period the Company remained independent of its controlling shareholder beneficial controllers
and related parties in terms of its business assets finance personnel and organisations and the Board the
Supervisory Committee and internal departments of the Company operated independently which complied with the
relevant provisions of the CSRC on the independence of listed companies. The controlling shareholder and beneficial
controllers strictly regulated their behaviour and exercised their rights and performed their obligations in accordance
with the laws and there was no appropriation of capital and assets of the Company by the controlling shareholder
beneficial controllers and their related parties.(iii) Directors and the Board
The Board of the Company has a total of 11 Directors of which 4 are independent Directors. They are professionals
with professional knowledge in finance law management etc. ensuring the quality and level of decision-making
by the Board. During the reporting period the Board held a total of 12 meetings and the convening and holding
of Board meetings were in strict compliance with the Articles of Association and the Rules of Procedure of Board
Meetings and other relevant provisions. Directors of the Company were able to diligently perform their duties. They
attended meetings on time and reviewed each proposal earnestly which had pivotal impact on decision in corporate
governance. Independent Directors performed their duties independently and expressed their independent opinions
on material matters which solidly safeguarded the interests of the Company and the investing public.The four special committees under the Board of the Company namely the Strategic and Sustainable Development
Committee the Audit Committee the Nomination Committee and the Remuneration and Assessment Committee
performed their duties normally and provided scientific and professional opinions for the decision-making of the Board
during the reporting period.
52 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
I. Corporate governance in practice (Continued)
(iv) Supervisors and the Supervisory Committee
The Supervisory Committee of the Company has a total of 5 Supervisors including 3 shareholder representative
Supervisors and 2 employee representative Supervisors. During the reporting period the Supervisory Committee
of the Company held a total of 7 meetings. The Supervisory Committee strictly followed the requirement of relevant
laws and regulations including the Company Law the Articles of Associations and the Rules of Procedure of the
Supervisory Committee in fulfilling its duties. In the spirit of being accountable to the shareholders and the Company
the Supervisory Committee independently and effectively exercised its supervision and inspection functions to
supervise the Company’s operation and management decision-making procedures financial position and the duty of
care and diligence of the Company’s Directors and Senior Management so as to safeguard the legitimate interests of
the Company and the shareholders.(v) Information disclosure and prevention and control of inside information
The Company earnestly fulfils its information disclosure obligation safeguards the truthfulness accuracy
completeness and timeliness of information disclosure effectively strengthens the confidentiality of inside information
and improve the registration and management of personnel with inside information to ensure fair information
disclosure in accordance with the requirements of the Articles of Association Rules Governing the Listing of Stocks
on Shenzhen Stock Exchange the Listing Rules of Hong Kong Stock Exchange and relevant laws and regulations
of the CSRC. During the reporting period the Company issued a total of more than 160 periodic reports interim
announcements and related documents through the designated information disclosure media and a total of more
than 190 periodic reports interim announcements and related documents through the website of the Hong Kong
Stock Exchange. There was no case where the Directors Supervisors Senior Management and other related
personnel of the Company used inside information to buy and/or sell the shares of the Company throughout the
preparation of periodic reports temporary announcements and the planning of major events ensuring that all
shareholders had fair access to information related to the Company.Any material non-compliance of the laws administrative regulations and the regulatory documents on the governance
of listed companies issued by the CSRC in respect of actual governance of the Company
□ Yes □ No
There was no material non-compliance of the laws administrative regulations and the regulatory documents on the
governance of listed companies issued by the CSRC in respect of the actual governance of the Company.
2023 ANNUAL REPORT 53VI Corporate Governance
II. Particulars about the independence in terms of assets personnel finance organisations
and business from the controlling shareholder and beneficial controllers
The Company was completely separated from the controlling shareholder in terms of business personnel assets
organisations and finance. The Company had a comprehensive internal structure independent and complete businesses as
well as the capability of self-operation.
1. In terms of business: the Company had its own R&D production procurement and sales system and was completely
independent of controlling shareholder in terms of business. The controlling shareholder and its other subsidiaries
were not competitors of the Company in the same industry.
2. In terms of personnel: the Company had an independent workforce and had established independent departments
including the research and development department production department administration department finance
department procurement department and sales department. The Company had also established a comprehensive
management system with respect to labour personnel and salary. Personnel of the Company were independent of
the controlling shareholder. The Company’s Chairman was elected at the general meeting while the general manager
deputy general manager secretary to the Board chief financial officer and other Senior Management members all
worked at and received remuneration from the Company. They did not receive remuneration from related companies
of the controlling shareholder nor did they serve at any position therein other than a director or supervisor. The
appointment of the Company’s Directors Supervisors and Senior Management was conducted through legal
procedures and in strict compliance with the relevant requirements of Company Law and the Articles of Association.None of the controlling shareholders interfered with the Company’s Board or the appointment and dismissal
decisions at general meetings.
3. In terms of assets: the title relationship between the Company and the controlling shareholder was clear and the
Company’s funds assets and other resources were not illegally occupied or dominated by the controlling shareholder.The Company’s assets were complete and possessed production equipment auxiliary production equipment
patents and other assets that were in line with its production and operation scope. The Company had complete
control and dominance over all assets.
4. In terms of organisations: the Board Supervisory Committee management and other internal organisations of the
Company operated independently. Each functional department was completely separated from the controlling
shareholder in terms of authority personnel etc. There was no subordinate relationship between the controlling
shareholder and its functional departments and the Company and its functional departments. The Company’s
independence in terms of its production operation and management was not affected by the controlling shareholder.
5. In terms of finance: the Company had its own finance department accounting and auditing system and financial
management system and was able to make independent financial decisions with a standardised financial accounting
system and financial management system for subsidiaries. None of the controlling shareholders interfered with the
Company’s finance and accounting activities. The Company had a separate account in a commercial bank and there
was no sharing of bank accounts with the controlling shareholder. The Company reported on tax return and fulfilled its
tax obligations independently in accordance with the law.
54 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
III. Competition in the industry
□ Applicable □ Not applicable
IV. Annual general meeting and extraordinary general meeting convened during the reporting
period
1. General meetings during the reporting period
Attendance rate
Meeting Type of meeting of investors Convening date Disclosure date Resolutions of meeting
2023 first extraordinary Extraordinary general 21.96% 27 February 2023 28 February 2023 http://www.cninfo.com.cn
general meeting meeting (announcement no.: 2023-010)
2023 first class meeting for holders of Class meeting 24.14% 27 February 2023 28 February 2023 http://www.cninfo.com.cn
domestic-listed shares (announcement no.: 2023-010)
2023 first class meeting for holders of Class meeting 11.72% 27 February 2023 28 February 2023 http://www.cninfo.com.cn
overseas-listed shares (announcement no.: 2023-010)
2023 second extraordinary general Extraordinary general 20.53% 8 May 2023 9 May 2023 http://www.cninfo.com.cn
meeting meeting (announcement no.: 2023-043)
2022 annual general meeting Annual general meeting 21.60% 12 May 2023 13 May 2023 http://www.cninfo.com.cn
(announcement no.: 2023-044)
2023 third extraordinary general Extraordinary general 20.06% 26 September 2023 27 September 2023 http://www.cninfo.com.cn
meeting meeting (announcement no.: 2023-073)
2. Extraordinary general meeting requested by holders of the preference shares with voting right
restored
□ Applicable □ Not applicable
2023 ANNUAL REPORT 55VI Corporate Governance
V. Directors Supervisors and Senior Management
1. General information
Decrease
Increase in in the
Shareholding the number number
at the of shares of shares Shareholding
Date of the beginning of held during held during Other at the end
Status of beginning of Date of the the period the period the period changes of the period Reason for
Name Position Office Gender Age the term end of the term (shares) (shares) (shares) (shares) (shares) changes
Chen Hongguo Chairman In office M 59 6 September 15 June 2025 31080044 0 0 6000000 25080044 Repurchase and
2001 cancellation
of restricted
shares
General manager Resigned 15 June 2022 8 October 2023
Hu Changqing Vice chairman In office M 58 23 June 2018 15 June 2025 3792857 0 0 1500000 2292857 Repurchase and
cancellation
of restricted
shares
Li Xingchun Vice chairman In office M 58 11 June 2019 15 June 2025 5000000 0 0 1500000 3500000 Repurchase and
cancellation
of restricted
shares
Li Feng Director In office M 50 19 June 2020 15 June 2025 3156027 0 0 900000 2256027 Repurchase and
cancellation
of restricted
shares
Deputy general 15 June 2022 15 June 2025
manager
Li Weixian Director In office M 42 15 June 2022 15 June 2025 1562100 0 0 600000 962100 Repurchase and
cancellation
of restricted
shares
General manager 8 October 2023 15 June 2025
Deputy general Resigned 6 November 8 October 2023
manager 2019
Han Tingde Director In office M 55 11 June 2019 15 June 2025 0 0 0 0 0 N/A
Li Chuanxuan Director In office M 46 11 June 2019 15 June 2025 0 0 0 0 0 N/A
Li Zhihui Independent In office M 65 15 June 2022 15 June 2025 0 0 0 0 0 N/A
Director
Sun Jianfei Independent In office M 51 11 June 2019 15 June 2025 0 0 0 0 0 N/A
Director
Yin Meiqun Independent In office F 53 11 June 2019 15 June 2025 0 0 0 0 0 N/A
Director
Yang Biao Independent In office M 44 11 June 2019 15 June 2025 0 0 0 0 0 N/A
Director
Li Kang Supervisor In office F 42 27 July 2020 15 June 2025 149300 0 0 0 149300 N/A
Chairman of the 15 June 2022 15 June 2025
Supervisory
Committee
Pan Ailing Supervisor In office F 59 11 June 2019 15 June 2025 0 0 0 0 0 N/A
Zhang Hong Supervisor In office F 59 11 June 2019 15 June 2025 0 0 0 0 0 N/A
Qiu Lanju Supervisor In office F 50 11 June 2019 15 June 2025 0 0 0 0 0 N/A
Sang Ailing Supervisor In office F 45 19 April 2021 15 June 2025 0 0 0 0 0 N/A
Li Xueqin Deputy general In office F 58 18 March 2003 15 June 2025 3861322 0 0 900000 2961322 Repurchase and
manager cancellation
of restricted
shares
56 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
V. Directors Supervisors and Senior Management (Continued)
1. General information (Continued)
Decrease
Increase in in the
Shareholding the number number
at the of shares of shares Shareholding
Date of the beginning of held during held during Other at the end
Status of beginning of Date of the the period the period the period changes of the period Reason for
Name Position Office Gender Age the term end of the term (shares) (shares) (shares) (shares) (shares) changes
Li Zhenzhong Deputy general In office M 50 20 March 2011 15 June 2025 1946400 0 0 600000 1346400 Repurchase and
manager cancellation
of restricted
shares
Li Mingtang Deputy general In office M 56 15 June 2022 15 June 2025 750000 0 0 300000 450000 Repurchase and
manager cancellation
of restricted
shares
Ge Guangming Deputy general In office M 53 15 June 2022 15 June 2025 0 0 0 0 0 N/A
manager
Dong Lianming Financial controller In office M 49 12 October 2018 15 June 2025 859600 0 40000 300000 519600 Repurchase and
cancellation
of restricted
shares and
personal
capital needs
Yuan Xikun Secretary to the In office M 38 16 May 2018 15 June 2025 344700 0 75000 90000 179700 Repurchase and
Board cancellation
of restricted
shares and
personal
capital needs
Chu Hon Leung Company secretary In office M 41 11 June 2019 15 June 2025 0 0 0 0 0 N/A
(Hong Kong)
Total － － － － － － 52502350 0 115000 12690000 39697350 －
During the reporting period did any Director and Supervisor resign and was any member of the Senior Management
dismissed during their term of office
□ Yes □ No
On 8 October 2023 Mr. Chen Hongguo resigned from his position as the general manager of the Company in order to
better perform duties as the chairman and devote more energy to the strategic planning development innovation and
standardised governance of the Company and strengthen the construction of the Board of the Company and Mr. Li
Weixian was appointed as the general manager of the Company.
2023 ANNUAL REPORT 57VI Corporate Governance
V. Directors Supervisors and Senior Management (Continued)
1. General information (Continued)
Changes of Directors Supervisors and Senior Management of the Company
□ Applicable □ Not applicable
Name Position Type Date Reason
Chen Hongguo General manager Resigned 8 October 2023 Resignation from his position as the general
manager in order to better perform duties
as the chairman and devote more energy
to among others the strategic planning
development innovation and standardised
governance of the Company.Li Weixian Deputy general Resigned 8 October 2023 Mr. Li Weixian was appointed as the general
manager manager of the Company after the
General manager Appointed 8 October 2023 consideration of the twelfth extraordinary
meeting of the tenth session of the Board
with his term of office commencing from
the date of consideration and approval of
the Board until the expiration of the tenth
session of the Board.
58 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
V. Directors Supervisors and Senior Management (Continued)
2. Employment
Professional background major working experiences and current duties at the Company of Directors Supervisors
and the Senior Management
1. Brief biographies of Directors
(1) Brief biographies of executive Directors
Mr. Chen Hongguo is a member of the Communist Party of the PRC. He holds a bachelor’s degree. He is
a senior economist and holds the titles including Nationwide Light Industry Top Ten Youth Experts (全國
輕工系統十佳傑出青年崗位能手) Labour Medal on Enriching Shandong Province (山東省富民興魯勞動獎
章獲得者) Excellent Entrepreneur of Shandong Province (山東省優秀企業家) Nationwide May 1st Labor
Medal (全國五一勞動獎章獲得者) Nationwide Excellent Entrepreneur (全國優秀創業企業家) and USA RISI
CEO of the Year (美國銳思“年度最佳 CEO 獎”). He is vice chairman of the China National Light Industry
Council. He joined the Company in 1987 and had held positions including chief officer of manufacturing
section chief officer of branch factory deputy general manager general manager of the Company and
the chairman of Wuhan Chenming. He is currently the chairman of Chenming Holdings the chairman of
the Company and a Party Committee Secretary. Mr. Chen Hongguo is the spouse of Ms. Li Xueqin a
deputy general manager of the Company.Mr. Hu Changqing is a member of the Communist Party of the PRC. He holds a bachelor’s degree. He
joined the Company in 1987. He had held various positions in the Company such as the chief of the
technological reform department the chief officer of branch factory and the deputy general manager. He
is currently a director of Chenming Holdings and a vice chairman of the Company.Mr. Li Xingchun holds a doctorate from School of Engineering Management and Engineering at Nanjing
University and is a visiting professor of Shanghai Finance University. He has successively worked in
Ctrip.com Fuyou Securities Co. Ltd. (富友證券有限責任公司) and Western Development Holdings
Co. Ltd. accumulating more than 30 years of experience in industry securities trust and other fields.He is currently the chairman of Leadbank Technology Ltd. the chairman of Zhejiang Kingland Pipeline
and Technologies Co. Ltd. a vice chairman of Shanghai New Huangpu Industrial Group Co. Ltd. the
chairman of Kunpeng Asset Management Co. Ltd. a director of Western Leadbank Fund Management
Co. Ltd. an independent director of Huadian International Power Co. Ltd. and a vice chairman of the
Company.Mr. Li Feng is a member of the Communist Party of the PRC. He holds a bachelor’s degree. He joined
the Company in 1992 and had held different positions including the chief officer of manufacturing section
and assistant to the general manager of the Company chairman marketing director deputy general
manager and general manager of Wuhan Chenming. He is currently a director of Chenming Holdings and
an executive Director and deputy general manager of the Company. Mr. Li Feng is the younger brother of
Ms. Li Xueqin a deputy general manager of the Company.Mr. Li Weixian graduated with a postgraduate degree. He joined the Company in 2002 and served as the
deputy manager of a sales company of the Company manager of a sales company general manager of
Jiangsu district of a sales company chairman of a household paper company product general manager
deputy marketing director and marketing director of a sales company a deputy general manager of the
Group and chairman of the financial division of a group. He is currently an executive Director and the
general manager of the Company.
2023 ANNUAL REPORT 59VI Corporate Governance
V. Directors Supervisors and Senior Management (Continued)
2. Employment (Continued)
1. Brief biographies of Directors (Continued)
(2) Brief biographies of non-executive Directors
Mr. Han Tingde graduated with a bachelor’s degree. He was the deputy general manager and the general
manager of operational department of Jinan Liaocheng and Linyi offices of Shandong Securities Co.Ltd. the deputy general manager and the general manager of operational department of Zibo and Jinan
offices of Tiantong Securities Co. Ltd. in China the general manager of each of the customer service
department the brokerage headquarters and the legal affairs department as well as a deputy general
manager of the retail headquarters of Zhongtai Securities Co. Ltd. etc. He is currently a non-executive
Director of the Company.Mr. Li Chuanxuan holds a doctorate in law. He is a professor at Fudan University Shanghai. From 2008
to 2012 he was a lecturer in the Law School of Fudan University. From 2012 to 2013 he was a visiting
scholar of the Law School of Columbia University in the United States focusing on the research on green
finance laws and policies. He is currently the secretary general of the Environmental and Resources
Protection Law Society of Shanghai Law Society (上海市法學會環境和資源保護法研究會) the director
of the Chinese Society of Environmental and Resources Law (中國法學會環境資源法研究會) and an
appraisal expert of environmental damage forensics in China. He has been selected into the Shanghai
Pujiang Talent Programme. He has been in charge of and undertook over 10 national and provincial
scientific research projects. Moreover he has participated in the drafting of several laws and regulations
of different legislatures including the Standing Committee of the National People’s Congress the Ministry
of Ecology and Environment and Shanghai National People’s Congress. He concurrently serves as a
director of Jiangsu Guanlian New Material Technology Co. Ltd. and an independent director of Shanghai
Liangxin Electrical Co. Ltd. and is currently a non-executive Director of the Company.
(3) Brief biographies of independent non-executive Directors
Mr. Li Zhihui holds a doctorate degree in economics and is a professor and advisor to doctoral students.He currently serves as the head of the Institute of Finance the School of Economics Nankai University
a director of the China Society for Finance and Banking a director of the China International Finance
Society a member of the China Financial Publishing House’s teaching material editorial committee and
a visiting professor at Tianjin Foreign Studies University. He also serves as an independent director of
Shandong Gold Futures Co. Ltd. a director of Henan Anyang Shangdu Rural Commercial Bank Co. Ltd.an independent director of Henan Yiyang Rural Commercial Bank Co. Ltd. and an external supervisor of
Dezhou Bank Co. Ltd. He is currently an independent Director of the Company.
60 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
V. Directors Supervisors and Senior Management (Continued)
2. Employment (Continued)
1. Brief biographies of Directors (Continued)
(3) Brief biographies of independent non-executive Directors (Continued)
Mr. Sun Jianfei holds a doctorate in finance and is a professor. He was a lecturer at University of Nevada
Reno and concurrently served as the consultant of hedge funds such as EP. From August 2010 to
February 2017 he was an assistant professor at Antai College of Economics & Management Shanghai
Jiao Tong University. He was selected in the National Academic Leadership Talent Programme in
Accounting (Standby List) (全國學術類會計領軍(後備)人才項目) organised by the Ministry of Finance as
well as the Shanghai Pujiang Talent Programme. From February 2017 to August 2020 he was a professor
at the Institute for Social and Economic Research of Nanjing Audit University and a part-time professor
at Antai College of Economics & Management and Advanced Institute of Finance Shanghai Jiao Tong
University. He is currently an Associate professor of Shanghai Advanced Institute of Finance of Shanghai
Jiao Tong University. He has concurrently served as an independent director of Central China Land Media
Co. Ltd. Suzhou Thvow Technology Co. Ltd. and an independent director of Cubic Digital Technology
Co. Ltd. He is currently an independent Director of the Company.Mr. Yang Biao holds a doctorate in law and is currently a professor and advisor to doctoral students. He
is current a professor of the School of Law of Sun Yat-sen University. He has concurrently served as an
independent director of Guangdong Tianhe Agricultural Resources Co. Ltd. an independent director of
Qiaoyi Logistics Co. Ltd. and a supervisor of Guangzhou Chuanwen Education Consulting Co. Ltd. He is
currently an independent Director of the Company.Ms. Yin Meiqun holds a doctorate in accounting and is a professor an advisor to doctoral students and
a certified public accountant in China. She paid academic visits to Sweden Finland Denmark and the
Iowa State University in the United States. From July 2007 to August 2021 she was a professor of Beijing
International Studies University. She is currently a professor of China University of Political Science and
Law. She has also served as a member of the 14th Chinese People’s Political Consultative Conference
of Chaoyang District Beijing a managing director of China Business Accounting Institute and a council
member of the Accounting Society of China. She has concurrently served as an independent director of
China Best Group Holding Limited. She is currently an independent Director of the Company.
2023 ANNUAL REPORT 61VI Corporate Governance
V. Directors Supervisors and Senior Management (Continued)
2. Employment (Continued)
2. Brief biographies of Supervisors
Ms. Li Kang is a member of the Communist Party of the PRC. She holds a bachelor’s degree. She joined the
Company in 2001. She has successively served as the section chief deputy minister minister and assistant to
the general manager of the management section of purchasing department. She is currently a deputy financial
controller of the Company and the chairman of the Supervisory Committee of the Company.Ms. Pan Ailing is a Ph.D. in Economics and holds a post-doctoral degree in Financial Management. She is
currently a level-2 professor of the School of Management an advisor to doctoral students and the chief of
the Investment and Financing Research Centre (投融資研究中心) in Shandong University and a non-practising
member of CICPA (Chinese Institute of Certified Public Accountants). She is also a council member of
Shandong Comparative Management Association a visiting scholar at University of Connecticut in the United
States and a state-level candidate for the New Century Ten Million Talents Project (新世紀“百千萬人才工程”).She is a specialist entitled to the State Council Special Allowance (國務院政府特貼專家) and a special expert of
the Taishan Scholar. She is the chief expert of the Major Tender Projects of National Social and Science Fund (國
家社科基金重大招標課題首席專家). She has finished various research projects at national and provincial level.She is also an independent director of Shandong Sunway Chemical Group Co. Ltd. Qingdao Rural Commercial
Bank Co. Ltd. and Shandong Linglong Tire Co. Ltd. She is currently a Supervisor of the Company.Ms. Zhang Hong holds a doctoral degree in Economics and is currently a professor and advisor to doctoral
students at Shandong University a non-practising member of the Chinese Institute of Certified Public
Accountants a director of China Association of International Trade and the managing director of the Shandong
Society of World Economics. She has concurrently served as an independent director of Hua Xia Bank Co.Limited an independent director of Shandong Hi-speed Road & Bridge Group Co. Ltd. an independent director
of Vosges Group Co. Ltd. and an independent director of Sinotruck Jinan Truck Co. Ltd. She is currently a
Supervisor of the Company.Ms. Qiu Lanju graduated with a diploma. She joined the Company in 1995 and served as the deputy chief of
the price audit section of the Company’s inspection department the chief of the implementation section of the
procurement department the chief of the general management section of the procurement department and
the director of the procurement department. She is currently an employee representative Supervisor of the
Company responsible for the management of the human resources department.Ms. Sang Ailing holds a bachelor’s degree and is a member of the Communist Party of the PRC. She joined the
Company in 2000 and served as the chief of the personnel management section of the marketing department
of a sales company the deputy director and director of the marketing department of a sales company etc. She
is currently a deputy director of the marketing department of the Company and an employee representative
Supervisor of the Company.
62 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
V. Directors Supervisors and Senior Management (Continued)
2. Employment (Continued)
3. Brief biographies of Senior Management
Ms. Li Xueqin is a member of the Communist Party of the PRC. She holds a bachelor’s degree. She wassuccessively awarded titles including “Model Worker in Shandong Province (山東省勞動模範) Model Workerin the Country (全國勞動模範) and Nationwide May 1st Labour Medal (全國五一勞動獎章)” and a deputy of
the Tenth Eleventh Twelfth and Thirteenth National People’s Congress. She joined the Company in 1987 and
had held the positions of the chief of audit department and deputy general manager of the Company. She has
been a deputy general manager of the Company since March 2003. Ms. Li Xueqin is the spouse of Mr. Chen
Hongguo the chairman of the Company.Mr. Li Feng is a member of the Communist Party of the PRC. He holds a bachelor’s degree. He joined the
Company in 1992 and had held different positions including the chief officer of manufacturing section and
assistant to the general manager of the Company chairman marketing director deputy general manager
and general manager of Wuhan Chenming. He is currently a director of Chenming Holdings and an executive
Director and deputy general manager of the Company. Mr. Li Feng is the younger brother of Ms. Li Xueqin a
deputy general manager of the Company.Mr. Li Weixian graduated with a postgraduate degree. He joined the Company in 2002 and served as a deputy
manager of a sales company of the Company manager of a sales company general manager of Jiangsu district
of a sales company chairman of a household paper company product general manager deputy marketing
director and marketing director of a sales company the general manager of the Group and chairman of the
financial division of a group. He is currently an executive Director and the general manager of the Company.Mr. Li Zhenzhong is a member of the Communist Party of the PRC. He holds a bachelor’s degree. He joined
the Company in 1995 and had served as principal representative of the Shanghai management region of a
sales company sales manager of light weight coated culture paper products general manager of culture paper
products of a sales company. He is currently a deputy general manager of the Company.Mr. Li Mingtang is a member of the Communist Party of the PRC. He joined the Company in 2002 and had
served as principal representative of the Jiangsu management region and Jinan branch of a sales company
assistant to general manager and general manager of a culture paper products company and deputy general
manager of a coated linerboard products company. He is currently a deputy general manager of the Company.
2023 ANNUAL REPORT 63VI Corporate Governance
V. Directors Supervisors and Senior Management (Continued)
2. Employment (Continued)
3. Brief biographies of Senior Management (Continued)
Mr. Ge Guangming is a member of the Communist Party of the PRC. He joined the Company in 1995 and
had served as a deputy general project manager of the Company deputy general manager of Jilin Chenming
assistant to general manager of the Company and deputy general manager responsible for the Zhanjiang
Chenming project and the Huanggang Chenming Pulp & Paper project. He is currently a deputy general
manager of the Company.Mr. Dong Lianming is a member of the Communist Party of the PRC and an accountant. He holds a bachelor’s
degree. He joined the Company in 1997 and had held positions as the chief of accounting and auditing section
under the financial department of the Company the deputy chief and chief of the financial department chief
accountant of Jiangxi Chenming chief accountant of Shandong Chenming Panels and financial controller and
deputy general manager of Zhanjiang Chenming. He is currently the financial controller of the Company.Mr. Yuan Xikun is a member of the Communist Party of the PRC. He holds a bachelor’s degree in management.He joined the Company in 2010 and had held positions as the accountant for consolidated financial statements
in the financial department of the Company manager of disclosure department security affairs specialist and
chief of the security investment section. He is currently the secretary to the Board of the Company.Mr. Chu Hon Leung is a lawyer. He obtained a bachelor’s degree in business from Macquarie University
Sydney Australia and a postgraduate diploma in law from The College of Law London England. He graduated
from the City University of Hong Kong and obtained a diploma in Hong Kong law. He had been a lawyer in
local and international law firms in Hong Kong and served and an internal consultant for leading Chinese asset
management companies. He has been a practicing lawyer in Hong Kong since 2009 and currently works for Li &
Partners.Employment at the shareholder of the Company
□ Applicable □ Not applicable
Receipt of any
remuneration or
allowance from
Position at the Date of the the shareholder
Name of shareholder shareholder of beginning of Date of the end of of the Company
Name of employee of the Company the Company the term the term or not
Chen Hongguo Chenming Holdings Chairman 22 September 2016 29 December 2026 No
Company Limited
Hu Changqing Chenming Holdings director 22 September 2016 29 December 2026 No
Company Limited
Li Xueqin Chenming Holdings director 22 September 2016 29 December 2026 No
Company Limited
Li Feng Chenming Holdings director 13 August 2021 29 December 2026 No
Company Limited
Explanation of the employment Nil
at the shareholder of the
Company
64 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
V. Directors Supervisors and Senior Management (Continued)
2. Employment (Continued)
3. Brief biographies of Senior Management (Continued)
Employment at other units
□ Applicable □ Not applicable
Receipt of any
remuneration or
Name of Date of the allowance from
employee Name of other unit(s) Position at other unit(s) beginning of the term Date of the end of the term other units or not
Li Chuanxuan Shanghai Liangxin Electrical Co. Ltd. Independent director 17 May 2023 14 September 2024 Yes
Yang Biao Guangdong Tianhe Agricultural Resources Co. Ltd. Independent director 17 May 2018 16 May 2024 Yes
Yang Biao Qiaoyi Logistics Co. Ltd. Independent director 31 March 2021 31 March 2024 Yes
Yang Biao Dongguan Rural Commercial Bank Co. Ltd. External supervisor 1 October 2019 1 October 2025 Yes
Sun Jianfei Nanya New Material Technology Co. Ltd. Independent director 4 August 2017 21 September 2023 Yes
Sun Jianfei Suzhou Thvow Technology Co. Ltd. Independent director 8 May 2020 An announcement on resignation Yes
was disclosed on 21 June 2023
Sun Jianfei Cubic Digital Technology Co. Ltd. Independent director 18 May 2021 18 May 2024 Yes
Sun Jianfei Central China Land Media Co. Ltd. Independent director 19 May 2023 18 May 2026 Yes
Yin Meiqun Shangqiu Dingfeng Wood Co. Ltd. Independent director 21 April 2021 20 April 2024 Yes
Yin Meiqun China Best Group Holding Limited Independent director 1 December 2021 30 November 2024 Yes
Li Xingchun Huadian International Power Co. Ltd. Independent director 30 June 2020 30 May 2026 Yes
Li Xingchun Shanghai New Huangpu Industrial Group Co. Ltd. Vice chairman 9 August 2022 8 August 2025 No
Li Xingchun Zhejiang Kingland Pipeline and Technologies Co. Ltd. Chairman 11 May 2023 28 December 2025 No
Pan Ailing Shinva Medical Instrument Co. Ltd. Independent director 27 July 2020 25 July 2026 Yes
Pan Ailing Qingdao Rural Commercial Bank Co. Ltd. Independent director 12 October 2022 28 May 2024 Yes
Pan Ailing Shandong Linglong Tire Co. Ltd. Independent director 6 July 2022 5 July 2025 Yes
Pan Ailing Shandong Sunway Chemical Group Co. Ltd. Independent director 15 May 2020 15 December 2023 Yes
Zhang Hong Hua Xia Bank Co. Limited External supervisor 31 March 2022 Expiration of the eighth session of Yes
the Supervisory Committee
Zhang Hong Vosges Group Co. Ltd. Independent director 15 July 2019 15 July 2025 Yes
Zhang Hong Sinotruck Jinan Truck Co. Ltd. Independent director 28 April 2020 11 May 2026 Yes
Zhang Hong Cisen Pharmaceutical Co. Ltd. Independent director 8 December 2020 28 February 2024 Yes
Zhang Hong Shandong Hi-speed Road & Bridge Group Co. Ltd. Independent director 23 April 2019 – Yes
Sanctions against current Directors Supervisors and Senior Management of the Company and those who
resigned during the reporting period by securities regulatory authorities in the past three years
□ Applicable □ Not applicable
2023 ANNUAL REPORT 65VI Corporate Governance
V. Directors Supervisors and Senior Management (Continued)
3. Remuneration of Directors Supervisors and Senior Management
Decision process basis for determining the remuneration and actual payment for the remuneration of Directors
Supervisors and the Senior Management
(1) Determination basis for remuneration of Directors Supervisors and the Senior Management: The annual
remuneration of each of the executive Directors and the Senior Management of the Company was in the
band of RMB0.20 million to RMB5.00 million and the specific amount for each of them was determined
by the remuneration committee based on the main financial indicators and operation target completed by
the Company the scope of work and main responsibilities of the Directors and Senior Management of the
Company the target completion of the Directors and Senior Management as assessed by the duty and
performance appraisal system as well as business innovation capability and profit generation ability of the
Directors and the Senior Management. The annual remuneration of Supervisors assuming specific managerial
duties in the Company were determined by the general manager office of the Company based on specific
managerial duties assumed by them. Fixed annual remuneration policy was adopted on external Supervisors
who did not hold actual management positions in the Company. As approved at the 2022 first extraordinary
general meeting of the Company the Company paid each of the independent non-executive Directors and
non-executive Directors of the Company allowance of RMB200000 (before tax). The remuneration of external
Supervisors amounted to RMB100000 (before tax). The travel expenses for attending board meetings
supervisory meetings and general meetings of the Company and fees reasonably incurred in the performance of
their duties under the Articles of Association by independent non-executive Directors non-executive Directors
and external supervisors are reimbursed as expensed.
(2) Decision process for remuneration of Directors Supervisors and Senior Management: In accordance with
the relevant policies and regulations such as the Implementation Rules of the Remuneration and Assessment
Committee under the Board any remuneration plan for the Company’s executive Directors proposed by the
remuneration and assessment committee shall be agreed on by the Board and then submitted to the general
meeting for consideration and approval prior to implementation. Any proposal of remuneration distribution
plan for the Senior Management officers of the Company shall be submitted to the Board for approval. The
remuneration of independent non-executive Directors non-executive Directors and external Supervisors of the
Company shall be agreed on by the Board and then submitted to the general meeting for consideration and
approval prior to implementation.
(3) The remuneration and assessment committee which was set up by the Board according to the resolution of the
general meeting is mainly responsible to formulate the standards of carry out appraisal in respect of the non-
independent Directors and Senior Management of the Company; formulate and examine the remuneration policy
and scheme of the non-independent Directors and Senior Management of the Company and accountable to
the Board.
66 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
V. Directors Supervisors and Senior Management (Continued)
3. Remuneration of Directors Supervisors and Senior Management (Continued)
Decision process basis for determining the remuneration and actual payment for the remuneration of Directors
Supervisors and the Senior Management (Continued)
Remuneration of Directors Supervisors and Senior Management of the Company during the reporting period
Unit: RMB’0000
Receipt of
Total remuneration
remuneration from related
before tax parties of the
received from Company
Name Position Gender Age Status the Company or not
Chen Hongguo Chairman M 59 In office 317.42 No
Hu Changqing Vice chairman M 58 In office 201.25 No
Li Xingchun Vice chairman M 58 In office 420.00 Yes
Li Feng Director and deputy general manager M 50 In office 144.38 No
Li Weixian Director and general manager M 42 In office 232.96 No
Han Tingde Director M 55 In office 20.00 No
Li Chuanxuan Director M 46 In office 20.00 No
Li Zhihui Independent Director M 65 In office 20.00 No
Sun Jianfei Independent Director M 51 In office 20.00 No
Yin Meiqun Independent Director F 53 In office 20.00 No
Yang Biao Independent Director M 44 In office 20.00 No
Li Kang Chairman of the Supervisory Committee F 42 In office 84.30 No
Pan Ailing Supervisor F 59 In office 10.00 No
Zhang Hong Supervisor F 59 In office 10.00 No
Qiu Lanju Supervisor F 50 In office 75.03 No
Sang Ailing Supervisor F 45 In office 22.09 No
Li Xueqin Deputy general manager F 58 In office 169.67 No
Li Zhenzhong Deputy general manager M 50 In office 135.77 No
Li Mingtang Deputy general manager M 56 In office 87.27 No
Ge Guangming Deputy general manager M 53 In office 130.35 No
Dong Lianming Financial controller M 49 In office 145.66 No
Yuan Xikun Secretary to the Board M 38 In office 55.52 No
Chu Hon Leung Company secretary (Hong Kong) M 41 In office 0.00 No
Total － － － － 2361.67 －
Note: The total pre-tax remuneration received by Directors Supervisors and the Senior Management from the Company is the remuneration
during their tenure.Other explanation
□ Applicable □ Not applicable
2023 ANNUAL REPORT 67VI Corporate Governance
VI. Performance of Directors during the reporting period
1. Board meetings during the reporting period
Meeting Convening date Disclosure date Resolutions of meeting
The sixth extraordinary meeting of 19 January 2023 20 January 2023 http://www.cninfo.com.cn
the tenth session of the Board (announcement no.: 2023-003)
The fourth meeting of the tenth 30 March 2023 31 March 2023 http://www.cninfo.com.cn
session of the Board (announcement no.: 2023-016)
The seventh extraordinary meeting 19 April 2023 20 April 2023 http://www.cninfo.com.cn
of the tenth session of the Board (announcement no.: 2023-030)
The fifth meeting of the tenth 28 April 2023 29 April 2023 http://www.cninfo.com.cn
session of the Board (announcement no.: 2023-039)
The eighth extraordinary meeting of 29 June 2023 30 June 2023 http://www.cninfo.com.cn
the tenth session of the Board (announcement no.: 2023-046)
The ninth extraordinary meeting of 17 July 2023 18 July 2023 http://www.cninfo.com.cn
the tenth session of the Board (announcement no.: 2023-053)
The sixth meeting of the tenth 30 August 2023 31 August 2023 http://www.cninfo.com.cn
session of the Board (announcement no.: 2023-064)
The tenth extraordinary meeting of 8 September 2023 9 September 2023 http://www.cninfo.com.cn
the tenth session of the Board (announcement no.: 2023-067)
The eleventh extraordinary meeting 20 September 2023 21 September 2023 http://www.cninfo.com.cn
of the tenth session of the Board (announcement no.: 2023-071)
The twelfth extraordinary meeting 8 October 2023 9 October 2023 http://www.cninfo.com.cn
of the tenth session of the Board (announcement no.: 2023-074)
The seventh meeting of the tenth 30 October 2023 N/A The Company’s 2023 Third
session of the Board Quarterly Report was considered
and approved. It was exempted
from disclosure by resolution
announcement.The thirteenth extraordinary 28 November 2023 29 November 2023 http://www.cninfo.com.cn
meeting of the tenth session of (announcement no.: 2023-080)
the Board
68 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
VI. Performance of Directors during the reporting period (Continued)
2. Attendance of Directors at Board meetings and general meetings
Attendance of Directors at Board meetings and general meetings
Number of
attendance
required
for Board Absent from
meetings Attendance Attendance Attendance Board
during the at Board at Board at Board Absence meetings twice Attendance
reporting meetings meetings by meetings from Board in a row at general
Name of Directors period in person communication by proxy meetings (in person) meetings
Chen Hongguo 12 0 12 0 0 No 0
Hu Changqing 12 0 12 0 0 No 6
Li Xingchun 12 0 12 0 0 No 6
Li Feng 12 0 12 0 0 No 5
Li Weixian 12 0 12 0 0 No 5
Han Tingde 12 0 12 0 0 No 6
Li Chuanxuan 12 0 12 0 0 No 6
Li Zhihui 12 0 12 0 0 No 6
Sun Jianfei 12 0 12 0 0 No 6
Yin Meiqun 12 0 12 0 0 No 6
Yang Biao 12 0 12 0 0 No 6
Explanation for absent from Board meetings twice in a row (in person)
During the reporting period none of the Directors was absent from Board meetings twice in a row (in person).
2023 ANNUAL REPORT 69VI Corporate Governance
VI. Performance of Directors during the reporting period (Continued)
3. Objections from Directors on related issues of the Company
Were there any objections on related issues of the Company from Directors
□ Yes □ No
There was no objection on related issues of the Company from Directors during the reporting period.
4. Other details about the performance of duties by Directors
Were there any suggestions from Directors adopted by the Company
□ Yes □No
Explanation on the adoption or non-adoption with related suggestions from the Directors
During the reporting period all Directors of the Company performed their duties with integrity and diligence and
conducted works in strict compliance with relevant rules of the CSRC Shenzhen Stock Exchange and Stock
Exchange as well as the Articles of Association the Rules of Procedures of the Board of Directors the Administrative
Rules for Independent Directors and other systems. They actively attended the Board meetings carefully reviewed
various proposals made scientific decisions and executed resolutions of the general meetings. Independent Directors
of the Company maintained good communication with other Directors Supervisors and senior management.They focused on the operation and financial conditions and legal person governance structure of the Company
and expressed their independent opinions on matters of the Company that have significant impacts on minority
shareholders including external guarantees related party transactions financial aids and change in general manager
etc. They also enhanced their exchange with investors by attending general meetings and result announcement
roadshows thus actively safeguarding the legitimate rights of the Company and all shareholders which is beneficial
to the regulated operation and healthy development of the Company.
70 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
VII. Special committees under the Board during the reporting period
Number of
Name of the meeting Important opinion and Details of
committee Member convened Convening date Details of the meeting advice Other performance of duty objection
Audit Yin Meiqun 4 30 March 2023 Reviewed Full Text Agreed to submit to the Communication with accountants Nil
Committee Li Zhihui and and Summary of the Board for review on the independence
Sun Jianfei Company’s 2022 responsibilities key audit
Annual Report the matters and important matters
Company’s 2022 of the audit for 2022; review
Financial Final of the 2022 audit report and
Accounts Report financial report the reasons
Proposal on the for making asset impairment
Appointment of Auditor provision for 2022 asset
for 2023 and Proposal scope and basis of provision
on Provision for and ensure the rationality
Impairment of Assets and prudence of provision;
in 2022 review of the professional
competence independence
investor protection ability and
audit fees of the 2023 auditor.
28 April 2023 Reviewed the 2023 First Agreed to submit to the Review of the 2023 first quarterly Nil
Quarterly Report of the Board for review report of the Company.Company
30 August 2023 Reviewed the Full Text Agreed to submit to the Review of Capital Flows Between Nil
and Summary of the Board for review Related Parties external
2023 Interim Report guarantees and impairment
of the Company and provision of the Company for
the Proposal of Asset the first half of 2023 and the
Impairment Provision 2023 interim report.for the First Half of
2023
30 October 2023 Reviewed the 2023 Third Agreed to submit to the Review of the 2023 third quarterly Nil
Quarterly Report of the Board for review report of the Company; paying
Company attention to reasons for the
year-on-year decrease in
profits.
2023 ANNUAL REPORT 71VI Corporate Governance
VII. Special committees under the Board during the reporting period (Continued)
Number of
Name of the meeting Important opinion and Details of
committee Member convened Convening date Details of the meeting advice Other performance of duty objection
Remuneration Yang Biao Li 2 30 March 2023 Reviewed the Proposal Agreed to submit to the Review of the performance Nil
and Xingchun and on Determination Board for review assessment on executive
Assessment Sun Jianfei of Remuneration Directors and senior
Committee of Directors management and Supervisors
Supervisors and Senior who assume specific
Management for 2022 management positions in the
Company and determination
of the remuneration of
Directors Supervisors and the
Senior Management based on
the operations of the Company
in 2022.
17 July 2023 Reviewed the Proposal Agreed to submit to the Review of each of the items Nil
on Failure Fulfilment Board for review under the 2020 Restricted
of the Unlocking A Share Incentive Scheme
Conditions for the including the performance
Second Unlocking appraisal indicators at the
Period under the 2020 company level resignation
Restricted A Share of employees the list of
Incentive Scheme participants who do not meet
and Repurchase and the unlocking conditions
Cancellation of Certain number of shares repurchased
Restricted Shares and cancelled repurchase
price and basis.Nomination Li Zhihui Chen 1 8 October 2023 Reviewed the Proposal Agreed to submit to the Review of the reasons for Nil
Committee Hongguo and on Change in General Board for review resignation of Mr. Chen
Yin Meiqun Manager Hongguo the former general
manager and the qualification
work experience and
shareholding of Mr. Li Weixian
the candidate to determine
that he is capable to serve as
senior management.
72 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
VIII. Performance of duties by the Supervisory Committee
Were there any risks of the Company identified by the Supervisory Committee when performing its duties during the
reporting period
□ Yes □ No
None of those issues under the supervision was objected by the Supervisory Committee during the reporting period.IX. Personnel of the Company
1. Number of staff specialty composition and education level
Number of staff at the Company (person) as at the end of the reporting period 2522
Number of staff at major subsidiaries (person) as at the end of the reporting period 7341
Total number of staff (person) as at the end of the reporting period 10604
Total number of staff receiving remuneration during the period (person) 10604
Number of retired/resigned staff the Company and its major subsidiaries are required to
compensate (person) 0
Specialty composition
Number of people
Category of specialty composition (person)
Production staff 7181
Sales staff 465
Technical staff 410
Financial staff 177
Administrative staff 1198
Other staff 1173
Total 10604
Education level
Number of people
Category of education level (person)
Postgraduate and above 23
Undergraduate 879
Post-secondary 2253
Technical secondary and below 7449
Total 10604
2023 ANNUAL REPORT 73VI Corporate Governance
IX. Personnel of the Company (Continued)
2. Remuneration policies
The remuneration of the employees of the Company includes their salaries performance bonuses and other fringe
benefits. Subject to the relevant laws and regulations the Company adopts different standards of remuneration for
different employees which are determined based on their position skill variety performance etc. with reference to
the remuneration level in the labour market the average level of salary in the society and the corporate reference line
set by the government. The Company provides various benefits to the employees including social insurance housing
allowance and paid leaves etc.
3. Training programmes
Adhering to the corporate spirit of “working hard and operating aggressively” the Company has established
comprehensive staff promotion and incentive mechanisms to enhance the enthusiasm and creativity of employees.The Company focuses on the cooperation with quality training institutions to introduce quality training programmes
especially focusing on improving the capability of middle-level and senior management in respect of learning
management and action. The Company deep dives into front-line of production to understand the true needs of
employees for trainings improve the operational skills of employees and enhance our core competitiveness.
4. Labour outsourcing
□ Applicable □ Not applicable
X. Profit distribution of the Company and conversion of capital reserves into share capital
Formulation implementation or adjustment of profit distribution policy especially the cash dividend during the reporting
period
□ Applicable □ Not applicable
The Company was profitable during the reporting period and the Parent Company’s profit available for distribution to
shareholders was positive but no cash dividend distribution plan was proposed
□ Applicable □ Not applicable
Profit distribution and conversion of capital reserves into share capital during the reporting period
□ Applicable □ Not applicable
The Company does not propose distribution of cash dividends or bonus shares for the year and there will be no increase of
share capital from reserves.
74 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
XI. Implementation of the equity incentive plan employee shareholding plan or other employee
incentive measures of the Company
□ Applicable □ Not applicable
1. Equity incentives
1. On 30 March 2020 the Company convened the ninth extraordinary meeting of the ninth session of the Board at
which the Company considered and approved the Resolution in Relation to the 2020 Restricted Share Incentive
Scheme of Shandong Chenming Paper Holdings Limited (Draft) and Its Summary and other resolutions. On the
same date the fourth extraordinary meeting of the ninth session of the Supervisory Committee of the Company
considered and approved the above resolutions and verified the list of proposed participants of the incentive
scheme. Independent Directors of the Company issued independent opinions on the incentive scheme.
2. On 3 April 2020 the Company announced the list of participants through the Company’s internal website for
a period from 3 April 2020 to 12 April 2020. During the period the Supervisory Committee of the Company
and relevant departments did not receive any objection against the proposed participants. The Supervisory
Committee verified the list of participants under the grant of the incentive scheme.
3. On 15 May 2020 the Company convened the 2020 second extraordinary general meeting the 2020 first class
meeting for holders of domestic-listed shares and the 2020 first class meeting for holders of overseas-listed
shares at which the Company considered and approved the Resolution in Relation to the 2020 Restricted
Share Incentive Scheme of Shandong Chenming Paper Holdings Limited (Draft) and Its Summary and other
resolutions. On 16 May 2020 the Company disclosed the Self-Examination Report for the Trading of Shares of
the Company by Insiders and Participants of the 2020 Restricted A Share Incentive Scheme.
4. On 29 May 2020 the Company convened the tenth extraordinary meeting of ninth session of the Board and the
fifth extraordinary meeting of the ninth session of the Supervisory Committee at which the Company considered
and approved the Resolution on the Matters Relating to Adjustments to the 2020 Restricted A Share Incentive
Scheme of the Company and the Resolution in Relation to the Grant of Restricted Shares to the Participants
approving the issue of 79600000 restricted A shares to 111 participants at the price of RMB2.85 per share on
29 May 2020.
5. On 15 July 2020 the 79600000 restricted A shares granted to the participants were listed.
6. On 18 July 2022 the Company convened the second extraordinary meeting of the tenth session of the Board
and the first extraordinary meeting of the tenth session of the Supervisory Committee at which the Company
considered and approved the Resolution on the Fulfilment of the Unlocking Conditions of the Restricted
Shares Granted under the 2020 Restricted A Share Incentive Scheme during the First Unlocking Period and the
Resolution on the Adjustment to the Repurchase Price of the 2020 Restricted A Share Incentive Scheme and
Repurchase and Cancellation of Certain Restricted Shares. The independent Directors of the Company issued
independent opinions to agree with such resolutions.
96 participants fulfilled the unlocking conditions for the first unlocking period under the 2020 Restricted A Share
Incentive Scheme with 29948000 restricted shares being eligible for unlocking. 15 participants had resigned
had changed duty and had removed from office which failed to comply with the unlocking conditions. The
total number of restricted shares that have been granted to and held by the participants and have not yet been
unlocked is 4466000 with a repurchase price of RMB2.5184172 per share (excluding the bank loan interest
rate for the same term). On 27 July 2022 29948000 restricted A shares that were unlocked were listed for
trading. On 18 October 2022 the Company completed the procedures for the repurchase and cancellation
of 4466000 restricted A shares with the Shenzhen Branch of China Securities Depository and Clearing
Corporation Limited.
2023 ANNUAL REPORT 75VI Corporate Governance
XI. Implementation of the equity incentive plan employee shareholding plan or other employee
incentive measures of the Company (Continued)
1. Equity incentives (Continued)
7. On 17 July 2023 the Company convened the ninth extraordinary meeting of the tenth session of the Board and
the fifth extraordinary meeting of the tenth session of the Supervisory Committee at which the Resolution on
the Failure Fulfilment of the Unlocking Conditions for the Second Unlocking Period under the 2020 Restricted
A Share Incentive Scheme and Repurchase and Cancellation of Certain Restricted Shares was considered and
approved. The results for 2022 of the Company failed to pass the performance appraisal targets at company
level set for the second unlocking period. Meanwhile 5 participants lost their incentive qualification due to their
resignation. The Board of the Company repurchased and cancelled 22929000 restricted A shares which had
been granted to participants but not yet unlocked for the second unlocking period at a repurchase price of
RMB2.5184172 per share (excluding the bank loan interest rate for the same term). On 20 November 2023 the
Company completed the repurchase and cancellation procedures of the 22929000 restricted A shares at the
Shenzhen Branch of China Securities Depository and Clearing Corporation Limited.Equity incentives granted to Directors and the Senior Management of the Company
□Applicable □Not applicable
Unit: share
Number Exercise Number
of newly price of of newly
Number granted Number Number the shares Number Market Number Number granted Number
of share share of shares of shares exercised of share price at the of restricted of unlocked restricted of restricted
options held options exercisable exercised during the options end of the shares held shares shares Grant price shares
at the during the during the during the reporting held at reporting at the during the during the of restricted held at the
beginning of reporting reporting reporting period the end of period beginning current reporting shares end of the
Name Position the period period period period (RMB/share) the period (RMB/share) of the period period period (RMB/share) period
Chen Hongguo Chairman 0 0 0 0 0 0 3.88 12000000 0 0 2.85 6000000
Hu Changqing Vice chairman 0 0 0 0 0 0 3.88 3000000 0 0 2.85 1500000
Li Xingchun Vice chairman 0 0 0 0 0 0 3.88 3000000 0 0 2.85 1500000
Li Feng Director and 0 0 0 0 0 0 3.88 1800000 0 0 2.85 900000
deputy general
manager
Li Weixian Director and 0 0 0 0 0 0 3.88 1200000 0 0 2.85 600000
general
manager
Li Xueqin Deputy general 0 0 0 0 0 0 3.88 1800000 0 0 2.85 900000
manager
Li Zhenzhong Deputy general 0 0 0 0 0 0 3.88 1200000 0 0 2.85 600000
manager
Li Mingtang Deputy general 0 0 0 0 0 0 3.88 600000 0 0 2.85 300000
manager
Dong Lianming Financial 0 0 0 0 0 0 3.88 600000 0 0 2.85 300000
controller
Yuan Xikun Secretary to the 0 0 0 0 0 0 3.88 180000 0 0 2.85 90000
Board
Total － 0 0 0 0 － 0 － 25380000 0 0 － 12690000
Remarks (if any) The 2022 annual result of the Company failed to pass the performance appraisal targets at company level set for the second unlocking period. Pursuant to the 2020 Restricted A Share
Incentive Scheme (Draft) of the Company the restricted shares held by participants under the second unlocking period shall be repurchased and cancelled. In particular the number of
shares for Directors Supervisors and Senior Management of the Company repurchased and cancelled was 12690000 during the reporting period.
76 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
XI. Implementation of the equity incentive plan employee shareholding plan or other employee
incentive measures of the Company (Continued)
1. Equity incentives (Continued)
Assessment and incentive mechanism for the Senior Management
The Senior Management of the Company is assessed on monthly and annually basis. Monthly assessments were
conducted in line with the direction of the annual major tasks and were focused on appraisals of two fixed indicators
namely the completion status of each month and the evaluation on important performance indicators. It was carried
out monthly by way of cross assessment and supervision among the related departments. The annual assessments
were carried out by the Remuneration and Assessment Committee with reference to the results of monthly
assessments and overall performances during the year including the integrated quality of Senior Management and
internal training of talents.
2. Implementation of employee shareholding plans
□ Applicable □ Not applicable
3. Other employee incentive measures
□ Applicable □ Not applicable
2023 ANNUAL REPORT 77VI Corporate Governance
XII. Construction and implementation of internal control system during the reporting period
1. Construction and implementation of internal control system
During the reporting period in accordance with the Basic Internal Control Norms for Enterprises and its supporting
guidelines taking internal and external environment internal organisation and management requirements into account
the Company updated and improved its internal control system in a timely manner comprehensively reviewed and
revised the daily work and business flows and internal control systems of each department and business segment
of the Company supplemented and revised the relevant content of the Internal Control Management Manual and
established a scientifically designed concise and applicable internal control system with effective operation. The
internal control of the Company was able to cover the main aspects of the Company’s operation and management
and there were no major omissions. The units businesses and events included in the evaluation scope and high-risk
areas covered the main aspects of the Company’s operation and management and there were no major omissions.The design of the internal control system of the Company was sound and reasonable. The implementation of internal
controls was effective and there were no major omissions.Through the operation analysis and evaluation of the internal control system the Company effectively prevented risks
in operation and management and promoted the realisation of internal control objectives.
2. Particulars of material deficiencies in internal control detected during the reporting period
□Yes □ No
XIII. The Company’s management and control of subsidiaries during the reporting period
Issue
encountered
Integration during Implemented Solution Follow-up
Name of the company Integration plan progress integration solution progress solution
Jiangxi Chenming Port In April 2023 Jiangxi Chenming a Completed Nil N/A N/A N/A
Co. Ltd. subsidiary acquired equity interest in
Jiangxi Port which is included in the
scope of consolidation. The principal
activities of Jiangxi Chenming Port is
goods loading and transportation at
wharf. In order to revitalise Jiangxi Port
and enhance economic benefits to
the Company Jiangxi Chenming has
contracted the businesses of Jiangxi Port
to Jiangxi Yirong Investment Co. Ltd. for
5 years and receives fixed contracting
fees of RMB4.00 million per year on
quarterly basis.
78 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
XIV. Assessment report on internal control or auditor’s report on internal control
1. Assessment report on internal controls
Date of disclosure of assessment report on internal controls 29 March 2024
Index of assessment report on internal controls disclosure http://www.cninfo.com.cn
Percentage of total assets included in assessment to total assets in consolidated
financial statements of the Company 99.70%
Percentage of revenue included in assessment to revenue in consolidated financial
statements of the Company 99.40%
Basis for identifying deficiencies
Type Financial reporting Type
Qualitative criteria * Indicators of material deficiencies in the internal control of * Indicators of material deficiencies in the internal control of
financial reporting include: ineffective control environment non-financial reporting include: major failure as a result
material loss to and adverse impact on the Company as a of the decision making process; lack of control system or
result of misconduct by Directors Supervisors and Senior occurrence of systematic failure in principal activities and
Management; material misstatement of non-exceptional lack of effective compensation control high turnover rate
incidents; ineffectiveness in supervision of internal control of mid to senior level management and senior technical
of the Company by the Board or its delegated authorities staff; failure to address the findings of internal control
and the internal audit department. assessment in particular material deficiencies; and other
* Indicators of major deficiencies in internal control of factors which impose material adverse impact on the
financial reporting include: failure in selecting and Company.applying accounting policies in accordance with * Indicators of major deficiencies in internal control of non-
generally accepted accounting principles; failure to financial reporting include: general failure as a result of the
establish procedures and control measures to prevent decision-making process; deficiencies in major business
corrupt practices; failure to establish corresponding procedure or system; high turnover rate of key staff; failure
control mechanism for the accounting of unusual or to address the findings of internal control assessment
special transactions or failure to implement or set up in particular major deficiencies; and other factors which
the corresponding compensation control; failure to impose great adverse impact to the Company.reasonably ensure the truthfulness and accuracy in the * Indicators of general deficiencies in internal control of non-
preparation of financial statement as a result of one or financial reporting include: low efficiency of decision-
more deficiencies in the control of financial reporting as of making process; deficiencies in general business procedure
the end of the period. or system; high turnover rate of employees; and failure to
* General deficiencies: other deficiencies in internal control rectify general deficiencies.that do not constitute material or major deficiencies.Quantitative criteria General deficiencies: deviation of less than or equal to 0.1% General deficiencies: quantitative criterion (financial loss)
from the target of accounting error/the total revenue; less than RMB5000000; major deficiencies: quantitative
Major deficiencies: deviation of 0.1% – 0.5% from the criterion (financial loss) between RMB5000000 and
target of accounting error/the total revenue; material RMB20000000; material deficiencies: quantitative criterion
deficiencies: deviation greater than 0.5%. (financial loss) over RMB20000000.Number of material deficiencies in financial reporting 0
Number of material deficiencies in non-financial reporting 0
Number of major deficiencies in financial reporting 0
Number of major deficiencies in non-financial reporting 0
2023 ANNUAL REPORT 79VI Corporate Governance
XIV. Assessment report on internal control or auditor’s report on internal control (Continued)
2. Auditor’s report on internal control
□ Applicable □ Not applicable
Auditor’s opinion contained in the auditor’s report on internal control
We are of the opinion that Shandong Paper Company had in all material aspects maintained effective internal control
over the financial statements in accordance with the Basic Internal Control Norms for Enterprises as of 31 December
2023.
Disclosure of auditor’s report on internal control Disclosed
Date of disclosure of auditor’s report on internal control 29 March 2024
Index of auditor’s report on internal control disclosure http://www.cninfo.com.cn
Type of opinion in auditor’s report on internal control Standard and unqualified opinion
Material deficiencies in non-financial reporting No
Any opinions of non-standardisation set out in the auditor’s report on internal control issued by accountants
□ Yes □ No
Auditor’s report on internal control issued by accountants was in line with Directors’ opinions contained in self-
assessment report
□ Yes □ No
XV. Rectification of problems found in self-inspection under the special initiative on corporate
governance of the listed company
Not applicable
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited
(i) Compliance with the Code on Corporate Governance
The Company maintained high standards of corporate governance through various internal controls. The Board
reviewed the corporate governance practices of the Company from time to time to enhance the corporate governance
standards of the Company.Save for the details set out in III. Board and XVII. Communications with shareholders in this section the Company
had fully complied with all the principles and code provisions of the Code on Corporate Governance as set out in
Appendix C1 to the Hong Kong Listing Rules during the reporting period.
80 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(ii) Securities transactions by Directors
The Directors of the Company confirmed that the Company had adopted the Model Code for Securities Transactions
by Directors of Listed Companies as set out in Appendix C3 to the Hong Kong Listing Rules. Having made adequate
enquiries with all Directors and Supervisors of the Company the Company was not aware of any information that
reasonably suggested that the Directors and Supervisors had not complied with the requirements as stipulated in this
code during the reporting period.(iii) Board
The members of the Board of the Company are elected at the general meeting and held accountable to the general
meeting and shall exercise the following functions and powers: (1) to be responsible for convening the general
meeting and to report on its work to the general meeting; (2) to carry out the resolutions of general meetings; (3)
to decide on the business plans and investment proposals of the Company; (4) to formulate the proposed annual
financial budget and final accounts of the Company; (5) to formulate the plan for profit distribution and the plan
making up losses of the Company; (6) to formulate plans for the increase or reduction in the registered capital
of the Company and for the issue and listing of Company’s debentures or other securities; (7) to draft plans for
material acquisition and repurchase of the Company’s ordinary shares; (8) to draft plans for the merger division or
dissolution or the change of formation of the Company; (9) to decide on external investment acquisition and disposal
of assets pledge of assets matter in relation to external guarantee entrusted wealth management connected
transactions etc. within the scope of mandate of the general meeting; (10) to decide on the establishment of the
Company’s internal management organisation; (11) to employ or dismiss the manager or secretary to the Board of
the Company; to employ or dismiss the Senior Management such as the deputy general manager(s) and personnel
in charge of financial affairs as proposed by the general manager; and to decide on their remuneration and rewards
and punishments; (12) to formulate the basic management system of the Company; (13) to formulate proposals for
amending the Articles of Association; (14) to administrate matter related to information disclosure of the Company;
(15) to propose to the general meeting for the engagement or replacement of accounting firm performing audit for the
Company; (16) to review work reports from managers of the Company and to inspect on their work; (17) to exercise
the functions and powers as conferred upon by the Articles of Association or the general meeting.As regards its corporate governance functions the Board is responsible for: (1) formulating reviewing and making
recommendations on the Company’s corporate governance policies and practices; (2) reviewing and monitoring
the training and continuous professional development of the Directors and Senior Management of the Company; (3)
reviewing and monitoring the Company’s policies and practices on compliance with legal and regulatory requirements;
(4) formulating reviewing and monitoring the code of conduct and compliance manual applicable to employees and
Directors of the Company; and (5) reviewing the Company’s compliance with the Code on Corporate Governance
and disclosure in the Corporate Governance Report. During the reporting period the Board had performed the above
duties.
2023 ANNUAL REPORT 81VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(iii) Board (Continued)
The Board comprised five executive Directors: Chen Hongguo (Chairman) Hu Changqing Li Xingchun Li Feng and Li
Weixian; two non-executive Directors: Han Tingde and Li Chuanxuan; and four independent non-executive Directors:
Li Zhihui Sun Jianfei Yin Meiqun and Yang Biao. Please refer to part V of this section for their brief biographies.The management of the Company regularly report to the Board on the Company’s operations and material matters
based on the Company’s business situation. The Board of the Company is responsible for leading and monitoring the
Company and is wholly responsible for the administration and supervision of the Company’s businesses to facilitate
its success. The Executive Director or the Senior Management is authorised to be responsible for the various divisions
and functions and management of the processing. Directors of the Company shall act objectively and make decisions
in the interests of the Company. The management and the Senior Management of the Company held regular meetings
with the Board to discuss the ordinary business operations and performance of the Company and carried out the
relevant decisions of the Board. The management and the Senior Management of the Company have to get prior
approval from among others the Board before they make any decision or enter into any commitment on behalf
of the Company. The Company will arrange independent legal advice upon the request from the Directors or any
committees of the Board if the Board or any committees of the Board consider it necessary to seek for independent
professional advice.Pursuant to Code C.1.8 of the code provisions the Company should arrange appropriate insurance cover in respect
of legal action against its Directors. During the reporting period the Company arranged director liability insurance for
Directors to safeguard the rights and interests of Directors to perform their duties in compliance.During the reporting period the Board held 12 meetings 4 of which were regular meetings and 8 were extraordinary
meetings. None of the Directors were absent from any Board meetings.Attendance at the relevant meetings (attention required/attended)
Remuneration Strategic and
and Sustainable
Audit Nomination Assessment Development
Board Committee Committee Committee Committee General
Name Position meetings meetings meetings meetings meetings meetings
I. Executive Directors
Chen Hongguo Chairman 12/12 N/A 1/1 N/A N/A 6/0
Hu Changqing Vice chairman 12/12 N/A N/A N/A N/A 6/6
Li Xingchun Vice chairman 12/12 N/A N/A 2/2 N/A 6/6
Li Feng Executive Director 12/12 N/A N/A N/A N/A 6/5
Li Weixian Executive Director 12/12 N/A N/A N/A N/A 6/5
II. Non-executive Directors
Li Chuanxuan Director 12/12 N/A N/A N/A N/A 6/6
Han Tingde Director 12/12 N/A N/A N/A N/A 6/6
III. Independent non-executive
Directors
Li Zhihui Independent Director 12/12 4/4 1/1 N/A N/A 6/6
Sun Jianfei Independent Director 12/12 4/4 N/A 2/2 N/A 6/6
Yin Meiqun Independent Director 12/12 4/4 1/1 N/A N/A 6/6
Yang Biao Independent Director 12/12 N/A N/A 2/2 N/A 6/6
82 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(iii) Board (Continued)
Save for those disclosed in the brief profile of Directors of the Company in this Report none of the members of the
Board had any financial business family relations or material connections with each other.According to Article 197 of the Articles of Association Board meetings shall be notified to all the Directors and
Supervisors in writing ten (10) days in prior and there was no objection from any director to a shorter notice period.Therefore the Board held 4 regular meetings during the year each by giving a 10-day notice in advance to ensure
that all Directors could participate in discussions of matters in the agenda and could make timely and prompt
decisions on transactions that are material to the Group’s business. Reasonable prior notification was given for the
other meetings of the Board to ensure all Directors could take time to attend. The Board will use its best endeavours
to comply with the requirements of the code provisions.All Directors had access to opinions and services of the secretary to the Board to ensure the procedures governing
the Board and all applicable regulations and rules were complied with.Directors’ training and professional development
All newly appointed Directors are provided with necessary orientation information with an aim to ensure that they will
have a better understanding of operations and business of the Company as well as relevant laws and regulations and
obligations under the Listing Rules.Directors and Supervisors of the Company were arranged by the Company to attend training courses 2023 for
directors and supervisors held by China Securities Regulatory Commission Shandong; and briefing paper in respect
of amendments to Hong Kong Listing Rules prepared by Advisor to Hong Kong Law of the Company was distributed
to all Directors and Supervisors the above of which were to ensure all Directors and Supervisors to comply with
relevant laws and sound corporate governance practice and enhance their awareness of sound corporate governance
practice.(iv) Chairman and general manager
Mr. Chen Hongguo is the Chairman of the Company and Mr. Li Weixian is the general manager of the Company.Please refer to part V of this section for his brief biographies.According to the Articles of Association of the Company the chairman shall exercise the following powers: (1)
presiding over general meetings and convening and presiding over Board meetings; (2) supervising and inspecting
the implementation of the resolutions of the Board; (3) signing the shares the securities and bonds issued by the
Company; (4) signing important documents of the Board and other documents which are required to be signed by
legal representative of the Company; (5) performing the powers of a legal representative; (6) nominating candidates
for general manager for the Board; (7) exercising the special right to operate the Company in accordance with the
laws and acting for the benefits of the Company in the event of emergency situation as a result of act of God or
natural disaster and reporting to the Board meetings and general meeting afterwards; and (8) exercising other powers
authorised by the Board.
2023 ANNUAL REPORT 83VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(iv) Chairman and general manager (Continued)
The general manager of the Company exercises the duties of a chief executive officer. The general manager shall
exercise the following powers: (1) in charge of the operation and management of the Company and organising the
implementation of the resolutions of the Board; (2) organising the implementation of the Company’s annual business
plans and investment plans; (3) drafting plans for the establishment of the internal organisational structure of the
Company; (4) drafting the basic management system of the Company; (5) formulating specific rules and regulations for
the Company; (6) proposing the appointment or dismissal of the deputy general manager and chief financial officer;
(7) appointing or dismissing management personnel other than those required to be appointed or dismissed by the
Board; (8) proposing the wages welfare rewards and penalties of staff and to decide the appointment or dismissal
of staff of the Company; (9) proposing the convening of extraordinary meeting of the Board; and (10) exercising other
powers conferred by the Articles of Association of the Company and the Board.(v) Independent non-executive Directors
There are four independent non-executive Directors in the Board which is in compliance with the minimum
requirement of the number of independent non-executive directors set out in the Hong Kong Listing Rules. Yin Meiqun
and Sun Jianfei the independent non-executive Directors of the Company have appropriate accounting or related
financial management expertise which is compliance with the requirement of Rule 3.10 of the Hong Kong Listing
Rules. Please refer to part V of this section for their brief biographies. The Company has received from each of the
independent non-executive Directors a confirmation of independence for the year pursuant to Rule 3.13 of the Hong
Kong Listing Rules and considered all of the independent non-executive Directors to be independent during the year.(vi) Terms of Directors
According to the Articles of Association of the Company all Directors including non-executive Directors have been
elected at the general meetings with a term of three years from June 2022 to June 2025. They may be re-elected for
another term upon expiry of tenure. The term of office of independent non-executive Directors is the same as that of
other Directors. They may be re-elected for consecutive terms but the consecutive terms shall not be more than six
years.(vii) Directors’ responsibility for the financial statements
The Directors acknowledged their responsibility to prepare financial statements for each financial year which give
a true and fair view of the state of affairs of the Company. The Directors believed that the Company had adopted
and applied consistently appropriate accounting policies in preparing the financial statements in compliance with all
related accounting standards.
84 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(viii) Board committees
Pursuant to Code on Corporate Governance the Board has established four committees namely Audit Committee
Remuneration and Assessment Committee Strategy and Sustainable Development Committee and Nomination
Committee for overseeing particular aspects of the Company’s affairs. Each Board Committee has its own defined
written terms of reference. The written terms of reference of each Board Committee are published on websites of
stock exchange and the Company.Save for requirements of Code on Corporate Governance the Company also set up Strategy and Sustainable
Development Committee for overseeing and studying long-term strategic development plan of the Company and
making recommendations.(ix) Audit Committee
The Audit Committee of the Company comprises three members including Yin Meiqun (as the chairman) Li Zhihui
and Sun Jianfei all of whom are independent non-executive Directors. The primary duties of the Audit Committee are
serving as a communication media between internal and external audit and the related review and supervision. Yin
Meiqun and Sun Jianfei have appropriate professional qualifications or appropriate accounting or related financial
management expertise which is in compliance with the requirement of the Hong Kong Listing Rules.The primary duties of the Audit Committee of the Company are: (1) supervising and evaluating the work of the
external auditor; (2) supervising and evaluating the internal audit; (3) reviewing the financial reports of the Company
and express opinions on them; (4) supervising and evaluating the internal control of the Company; (5) coordinating
the communication between management internal audit department and relevant departments and external audit;
(6) dealing with other matters as delegated by the Board and other matters involved in laws and regulations and the
regulations of Shenzhen Stock Exchange.The Audit Committee discussed with the management of the Company the accounting standards and practices
adopted by the Group and discussed and reviewed this report including the review of the financial statements of the
Group for the year ended 31 December 2023 prepared in accordance with China Accounting Standards for Business
Enterprises.Particulars of the meetings held by the Audit Committee during the reporting period are detailed in part VII of this
section.Risk Management and Internal Control
The Board is responsible for the risk management and internal control systems and reviewing their effectiveness.Such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and can
only provide reasonable but not absolute assurance against material misstatement or loss.The Audit Committee (on behalf of the Board) oversees management in the design implementation and monitoring of
the risk management and internal control systems and the Audit Committee reviews the adequacy and effectiveness
of the risk management and internal control systems at least once a year. The management has provided confirmation
to the Audit Committee (and the Board) on the adequacy and effectiveness of these systems for the year ended 31
December 2023. The Audit Committee (as well as the Board) was satisfied with the adequacy and effectiveness of the
related systems.
2023 ANNUAL REPORT 85VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(ix) Audit Committee (Continued)
Risk Management and Internal Control (Continued)
In respect of internal control system procedures have been designed for safeguarding assets against unauthorised
use or disposition ensuring the maintenance of proper accounting records for the provision of reliable financial
information for internal use or for publication and ensuring compliance of applicable laws rules and regulations.(x) Remuneration and Assessment Committee
The Remuneration and Assessment Committee of the Company comprises three members including Yang Biao (as
the chairman) Li Xingchun and Sun Jianfei. Two of them including the chairman are independent non-executive
Directors which is in compliance with Code on Corporate Governance Practices. The Remuneration and Assessment
Committee is primarily responsible for formulating the criteria of appraisal of the Directors and managers and
conducting the appraisal and studying and formulating the remuneration policy and package of the Directors and the
Senior Management of the Company. The Remuneration and Assessment Committee is accountable to the Board.The primary duties of the Remuneration and Assessment Committee of the Company are: (1) formulating the
remuneration plan or package based on the major scope of work duties and importance of the Directors and the
management and the remuneration level of other counterparts; (2) formulating the remuneration plan or package
which mainly includes but not limited to standards procedures and a system for performance appraisals as well
as major plans and a system for rewards and sanctions; (3) examining the performance of the Directors excluding
the independent non-executive Directors and the Senior Management and conduct annual performance appraisals
for them; (4) supervising the implementation of the remuneration policy of the Company; and (5) dealing with other
matters as delegated by the Board.Particulars of the meetings held by the Remuneration and Assessment Committee during the reporting period are
detailed in part VII of this section.(xi) Nomination Committee
The Nomination Committee of the Company comprises three members including Li Zhihui (as the chairman) Chen
Hongguo and Yin Meiqun. Two of them including the chairman are independent non-executive Directors which is
in compliance with Code on Corporate Governance Practices. The Nomination Committee is primarily responsible
for selecting candidates for directors and the management of the Company determining the selection criteria and
procedure and making recommendations.
86 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xi) Nomination Committee (Continued)
The primary duties of the Nomination Committee are (1) advising the Board on the size and composition of the Board
in light of the Company’s operating activities asset scale and shareholding structure; (2) studying the selection criteria
and procedure for Directors and the management and advising the Board on the same; (3) extensively identifying
qualified candidates for Directors and the management; (4) examining candidates for Director and the management
and advising on the same; (5) examining other Senior Management staff pending referral to the Board for decision on
their employment and advising on the same; (6) advising to the Board on appointment and re-appointment of directors
and on skills knowledge experience background gender and other characteristics required in serving as a director
taking into consideration diversity balance and efficiency of the Board and benefits thereto; (7) reviewing the Board
diversity policy revising thereon in a timely manner and making relevant disclosure in the corporate governance report
in the corresponding annual report; and (8) dealing with other matters as delegated by the Board.During the reporting period the Nomination Committee studied matters in relation to the change in general manager.Upon acceptance of nomination by the nominated person the Nomination Committee performed qualification review
on preliminary candidates by holding meetings review criteria include the academic qualifications relevant experience
and specialised skills of the preliminary candidates. Prior to the appointment of new general manager the Nomination
Committee submitted recommendations and relevant materials of the candidates for the new general manager.Particulars of the meetings held by the Nomination Committee during the reporting period are detailed in part VII of
this section.(xii) Strategy and Sustainable Development Committee
The Company set up a Strategy and Sustainable Development Committee which comprised three members including
Chen Hongguo (as the chairman) Hu Changqing and Yang Biao. The Strategy and Sustainable Development
Committee is primarily responsible for studying the long-term strategic development major investments sustainable
development and ESG works of the Company and making recommendations.The primary duties of the Strategy and Sustainable Development Committee are (1) conducting research and
submitting proposals regarding the long term development strategic plan; (2) conducting research and submitting
proposals regarding the financing plans for major investments which require approval from the Board as stipulated
in the Articles of Association of the Company; (3) conducting research and submitting proposals regarding major
capital operations and assets operation projects which require approval from the Board as stipulated in the Articles
of Association of the Company; (4) supervising the Company and its subsidiaries to operate in compliance with
the national and local directions policies laws and regulations in respect of sustainable development; (5) making
recommendation to the Board in respect of material matters on sustainable development and ESG of the Company;
(6) guiding sustainable development and ESG works studying ESG-related planning objectives systems and material
matters of the Company reviewing ESG-related reports and providing consultation recommendations to the Board;
(7) conducting supervision and inspection on the execution of ESG works and providing guidance and opinions in
due course; (8) conducting research and submitting proposals regarding other material matters that may affect the
development of the Company; (9) carrying out examination on the implementation of the above matters; (10) dealing
with other matters as delegated by the Board.During the reporting period the Strategic Committee was renamed as the Strategy and Sustainable Development
Committee. The Company has formulated the Implementation Rules of the Strategy and Sustainable Development
Committee thereby guiding sustainable development and ESG works and conducting supervision and inspection on
the execution of ESG works to ensure compliance operation of the Company in respect of environmental social and
governance matters.
2023 ANNUAL REPORT 87VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xiii) Auditor
On 18 June 2021 the Company convened the 2020 annual general meeting and considered and approved the
Resolution in relation to the Appointment of the Auditor for 2021 and continued to engage Grant Thornton (Special
General Partnership) as the domestic auditor of the Company for 2021 and be responsible for domestic auditing of
the Company for 2021.On 11 May 2022 the Company convened the 2021 annual general meeting and considered and approved the
Resolution in relation to the Appointment of the Auditor for 2022 and continued to engage Grant Thornton (Special
General Partnership) as the domestic auditor of the Company for 2022 and be responsible for domestic auditing of
the Company for 2022.On 12 May 2023 the Company convened the 2022 annual general meeting and considered and approved the
Resolution in relation to the Appointment of the Auditor for 2023 and continued to engage Grant Thornton (Special
General Partnership) as the domestic auditor of the Company for 2023 and be responsible for domestic auditing of
the Company for 2023.(xiv) Remuneration for the Auditor
The financial statements for 2023 prepared in accordance with Accounting Standards for Business Enterprises by the
Group were audited by Grant Thornton (Special General Partnership). In 2023 the Company paid the auditor a total
of RMB2.5 million (tax inclusive; tax exclusive amount: RMB2.3585 million) in respect of financial statements audit
for 2022 and a total of RMB0.8 million (tax inclusive; tax exclusive amount: RMB0.7547 million) in respect of audit
services in relation to internal control for 2022.Grant Thornton (Special General Partnership) has stated their reporting responsibilities on the financial statements of
the Group in XII. Financial Report of this annual report.In addition to the aforesaid annual financial report and internal control audit fees paid to Grant Thornton (Special
General Partnership) totalling RMB3.1132 million (tax exclusive) other tax-exclusive audit expenses incurred due to
the audit of R&D expenses and the audit of income tax settlement and payment totalled RMB2.4279 million.(xv) Supervisors and Supervisory Committee
The Supervisory Committee comprises three shareholder representatives and two employee representatives. The
shareholder representative Supervisors shall be elected and removed at a general meeting and the employee
representative Supervisors shall be elected and removed democratically by the employees of the Company. During
the reporting period the Supervisory Committee of the Company convened 7 meetings and all Supervisors attended
Supervisory Committee meetings convened during the year and carefully reviewed the 2022 Annual Report 2023
First Quarterly Report 2023 Interim Report and 2023 Third Quarterly Report and issued special opinions. The
Supervisory Committee is accountable to the shareholders. It monitors the financial position of the Company and
the performance of the Directors managers and Senior Management of the Company as to whether they are in
accordance with relevant requirements of the laws and regulations to protect the lawful rights of the Company and the
shareholders.
88 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xvi) Company Secretary
During the year the company secretary confirmed that he has received relevant professional training for not less than
15 hours in accordance with Rule 3.29 of the Listing Rules.
(xvii) Communications with Shareholders
The Company considers effective communication with Shareholders is essential to enable them to have a clear
assessment of the Group’s performance as well as accountability of the Board. Principal means of communication
with Shareholders of the Company are as follows:
Information disclosure on the Company’s website
The Company endeavours to disclose all material information about the Group to all interested parties as widely and
timely as possible. The Company maintains its website at www.chenmingpaper.com where important information
about the Group’s activities and corporate matters such as annual reports and interim reports to Shareholders
announcements business development and operations corporate governance practices and other information are
available for review by Shareholders and other stakeholders.When announcements are made through the Stock Exchange the same information will be made available on the
Company’s website.General meetings
The Company’s annual general meeting provides a useful platform for direct communication between the Board and
Shareholders. Various resolutions are proposed on each substantially separate issue at the general meetings. Save
for the annual general meeting held on 12 May 2023 by the Company three extraordinary general meetings one
class meeting for holders of domestic-listed shares and one class meeting for holders of overseas-listed shares were
convened in 2023. The attendance record of Directors at each general meeting is set out below:
Name Directors attending general meetings in person
2023 first extraordinary general meeting Hu Changqing Li Chuanxuan Li Feng Li Weixian Han Tingde Li
Chuanxuan Li Zhihui Sun Jianfei Yin Meiqun Yang Biao
2023 first class meeting for holders of domestic- Hu Changqing Li Chuanxuan Li Feng Li Weixian Han Tingde Li
listed shares Chuanxuan Li Zhihui Sun Jianfei Yin Meiqun Yang Biao
2023 first class meeting for holders of overseas- Hu Changqing Li Chuanxuan Li Feng Li Weixian Han Tingde Li
listed shares Chuanxuan Li Zhihui Sun Jianfei Yin Meiqun Yang Biao
2023 second extraordinary general meeting Hu Changqing Li Chuanxuan Han Tingde Li Chuanxuan Li
Zhihui Sun Jianfei Yin Meiqun Yang Biao
2022 annual general meeting Hu Changqing Li Chuanxuan Li Feng Li Weixian Han Tingde Li
Chuanxuan Li Zhihui Sun Jianfei Yin Meiqun Yang Biao
2023 third extraordinary general meeting Hu Changqing Li Chuanxuan Li Feng Li Weixian Han Tingde Li
Chuanxuan Li Zhihui Sun Jianfei Yin Meiqun Yang Biao
2023 ANNUAL REPORT 89VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xvii) Communications with Shareholders (Continued)
General meetings (Continued)
The Company’s external auditor also attended the Annual General Meeting and scrutinised voting.Code F.2.2 of the code provisions – This code provision requires the chairman to invite the chairmen of the audit
remuneration and nomination committees to attend the annual general meeting.Mr. Chen Hongguo the chairman of the Company and a member of the Nomination Committee was absent from the
annual general meeting due to business commitments.Code C.1.6 of the code provisions – This code provision requires independent non-executive directors and other non-
executive directors as equal board members should give the board of the directors and any committees on which
they serve the benefit of their skills expertise and varied backgrounds and qualifications through regular attendance
and active participation. They should also attend general meetings and develop a balanced understanding of the
views of shareholders.During the year all independent non-executive Directors and other non-executive Directors of the Company attended
the general meetings without absence.Voting by poll
Resolutions put to vote at the general meetings of the Company are taken by poll. Procedures regarding the conduct
of the poll are explained to the shareholders at the commencement of each general meeting and questions from
shareholders regarding the voting procedures are answered. The poll results are posted on the websites of the Stock
Exchange and the Company respectively on the same day.
90 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xvii) Communications with Shareholders (Continued)
Shareholders’ right
1. Procedures for convening an extraordinary general meeting by Shareholder
Pursuant to Article 100 of the Articles of Association Shareholder(s) alone or in aggregate holding 10% or
more of the Company’s voting shares shall be entitled to request the Board to convene extraordinary general
meetings provided that such request shall be made in writing. The Board shall in accordance with provisions of
the laws administrative regulations and the Articles of Association furnish a written reply stating its agreement
or disagreement to the convening of an extraordinary general meeting within ten days after receiving such
proposal of the same.In the event that the Board agrees to convene an extraordinary general meeting the notice of general meeting
shall be issued within five days after the passing of the relevant resolution of the Board. Any changes in the
original request made in the notice shall require prior approval of Shareholders concerned.In the event that the Board does not agree to convene an extraordinary general meeting or does not furnish any
reply within ten days after receiving such proposal Shareholder(s) alone or in aggregate holding 10% or more of
the Company’s Shares shall be entitled to propose to the Supervisory Committee the convening of extraordinary
general meeting provided that such proposal shall be made in writing.In the event that the Supervisory Committee agrees to convene an extraordinary general meeting the notice of
general meeting shall be issued within five days after receiving such request. Any changes in the original request
made in the notice shall require prior approval of Shareholders concerned.Failure of the Supervisory Committee to issue a notice of general meeting within the stipulated period
shall be deemed as failure of the Supervisory Committee to convene and preside over a general meeting
and Shareholder(s) alone or in aggregate holding 10% or more of the Company’s voting shares for ninety
consecutive days or more shall be entitled to convene and preside over the meeting on a unilateral basis.Pursuant to Article 101 of the Articles of Association if Shareholders determine to convene a general meeting
on their own they shall give a written notice to the Board and file the same with the stock exchange for
records. The shareholding percentage of shareholders who convened shall not be lower than 10% prior to the
announcement of resolutions of the general meeting.Shareholders who convened shall submit relevant certifications to the stock exchange upon the issuance of the
notice of general meeting and the announcement of resolutions of the general meeting.Pursuant to Article 102 of the Articles of Association the Board and its secretary shall cooperate with respect
to matters relating to general meetings convened by Shareholders on their own. The Board shall provide
Shareholder registers as of the date of shareholding register.Pursuant to Article 103 of the Articles of Association if a general meeting is convened by shareholders on their
own all necessary expenses incurred shall be borne by the Company.
2023 ANNUAL REPORT 91VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xvii) Communications with Shareholders (Continued)
Shareholders’ right (Continued)
2. Procedures for sending shareholders’ enquiries to the Board
Shareholders may at any time send their enquiries and concerns to the Board of the Company in writing through
the Company Secretary/Secretary to the Board whose contact details are as follows:
Secretary to the Board Hong Kong Company Secretary
Name Yuan Xikun Chu Hon Leung
Address No. 2199 East Nongsheng Road 22/F Universal Building Central
Shouguang City Shandong Province Hong Kong
Telephone 0536-2158008 00852-21629600
Facsimile 0536-2158977 00852-25010028
Email chenmmingpaper@163.com liamchu@li-partners.com
The Company Secretary and the secretary to the Board shall forward shareholders’ enquiries and concerns
to the Board and/or relevant Board Committees of the Company where appropriate to answer shareholders’
questions.
3. Procedures for putting forward proposals of Shareholders at general meetings
Pursuant to Article 111 of the Articles of Association shareholders individually or jointly holding over 3% of the
total shares of the Company are entitled to propose motions to the Company.Shareholders individually or jointly holding over 3% of the total shares of the Company may submit
extraordinary motions to the convener ten days before the convening of the General Meeting. The convener
shall issue supplementary notice of the General Meeting to disclose the name of the shareholders who propose
the extraordinary motions their shareholding ratio and the specific content of the new motions within two days
after receiving the proposed motions.Save for provided above the convener shall not amend proposals stated in the notice of general meeting or add
new proposals therein following the notice of general meeting has been issued.No voting or resolution shall be effected or adopted at the general meeting for proposals that have not been
stated in the notice of general meeting or that do not comply with provisions of the Articles of Association.Extraordinary general meeting shall not resolve issues that are not contained in the notice.
92 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xvii) Communications with Shareholders (Continued)
Relationships with investors
The Company recognises its responsibility to explain its activities to those with a legitimate interest and to respond to
their questions. Investors are received and visited at appropriate times to explain the Group’s business. In addition
questions received from the general public and individual shareholders are answered promptly. In all cases great care
is taken to ensure that no price-sensitive information is disclosed selectively.The Board has reviewed the interaction with Shareholders during the reporting period and is satisfied with the
implementation of the shareholder communications policy of the Company and its effectiveness.(xviii) Internal Control
For details of internal control of the Company please refer to XII. Internal control system development and
implementation during the reporting period and XIV. Self-assessment report on internal control or auditor’s report on
internal control of this section.(xix) Articles of Association
On 12 May 2023 and 17 July 2023 the Company amended the new Articles of Association. The amendments were
primarily relating to rename of the Strategy Committee of the Board to the Strategy and Sustainable Development
Committee of the Board share capital structure after repurchase and cancellation of certain restricted shares and
changes in registered capital etc. The Memorandum of Association and the amended version of the new Articles of
Association of the Company are available on websites of the Company and Stock Exchange.(xx) Board Diversity
On 21 August 2013 the Company formulated policies to diversify Board members and amended the implementing
rules of the nomination committee. Pursuant to the new policies the nomination committee shall regularly review the
Board diversity policy to improve efficiency and ensure interest thereof.Such policies are summarised as follows:
The Company recognises and embraces the benefits of having a diverse Board and sees diversity at Board level as
an essential element in maintaining a competitive advantage. A truly diverse Board will include and make good use
of differences in the talents skills regional and industry experience backgrounds genders and other qualities of the
members of the Board. These differences will be considered in determining the optimum composition of the Board
and when possible should be balanced appropriately. All appointments of the members of the Board are made on
merit and in the context of the talents skills and experience of the Board as a whole.
2023 ANNUAL REPORT 93VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xx) Board Diversity (Continued)
The Nomination Committee of the Company reviews and assesses the composition of the Board and makes
recommendations to the Board on appointment of new directors of the Company. The Nomination Committee
also oversees the conduct of the annual review of the effectiveness of the Board. In reviewing and assessing the
composition of the Board the Nomination Committee will consider the benefits of all aspects of diversity including
without limitation those described above in order to maintain an appropriate range and balance of talents skills
experience and backgrounds on the Board. In recommending candidates for appointment to the Board the
Nomination Committee will consider candidates on merit against objective criteria and with due regard for the benefits
of diversity on the Board. As at the date of the report the Board is composed of 10 male Directors and 1 female
Director. The Nomination Committee and the Board will seize the opportunity to gradually increase the proportion of
female Directors in the Board when they select and recommend a suitable Director candidate.The composition of the Board of the Company is basically diversified. For details please refer to (iii) Board of this
section.(xxi) Dividend policy
During the reporting period as the downstream demand in papermaking industry was weak the sales volume of
machine-made paper decreased year on year. At the same time as affected by the concentration of new production
capacity the prices of machine-made paper especially cardboard prices recorded significant year-on-year decline.The prices of wood chips raw coal chemicals and other raw materials remained at high level which exerted great
pressure on the profitability of the Company. The net profit attributable to shareholders of the Company for 2023
amounted to RMB-1.281 billion. Meanwhile considering the overall development plan of the Company for 2024 the
Board proposed not to pay cash dividend issue bonus shares and increase share capital from reserves for 2023 to
further reduce its liability size and satisfy the capital needs for among other things day-to-day production and project
construction of the Company thereby enhancing risk resistance securing the sustainable and steady development of
the pulp production and paper making business the principal business of the Company and better safeguarding the
long-term interests of all shareholders.
94 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVII Environmental and Social Responsibility
I. Major environmental protection matters
Are the Company and its subsidiaries classified as key pollutant discharging unit as specified by environmental protection
authority
□ Yes □ No
Environmental protection related policies and industry standards
1. The Company during its own production and operation process strictly abides by relevant environmental
protection laws and regulations as follows:
The Environmental Protection Law of the People’s Republic of China the Law on the Prevention and Control of Air
Pollution of the People’s Republic of China the Law on the Prevention and Control of Water Pollution of the People’s
Republic of China the Law on the Prevention and Control of Environmental Pollution by Solid Waste of the People’s
Republic of China the Law on Noise Pollution Prevention and Control of the People’s Republic of China Regulations
on the Administration of Pollutant Discharge Permit Regulations on Groundwater Management and the Measures for
the Emergency Administration of Environmental Contingencies.
2. The Company strictly implements national industry and local standards for pollutant discharge as follows:
Exhaust gas: Integrated Emission Standard of Air Pollutants (GB 16297-1996) Emission Standard of Air Pollutants for
Thermal Power Plants (GB 13223-2011) Emission Standard for Odor Pollutants (GB 14554-93) Emission Standard of
Air Pollutants for Boilers (DB44/765-2019) Emission Standard of Air Pollutants for Thermal Power Plants (DB37/664-
2019) Regional and Integrated Emission Standard of Air Pollutants (DB37/2376-2019) and Emission Standard of Air
Pollutants for Building Materials Industry (DB37/2373-2018).Wastewater: Integrated Wastewater Discharge Standard (GB 8978-1996) Wastewater Quality Standards for Discharge
to Municipal Sewers (GB/T 31962-2015) Discharge Standard of Water Pollutants for the Pulp and Paper Industry (GB
3544-2008) and Discharge Limits of Water Pollutants (DB44/26-2001) and the wastewater influent standard of local
wastewater treatment plants.Noise: Emission Standard for Industrial Enterprises Noise at Boundary (GB 12348-2008).Environmental protection administrative licensing
Shandong Chenming Paper Holdings Limited: Issued on 2 March 2023 and valid up to 1 March 2028.Shouguang Meilun Paper Co. Ltd.: Issued on 2 March 2023 and valid up to 1 March 2028.Zhanjiang Chenming Pulp & Paper Co. Ltd.: Issued on 30 May 2022 and valid up to 29 May 2027.Jiangxi Chenming Paper Co. Ltd.: Issued on 11 June 2020 and valid up to 27 June 2025.Huanggang Chenming Pulp & Paper Co. Ltd.: Issued on 14 September 2021 and valid up to 13 September 2026.Jilin Chenming Paper Co. Ltd.: Issued on 10 December 2021 and valid up to 9 December 2026.
2023 ANNUAL REPORT 95VII Environmental and Social Responsibility
I. Major environmental protection matters (Continued)
Industry emission standards and the status of pollutant emissions involved in production and operation
activities
Category of Name of major
major pollutants pollutants Number of Approved
Name of company and specific and specific Way of emission Distribution of emission Emission Pollutant emission total Excessive
or subsidiary pollutants pollutants emission outlets outlets concentration/intensity standards implemented Total emissions emissions emissions
Shandong Exhaust gas SO2 Organised 2 Chenming Industrial Park Power plant no. 1: 15.8mg/m
3 35mg/m3 Power plant no. 1: 26.68t 160.32t/year No
Chenming Paper emission Power plant no. 2: 13.9mg/m3 Power plant no. 2: 25.27t
Holdings Limited NOx Organised 2 Chenming Industrial Park Power plant no. 1: 38.6mg/m
3 50mg/m3 Power plant no. 1: 67.4t 233.91t/year No
emission Power plant no. 2: 38.3mg/m3 Power plant no. 2: 70.92t
Particulates Organised 2 Chenming Industrial Park Power plant no. 1: 0.82mg/m3 5mg/m3 Power plant no. 1: 1.425t 23.39t/year No
emission Power plant no. 2: 0.634mg/m3 Power plant no. 2: 1.188t
Wastewater COD Indirect emission 2 Chenming Industrial Park Sewage outlet no. 1: 147mg/L 300mg/L Sewage outlet no. 1: 1200.8t 6510.74t/year No
Sewage outlet no. 2: 197mg/L Sewage outlet no. 2: 2611t
Ammonia Indirect emission 2 Chenming Industrial Park Sewage outlet no. 1: 4.81mg/L 30mg/L Sewage outlet no. 1: 40.44t 650.7t/year No
nitrogen Sewage outlet no. 2: 0.969mg/L Sewage outlet no. 2: 12.969t
Total nitrogen Indirect emission 2 Chenming Industrial Park Sewage outlet no. 1: 18.6 mg/L 70mg/L Sewage outlet no. 1: 150t 1519.1t/year No
Sewage outlet no. 2: 13.4 mg/L Sewage outlet no. 2: 183t
Shouguang Meilun Exhaust gas SO2 Organised 4 Chenming Industrial Park Power plant no. 1: 18 mg/m
3 35mg/m3 Power plant no. 1: 23.72t 342.89t/year No
Paper Co. Ltd. emission Power plant no. 2: 14.3 mg/m3 (power plant) 50mg/m3 Power plant no. 2: 32.98t
Alkali recovery: 3.95 mg/m3 (chemical pulp) Alkali recovery: 58.05t
Lime kiln: 5.23 mg/m3 Lime kiln: 7.25t
NOx Organised 4 Chenming Industrial Park Power plant no. 1: 32.8 mg/m
3 50mg/m3 Power plant no. 1: 41.86t 1202.75t/year No
emission Power plant no. 2: 31.3 mg/m3 (power plant) 100mg/m3 Power plant no. 2: 69.26t
Alkali recovery: 73.7 mg/m3 (chemical pulp) Alkali recovery: 759.2t
Lime kiln: 17.2 mg/m3 Lime kiln: 26.6t
Particulates Organised 4 Chenming Industrial Park Power plant no. 1: 0.653mg/m3 5mg/m3 Power plant no. 1: 0.766t 121.979t/year No
emission Power plant no. 2: 1.18 mg/m3 (power plant) 10mg/m3 Power plant no. 2: 2.641t
Alkali recovery: 1.11 mg/m3 (chemical pulp) Alkali recovery: 14.035t
Lime kiln: 1.51 mg/m3 Lime kiln: 1.95t
Jiangxi Chenming Exhaust gas SO2 Organised 2 Within factory area 9.47mg/m3 200mg/m
3 23.05t 806t/year No
Paper Co. Ltd. emission
NOx Organised 2 Within factory area 30.55mg/m3 200mg/m
3 69.31t 806t/year No
emission
Particulates Organised 2 Within factory area 2.57mg/m3 30mg/m3 6.22t 135t/year No
emission
Wastewater COD Direct emission 1 Total wastewater 36.39mg/L 90mg/L 142.06t 1260t/year No
discharge
Ammonia Direct emission 1 Total wastewater 0.97mg/L 8mg/L 4.77t 112t/year No
nitrogen discharge
Total nitrogen Direct emission 1 Total wastewater 2.87mg/L 12mg/L 11.66t / No
discharge
96 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVII Environmental and Social Responsibility
I. Major environmental protection matters (Continued)
Industry emission standards and the status of pollutant emissions involved in production and operation
activities (Continued)
Category of Name of major
major pollutants pollutants Number of Approved
Name of company and specific and specific Way of emission Distribution of emission Emission Pollutant emission total Excessive
or subsidiary pollutants pollutants emission outlets outlets concentration/intensity standards implemented Total emissions emissions emissions
Jilin Chenming Exhaust gas SO2 Organised 3 (2 in use Within factory area 24.80mg/m
3 100mg/m3 18.85t 97t/year No
Paper Co. Ltd. emission 1 spare)
NOx Organised 3 (2 in use Within factory area 54.28mg/m
3 100mg/m3 42.73t 213t/year No
emission 1 spare)
Particulates Organised 3 (2 in use Within factory area 16.53mg/m3 30mg/m3 14.10t 51.66t/year No
emission 1 spare)
Wastewater COD Indirect emission 1 Total wastewater 121.85mg/L 120mg/L 625.05t 6000t/year No
discharge
Ammonia Indirect emission 1 Total wastewater 1.47mg/L 45mg/L 7.59t 500t/year No
nitrogen discharge
Total nitrogen Indirect emission 1 Total wastewater 6.66mg/L 50mg/L 34.01t / No
discharge
Zhanjiang Exhaust gas SO2 Organised 6 Within factory area Power plant no. 1: 2.2mg/m
3 Power plant: 35mg/m3 100t 620t/year No
Chenming Pulp & emission Power plant no. 2: 3.5mg/m3 Lime kiln: 200mg/m3
Paper Co. Ltd. Power plant no. 3: 2.7mg/m3 Alkali furnace: 200mg/m3
Power plant no. 4: 2.1mg/m3
Lime kiln: 24.5mg/m3
Alkali boilers: 5.7mg/m3
NOx Organised 6 Within factory area Power plant no. 1: 23.5mg/m3 Power plant: 50mg/m3 1500t 1799.999t/year No
emission Power plant no. 2: 26mg/m3 Lime kiln: 200mg/m3
Power plant no. 3: 22.1mg/m3 Alkali furnace 200mg/m3
Power plant no. 4: 24.6mg/m3
Lime kiln: 118.9mg/m3
Alkali boilers: 70.3mg/m3
Particulates Organised 6 Within factory area Power plant no. 1: 1.3mg/m3 Power plant: 10mg/m3 150t 195.06t/year No
emission Power plant no. 2: 1.2mg/m3 Lime kiln: 30mg/m3
Power plant no. 3: 1.2mg/m3 Alkali furnace: 30mg/m3
Power plant no. 4: 1.5mg/m3
Lime kiln: 17.3mg/m3
Alkali boilers: 6.5mg/m3
Wastewater COD Continuous 1 Wastewater discharge 45mg/L 90mg/L 750t 1943t/year No
emission
Ammonia Continuous 1 Wastewater discharge 0.55mg/L 8mg/L 25t 43.9t/year No
nitrogen emission
Total nitrogen Continuous 1 Wastewater discharge 4.039mg/L 12mg/L 91.218t 320.4t/year No
emission
2023 ANNUAL REPORT 97VII Environmental and Social Responsibility
I. Major environmental protection matters (Continued)
Industry emission standards and the status of pollutant emissions involved in production and operation
activities (Continued)
Category of Name of major
major pollutants pollutants Number of Approved
Name of company and specific and specific Way of emission Distribution of emission Emission Pollutant emission total Excessive
or subsidiary pollutants pollutants emission outlets outlets concentration/intensity standards implemented Total emissions emissions emissions
Huanggang Exhaust gas SO2 Organised 1 Lime kiln chimney 15.87mg/m
3 80mg/m3 14.74t 142.872t/year No
Chenming Pulp & emission
Paper Co. Ltd. SO2 Organised 1 Alkali furnace chimney 8.50mg/m
3 200mg/m3 32.14t 328.417t/year No
emission
NOX Organised 1 Lime kiln chimney 119.64mg/m
3 180mg/m3 111.10t 181.887t/year No
emission
NOX Organised 1 Alkali furnace chimney 157.41 mg/m
3 200mg/m3 595.56t 950.829t/year No
emission
Particulates Organised 1 Lime kiln chimney 17.72mg/m3 200mg/m3 16.45t 45.311t/year No
emission
Particulates Organised 1 Alkali furnace chimney 14.38mg/m3 30mg/m3 54.42t 83.759t/year No
emission
Wastewater COD Indirect emission 1 Total wastewater 24.75 mg/L 150mg/L 215.51t 398.911t/year No
discharge
Ammonia Indirect emission 1 Total wastewater 0.12mg/L 14mg/L 1.01t 39.891t/year No
nitrogen discharge
Total nitrogen Indirect emission 1 Total wastewater 1.06mg/L 29mg/L 9.20t / No
discharge
Treatment of pollutants
1. Shandong Chenming Paper Holdings Limited
Its own power plant uses the exhaust gas treatment process of limestone-gypsum desulfurisation + SNCR selective
non-catalytic reduction denitration + electric and bag composite dust removal + wet type electric dust removal.In 2023 the environmental protection exhaust gas treatment facilities operated well and were overhauled in time
according to the overhaul plan. The daily average exhaust gas indicator did not exceed the standard and the exhaust
gas was discharged up to the standard after treatment.Its sewage treatment plant uses the traditional activated sludge wastewater treatment process + membrane treatment
and recycle process and the wastewater which is treated up to the standard is partially discharged into the sewage
treatment plant of Shouguang Zhongye Water Co. Ltd. and partially reused in production lines after the treatment
at the membrane treatment plant. In 2023 the wastewater treatment facilities operated well and were overhauled
in time according to the overhaul plan. The daily average wastewater indicator did not exceed the standard and the
wastewater was discharged up to the standard after treatment.
2. Shouguang Meilun Paper Co. Ltd.
Its own power plant uses the exhaust gas treatment process of limestone-gypsum desulfurisation + SNCR selective
non-catalytic reduction denitration + electric and bag composite dust removal + wet type electric dust removal. The
chemical pulp alkali recovery furnace uses the exhaust gas treatment process of PSCR denitration + electrostatic dust
removal + wet electrostatic dust removal and the chemical pulp lime kiln uses the exhaust gas treatment process of
ozone denitration + electrostatic dust removal + wet type electric dust removal. In 2023 the environmental protection
exhaust gas treatment facilities operated well and were overhauled in time according to the overhaul plan. The daily
average exhaust gas indicator did not exceed the standard and the exhaust gas was discharged up to the standard
after treatment.
98 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVII Environmental and Social Responsibility
I. Major environmental protection matters (Continued)
Treatment of pollutants (Continued)
3. Jiangxi Chenming Paper Co. Ltd.
Its own power plant uses the exhaust gas treatment process of ammonia desulfurisation + SNCR catalytic reduction
denitrification+ electric and bag composite dust removal + 90-metre desulfurisation and denitrification tower. The
aerobic section of the sewage treatment plant is equipped with a negative pressure exhaust device to recover and
treat the exhaust gas from anaerobic and aerobic sections and uses the process of alkali spraying + biofiltration
+ water washing. In 2023 the environmental protection exhaust gas treatment facilities operated well and were
overhauled in time according to the overhaul plan. The daily average exhaust gas indicator did not exceed the
standard and the exhaust gas was discharged up to the standard after treatment.Industrial wastewater is collected by a catchment well with large particles removed by grids and fibres in the
wastewater recovered by inclined mesh and then flow into the settling tank for preliminary settling and cooling in
free-flowing. When the water temperature reaches 38°C the water is pumped into a high-concentration primary
settling tank and a low-concentration primary settling tank. After the pre-acidification treatment organic matter which
can be easily decomposed from the polymer decomposed through a hydrolysis acidification tank. In the biochemical
process the biogas produced is recovered for power generation and the biochemical water enters into the anaerobic
section and gets into aeration and other aerobic systems with cooled low-concentration water. A stable COD value
is achieved through the aerobic system. In order to better treat the water the aerobic water enters into the in-depth
treatment system and is treated up to the standard through the processes such as Fenton treatment settling tank
treatment inclined plate settling and flocculation settling. In the process of wastewater treatment the suspended
matter in the water body is removed from the sludge produced which is treated by the processes such as plate and
frame filtering and belt machine desliming which meets the requirements of Table II of GB3544. A reclaimed water
recycling device is in place to recycle some water which meets the requirements.
4. Jilin Chenming Paper Co. Ltd.
Its own power plant uses low-temperature combustion staged combustion and SCR denitrification outside the
furnace and uses bag filter for flue gas dust removal and uses wet desulfurisation process of limestone inside the
furnace + limestone-gypsum outside the furnace and the discharge is up to the standard.The sewage station uses the treatment process of anaerobic (IC reactor) + aerobic (jet aeration) + in-depth treatment
(Fenton advanced oxidation) with wastewater being discharged to local wastewater treatment plant and the discharge
is up to the standard.
5. Zhanjiang Chenming Pulp and Paper Co. Ltd.
The thermal power plant of Zhangjiang Chenming Pulp and Paper Co. Ltd. has three circulating fluidised bed boilers
of 280t/h and one circulating fluidised bed boiler of 400t/h. In particular the three boilers of 280t/h are equipped with
SNGR denitrification and external wet (cement-plaster) desulphurisation system. The boiler of 400t/h is equipped with
SNCR+SCR in combination denitrification external wet desulphurisation and wet electrostatic dust removal system.The company has constructed wastewater treatment station in two phases. Among which the capacity of phase Iwastewater treatment station is 86000 m3/d (applies “primary settling tower + conditioning tower + selective aerationtank + Fenton oxidation tank + clarifier” treatment) while that of phase II wastewater treatment station is 30000 m3/d(applies “first-class sedimentation pre-treatment + second-class biological treatment + third-class Fenton oxidationdeep treatment”).
2023 ANNUAL REPORT 99VII Environmental and Social Responsibility
I. Major environmental protection matters (Continued)
Treatment of pollutants (Continued)
6. Huanggang Chenming Pulp & Paper Co. Ltd.
The alkali furnace uses polymer denitration outside the furnace + electrostatic dust removal and alkaline melt from
the process able to absorb sulphur dioxide. The discharge is up to the standard. The lime kiln uses limestone to fix
sulphur and five electrostatic precipitators to remove dust. The discharge is up to the standard.The sewage treatment uses physical settling + aerobic biochemical treatment + Fenton in-depth treatment process.The discharge is up to the standard.The lime kiln scrubbing tower which was constructed with an investment of RMB4.2 million came into use on 1 May
2022. It can effectively reduce the emission concentration of sulphur dioxide and hydrogen sulphide to below 10 mg/m3.
Environmental self-monitoring programme
The Company has strictly complied with self-monitoring laws and regulations and conducted self-monitoring in accordance
with the environmental protection requirements to establish and perfect the corporate environmental management ledgers
and materials. At present self-monitoring is a combination of manual monitoring and automatic monitoring. At the same
time qualified units are engaged to conduct regular monitoring. Automatically monitored items include: total wastewater
discharge (COD ammonia nitrogen flow rate total phosphorus total nitrogen and pH); power plant alkali recovery boilers
and lime kiln exhaust emissions (sulphur dioxide nitrogen oxide and smoke). Manually monitored items include: daily
monitoring of COD ammonia nitrogen SS chroma pH total phosphorus and total nitrogen indicators. Sewage and other
monitoring items unorganised exhaust emission solid waste and noise at the plant boundary are monitored on a monthly
or quarterly basis by qualified units engaged in accordance with the local environmental protection requirements in relation
to each subsidiary.The self-monitoring data and environmental monitoring programmes for pollutants discharge of various subsidiaries are
published on the national key pollution source information disclosure website and the provincial key pollution source
information disclosure websites.Emergency plan for emergency environmental incidents
The Company has strictly implemented emergency regulations for emergency environmental incidents and formulatedvarious emergency plans for emergency environmental incidents according to the technical requirements in the “TechnicalGuidelines for Emergency Environmental Pollution Accidents”. The plans are reviewed by and filed with the Environmental
Protection Bureau and regular emergency training and emergency drills are conducted. Emergency measures in relation
to dangerous chemicals are formulated in accordance with the environmental protection requirements. At the same time
necessary emergency supplies are provided with regular inspections and updates.
100 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVII Environmental and Social Responsibility
I. Major environmental protection matters (Continued)
Investment in environmental governance and protection and payment of environmental protection tax
The Company has always adhered to the concept of “green development ecological Chenming” and clung to the
development model of “clean production” and resource recycling. A green ecology is incorporated in the whole process of
production and operation. The Company has invested more than RMB8 billion in total to construct the pollution treatment
facilities including the alkali recovery system reclaimed water treatment system reclaimed water reuse system white water
recovery system and black liquor comprehensive utilisation system. The environmental protection indicators rank high
in China. During the reporting period the Company paid environmental protection tax according to law. The Company’s
environmental protection tax mainly results from atmospheric pollutants. According to the Environmental Protection
Tax Law of People’s Republic of China and its implementation rules the pollutants shall be calculated according to the
automatic monitoring data of pollutants if automatic pollutant monitoring equipment which complies with national provisions
and monitoring standards is installed and used. Taxable atmospheric pollutants are determined according to the pollution
equivalent quantity converted from the amount of pollutant discharge. The taxable atmospheric pollutants discharged
from each outlet or where there is no outlet are to be ranked in decreasing order of pollution equivalent quantity and
environmental taxes are to be levied on the top three pollutants. In 2023 the Company paid environmental protection tax
amounting to RMB13.0517 million.Measures taken to reduce its carbon emissions during the reporting period and their effectiveness
□ Applicable □ Not applicable
1. The Group strengthened energy management and compared and analysed the consumption of coal electricity on a
daily basis with strict control.
2. The Group implemented the conversion of old and new energy sources eliminated high energy-consuming
equipment replaced high-efficiency inverter and energy-saving motors and reduced energy consumption.
3. According to the zero position of the air cover of the paper machine dryer the Group reduced the frequency of the fan
appropriately to improve the drying efficiency by raising the zero position and save electricity consumption.
4. For moisture content of screening unit and squeezing unit of paper machine the Group reduced out of the press
moisture and the amount of steam used of drying unit by adjusting the lip plate flow rate retention rate and line
pressure and other measures.
5. The Group strengthened daily energy-saving management by developing a system for temperature of air conditioning
and switching on and off of various power supplies with tracking and inspection.
6. The Group vigorously developed clean energy and energy recycling projects to reduce carbon emissions. The
Shouguang Chenming 33 MW and Zhanjiang Chenming 24 MW photovoltaic power generation projects were
underway.
7. The Group carried out energy saving and emission reduction at different factories so that the amount of clean water
was under strict control the amount of water produced by membrane treatment was increased and the amount of
wastewater recycled was increased.
2023 ANNUAL REPORT 101VII Environmental and Social Responsibility
I. Major environmental protection matters (Continued)
Administrative penalties for environmental problems during the reporting period
Impact on the production
Name of company or and operation of the Corrective measures of the
subsidiary Reasons for penalty Violations Penalty results listed company Company
Zhanjiang Chenming Failure in making the According to the Interim Measures Ordered for correction Zhanjiang Chenming Zhanjiang Chenming has
payment for 2022 for Carbon Emission Management has completed the completed the payment for
carbon emission in Guangdong Province and the payment for 2022 carbon emission trading
trading quota on time Notice on Delay in Settlement of the carbon emission quota within the prescribed
Payment for 2022 Carbon Emission trading quota. There timeframe.Trading Quota of the Department is no material adverse
of Ecology and Environment of impact on the listed
Guangdong Province the emission company.control enterprise and unit shall
complete the settlement of payment
by 20 July 2023 based on the actual
carbon emission volume for the prior
year. Zhanjiang Chenming failed to
fulfil the obligation to settle carbon
emission allowances for 2022 within
the aforementioned timeframe and
received the Decision on Ordering
for Correction of illegal acts from
the Department of Ecology and
Environment of Guangdong Province.Other environmental information to be disclosed
The relevant environmental protection information of the pollutant discharge permit information and the pollutant discharge
permit requirements is announced on the national sewage discharge permit management information platform.Other environmental protection related information
Other environmental protection related information is announced on the Company’s website.
102 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVII Environmental and Social Responsibility
II. Social responsibility
During the reporting period adhering to the corporate mission of “creating values and contributing to the society” the
Company stayed true to original aspiration and strived to its missions proactively assumed its social responsibilities
and paid attention to the creation of social value while pursuing economic benefits. For details please refer to the 2023
Environmental Social and Governance Report of Shandong Chenming Paper Holdings Limited published by the Company
on CNINFO on 29 March 2024.III. Consolidate and expand the achievements of poverty alleviation and rural revitalisation
The Company adhered to the pulp and paper integration strategic layout and brought rural forest land into the whole
industrial chain which directly and indirectly promoted employment urban and rural resources flow and farmers’ income
increase. Meanwhile the Company spared no effort to prevent pollution to effectively protect the local rural environment
and bear fruit in the construction of beautiful countryside. Through public welfare investment the Company helped local
rural areas improve the education and infrastructure construction level consolidate the poverty alleviation achievements
and fully support rural revitalisation. During the reporting period the Company donated RMB500000 to Shouguang Virtue
Education Fund to help Shouguang education development. In addition the Group was granted the Industrial Assistance
Outstanding Case Award issued by the JRJ Organising Committee of Rural Revitalisation and Development Alliance and
was awarded the membership unit of the Rural Revitalisation and Development Alliance. For details please refer to the
Company’s 2023 Environment Society and Governance Report which was published on CNINFO on 29 March 2024. In
2024 the Company will rely on its own strength reinforce technological innovation unswervingly take the low carbon green
paper making road and ensure rural ecological liveability with strong environmental protection measures while boosting
local economic development. Through the staff mutual aid foundation the Company will effectively help employees get rid
of poverty actively participate in charitable activities support education and help rural revitalisation.
2023 ANNUAL REPORT 103VIII Material Matters
I. Performance of undertakings
1. Undertakings made by parties involved in undertakings including the Company’s beneficial controllers
shareholders related parties bidders and the Company during the reporting period or prior periods
but subsisting to the end of the reporting period
□ Applicable □ Not applicable
Party involved in Type of Undertaking Particulars on
Undertaking undertaking undertaking Details of undertaking date Term the performance
Undertaking Shandong Chenming Undertaking to 1. I/The Company has provided information and documents related to 21 November Until the During the
made Paper Holdings provide true the transaction (including but not limited to original written materials 2022 implementation reporting
during asset Limited and accurate and duplicate materials or oral testimony). I/The Company guarantees that of the period
restructuring its Directors complete the copies or photocopies of the documents and materials provided restructuring the parties
Supervisors and information are the same as the originals and the signatures and seals of these plan is involved in
Senior Management documents and materials are true ensures that the relevant information completed undertaking
(Chen Hongguo and documents provided for the transaction are true accurate and did not
Hu Changqing Li complete and there are no false records misleading statements or violate the
Xingchun Li Feng Li major omissions and bears individual and joint legal responsibilities undertaking
Weixian Han Tingde for the authenticity accuracy and completeness of the information the asset
Li Chuanxuan Li provided. 2. The Company/I guarantee that there are no false records restructuring
Zhihui Sun Jianfei Yin misleading statements or major omissions in the information disclosure ended
Meiqun Yang Biao and application documents of the transaction. If the information and the
Li Kang Qiu Lanju provided or disclosed in the transaction is suspected to contain false undertaking
Sang Ailing Pan records misleading statements or major omissions thus causing was fulfilled.Ailing Zhang Hong Li losses to investors the Company/I will be jointly and severally liable for
Xueqin Li Zhenzhong compensation. 3. If the transaction is placed on file for investigation by
Li Mingtang Ge the judicial authorities or by the CSRC because of the false records
Guangming Dong misleading statements or major omissions in the information provided
Lianming Yuan Xikun or disclosed the Directors Supervisors and Senior Management
and Chu Hon Leung) members who hold the shares of the Company will suspend the
transfer of the shares (if any) before the case investigation conclusion
is clear and submit the written application for transfer suspension and
the stock account to the Board within two trading days after receiving
the notice of filing the investigation. The Board shall apply to the stock
exchange and the depository and clearing corporation for locking up
on their behalf. If the lock-up application is not submitted within two
trading days the Board is authorised to directly submit the identity
and account information of the Directors Supervisors and Senior
Management members of the Company to the stock exchange and
the depository and clearing corporation for lock-up after verification.If the Board fails to submit the identity and account information of
the directors supervisors and Senior Management members to the
stock exchange and the depository and clearing corporation the
stock exchange and the depository and clearing corporation shall be
authorised to directly lock up the relevant shares. If the investigation
concludes that there are violations of laws and regulations the relevant
Directors Supervisors and Senior Management members promise
to lock up the shares and voluntarily use them for compensation to
relevant investors.
104 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Material Matters
I. Performance of undertakings (Continued)
1. Undertakings made by parties involved in undertakings including the Company’s beneficial controllers
shareholders related parties bidders and the Company during the reporting period or prior periods
but subsisting to the end of the reporting period (Continued)
Party involved in Type of Undertaking Particulars on
Undertaking undertaking undertaking Details of undertaking date Term the performance
Chenming Holdings Undertaking on 1. This reorganisation is conducive to improving the Company’s 21 November Until the During the
Company Limited the principle profitability enhancing the sustainable operation ability and protecting 2022 implementation reporting
Chenming Holdings transaction the interests of investors and minority shareholders. We agree to this of the period
(Hong Kong) Limited opinions and reorganisation in principle. 2. During the period from the first disclosure restructuring the parties
share changes of the reorganisation plan to its completion the company will not plan is involved in
during the reduce its shareholding in the Company. This commitment letter is completed undertaking
reorganisation legally binding on the company from the date of signing and the did not
period company is willing to bear all the legal responsibility of the economic violate the
losses claims and extra expenses caused to Chenming Paper for undertaking
violating the above commitments. the asset
restructuring
ended
and the
undertaking
was fulfilled.Chen Hongguo Hu Undertaking On 12 August 2022 the Company published an announcement on the 21 November Until the completion During the
Changqing Li on the preliminary disclosure of disposal of shares by certain Directors 2022 date of the reporting
Xingchun Li Feng Li shareholding and Senior Management members namely Hu Changqing Li Feng implementation period
Weixian Han Tingde reduction Li Weixian Li Zhenzhong Li Mingtang Dong Lianming and Yuan of the the parties
Li Chuanxuan Li plan during Xikun. Due to personal capital needs the Directors and Senior restructuring involved in
Zhihui Sun Jianfei Yin the asset Management members mentioned above intended to dispose of no plan undertaking
Meiqun Yang Biao restructuring more than 3753100 shares in total by centralised bidding or bulk did not
Li Kang Qiu Lanju transaction within 6 months after 15 trading days from the date of violate the
Sang Ailing Pan the announcement of disposal of shares. For details please refer undertaking
Ailing Zhang Hong Li to the relevant announcement of CNINFO (www.cninfo.com.cn). the asset
Xueqin Li Zhenzhong Apart from the plan of disposal of shares by certain Directors and restructuring
Li Mingtang Ge Senior Management members as disclosed above I have no other ended
Guangming Dong plan to dispose of shares from the date of the first disclosure of the and the
Lianming Yuan Xikun reorganisation plan to its completion. This commitment letter is legally undertaking
and Chu Hon Leung binding on me from the date of signing and I am willing to bear all legal was fulfilled.responsibilities for all economic losses claims and extra expenses
caused to Chenming Paper by violating the above commitments.
2023 ANNUAL REPORT 105VIII Material Matters
I. Performance of undertakings (Continued)
1. Undertakings made by parties involved in undertakings including the Company’s beneficial controllers
shareholders related parties bidders and the Company during the reporting period or prior periods
but subsisting to the end of the reporting period (Continued)
Party involved in Type of Undertaking Particulars on
Undertaking undertaking undertaking Details of undertaking date Term the performance
Chenming Holdings Commitment letter 1. The company and its all directors supervisors and senior management 21 November Until the completion During the
Company Limited on no insider members as well as the entities controlled by the above-mentioned 2022 date of the reporting
Chenming Holdings trading subjects have not been placed on file for investigation on suspicion of implementation period
(Hong Kong) insider trading related to the transaction. In the last 36 months there of the the parties
Limited Shandong is no case that the CSRC had imposed administrative punishment or restructuring involved in
Chenming Paper the judicial organs had lawfully investigated criminal responsibility for plan undertaking
Holdings Limited participating in insider trading related to major asset reorganisation did not
and their directors and there has been no case that the above personnel are not violate the
supervisors and allowed to participate in the transaction according to Article 13 of the undertaking
senior management Guidelines for Supervision of Listed Companies No.7 – Supervision the asset
(Chen Hongguo of Abnormal Stock Trading Related to Major Asset Restructuring of restructuring
Hu Changqing Li Listed Companies. 2. The company and its directors supervisors and ended
Xingchun Li Feng Li senior management members guarantee to take necessary measures and the
Weixian Han Tingde to keep the information and materials involved in the transaction strictly undertaking
Li Chuanxuan Li confidential. was fulfilled.Zhihui Sun Jianfei Yin
Meiqun Yang Biao
Li Kang Qiu Lanju
Sang Ailing Pan
Ailing Zhang Hong Li
Xueqin Li Zhenzhong
Li Mingtang Ge
Guangming Dong
Lianming Yuan Xikun
and Chu Hon Leung)
106 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Material Matters
I. Performance of undertakings (Continued)
1. Undertakings made by parties involved in undertakings including the Company’s beneficial controllers
shareholders related parties bidders and the Company during the reporting period or prior periods
but subsisting to the end of the reporting period (Continued)
Party involved in Type of Undertaking Particulars on
Undertaking undertaking undertaking Details of undertaking date Term the performance
Chenming Holdings Undertaking to 1. The company undertakes that it will not interfere the ordinary operation 19 January Until the completion During the
Company Limited take remedial of the Company nor encroach on the interests of the Company 2023 date of the reporting
measures nor compromise the interests of the Company in any other manner; implementation period
on effects of 2. The company undertakes that it will act to restrain duty-related of the the parties
dilution on spending by directors and senior management of the Company; 3. restructuring involved in
the current The company will ensure the remuneration system formulated by plan undertaking
earnings as a the Board or the Remuneration and Assessment Committee is in line did not
result of the with implementation of the remedial measures for the returns by the violate the
transaction Company; 4. The company undertakes that the vesting conditions undertaking
of share incentives to be formulated by the Company will be in line the asset
with the implementation of the remedial measures for returns if the restructuring
Company intends to make such share incentive plans in the future; 5. ended
During the period from the date of this undertaking until the date of and the
completion of the transaction supplementary undertakings will be given undertaking
in accordance with other new regulations of CSRC concerning remedial was fulfilled.measures for returns and related undertakings if such regulations
are announced by CSRC and the foregoing undertakings fall short of
meeting such new regulations; 6. The company undertakes that it will
practically perform the remedial measures for returns formulated by
the Company as well as any undertaking made by the company for
such remedial measures. The Company will be liable for indemnifying
the Company or the investors for their losses in the event of failure to
perform the undertakings. The company will be liable for relevant legal
liabilities to the Company or the investors for their losses in the event of
failure to perform the undertakings.
2023 ANNUAL REPORT 107VIII Material Matters
I. Performance of undertakings (Continued)
1. Undertakings made by parties involved in undertakings including the Company’s beneficial controllers
shareholders related parties bidders and the Company during the reporting period or prior periods
but subsisting to the end of the reporting period (Continued)
Party involved in Type of Undertaking Particulars on
Undertaking undertaking undertaking Details of undertaking date Term the performance
Chen Hongguo Hu 1. Not to transfer interests to other entities or individuals without 19 January Until the completion During the
Changqing Li consideration or with unfair consideration nor otherwise damage 2023 date of the reporting
Xingchun Li Feng Li the Company’s interests in any other ways; 2. Restrain his/her own implementation period
Weixian Han Tingde duty-related spending; 3. not to use the Company’s assets for of the the parties
Li Chuanxuan Li investments and consumption activities unrelated to the performance restructuring involved in
Zhihui Sun Jianfei Yin of their duties; 4. the remuneration system formulated by the plan undertaking
Meiqun Yang Biao Board or the Remuneration and Assessment Committee is in line did not
Li Kang Qiu Lanju with implementation of the remedial measures for the returns by violate the
Sang Ailing Pan the Company; 5. the vesting conditions of share incentives to be undertaking
Ailing Zhang Hong Li formulated by the Company will be in line with the implementation of the asset
Xueqin Li Zhenzhong the remedial measures for returns if the Company intends to make restructuring
Li Mingtang Ge such share incentive plans in the future; 6. during the period from the ended
Guangming Dong date of this undertaking until the date of completion of the transaction and the
Lianming Yuan Xikun supplementary undertakings will be given in accordance with other new undertaking
and Chu Hon Leung regulations of CSRC concerning remedial measures for returns and was fulfilled.related undertakings if such regulations are announced by CSRC and
the foregoing undertakings fall short of meeting such new regulations; 7.I will practically perform the remedial measures for returns formulated
by the Company as well as any undertaking made by the Company for
such remedial measures. I will be liable for indemnifying the Company
or the investors for their losses in the event of failure to perform the
undertakings.Chenming Holdings Undertaking Regarding the reduction and avoidance of related party transactions the 19 January Until the completion During the
Company Limited to regulate following unconditional and irrevocable undertaking are hereby made: 2023 date of the reporting
and reduce 1. The company and the companies controlled by the company will implementation period
related party minimise and regulate potential related party transactions with the of the the parties
transactions Company and the companies controlled by the Company; Regarding restructuring involved in
the related party transactions between the company and other plan undertaking
companies controlled by the company and the Company and the did not
companies controlled by the Company that cannot be reduced or have violate the
reasonable reasons in the future the company and other companies undertaking
controlled by the company will follow the principle of fairness and the asset
justice in market transactions conduct transactions at fair and restructuring
reasonable market prices perform related party transaction decision- ended
making procedures in accordance with relevant laws regulations and and the
normative documents and perform information disclosure obligations undertaking
according to law. 2. The company guarantees that the company was fulfilled.and other companies controlled by the company will not obtain
any illegitimate benefits through related party transactions with the
Company and the companies controlled by the Company or make the
Company and the companies controlled by the Company bear any
improper obligations. 3. The company will urge the company and other
companies controlled by the company not to seek special interests
through the related relationship with the Company and not to conduct
related party transactions that damage the interests of the Company
and its minority shareholders.
108 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Material Matters
I. Performance of undertakings (Continued)
1. Undertakings made by parties involved in undertakings including the Company’s beneficial controllers
shareholders related parties bidders and the Company during the reporting period or prior periods
but subsisting to the end of the reporting period (Continued)
Party involved in Type of Undertaking Particulars on
Undertaking undertaking undertaking Details of undertaking date Term the performance
Shouguang Meilun Undertaking to 1. The company has provided the Company and the intermediaries 21 November Until the completion During the
Chenrong Fund provide true serving for the transaction with relevant information and documents 2022 date of the reporting
accurate and of the company (including but not limited to original written materials implementation period
complete duplicate materials or oral testimony). The company guarantees that of the the parties
information the copies or photocopies of the documents and materials provided restructuring involved in
are consistent with the originals and the signatures and seals of these plan undertaking
documents and materials are true ensures that the relevant information did not
and documents provided for the transaction are true accurate and violate the
complete and there are no false records misleading statements or undertaking
major omissions and bears individual and joint legal responsibilities the asset
for the authenticity accuracy and completeness of the information restructuring
provided. 2. During the period of the transaction the company will ended
disclose the information about the transaction to the Company in and the
a timely manner in accordance with relevant laws regulations and undertaking
rules and the relevant provisions of the CSRC and Shenzhen Stock was fulfilled.Exchange so as to ensure the authenticity accuracy and completeness
of such information and guarantee that there are no false records
misleading statements or major omissions in such information. If the
relevant information provided by the company for the transaction does
not meet the above requirements and causes losses to the Company
and investors the company will bear individual and joint liability for
compensation.Undertaking on 1. The company its controlling shareholder all directors supervisors 21 November Until the completion During the
absence of and senior management members and the entities controlled by the 2022 date of the reporting
insider trading abovementioned subjects have not been placed on file for investigation implementation period
for suspected insider trading related to this transaction. In the last 36 of the the parties
months there is no case that the CSRC has imposed administrative restructuring involved in
punishment or the judicial organs have lawfully investigated criminal plan undertaking
responsibility for participating in insider trading related to major asset did not
reorganisation and here is no case that the above personnel are not violate the
allowed to participate in the transaction according to Article 13 of the undertaking
Guidelines for Supervision of Listed Companies No.7 – Supervision the asset
of Abnormal Stock Trading Related to Major Asset Restructuring of restructuring
Listed companies. 2. The company its controlling shareholder and its ended
all directors supervisors and senior management members guarantee and the
to take necessary measures to keep the confidential materials undertaking
and information involved in the transaction strictly confidential in was fulfilled.accordance with the requirements of applicable laws and regulations.
2023 ANNUAL REPORT 109VIII Material Matters
I. Performance of undertakings (Continued)
1. Undertakings made by parties involved in undertakings including the Company’s beneficial controllers
shareholders related parties bidders and the Company during the reporting period or prior periods
but subsisting to the end of the reporting period (Continued)
Party involved in Type of Undertaking Particulars on
Undertaking undertaking undertaking Details of undertaking date Term the performance
Undertaking on 1. As of the date of this letter of undertaking the party involved in 19 January Until the completion During the
compliance undertaking and the directors and key management personnel of the 2023 date of the reporting
and integrity party involved in undertaking are not being investigated by the judicial implementation period
authority for suspected crimes or being investigated by the CSRC for of the the parties
suspected violations of laws and regulations; 2. The party involved restructuring involved in
in undertaking and the directors and key management personnel of plan undertaking
party involved in undertaking have been in good faith in the past five did not
years and there has been no failure to repay large debts on schedule violate the
fail to fulfil undertakings or be subject to administrative supervision undertaking
measures by the CSRC or disciplinary action by the stock exchange; the asset
3. The party involved in undertaking and the directors and key restructuring
management personnel of the party involved in undertaking have not ended
been subject to administrative punishment (except those obviously and the
irrelevant to the securities market) criminal punishment or involved in undertaking
major civil lawsuits or arbitrations related to economic disputes in the was fulfilled.past five years. As at the date of this letter of undertaking there are no
pending or foreseeable major lawsuits arbitrations or administrative
punishment cases of the party involved in undertaking and the directors
and key management personnel of the party involved in undertaking;
4. The party involved in undertaking has not had any untrustworthy
circumstances such as failure to repay large debts on schedule fail to
fulfil undertakings or be subject to administrative supervision measures
by the CSRC or disciplinary action by the stock exchange in the past
five years. None of the above situation is currently in the stage of
investigation and has not yet formed a conclusion; 5. Directors and key
management personnel of the party involved in undertaking were not
subject to the circumstances listed in Article 146 of the Company Law.The content of the above undertaking is true complete and accurate
and there are no false or misleading statements or major omissions.The party involved in undertaking is fully aware of the possible
consequences of making a false statement and is willing to bear all
legal consequences arising therefrom.
110 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Material Matters
I. Performance of undertakings (Continued)
1. Undertakings made by parties involved in undertakings including the Company’s beneficial controllers
shareholders related parties bidders and the Company during the reporting period or prior periods
but subsisting to the end of the reporting period (Continued)
Party involved in Type of Undertaking Particulars on
Undertaking undertaking undertaking Details of undertaking date Term the performance
Dongxing Securities Undertaking to 1. The company has provided the Company and the intermediaries 21 November Until the completion During the
Investment Co. provide true serving for the transaction with relevant information and documents 2022 date of the reporting
Ltd. Chongqing accurate and of the company (including but not limited to original written materials implementation period
International Trust Inc. complete duplicate materials or oral testimony). The company guarantees that of the the parties
Chenming (Qingdao) information the copies or photocopies of the documents and materials provided restructuring involved in
Asset Management are consistent with the originals and the signatures and seals of plan undertaking
Co. Ltd. these documents and materials are true ensures that the relevant did not
information and documents provided for the transaction are true violate the
accurate and complete and there are no false records misleading undertaking
statements or major omissions and bears individual and joint legal the asset
responsibilities for the authenticity accuracy and completeness of restructuring
the information provided. 2. During the period of the transaction ended
the company will disclose the information about the transaction to and the
the Company in a timely manner in accordance with relevant laws undertaking
regulations and rules and the relevant provisions of the CSRC and was fulfilled.Shenzhen Stock Exchange so as to ensure the authenticity accuracy
and completeness of such information and guarantee that there are
no false records misleading statements or major omissions in such
information. If the relevant information provided by the company for
the transaction does not meet the above requirements and causes
losses to the Company and investors the company will bear individual
and joint liability for compensation. 3. If the information provided or
disclosed for the transaction is suspected of false records misleading
statements or major omissions and is put on file for investigation by
the judicial authorities or by the CSRC the shares of Chenming Paper
will not be transferred before the investigation conclusion is formed
and the written application for transfer suspension and the securities
account will be submitted to the Board of Chenming Paper within two
trading days after receiving the notice of filing for investigation and the
Board will apply to the stock exchange and the depository and clearing
corporation for locking up on behalf of the company. If the locking
up application is not submitted within two trading days the company
authorises the Board to directly submit the identity and account
information of the company to the stock exchange and the depository
and clearing corporation for locking up after verification. If the Board
fails to submit the identity and account information of the company
to the stock exchange and the depository and clearing corporation
the company authorises the stock exchange and the depository and
clearing corporation to directly lock up the relevant shares. If the
investigation concludes that there is a violation of laws and regulations
the company promises to lock up the shares and voluntarily use them
for compensation to relevant investors.
2023 ANNUAL REPORT 111VIII Material Matters
I. Performance of undertakings (Continued)
1. Undertakings made by parties involved in undertakings including the Company’s beneficial controllers
shareholders related parties bidders and the Company during the reporting period or prior periods
but subsisting to the end of the reporting period (Continued)
Party involved in Type of Undertaking Particulars on
Undertaking undertaking undertaking Details of undertaking date Term the performance
Dongxing Securities Undertaking on 1. The company will not transfer the shares acquired from the transaction 21 November Twelve months The asset
Investment Co. Ltd. share lock-up within 12 months from the date when the shares acquired in the 2022 from the date of restructuring
transaction are issued. However if the CSRC requests to adjust the completion of ended
lock-up period of the subject shares it shall be adjusted according share issuance and theto relevant requirements. 2. The above-mentioned “shares acquired undertakingin the transaction” include the shares acquired during the lock-up was fulfilled.period due to the distribution of stock dividends and the increase of
capital reserves. 3. After the shares of Chenming Paper acquired in
the transaction are unlocked the company’s disposal of shares must
comply with the Company Law of the People’s Republic of China
the Securities Law of the People’s Republic of China the Rules
Governing Listing of Stocks on Shenzhen Stock Exchange Shenzhen
Stock Exchange Implementation Rules on the Share Lessening by the
Shareholders Directors Supervisors and Senior Management of Listed
Companies and the Articles of Association of Shandong Chenming
Paper Holdings Limited and other provisions of laws regulations rules
and normative documents.Chongqing International Chongqing Trust (the “company”) as the trustee of Chongqing Trust 21 November Twelve months The asset
Trust Inc. Huiyu No. 6 Collective Fund Trust Plan (“Huiyu No. 6” or the “Plan”) 2022 from the date of restructuring
represents Huiyu No. 6 as the counterparty of the Company in the completion of ended
transaction and will hold shares of the Company after the transaction share issuance and the
is completed. The company has made the following commitments undertaking
on the lock-up period of the shares of the Company acquired in the was fulfilled.transaction (the “subject shares”): 1. The shares of the Company
acquired by the company (representing Huiyu No. 6) in the transaction
will not be transferred within 12 months from the date when the shares
acquired in the transaction are issued but if the CSRC requests to
adjust the lock-up period of the subject shares it shall be adjustedaccording to relevant requirements. 2. “The shares of the Companyacquired in the transaction” as mentioned above include shares of the
Company acquired during the lock-up period due to the distribution
of stock dividends by the Company and the increase of capital
reserves. 3. The company (representing Huiyu No. 6) shall abide by
the Company Law of the People’s Republic of China the Securities
Law of the People’s Republic of China the Rules Governing Listing
of Stocks on Shenzhen Stock Exchange Shenzhen Stock Exchange
Implementation Rules on the Share Lessening by the Shareholders
Directors Supervisors and Senior Management of Listed Companies
and the Articles of Association of Shandong Chenming Paper Holdings
Limited and other provisions of laws regulations rules and normative
documents.
112 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Material Matters
I. Performance of undertakings (Continued)
1. Undertakings made by parties involved in undertakings including the Company’s beneficial controllers
shareholders related parties bidders and the Company during the reporting period or prior periods
but subsisting to the end of the reporting period (Continued)
Party involved in Type of Undertaking Particulars on
Undertaking undertaking undertaking Details of undertaking date Term the performance
Dongxing Securities Explanation and 1. The company has a clear ownership of the subject assets which can 21 November Until the completion During the
Investment Co. Ltd. commitment be legally disposed of and there are no rights restrictions or defects 2022 date of the reporting
Chenming (Qingdao) letter of the such as pledge guarantee freezing and seizure nor major legal implementation period
Asset Management counterparty disputes such as litigation and arbitration. 2. During the period from the of the the parties
Co. Ltd. on the valuation benchmark date of the subject assets of the transaction to restructuring involved in
ownership of the asset delivery date the company will not set any third-party rights plan undertaking
the underlying such as mortgage and pledge on the subject assets. 3. The company did not
assets waives the pre-emptive right to buy the shares transferred by other violate the
shareholders of the target company. 4. There are no legal obstacles to undertaking
the target asset transfer by the company nor other relevant investment the asset
agreements or other arrangements that restrict transactions. restructuring
ended
and the
undertaking
was fulfilled.Chongqing International Chongqing Trust (the “company”) as the trustee of Chongqing Trust 21 November Until the completion During the
Trust Inc. Huiyu No. 6 Collective Fund Trust Plan (“Huiyu No. 6” or the “Plan”) 2022 date of the reporting
represents Huiyu No. 6 as the transaction counterparty of the Company implementation period
and hereby promises as follows: 1. The company (representing Huiyu of the the parties
No. 6) has a clear ownership of the subject assets and can make legal restructuring involved in
disposal. There are no rights restrictions or defects such as pledge plan undertaking
guarantee freezing and seizure nor major legal disputes such as did not
litigation and arbitration. 2. During the period from the asset valuation violate the
benchmark date to the asset delivery date the company (representing undertaking
Huiyu No. 6) will not set any third-party rights such as mortgage and the asset
pledge on the subject assets. 3. The company (representing Huiyu No. restructuring
6) waives the pre-emptive right to buy the shares transferred by other ended
shareholders of the target company. 4. In addition there are no legal and the
obstacles to the target asset transfer by the company (representing undertaking
Huiyu No. 6) nor other investment agreements or other arrangements was fulfilled.that restrict transactions.Dongxing Securities Undertaking on 1. The company its controlling shareholder all directors supervisors 21 November Until the completion During the
Investment Co. absence of and senior management members and the entities controlled by the 2022 date of the reporting
Ltd. Chongqing insider trading abovementioned subjects have not been placed on file for investigation implementation period
International Trust Inc. for suspected insider trading related to this transaction. In the last 36 of the the parties
Chenming (Qingdao) months there is no case that the CSRC has imposed administrative restructuring involved in
Asset Management punishment or the judicial organs have lawfully investigated criminal plan undertaking
Co. Ltd. responsibility for participating in insider trading related to major asset did not
reorganisation and there is no case that the above personnel are not violate the
allowed to participate in the transaction according to Article 13 of the undertaking
Guidelines for Supervision of Listed Companies No.7 – Supervision the asset
of Abnormal Stock Trading Related to Major Asset Restructuring of restructuring
Listed Companies. 2. The company its controlling shareholder and its ended
all directors supervisors and senior management members guarantee and the
to take necessary measures to keep the confidential materials undertaking
and information involved in the transaction strictly confidential in was fulfilled.accordance with the requirements of applicable laws and regulations.
2023 ANNUAL REPORT 113VIII Material Matters
I. Performance of undertakings (Continued)
1. Undertakings made by parties involved in undertakings including the Company’s beneficial controllers
shareholders related parties bidders and the Company during the reporting period or prior periods
but subsisting to the end of the reporting period (Continued)
Party involved in Type of Undertaking Particulars on
Undertaking undertaking undertaking Details of undertaking date Term the performance
Dongxing Securities Commitment 1. The company and its major management personnel did not receive 21 November Until the completion During the
Investment Co. Ltd. on no illegal any criminal punishment or administrative punishment related to the 2022 date of the reporting
Chenming (Qingdao) matters in the securities market in the last five years and there was no major civil implementation period
Asset Management past five years litigation or arbitration related to economic disputes; 2. The company of the the parties
Co. Ltd. and its major management personnel did not fail to repay large debts restructuring involved in
on schedule or fulfil their commitments were not taken administrative plan undertaking
supervision measures by the CSRC or were not disciplined by stock did not
exchanges; 3. The company had no other major illegal acts that violate the
damaged the investors’ legitimate rights and interests and social public undertaking
interests nor other bad records. the asset
restructuring
ended
and the
undertaking
was fulfilled.Chongqing International Chongqing Trust (the “company”) as the trustee of Chongqing Trust 19 January Until the completion During the
Trust Inc. Huiyu No. 6 Collective Fund Trust Plan (“Huiyu No. 6” or the “plan”) 2023 date of the reporting
represents Huiyu No. 6 as the counterparty of the transaction and implementation period
makes the following commitments on the plan and the relevant of the the parties
information of the company: (1) Commitments of the plan: 1. Since restructuring involved in
its establishment the plan has not been subject to administrative plan undertaking
punishment or criminal punishment related to the securities market did not
and there are no major civil lawsuits or arbitrations related to economic violate the
disputes; 2. There is no failure to repay large debts fulfil commitments undertaking
take administrative supervision measures by the CSRC or be disciplined the asset
by stock exchanges on the plan; 3. There are no other major illegal acts restructuring
that damage the investors’ legitimate rights and interests and social ended
public interests in the plan nor other bad records. (2) Commitments of and the
the company: 1. The company and its major management personnel undertaking
did not receive any criminal punishment or administrative punishment was fulfilled.related to the securities market in the last five years and there were
no major civil lawsuits or arbitrations related to economic disputes
(except for other products managed by the company as litigants);
2. On 3 January 2023 the Beijing Supervision Bureau of the CSRC
issued the Decision on the Administrative Supervisory Measures
Against Chongqing International Trust Inc. for Correction ([2023] No.
10) pursuant to which due to the existing issues as a shareholder of
Guodu Securities Co. Ltd. the company was subject to administrative
supervisory measures for correction by the Beijing Regulatory Bureauof the CSRC which required the company to “take practical andeffective corrective measures to rectify the illegal pledges and exercise
its rights and fulfil its obligations as a shareholder in compliance
with the law and not to become a major shareholder and a de factocontroller of a securities company without approval”. In addition to the
above the company and its major management personnel did not fail
to repay large debts on schedule or fulfil their commitments were not
taken administrative supervision measures by the CSRC or were not
disciplined by stock exchanges; 3. The company had no other major
illegal acts that damage the investors’ legitimate rights and interests
and social public interests nor other bad records.
114 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Material Matters
I. Performance of undertakings (Continued)
1. Undertakings made by parties involved in undertakings including the Company’s beneficial controllers
shareholders related parties bidders and the Company during the reporting period or prior periods
but subsisting to the end of the reporting period (Continued)
Party involved in Type of Undertaking Particulars on
Undertaking undertaking undertaking Details of undertaking date Term the performance
Undertaking Chenming Holdings Non-competitive (1) Chenming Holdings Co. Ltd. (“Chenming Holdings”) shall not engage 22 May 2008 During the period Implementing
made on initial Company Limited undertaking whether solely jointly or by representing itself or any other persons when Chenming as normal
public offering or companies and shall not procure its associates (as defined in Holdings was
or refinancing The Listing Rules of Hong Kong Stock Exchange) to engage in any the major
business which competes with the business of the Company and its shareholder of
subsidiaries (“Chenming Group” or “we”) directly or indirectly in any the Company
country and region which our business exists (or any part of the world if
in any form of electronics business) or in any business that directly or
indirectly competes with Chenming Group’s business which we operate
from time to time (including but not limited to any business in the form
of sole proprietorship joint ventures or acquisitions or holding interests
directly or indirectly in such enterprises or by any other means); (2)
in the event that Chenming Holdings is required by its business to
whether solely jointly or by representing itself or any other persons or
companies engage in business which directly or indirectly competes
against the business of Chenming Group or obtain any business
opportunity which directly or indirectly competes against the business
of Chenming Group it shall endeavour to procure that Chenming Group
shall have priority to obtain the right to operate such business or to
obtain such business opportunity; (3) if Chenming Holdings is in breach
of the abovementioned undertakings it shall indemnify the Company
for any loss caused by such breach and the Company shall have the
right to acquire all businesses of Chenming Holdings which directly or
indirectly compete with the businesses of our Group at market price
or cost price (whichever price is lower); (4) Chenming Holdings shall
not make use of its position as the controlling shareholder (as defined
in The Listing Rules of Hong Kong Stock Exchange) of our Group to
jeopardise the legal interests of Chenming Group and its shareholders
with other persons or companies or on their behalf.
2023 ANNUAL REPORT 115VIII Material Matters
I. Performance of undertakings (Continued)
1. Undertakings made by parties involved in undertakings including the Company’s beneficial controllers
shareholders related parties bidders and the Company during the reporting period or prior periods
but subsisting to the end of the reporting period (Continued)
Party involved in Type of Undertaking Particulars on
Undertaking undertaking undertaking Details of undertaking date Term the performance
Chenming Holdings Defective (1) According to the plan on defective properties of the Company 16 January During the period Implementing
Company Limited properties Chenming Holdings Co. Ltd. (“Chenming Holdings”) has guaranteed 2008 when Chenming as normal
and undertaken that: according to the application of the Company Holdings was
for defective property(ies) owned by the Company and its holding the major
subsidiary company which situated in the administrative area of shareholder of
Shouguang city Chenming Holdings will purchase it (them) and have the Company
it (them) being transferred to itself pursuant to the law in accordance
with the result of the related asset valuation if the Company decides
to transfer and dispose of it (them) and there is no other transferee; (2)
before the Company transfers and disposes of the defective properties
pursuant to the law if the Company suffers any economic losses due to
the defects of the title (including but not limited to damages penalties
and relocation costs) Chenming Holdings will bear such economic
losses; (3) during the regulatory process taken to the defective
properties of buildings and land of subsidiaries of the Company
situated outside the local areas (outside the administrative area of
Shouguang city) the economic losses such as penalties or relocation
costs imposed by competent administrative authorities to be borne by
the subsidiaries arising from defects of insufficient title documents shall
be paid pursuant to the law by Chenming Holdings after verification.Whether undertakings performed on time Yes
If the undertakings are not performed within specified period N/A
details of the specific reasons for the incomplete performance
and the next steps should be provided
2. Description on the Company’s assets and items in meeting original profit forecast and its explanation
as there is profit forecast for assets and items of the Company and the reporting period is still within
the profit forecast period
□ Applicable □ Not applicable
116 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Material Matters
II. Appropriation of funds of the Company by the controlling shareholder and other related
parties for non-operating purposes
□ Applicable □ Not applicable
There was no appropriation of funds of the Company by the controlling shareholder and other related parties for non-
operating purposes during the reporting period.III. External guarantees against the rules and regulations
□ Applicable □ Not applicable
There was no external guarantee provided by the Company which was against the rules and regulations during the reporting
period.IV. Opinions of the Board regarding the “modified auditor’s report” for the latest period
□ Applicable □ Not applicable
V. Opinions of the Board the Supervisory Committee and independent directors (if any)
regarding the “modified auditor’s report” for the reporting period issued by the accountants
□ Applicable □ Not applicable
VI. Changes in accounting policies accounting estimates or correction of major accounting
errors as compared to the financial report for the prior year
□ Applicable □ Not applicable
There was no changes in accounting policies accounting estimates or correction of major accounting errors during the
reporting period.VII. Reason for changes in scope of the consolidated financial statements as compared to the
financial report for the prior year
□ Applicable □ Not applicable
During the year 1 subsidiary was newly established namely Shouguang Kunwo Trading Co. Ltd. and 1 subsidiary was
deregistered namely Beijing Chenming Financial Leasing Co. Ltd. 2 subsidiaries were disposed through the transfer of
65.21% equity interest namely Wuhan Chenming Hanyang Paper Holdings Co. Ltd. and Wuhan Chenming Qianneng
Electric Power Co. Ltd. 1 subsidiary was acquired namely Jiangxi Chenming Port Co. Ltd.
2023 ANNUAL REPORT 117VIII Material Matters
VIII. Engagement or dismissal of accounting firms
Current accounting firm engaged
Grant Thornton
Name of the domestic accounting firm (Special General Partnership)
Remuneration of the domestic accounting firm (RMB’0000) 390
Continued term of service of the domestic accounting firm 5
Name of certified public accountants of the domestic accounting firm Jiang Tao and Guo Dongmei
Continued term of service of certified public accountants of the domestic accounting firm 1
Whether to appoint another accounting firm during the period
□ Yes □ No
Particulars on recruitment of accounting firms financial consultants or sponsors for internal control and auditing purposes
□ Applicable □ Not applicable
During the year the Company engaged Grant Thornton (Special General Partnership) as the auditor for internal control of
the Company for 2023. The Company paid RMB800000 as internal control audit fees for prior year during the reporting
period. The Company engaged Huaying Securities Co. Ltd. as its independent financial advisor in respect of the issuance
of shares and payment of cash consideration for acquisition of assets and paid RMB2.12 million as financial advisor fees
during the reporting period.IX. Prospects of withdrawal from listing subsequent to the publication of the annual report
□ Applicable □ Not applicable
X. Matters related to bankruptcy and reorganisation
□ Applicable □ Not applicable
There was no matter related to bankruptcy and reorganisation during the reporting period.
118 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Material Matters
XI. Material litigation and arbitration
□ Applicable □ Not applicable
General information Whether
on the litigation provisions are Enforcement of Date of
(arbitration) Amount involved made Progress Trial results and impact judgment disclosure Disclosure index
Statutory demand and HK$389112432.44 No On 25 October 2022 the On 10 August 2023 the Company N/A 19 August 2023 http://www.cninfo.com.cn
winding-up petition Company engaged Hong received the judgment made by
Kong legal advisers to the Honourable Mr. Justice Harris
apply for seeking the of the Court of First Instance. On
dismissal or adjournment the ground that the application for
of the winding-up petition arbitration in respect of the joint
presented by HKK2 against venture agreement filed by the
the Company at the Court Company with the HKIAC in June
of First Instance. On 25 2022 is the basis of the cross-claim
July 2023 the Court of First made by the Company against HKK2
Instance held a hearing on under the winding-up petition it is
the aforesaid application. ruled to stay the winding-up petition.The substantive hearing of the
arbitration will be heard in May 2024.Summary of matters RMB1029.6935 million No The amount involved in For resolved litigations the court The amount N/A N/A
not subject to ongoing cases was ordered relevant defendant and involved in
disclosure as RMB54.4188 million; the guarantor to settle outstanding loans the resolved
material litigation amount involved in resolved to the Company in line with the and executed
(arbitration) in which cases was RMB975.2747 request of the Company and would cases was
Chenming Leasing million. not have any significant impact on RMB207.5134
is the plaintiff the operation and financial condition million and
of the Company. other cases
are in the
progress of
execution.Summary of matters RMB8.34 million No At the first instance stage. Conclusions have not yet made. It is Not yet entered N/A N/A
not subject to expected that there would not be any the execution
disclosure as significant impact on the operation stage
material litigation and financial condition of the
(arbitration) in which Company.Chenming Leasing
is the defendant
Summary of matters RMB568.8137 million No The amount involved in Did not have any significant impact on The amount N/A N/A
not subject to ongoing cases was the operation and financial condition involved in
disclosure as RMB205.9547 million; the of the Company. the resolved
material litigation amount involved in resolved and executed
(arbitration) in which cases was RMB362.8590 cases was
the Company and million. RMB70.2312
other subsidiaries million and
of the Company are other cases
the plaintiff are in the
progress of
execution.
2023 ANNUAL REPORT 119VIII Material Matters
XI. Material litigation and arbitration (Continued)
General information Whether
on the litigation provisions are Enforcement of Date of
(arbitration) Amount involved made Progress Trial results and impact judgment disclosure Disclosure index
Summary of matters RMB220.6950 million No The amount involved in Did not have any significant impact on All the resolved N/A N/A
not subject to ongoing cases was the operation and financial condition cases
disclosure as RMB134.1828 million; the of the Company. have been
material litigation amount involved in resolved executed.(arbitration) in which cases was RMB86.5122
the Company and million.other subsidiaries
of the Company are
the defendant
XII. Punishment and rectification
□ Applicable □ Not applicable
Type of inspection Date of
Name Type Reason and punishment Conclusion (if any) disclosure Disclosure index
Zhanjiang Chenming Subsidiary On 18 May 2023 there was a safety accident occurred by General administrative As Zhanjiang Chenming actively 25 May 2023 http://www.cninfo.com.cn
Shijiazhuang Kejing Waste Material Recycling Co. Ltd. punishment cooperated with the incident
(“Kejing”) a residue outsourcing entity of Zhanjiang investigation rectified the current
Chenming in the factory of Zhanjiang Chenming safety production conditions
causing the death of four employees of Kejing. On the entered into specific safety
ground that Zhanjiang Chenming’s failure in entering into production agreements with all
safety production management agreement with Kejing contractors and identified and
reaching agreement on respective safety management set up clear warning signs in all
responsibilities in the outsourcing contract arranging and premises with confined space it
initiating management over safety production accountability is eligible for a light penalty thus
and safety production of Kejing and its inclined screen Zhanjiang Emergency Management
slurry residue collection spots as well as in view of other Bureau issued the Decision for
failures Zhanjiang Emergency Management Bureau ruled Administrative Penalty and imposed
that Zhanjiang Chenming had violated relevant regulations penalty of RMB1.20 million on
under the Production Safety Law of the People’s Republic Zhanjiang Chenming. Zhanjiang
of China. Chenming paid the aforementioned
penalty on 27 February 2024.Rectification
□ Applicable □ Not applicable
120 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Material Matters
XII. Punishment and rectification (Continued)
Learning from the lesson of the safety accident happened in the external slurry residue selling unit Zhanjiang Chenming has
further improved its safety prevention measures strengthened the leadership responsibility and regulatory responsibility
regulated operational procedures enhanced safety awareness and developed emergency handling capability. Specific
measures are as follow:
(I) Establish sound safety production accountability system and implement safety responsibility and
performance assessment for all employees
(1) Establish safety production accountability appraisal system organise and optimise the safety production duty
list for employees in all departments at all levels covering from key responsible personnel and on-site operators
and implement appraisal by divisions and categories in strict compliance with safety production duty list.
(2) Facilitate implementation and discover weak points through appraisal remedy shortcomings promote theimplementation of safety production accountability for all employees and duly implement the “two duties forone position” policy for safety production.(II) Strengthen safety management of contractors and implement unified duty coordination and
management
(1) Include external contractors into the unified management of the Company formulate respective safety
responsibilities and enter into specific safety management agreement.
(2) Further optimise factory operation of contractors and clarify the requirements on different procedures covering
selection of contractors in-factory notice safety disclosure construction approval operation supervision
inspection and record award and punishment.
(3) Update the safety management ledger of contractor in a timely manner require contractor to create a post of
safety responsible personnel with key responsibility personnel and safety responsible personnel possessing
certificates arrange contractors to convene monthly safety management meetings and special safety inspection
and safety trainings and supervise contractors in respect of implementation execution and correction.(III) Enhance system on confined space operation and implement strict operation control
(1) Conduct comprehensive scientific inspection on facilities equipment and premises of the company with
confined space enhance risk management on confined space for the six aspects of inspection mechanism
identification method risk analysis risk identification scientific control and effective elimination and set up alert
poster and notice board in all prominent locations of facilities equipment and premises with confined space.
(2) Firmly conduct education and training on confined space operations especially the special safety trainings for
on-site responsible personnel supervisors operators and emergency personnel engaging in confined space
operations so as to fully enhance their safety skills and awareness.
(3) Strictly conduct confined space operation management implement strict and detailed safety rules for confined
space operations duly conduct identification approval supervision and other key procedures and ensure safe
confined space operation.
(4) Strengthen supervision and inspection set up part-time safety personnel in every factory and workshop to
assist head of factory to conduct safety works arrange safety management personnel to conduct weekly
benchmark inspection on premises with confined space rectify identified potential hazard based on the
principle of “determination of responsible personnel measures and terms” and arrange special personnel to
follow up rectification progress.Through strict implementation of safety production accountability system for employees Zhanjiang Chenming
strictly focus on hazardous operation management duly perform safety management works adhere to safety
baseline and strengthen safety infrastructure construction thereby avoiding the reoccurrence of similar issues.
2023 ANNUAL REPORT 121VIII Material Matters
XIII. Credibility of the Company its controlling shareholders and beneficial controllers
□ Applicable □ Not applicable
XIV. Significant related party transactions
1. Related party transactions associated with day-to-day operation
□ Applicable □ Not applicable
Subject matter Pricing basis Amount of Percentage as Amount of
Relationship Types of the of the of the Related party related party the amount transactions Whether Market price of
Related party with the related party related party related party transaction transactions of similar approved exceeding Settlement of related available similar Disclosure Disclosure
transactions Company transactions transactions transaction price (RMB’0000) transactions (RMB’0000) approved cap party transactions transaction date index
Weifang Port Wood Chip Joint venture Labour service Port miscellaneous Market price Market price 7880.33 8.57% N/A No Bank acceptance N/A N/A N/A
Terminal Co. Ltd. fees and telegraphic
transfer
Total － － 7880.33 － － － － － －
Particulars on refund of bulk sale Nil
Estimated total amount for day-to-day related party transactions to be conducted Nil
during the period (by types of transactions) and their actual implementing during
the reporting period (if any)
Reasons for large differences between transaction price and market reference price N/A
(if applicable)
2. Related party transaction in connection with purchase or sale of assets or equity interest
□ Applicable □ Not applicable
There was no related party transaction of the Company in connection with purchase or sale of assets or equity interest
during the reporting period.
3. Related party transaction connected to joint external investment
□ Applicable □ Not applicable
There was no related party transaction of the Company connected to joint external investment.
4. Related creditors’ rights and debts transactions
□ Applicable □ Not applicable
Was there any non-operating related creditors’ rights and debts transaction
□ Yes □ No
Creditor’s rights receivable from any related party
122 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Material Matters
XIV. Significant related party transactions (Continued)
4. Related creditors’ rights and debts transactions (Continued)
Amount Amount
Was there any increased recovered Interest for
Relationship non-operating Opening during the during the the current Closing
with the capital balance current period current period period balance
Related party Company Reason occupation (RMB’0000) (RMB’0000) (RMB’0000) Interest rate (RMB’0000) (RMB’0000)
Shouguang Meite A joint venture Financial support No 1829.12 – 870.02 6.00% 83.62 1042.72
Environmental Technology
Co. Ltd.Weifang Port Area Wood A joint venture Financial support No 7167.93 – – 6.00% 383.25 7551.18
Chip Port Co. Ltd.Wuhan Chenming Hanyang An associate Financial support No 22978.30 – 530.00 4.75% 276.97 22725.27
Paper Holdings Co. Ltd.Effect of related creditors’ The above creditors’ rights did not affect the ordinary operation of the Company. Moreover they catered to the needs for development of existing
rights on the operating businesses of the above entities.results and financial
position of the Company
Debts payable to any related party
Amount
increased Amount repaid Interest for Closing balance
Relationship Opening during the during the the current (RMB’0000)
with the balance current period current period period Closing balance
Related party Company Reason (RMB’0000) (RMB’0000) (RMB’0000) Interest rate (RMB’0000) (RMB’0000)
Chenming Holdings The controlling Financial support – 36470.00 22970.11 Market interest rate 61.40 13561.29
Company Limited shareholder
Guangdong Nanyue Bank An associate Borrowing 190910.00 206906.00 190910.00 Market interest rate 1988.57 206906.00
Co. Ltd.Effect of related debts on the operating results Financial support was provided by Chenming Holdings without requiring any pledge or guarantee which was a testament
and financial position of the Company to its support and confidence in the future development of the Company and helped the Company promote project
construction and satisfy its needs for working capital.
2023 ANNUAL REPORT 123VIII Material Matters
XIV. Significant related party transactions (Continued)
5. Deals with related financial companies
□ Applicable □ Not applicable
There were no deposits loans credits or other financial services between the Company its related financial
companies and the related parties.
6. Deals between financial companies controlled by the company and related parties
□ Applicable □ Not applicable
There were no deposits loans credits or other financial services between the financial companies controlled by the
Company and the related parties.
7. Other significant related party transactions
□ Applicable □ Not applicable
There was no other significant related party transaction of the Company during the reporting period.XV. Material contracts and implementation
1. Custody contracting and leasing
(1) Custody
□ Applicable □ Not applicable
There was no custody of the Company during the reporting period.
(2) Contracting
□ Applicable □ Not applicable
In April 2023 Jiangxi Chenming a subsidiary acquired equity interest in Jiangxi Port which is included in the
scope of consolidation. The principal activities of Jiangxi Chenming Port is goods loading and transportation at
wharf. In order to revitalise Jiangxi Port and enhance economic benefits to the Company Jiangxi Chenming has
contracted the businesses of Jiangxi Port to Jiangxi Yirong Investment Co. Ltd. for 5 years and receives fixed
contracting fees of RMB4.00 million per year on quarterly basis.A project which generates profit or loss for the Company representing more than 10% of the Company’s total
profit during the reporting period
□ Applicable □ Not applicable
124 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Material Matters
XV. Material contracts and implementation (Continued)
1. Custody contracting and leasing (Continued)
(3) Leasing
□ Applicable □ Not applicable
Leasing description:
As a lessee
The Company has simplified the treatment of short-term leases and leases of low-value assets by not recognising
right-of-use assets and lease liabilities. The charges to expense for short-term leases low-value assets and variable
lease payments not included in the measurement of lease liabilities during the current period are as follows:
Unit: RMB
Item 2023
Low-value leases 8017898.94
Total 8017898.94
As a lessor
Where an operating lease is formed:
According to paragraph 58 of the new lease standard the lessor shall disclose in the notes the following information
related to operating leases:
* Lease income and make separate disclosure of income related to variable lease payments not included in lease
receipts;
Unit: RMB
Item 2023
Lease income 205849883.65
2023 ANNUAL REPORT 125VIII Material Matters
XV. Material contracts and implementation (Continued)
1. Custody contracting and leasing (Continued)
As a lessor (Continued)
* The amount of undiscounted lease receipts to be received in each of the five consecutive fiscal years after the
balance sheet date and the total amount of undiscounted lease receipts to be received in the remaining years.Unit: RMB
Year 2023.12.31
Within 1 year after the balance sheet date 179905002.33
1 to 2 years after the balance sheet date 168651189.37
2 to 3 years after the balance sheet date 167585064.63
3 to 4 years after the balance sheet date 162996827.55
4 to 5 years after the balance sheet date 159887562.91
More than 5 years after the balance sheet date 165396559.34
Total 1004422206.13
Items that bring profit or loss of more than 10% of the total profit of the Company during the reporting period
□ Applicable □ Not applicable
The Company did not have any leasing project that brought profit or loss to the Company amounting to more
than 10% of the total profit of the Company during the reporting period.
126 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Material Matters
XV. Material contracts and implementation (Continued)
2. Significant guarantees
□ Applicable □ Not applicable
(1) Guarantees
During the reporting period the Company provided guarantee to subsidiaries and the guarantee amount
incurred was RMB11918.5064 million. As at 31 December 2023 the balance of the external guarantee provided
by the Company (including the guarantee to its subsidiaries by the Company and the guarantee provided
to subsidiaries by subsidiaries) amounted to RMB13270.2932 million representing 79.50% of the equity
attributable to shareholders of the Company in 2023.Unit: RMB’0000
External guarantees of the Company and its subsidiaries (excluding guarantees to subsidiaries)
Date of the related Guarantee
announcement to related
disclosing the Amount of Guarantee Counter-guarantee (if Fulfilled parties
Name of obligee guarantee amount guarantee Guarantee date provided Type of guarantee Collateral any) Term or not or not
Weifang Port Area Wood 24 July 2017 17500.00 20 December 2017 9560.00 General guarantee Credit guarantee No 10 years No Yes
Chip Port Co. Ltd.Zhanjiang Runbao Trading 30 March 2022 16000.00 25 April 2022 16000.00 Pledge 34.64% equity Equity transfer payment 2 years No No
Co. Ltd. interest in Wuhan of RMB160 million
Chenming
Zhanjiang Dingjin Trading 7 December 2022 13558.19 7 December 2022 13558.19 Mortgage Properties Remaining equity transfer 3 years No No
Co. Ltd. payment of RMB136
million
Shanghai Shuilan Trading 7 December 2022 45700.00 7 December 2022 45000.00 Pledge 100% equity interest 80% equity interest in 3 years No No
Co. Ltd. in Shanghai Taixing Port held by
Chongmin Shanghai Huahao
Total external guarantees approved during the – Total actual external guarantees during the reporting period (A2) –
reporting period (A1)
Total external guarantees approved at the end of 92758.19 Balance of total actual guarantees at the end of the reporting period (A4) 84118.19
the reporting period (A3)
2023 ANNUAL REPORT 127VIII Material Matters
XV. Material contracts and implementation (Continued)
2. Significant guarantees (Continued)
(1) Guarantees (Continued)
Guarantees between the Company and its subsidiaries
Date of the related Guarantee
announcement to related
disclosing the Amount of Guarantee Fulfilled parties
Name of obligee guarantee amount guarantee Guarantee date provided Type of guarantee Collateral Counter-guarantee Term or not or not
Zhanjiang Chenming Pulp & 30 March 2019 9800.00 5 January 2021 9800.00 General guarantee No No 5 years No No
Paper Co. Ltd.Zhanjiang Chenming Pulp & 30 March 2022 91361.61 31 May 2022 91361.61 General guarantee No No 1 year No No
Paper Co. Ltd.Zhanjiang Chenming Pulp & 30 March 2023 1070000.00 25 May 2023 433385.08 General guarantee No No 1 year No No
Paper Co. Ltd.Shouguang Meilun Paper 30 March 2022 21000.00 28 February 2023 21000.00 General guarantee No No 1 year No No
Co. Ltd.Shouguang Meilun Paper 30 March 2023 500000.00 19 June 2023 163626.92 General guarantee No No 1 year No No
Co. Ltd.Jiangxi Chenming Paper 30 March 2022 15421.13 1 July 2022 15421.13 General guarantee No No 1 year No No
Co. Ltd.Jiangxi Chenming Paper 30 March 2023 430000.00 24 May 2023 139336.93 General guarantee No No 1 year No No
Co. Ltd.Huanggang Chenming Pulp 30 March 2022 2000.00 27 April 2023 2000.00 General guarantee No No 1 year No No
& Paper Co. Ltd.Huanggang Chenming Pulp 30 March 2023 380000.00 23 May 2023 40500.00 General guarantee No No 1 year No No
& Paper Co. Ltd.Huanggang Chenming 30 March 2023 470000.00 General guarantee No No 1 year No No
Paper Technology
Co. Ltd.Huanggang Chenming 15 December 2023 -50000.00 General guarantee No No 1 year No No
Paper Technology
Co. Ltd.Chenming (HK) Limited 30 March 2023 200000.00 7 December 2023 1548.00 General guarantee No No 1 year No No
Zhanjiang Chenming 30 March 2023 10000.00 General guarantee No No 1 year No No
Arboriculture
Development Co. Ltd.Jilin Chenming Paper Co. 30 March 2023 30000.00 27 June 2023 30000.00 General guarantee No No 1 year No No
Ltd.Jilin Chenming Paper Co. 15 December 2023 50000.00 29 December 2023 14563.93 General guarantee No No 1 year No No
Ltd.Shouguang Chenming Art 30 March 2023 20000.00 General guarantee No No 1 year No No
Paper Co. Ltd.Shandong Chenming Group 30 March 2023 20000.00 General guarantee No No 1 year No No
Finance Co. Ltd.
128 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Material Matters
XV. Material contracts and implementation (Continued)
2. Significant guarantees (Continued)
(1) Guarantees (Continued)
Guarantees between the Company and its subsidiaries
Date of the related Guarantee
announcement to related
disclosing the Amount of Guarantee Fulfilled parties
Name of obligee guarantee amount guarantee Guarantee date provided Type of guarantee Collateral Counter-guarantee Term or not or not
Kunshan Tuoan Plastic 30 March 2022 2000.00 27 February 2023 2000.00 General guarantee No No 1 year No No
Products Co. Ltd.Kunshan Tuoan Plastic 30 March 2023 10000.00 9 August 2023 3500.00 General guarantee No No 1 year No No
Products Co. Ltd.Chenming (Singapore) Co. 30 March 2023 50000.00 General guarantee No No 1 year No No
Ltd.Shandong Chenming Paper 30 March 2022 55996.71 19 August 2022 55996.71 General guarantee No No 5 years No No
Sales Co. Ltd.Shandong Chenming Paper 30 March 2023 350000.00 9 August 2023 150245.82 General guarantee No No 1 year No No
Sales Co. Ltd.Shanghai Chenming Pulp & 30 March 2022 975.00 13 February 2023 975.00 General guarantee No No 1 year No No
Paper Sales Co. Ltd.Shanghai Chenming Pulp & 30 March 2023 150000.00 29 May 2023 6450.00 General guarantee No No 1 year No No
Paper Sales Co. Ltd.Huanggang Chenming Pulp 30 March 2023 30000.00 31 August 2023 4000.00 General guarantee No No 1 year No No
& Fiber Trading Co. Ltd.Shouguang Chenming 30 March 2023 100000.00 21 December 2023 15000.00 General guarantee No No 1 year No No
Import and Export Trade
Co. Ltd.Hainan Chenming 30 March 2022 5000.00 30 March 2023 5000.00 General guarantee No No 1 year No No
Technology Co. Ltd.Hainan Chenming 30 March 2023 100000.00 10 August 2023 37200.00 General guarantee No No 1 year No No
Technology Co. Ltd.Chenming (Overseas) Co. 30 March 2023 30000.00 General guarantee No No 1 year No No
Ltd.Nanchang Chenming 30 March 2023 10000.00 General guarantee No No 1 year No No
Arboriculture
Development Co. Ltd.Shouguang Chenming 30 March 2023 5000.00 General guarantee No No 1 year No No
Papermaking Machine
Co. Ltd.Shouguang Hongxiang 30 March 2023 5000.00 General guarantee No No 1 year No No
Printing and Packaging
Co. Ltd
Shouguang Hongyi 30 March 2023 5000.00 General guarantee No No 1 year No No
Decorative Packaging
Co. Ltd.
2023 ANNUAL REPORT 129VIII Material Matters
XV. Material contracts and implementation (Continued)
2. Significant guarantees (Continued)
(1) Guarantees (Continued)
Guarantees between the Company and its subsidiaries
Date of the related Guarantee
announcement to related
disclosing the Amount of Guarantee Fulfilled parties
Name of obligee guarantee amount guarantee Guarantee date provided Type of guarantee Collateral Counter-guarantee Term or not or not
Shouguang Chenming 30 March 2023 5000.00 General guarantee No No 1 year No No
Modern Logistic Co.Ltd.Shandong Grand View 30 March 2023 5000.00 General guarantee No No 1 year No No
Hotel Co. Ltd.Foshan Chenming Import 30 March 2023 50000.00 General guarantee No No 1 year No No
and Export Trade Co.Ltd.Total amount of guarantee provided for 4035000.00 Total amount of guarantee provided for subsidiaries during the reporting period (B2) 1191850.64
subsidiaries approved during the reporting
period (B1)
Total amount of guarantee provided for 4238554.45 Total balance of guarantee provided for subsidiaries as at the end of the reporting period (B4) 1242911.13
subsidiaries approved as at the end of the
reporting period (B3)
Guarantees between subsidiaries
Total amount of guarantee provided for – Total amount of guarantee provided for subsidiaries during the reporting period (C2) –
subsidiaries approved during the reporting
period (C1)
Total amount of guarantee provided for – Total balance of guarantee provided for subsidiaries as at the end of the reporting period (C4) –
subsidiaries approved as at the end of the
reporting period (C3)
Total amount of guarantee provided (i.e. sum of the above three guarantee amount)
Total amount of guarantee approved during the 4035000.00 Total amount of guarantee during the reporting period (A2+B2+C2) 1191850.64
reporting period (A1+B1+C1)
Total amount of guarantee approved as at the 4331312.64 Total balance of guarantee as at the end of the reporting period (A4+B4+C4) 1327029.32
end of the reporting period (A3+B3+C3)
The percentage of total amount of guarantee 79.50%
provided (i.e. A4+B4+C4) to the net assets of
the Company
Of which:
Balance of guarantee provided for shareholders beneficial controllers and its related parties (D) –
Balance of guarantee directly or indirectly provided for obligors with gearing ratio over 70% (E) 334927.53
Total amount of guarantee provided in excess of 50% of net assets (F) 492420.56
Sum of the above three amount of guarantee (D+E+F) 827348.09
For the unexpired guarantee contract the guarantee liability has occurred during the reporting period or there is evidence showing that it is possible to bear joint liability for repayment No
(if any)
Providing external guarantees in violation of prescribed procedures (if any) No
130 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Material Matters
XV. Material contracts and implementation (Continued)
3. Entrusted cash and asset management
(1) Entrusted wealth management
□ Applicable □ Not applicable
The Company did not have any entrusted wealth management during the reporting period.
(2) Entrusted loans
□ Applicable □ Not applicable
The Company did not have any entrusted loans during the reporting period.
4. Other material contracts
□ Applicable □ Not applicable
The Company did not have any other material contracts during the reporting period.
2023 ANNUAL REPORT 131VIII Material Matters
XVI. Other matters of significance
□ Applicable □ Not applicable
1. Payment of corporate bonds of RMB350 million
On 3 April 2023 the Company entrusted the Shenzhen Branch of China Securities Depository & Clearing Co. Ltd. to
complete the payment of principal and interest of “18 Chenming Bond 01” of RMB350 million in accordance with the
“First Tranche of Corporate Bonds Publicly Issued to Qualified Investors in 2018”. The bond was delisted from the
Shenzhen Stock Exchange on the same day.For details please refer to the relevant announcement disclosed by the Company on CNINFO on 30 March 2023
(announcement number: 2023-015) and the overseas regulatory announcement disclosed by the Company on the
website of Hong Kong Stock Exchange on 30 March 2023.
2. Redemption of perpetual bonds of RMB1 billion
On 11 July 2017 the Company issued the 2017 First Tranche of Medium-term Notes (bond abbreviation: 17 Lu
Chenming MTN001 bond code: 101779001) amounting to RMB1 billion with a term of 3+N. According to the
“Prospectus of the Company’s 2017 First Tranche of Medium-term Notes” “17 Lu Chenming MTN001” is subject
to the issuer’s redemption option. On 11 May 2023 the Company disclosed the Announcement on Exercise of
Redemption Option of Issuer of 2017 First Tranche of Medium-term Notes of Shandong Chenming Paper Holders
Limited on Shanghai Clearing House (www.shclearing.com) and China Money (www.chinamoney.com.cn) and
redeemed the RMB1 billion perpetual bonds in full on 12 July 2023 with principal and interest payment amounted to
RMB1089.70 million. To date all the bonds of the Company have been redeemed.For details please refer to the relevant announcement disclosed by the Company on CNINFO on 15 July 2023
(announcement number: 2023-049) and the overseas regulatory announcement disclosed by the Company on the
website of Hong Kong Stock Exchange on 14 July 2023.
132 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Material Matters
XVI. Other matters of significance (Continued)
3. Termination of asset purchase through the issuance of shares and cash payments
On 27 February 2023 the Company convened the 2023 first extraordinary general meeting the 2023 first class
meeting for holders of domestic-listed shares and the 2023 first class meeting for holders of overseas-listed shares
at which the Company considered and approved relevant resolutions including the Report on the Agreement on Asset
Purchase through Issuance of Shares and Cash Payments and Connected Transactions (Draft) of the Company. The
Company intended to acquire 1.19% equity interests in Shouguang Meilun held by Dongxing Securities Investment
Co. Ltd. 44.44% limited partnership share in Chenrong Fund held by Chongqing International Trust Inc. through
issuance of shares. The Company’s wholly-owned subsidiary Chenming Investment intended to acquire 0.22%
general partnership interest in Chenrong Fund held by Chenming (Qingdao) Asset Management Co. Ltd. through
cash payment. The type of shares to be issued by the Company is A shares the price of the shares to be issued is
RMB4.42 per share and the number of shares to be issued is 71841345 shares.On 14 March 2023 the Company received the Notice on the Acceptance of Application Documents for Asset
Purchase through the Issuance of Shares of Shandong Chenming Paper Holdings Limited (Shen Zheng Shang Shen
[2023] No. 259)《 (關於受理山東晨鳴紙業集團股份有限公司發行股份購買資產申請文件的通知》(深證上審[2023]259 號))
from the Shenzhen Stock Exchange.On 29 June 2023 the Company convened the eighth extraordinary general meeting of the tenth session of the
Board and the fourth extraordinary general meeting of the tenth session of the Supervisory Committee at which the
Company considered and approved the Resolution on the Termination of the Asset Purchase through Issuance of
Shares and Cash Payments and Connected Transactions and Withdrawal of the Application Documents and agreed
to terminate the transaction sign the relevant termination agreement with the counterparty if needed and apply to the
Shenzhen Stock Exchange for relevant application documents for the withdrawal of the transaction.For details please refer to the relevant announcements disclosed by the Company on CNINFO on 28 February
2023 16 March 2023 and 30 June 2023 (announcement number: 2023-010 2023-014 2023-048) and the relevant
announcements disclosed by the Company on the website of Hong Kong Stock Exchange on 27 February 2023 15
March 2023 and 29 June 2023.
2023 ANNUAL REPORT 133VIII Material Matters
XVI. Other matters of significance (Continued)
4. Information disclosure index for 2023 Annual Report
Announcement No. Subject matter Date of publication Publication website and index
2023-001 Announcement on Receipt of Government Subsidies 3 January 2023 http://www.cninfo.com.cn
2023-002 Announcement on Pledge of Shares and Partial Release of 19 January 2023 http://www.cninfo.com.cn
Pledge of Shares by Shareholders
2023-003 Announcement on Resolutions of the Sixth Extraordinary 20 January 2023 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Board of Directors
2023-004 Announcement on Resolutions of the Third Extraordinary 20 January 2023 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Supervisory Committee
2023-005 Notice of the 2023 First Extraordinary General Meeting 2023 30 January 2023 http://www.cninfo.com.cn
First Class Meeting for Holders of Domestic-listed Shares
and 2023 First Class Meeting for Holders of Overseas-listed
Shares
2023-006 Announcement on Effects of Dilution on the Current Earnings 20 January 2023 http://www.cninfo.com.cn
Per Share As a Result of the Transaction and Relevant
Remedial Arrangement of the Company
2023-007 2022 Annual Results Forecast 31 January 2023 http://www.cninfo.com.cn
2023-008 Announcement on the Continued Pledge of Shares held by 11 February 2023 http://www.cninfo.com.cn
Shareholders
2023-009 Reply to the Inquiry Letter on Restructuring from the Shenzhen 16 February 2023 http://www.cninfo.com.cn
Stock Exchange
2023-010 Announcement on Resolutions of the 2023 First Extraordinary 28 February 2023 http://www.cninfo.com.cn
General Meeting 2023 First Class Meeting for Holders of
Domestic-listed Shares and 2023 First Class Meeting for
Holders of Overseas-listed Shares
2023-011 Self-inspection Report on the Trading of Shares by Insiders 28 February 2023 http://www.cninfo.com.cn
on Asset Purchase Through Issuance of Shares and Cash
Payments and Related Party Transaction
2023-012 Supplementary Announcement on the Self-inspection Report on 7 March 2023 http://www.cninfo.com.cn
the Trading of Shares by Insiders on Asset Purchase Through
Issuance of Shares and Cash Payments and Related Party
Transaction
2023-013 Announcement on the Continued Pledge of Shares held by 11 March 2023 http://www.cninfo.com.cn
Shareholders
2023-014 Announcement on the Acceptance of Asset Purchase Through 16 March 2023 http://www.cninfo.com.cn
Issuance of Shares and Cash Payments and Related Party
Transaction by the Shenzhen Stock Exchange
2023-015 Shandong Chenming Paper Holdings Limited Announcement on 30 March 2023 http://www.cninfo.com.cn
Payment of 2023 Interest and Delisting with Respect to the
First Tranche of Corporate Bonds Publicly Issued to Qualified
Investors in 2018
2023-016 Announcement on Resolutions of the Fourth Meeting of the 31 March 2023 http://www.cninfo.com.cn
Tenth Session of the Board of Directors
2023-017 Announcement on Resolutions of the Fourth Extraordinary 31 March 2023 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Supervisory Committee
134 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Material Matters
XVI. Other matters of significance (Continued)
4. Information disclosure index for 2023 Annual Report (Continued)
Announcement No. Subject matter Date of publication Publication website and index
2023-018 2022 Annual Report Summary 31 March 2023 http://www.cninfo.com.cn
2023-019 Notice of 2022 Annual General Meeting 31 March 2023 http://www.cninfo.com.cn
2023-020 Special Statement on Securities Investment in 2022 31 March 2023 http://www.cninfo.com.cn
2023-021 Announcement on Appointment of Auditor for 2023 31 March 2023 http://www.cninfo.com.cn
2023-022 Announcement on the Development of Equipment Financing 31 March 2023 http://www.cninfo.com.cn
Business
2023-023 Announcement on Carrying out Factoring Business of Accounts 31 March 2023 http://www.cninfo.com.cn
Receivable
2023-024 Announcement on Expected Provision of Guarantees to 31 March 2023 http://www.cninfo.com.cn
Subsidiaries for 2023
2023-025 Special Statement on the Proposed Non-Distribution of Profit 31 March 2023 http://www.cninfo.com.cn
for 2022
2023-026 Announcement on Changes in Accounting Policies 31 March 2023 http://www.cninfo.com.cn
2023-027 Announcement on the 2022 Annual Online Performance Briefing 31 March 2023 http://www.cninfo.com.cn
2023-028 Announcement on Receiving the Notice on Suspending the 1 April 2023 http://www.cninfo.com.cn
Review of Asset Purchase Through Issuance of Shares and
Cash Payments and Related Party Transaction from the
Shenzhen Stock Exchange
2023-029 Supplementary Notice of 2022 Annual General Meeting 1 April 2023 http://www.cninfo.com.cn
2023-030 Announcement on Resolutions of the Seventh Extraordinary 20 April 2023 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Board of Directors
2023-031 Announcement on the Operational Property-secured Loan by a 20 April 2023 http://www.cninfo.com.cn
Subsidiary and Provision of Guarantee therefor
2023-032 Notice of the 2023 Second Extraordinary General Meeting 20 April 2023 http://www.cninfo.com.cn
2023-033 Announcement on the Continued Pledge of Shares held by 22 April 2023 http://www.cninfo.com.cn
Shareholders
2023-034 Announcement on Application for Resumption of Review of 25 April 2023 http://www.cninfo.com.cn
Asset Purchase Through Issuance of Shares and Cash
Payments and Related Party Transaction
2023-035 Announcement on Receiving the Notice of Resumption of 26 April 2023 http://www.cninfo.com.cn
Review from the Shenzhen Stock Exchange
2023-036 Announcement on Signing a Strategic Cooperation Agreement 26 April 2023 http://www.cninfo.com.cn
with China Construction Bank Shandong Branch
2023-037 Announcement on the Meeting Arrangements for the Review 26 April 2023 http://www.cninfo.com.cn
of Asset Purchase Through Issuance of Shares and Cash
Payments and Related Party Transaction by the Listing
Review Center of the Shenzhen Stock Exchange
2023-038 Announcement on Receiving the Opinion Implementation 28 April 2023 http://www.cninfo.com.cn
Letter from the Listing Review Center of the Shenzhen Stock
Exchange
2023 ANNUAL REPORT 135VIII Material Matters
XVI. Other matters of significance (Continued)
4. Information disclosure index for 2023 Annual Report (Continued)
Announcement No. Subject matter Date of publication Publication website and index
2023-039 Announcement on Resolutions of the Fifth Meeting of the Tenth 29 April 2023 http://www.cninfo.com.cn
Session of the Board of Directors
2023-040 Announcement on Resolutions of the Fifth Meeting of the Tenth 29 April 2023 http://www.cninfo.com.cn
Session of the Supervisory Committee
2023-041 2023 First Quarterly Report 29 April 2023 http://www.cninfo.com.cn
2023-042 Announcement on Signing of the Agreement on the Recovery of 29 April 2023 http://www.cninfo.com.cn
State-owned Construction Land Use Right signed by Wuhan
Chenming
2023-043 Announcement on Resolutions of the 2023 Second Extraordinary 9 May 2023 http://www.cninfo.com.cn
General Meeting
2023-044 Announcement on Resolutions of 2022 Annual General Meeting 13 May 2023 http://www.cninfo.com.cn
2023-045 Announcement on Safety Accidents Occurred by the Slurry 25 May 2023 http://www.cninfo.com.cn
Residue Outsourcing Entity of a Subsidiary
2023-046 Announcement on Resolutions of the Eighth Extraordinary 30 June 2023 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Board of Directors
2023-047 Announcement on Resolutions of the Fourth Extraordinary 30 June 2023 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Supervisory Committee
2023-048 Announcement on Termination and Withdrawal of Application 30 June 2023 http://www.cninfo.com.cn
Documents for Asset Purchase Through Issuance of Shares
and Cash Payments
2023-049 Announcement on Completion of Payment for 2017 First 15 July 2023 http://www.cninfo.com.cn
Tranche of Medium-term Notes
2023-050 Announcement on Self-Inspection Report of Insider Trading 15 July 2023 http://www.cninfo.com.cn
in Respect of the Termination of Share Issuance and Cash
Payments for Asset Purchase
2023-051 2023 Interim Results Forecast 15 July 2023 http://www.cninfo.com.cn
2023-052 Announcement on the Continued Pledge of Shares held by 15 July 2023 http://www.cninfo.com.cn
Shareholders
2023-053 Announcement on Resolutions of the Ninth Extraordinary 18 July 2023 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Board of Directors
2023-054 Announcement on Resolutions of the Fifth Extraordinary Meeting 18 July 2023 http://www.cninfo.com.cn
of the Tenth Session of the Supervisory Committee
2023-055 Announcement on Failing to Fulfil the Unlocking Conditions for 18 July 2023 http://www.cninfo.com.cn
the Second Unlocking Period Under the 2020 Restricted A
Share Incentive Scheme and Repurchase and Cancellation of
Certain Restricted Shares
2023-056 Review Opinions on the Unlocking Conditions for the Second 18 July 2023 http://www.cninfo.com.cn
Unlocking Period Under the 2020 Restricted A Share
Incentive Scheme and Repurchase and Cancellation of
Certain Restricted Shares of the Supervisory Committee
2023-057 Announcement on Repurchase and Cancellation of Certain 18 July 2023 http://www.cninfo.com.cn
Restricted Shares and Notice to Creditors
2023-058 Announcement on Risks in Relation to the Ownership of B 18 July 2023 http://www.cninfo.com.cn
Shares and H Shares Held by the Controlling Shareholder
2023-059 Announcement on the Release of Pledge of Shareholders’ 26 July 2023 http://www.cninfo.com.cn
Shares
136 SHANDONG CHENMING PAPER HOLDINGS LIMITEDVIII Material Matters
XVI. Other matters of significance (Continued)
4. Information disclosure index for 2023 Annual Report (Continued)
Announcement No. Subject matter Date of publication Publication website and index
2023-060 Announcement on Continued Pledge of Shares held by 29 July 2023 http://www.cninfo.com.cn
Shareholders
2023-061 Announcement on Continued Pledge of Shares held by 11 August 2023 http://www.cninfo.com.cn
Shareholders
2023-062 Announcement on the Progress of Litigation 19 August 2023 http://www.cninfo.com.cn
2023-063 Announcement on Pledge of Shareholders’ Shares 29 August 2023 http://www.cninfo.com.cn
2023-064 Announcement of Resolutions of the Board of Directors on 31 August 2023 http://www.cninfo.com.cn
Interim Report
2023-065 Announcement of Resolutions of the Supervisory Committee on 31 August 2023 http://www.cninfo.com.cn
Interim Report
2023-066 2023 Interim Report Summary 31 August 2023 http://www.cninfo.com.cn
2023-067 Announcement on Resolutions of the Tenth Extraordinary 9 September 2023 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Board of Directors
2023-068 Announcement on Partial Disposal of Equity Interest in Wuhan 9 September 2023 http://www.cninfo.com.cn
Chenming
2023-069 Announcement on Provision of External Financial Assistance 9 September 2023 http://www.cninfo.com.cn
upon the Disposal of Equity Interest in Wuhan Chenming
2023-070 Notice of 2023 Third Extraordinary General Meeting 9 September 2023 http://www.cninfo.com.cn
2023-071 Announcement on Resolutions of the Eleventh Extraordinary 21 September 2023 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Board of Directors
2023-072 Announcement on Capital Increase and Introduction of Strategic 21 September 2023 http://www.cninfo.com.cn
Investors of a Majority-owned Subsidiary
2023-073 Announcement on Resolution of the 2023 Third Extraordinary 27 September 2023 http://www.cninfo.com.cn
General Meeting
2023-074 Announcement on Resolutions of the Twelfth Extraordinary 9 October 2023 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Board of Directors
2023-075 Announcement on Change of General Manager of the Company 9 October 2023 http://www.cninfo.com.cn
2023-076 2023 Third Quarterly Report 31 October 2023 http://www.cninfo.com.cn
2023-077 Announcement on Continued Pledge of Shares held by 4 November 2023 http://www.cninfo.com.cn
Shareholders
2023-078 Announcement on Completion of Repurchase and Cancellation 23 November 2023 http://www.cninfo.com.cn
of Certain Restricted Shares
2023-079 Announcement on Continued Pledge of Shares held by 25 November 2023 http://www.cninfo.com.cn
Shareholders
2023-080 Announcement on Resolutions of the Thirteenth Extraordinary 29 November 2023 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Board of Directors
2023-081 Announcement on the Disposal of Equity Interest in Investee 29 November 2023 http://www.cninfo.com.cn
2023-082 Announcement on Adjustment to Amount of Guarantee Between 15 December 2023 http://www.cninfo.com.cn
Subsidiaries
2023-083 Announcement on Pledge of Shareholders’ Shares 22 December 2023 http://www.cninfo.com.cn
2023-084 Announcement on Progress of the Disposal of Equity Interest in 27 December 2023 http://www.cninfo.com.cn
Investee
2023-085 Announcement on Pledge of Shareholders’ Shares 30 December 2023 http://www.cninfo.com.cn
2023 ANNUAL REPORT 137VIII Material Matters
XVII. Matters of significant of subsidiaries of the Company
□ Applicable □ Not applicable
1. Introduction of strategic investors by Zhanjiang Chenming
On 20 September 2023 the Company convened the eleventh extraordinary meeting of the tenth session of the Board
at which the Proposal on Capital Contribution and Introduction of Strategic Investors of a Controlling Subsidiary
was considered and approved. Given the promising development prospects of Zhanjiang Chenming a controlling
subsidiary of the Company and the high recognition of the pulp and paper integration strategic layout Shandong
Caixin Investment Co. Ltd. a wholly-owned subsidiary of Shandong key state-owned enterprise Shandong Caixin
Asset Operation Co. Ltd. made capital contribution to Zhanjiang Chenming in the amount of RMB300 million.For details please refer to the relevant announcement disclosed by the Company published on CNINFO on 21
September 2023 (announcement no.: 2023-072) and the overseas regulatory announcement disclosed on the website
of Hong Kong Stock Exchange on 20 September 2023.
2. Business status of Chenming Leasing
At present the Company focuses on the development of its principal activities i.e. pulp production and paper
making and continues to reduce the size of the financial leasing business. As at the end of the reporting period the
balance of financial leases of Chenming Leasing decreased to RMB4.8 billion. As affected by the macro-economic
condition some clients experienced short-term operational difficulties. some financial lease receivables were overdue
with the overdue principals amounting to RMB1440 million for which provisions of RMB430 million were made and
a provision coverage rate of 29.9%. Certain assets have been seized through litigation. The Company has resorted
to among other things control of the underlying assets litigation for seizure recovery for guarantors and debt
reconstruction with the overall risks under control.
138 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIX Changes in Share Capital and Shareholders
I. Changes in shares
1. Changes in shares
Unit: share
Opening balance Change during the reporting period (+/-) Closing balance
Shares
converted
Amount Percentage New issue Bonus issue from reserves Others Subtotal Amount Percentage
I. Restricted shares 61489837 2.06% -24911250 -24911250 36578587 1.24%
1. Shares held by other domestic
investors 61489837 2.06% -24911250 -24911250 36578587 1.24%
Including: Shares held by
domestic natural persons 61489837 2.06% -24911250 -24911250 36578587 1.24%
II. Non-restricted shares 2918252363 97.94% 1982250 1982250 2920234613 98.76%
1. RMB ordinary shares 1683561847 56.50% 1982250 1982250 1685544097 57.00%
2. Domestic listed foreign shares 706385266 23.71% 706385266 23.89%
3. Overseas listed foreign shares 528305250 17.73% 528305250 17.87%
III. Total number of shares 2979742200 100.00% -22929000 -22929000 2956813200 100.00%
The reasons for such changes
□ Applicable □ Not applicable
The Shenzhen Branch of China Securities Depository and Clearing Corporation Limited recalculated the statutory
quota of transferable shares for the Directors Supervisors and Senior Management of the Company this year at 25%
on the first trading day of this year based on the shares of the Company registered under the names of its Directors
Supervisors and Senior Management on the last trading day of the previous year resulting in a reduction of 1982250
RMB ordinary shares in the locked shares of Senior Management and an increase of 1982250 RMB ordinary shares
in restricted shares. Pursuant to the 2020 Restricted A Share Incentive Scheme (Draft) a total of 22929000 restricted
A shares that have granted to participants but not yet unlocked were repurchased and cancelled resulting in a
reduction of 22929000 shares in both restricted shares and total number of shares.
2023 ANNUAL REPORT 139IX Changes in Share Capital and Shareholders
I. Changes in shares (Continued)
1. Changes in shares (Continued)
Approval of changes in shareholding
□ Applicable □ Not applicable
On 17 July 2023 the Company convened the ninth extraordinary meeting of the tenth session of the Board and the
fifth extraordinary meeting of the tenth session of the Supervisory Committee at which the Resolution on the Failure
Fulfilment of the Unlocking Conditions for the Second Unlocking Period under the 2020 Restricted A Share Incentive
Scheme and Repurchase and Cancellation of Certain Restricted Shares was considered and approved. The results for
2022 of the Company failed to pass the performance appraisal targets at company level set for the second unlocking
period as set out in the 2020 Restricted A Share Incentive Scheme (Draft) and the Assessment Management Measures
for the 2020 Restricted A Shares Incentive Scheme. Meanwhile 5 participants lost their incentive qualification due
to their resignation. The Board of the Company repurchased and cancelled 22929000 restricted A shares of the
participants that have been granted but not yet unlocked representing 28.81% of the total number of shares granted
under the 2020 Restricted A Share Incentive Scheme.On 20 November 2023 the Company completed the repurchase and cancellation of 22929000 restricted A shares at
the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited.Transfer of shares arising from changes in shareholding
□ Applicable □ Not applicable
The effects of changes in shareholding on financial indicators such as basic earnings per share diluted earnings
per share and net assets per share attributable to ordinary shareholders of the Company for the latest year and
the latest period
□ Applicable □ Not applicable
Other information considered necessary by the Company or required by the securities regulatory authorities to be
disclosed
□ Applicable □ Not applicable
140 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIX Changes in Share Capital and Shareholders
I. Changes in shares (Continued)
2. Changes in restricted shares
□ Applicable □ Not applicable
Unit: share
Restricted Restricted Restricted
shares at the shares released shares increased Restricted
beginning of during the during the shares at the
Name of shareholders period period period end of period Reason for restriction Date of release from restriction
Chen Hongguo 23310033 0 6000000 17310033 Restricted shares of the participants of 20 November 2023
the Share Incentive Scheme
Locked-up shares of Directors
Supervisors and Senior Management
Hu Changqing 3782143 0 2250000 1532143 Restricted shares of the participants of 750000 locked-up shares of Directors
the Share Incentive Scheme Supervisors and Senior Management
were released on 3 January 2023;
Locked-up shares of Directors 1500000 restricted shares under the
Supervisors and Senior Management Equity Incentive Scheme completed
registration for repurchase and
cancellation on 20 November 2023.Li Xingchun 3750000 0 1500000 2250000 Restricted shares of the participants of 20 November 2023
the Share Incentive Scheme
Locked-up shares of Directors
Supervisors and Senior Management
Li Feng 2929520 0 1350000 1579520 Restricted shares of the participants of 450000 locked-up shares of Directors
the Share Incentive Scheme Supervisors and Senior Management
Locked-up shares of Directors were released on 3 January 2023;
Supervisors and Senior Management 900000 restricted shares under the
Equity Incentive Scheme completed
registration for repurchase and
cancellation on 20 November 2023.Li Weixian 1560900 0 957300 603600 Restricted shares of the participants of 357300 locked-up shares of Directors
the Share Incentive Scheme Supervisors and Senior Management
Locked-up shares of Directors were released on 3 January 2023;
Supervisors and Senior Management 600000 restricted shares under the
Equity Incentive Scheme completed
registration for repurchase and
cancellation on 20 November 2023.Li Kang 111975 0 0 111975 Locked-up shares of Directors In accordance with relevant
Supervisors and Senior Management requirements for shares held by
Directors Supervisors and Senior
Management
Li Xueqin 2895991 0 900000 1995991 Restricted shares of the participants of 20 November 2023
the Share Incentive Scheme
Locked-up shares of Directors
Supervisors and Senior Management
2023 ANNUAL REPORT 141IX Changes in Share Capital and Shareholders
I. Changes in shares (Continued)
2. Changes in restricted shares (Continued)
Restricted Restricted Restricted
shares at the shares released shares increased Restricted
beginning of during the during the shares at the
Name of shareholders period period period end of period Reason for restriction Date of release from restriction
Li Zhenzhong 1584750 0 724950 859800 Restricted shares of the participants of 124950 locked-up shares of Directors
the Share Incentive Scheme Supervisors and Senior Management
Locked-up shares of Directors were released on 3 January 2023;
Supervisors and Senior Management 600000 restricted shares under the
Equity Incentive Scheme completed
registration for repurchase and
cancellation on 20 November 2023.Li Mingtang 750000 0 450000 300000 Restricted shares of the participants of 150000 locked-up shares of Directors
the Share Incentive Scheme Supervisors and Senior Management
Locked-up shares of Directors were released on 3 January 2023;
Supervisors and Senior Management 300000 restricted shares under the
Equity Incentive Scheme completed
registration for repurchase and
cancellation on 20 November 2023.Dong Lianming 750000 0 450000 300000 Restricted shares of the participants of 150000 locked-up shares of Directors
the Share Incentive Scheme Supervisors and Senior Management
were released on 3 January 2023;
300000 restricted shares under the
Equity Incentive Scheme completed
registration for repurchase and
cancellation on 20 November 2023.Yuan Xikun 258525 0 90000 168525 Restricted shares of the participants of 20 November 2023
the Share Incentive Scheme
Other 88 participants 19806000 0 10239000 9567000 Restricted shares of the participants of 20 November 2023
under the 2020 the Share Incentive Scheme
Restricted A Share
Incentive Scheme
other than the
aforementioned
directors and senior
management
Total 61489837 0 24911250 36578587 － －
142 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIX Changes in Share Capital and Shareholders
II. Issuance and listing of securities
1. Issuance of securities (excluding preference shares) during the reporting period
□ Applicable □ Not applicable
2. Changes in the total number of shares and structure of shareholders and the structure of the assets
and liabilities of the Company
□ Applicable □ Not applicable
On 17 July 2023 the Company convened the ninth extraordinary meeting of the tenth session of the Board and
the fifth extraordinary meeting of the tenth session of the Supervisory Committee at which the Resolution on the
Failure Fulfilment of the Unlocking Conditions for the Second Unlocking Period under the 2020 Restricted A Share
Incentive Scheme and Repurchase and Cancellation of Certain Restricted Shares was considered and approved. On
20 November 2023 the Company completed the registration for the repurchase and cancellation of certain restricted
shares that have been granted to 98 participants but not yet unlocked under the 2020 Restricted A Share Incentive
Scheme. A total of 22929000 A shares were repurchased and cancelled. The total number of shares of the Company
changed to 2956813200 shares from 2979742200 and there was no change in controlling shareholder of the
Company. Upon the repurchase and cancellation of 22929000 A shares there was no change on net assets while
both assets and liabilities decreased by RMB66.2288 million.
3. Existing staff shares
□ Applicable □ Not applicable
2023 ANNUAL REPORT 143IX Changes in Share Capital and Shareholders
III. Shareholders and beneficial controllers
1. Total number of shareholders and shareholdings
Unit: share
Total number of 142995 of which Total number of 140889 of which Total number of 0 Total number of 0
ordinary shareholders 121718 were holders ordinary shareholders 119803 were holders holders of preference holders of preference
as at the end of the of A shares 20954 as at the end of the of A shares 20763 shares with restore shares with restored
reporting period were holders of B month prior to the were holders of B voting right as at the voting right as at the
shares and 323 were publication date of shares and 323 were end of the reporting end of the month prior
holders of H shares this annual report holders of H shares period to the disclosure date
of the annual report
Shareholdings of shareholders interested in more than 5% of the shares of the Company or Top 10 shareholders
(excluding the shares lent under refinancing business)
Changes
Number of (increase or
shares held decrease)
Percentage at the end of during the Number of Number of
Nature of of the reporting reporting restricted non-restricted
Name of shareholders shareholders shareholding period period shares held shares held Share pledged or locked-up
Status of
shares Number
CHENMING HOLDINGS COMPANY LIMITED State-owned legal 15.47% 457322919 0 0 457322919 Pledged 268994000
person
HKSCC NOMINEES LIMITED Overseas legal 12.63% 373461275 72650 0 373461275
person
CHENMING HOLDINGS (HONG KONG) LIMITED Overseas legal 12.32% 364131563 0 0 364131563
(Note 1) person
Hong Zejun Domestic natural 1.19% 35300000 -41400000 0 35300000
person
Chen Hongguo Domestic natural 0.85% 25080044 -6000000 17310033 7770011
person
SHANDONG SUN HOLDINGS GROUP CO. LTD. Domestic non- 0.85% 24987117 0 0 24987117
state-owned
legal person
China Merchants Securities (HK) Co. Limited Overseas legal 0.71% 20972258 10432024 0 20972258
person
VANGUARD EMERGING MARKETS STOCK INDEX Overseas legal 0.50% 14852146 163800 0 14852146
FUND person
VANGUARD TOTAL INTERNATIONAL STOCK INDEX Overseas legal 0.50% 14771945 0 0 14771945
FUND person
HONG KONG SECURITIES CLEARING COMPANY Overseas legal 0.38% 11251780 -6460301 0 11251780
LIMITED person
Strategic investors or general legal persons who Nil
become the top ten shareholders due to the
placement of new shares
Related party relationship or acting in concert among A shareholder Chenming Holdings (Hong Kong) Limited which is an overseas legal person is a wholly-owned subsidiary of a shareholder
the above shareholders Chenming Holdings Company Limited which is a state-owned legal person; A shareholder Chen Hongguo is the legal representative and
chairman of Chenming Holdings Company Limited. Save for the above it is not aware that any other shareholders of tradable shares are
persons acting in concert. It is also not aware that any other shareholders of tradable shares are related to each other.Explanation of the aforementioned shareholders’ Nil
entrusted/entrusted voting rights and waiver of
voting rights
Special explanation for designated repurchase accounts Nil
among the top ten shareholders
144 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIX Changes in Share Capital and Shareholders
III. Shareholders and beneficial controllers (Continued)
1. Total number of shareholders and shareholdings (Continued)
Shareholdings of the top ten non-restricted shareholders
Number of non-
restricted shares held
as at the end of the
Name of shareholder reporting period Class of shares
Class of shares Number
CHENMING HOLDINGS COMPANY LIMITED 457322919 RMB ordinary shares 457322919
HKSCC NOMINEES LIMITED 373461275 Overseas listed foreign shares 373461275
CHENMING HOLDINGS (HONG KONG) LIMITED 364131563 Domestic listed foreign shares 210717563
(Note 1) Overseas listed foreign shares 153414000
Hong Zejun 35300000 RMB ordinary shares 35300000
SHANDONG SUN HOLDINGS GROUP CO. LTD. 24987117 RMB ordinary shares 24987117
China Merchants Securities (HK) Co. Limited 20972258 Domestic listed foreign shares 20972258
VANGUARD EMERGING MARKETS STOCK 14852146 Domestic listed foreign shares 14852146
INDEX FUND
VANGUARD TOTAL INTERNATIONAL STOCK 14771945 Domestic listed foreign shares 14771945
INDEX FUND
HONG KONG SECURITIES CLEARING COMPANY
LIMITED 11251780 RMB ordinary shares 11251780
GUOTAI JUNAN SECURITIES (HONG KONG) 6252684 Domestic listed foreign shares 6252684
LIMITED
Related party relationship or acting in concert A shareholder Chenming Holdings (Hong Kong) Limited which is an overseas legal person is
among the top ten shareholders of non- a wholly-owned subsidiary of a shareholder Chenming Holdings Company Limited which is
restricted shares and between the top ten a state-owned legal person. Save for the above it is not aware that any other shareholders of
shareholders of non-restricted shares and the tradable shares are persons acting in concert. It is also not aware that any other shareholders
top ten shareholders of tradable shares are related to each other.Securities margin trading of top ten ordinary Chenming Holdings Company Limited held 457322919 RMB ordinary shares of which
Shareholders 326322919 shares were held through ordinary account and 131000000 shares were held
through credit guarantee security account;
Hong Zejun held 35300000 RMB ordinary shares of which no share was held through
ordinary account and 35300000 shares were held through credit guarantee security account;
Shandong Sun Holdings Group Co. Ltd. held 24987117 RMB ordinary shares of which no
share was held through ordinary account and 24987117 shares were held through credit
guarantee security account.Note 1: In order to meet its own capital needs Chenming Holdings (Hong Kong) Limited conducted share financing business with overseas
institutions entrusting 210717563 B shares and 153414000 H shares of the Company held by it to the custody brokerage
designated by overseas institutions. The aforesaid shares were subject to the risk of not to be recovered which may lead to a
reduction in the Company’s shareholding but does not affect Chenming Holdings’ position as the largest shareholder and does not
affect the Company’s control. For details please refer to the announcement disclosed by the Company on CNINFO on 18 July 2023
(announcement no.: 2023-058) and the insider information disclosed by the Company on the website of Hong Kong Stock Exchange
on 18 July 2023.Share lending by top 10 shareholders under refinancing business
□ Applicable □ Not applicable
Changes in top 10 shareholders as compared to prior period
□ Applicable □ Not applicable
2023 ANNUAL REPORT 145IX Changes in Share Capital and Shareholders
III. Shareholders and beneficial controllers (Continued)
1. Total number of shareholders and shareholdings (Continued)
Changes in top 10 shareholders as compared to prior period (Continued)
Unit: share
Changes in top 10 shareholders as compared to prior period
Shareholding under ordinary
account and credit account and
Number of shares lent out but not the number of shares lent out but
yet returned under refinancing not yet returned under refinancing
arrangement as at the end of arrangement as at the end of
the period the period
Addition/exit during Percentage of Percentage of
Name of shareholder (full name) the reporting period Total total share capital Total total share capital
GUOTAI JUNAN SECURITIES (HONG
KONG) LIMITED Exit 0.00 0.00% 6252684 0.00%
China Merchants Securities (HK)
Co. Limited Addition 0.00 0.00% 20972258 0.00%
Whether an agreed repurchase transaction was entered into during the reporting period by the top 10 ordinary
shareholders and top 10 non-restricted ordinary shareholders of the Company
□ Yes □ No
The top 10 ordinary shareholders and top 10 non-restricted ordinary shareholders of the Company did not enter into
any agreed repurchase transaction during the reporting period.
146 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIX Changes in Share Capital and Shareholders
III. Shareholders and beneficial controllers (Continued)
2. Controlling shareholders of the Company
Nature of controlling shareholder: regional state-owned enterprise
Type of controlling shareholder: legal person
Legal
representative/
Name of controlling Person in charge
shareholders of the unit Date of establishment Enterprise code Principal business
CHENMING HOLDINGS Chen Hongguo 30 December 2005 91370783783485189Q Investment in paper
COMPANY LIMITED making electricity heat
and arboriculture by its
own capital.Shareholdings of controlling shareholders who Save for the Company Chenming Holdings Company Limited is indirectly
have control or hold shares in other domestic or interested in 10.16% equity interest in Zhejiang Kingland Pipeline and
overseas listed companies during the reporting Technologies Co. Ltd.period
Change of controlling shareholders during the reporting period
□ Applicable □ Not applicable
There was no change in the controlling shareholders of the Company during the reporting period.
3. Beneficial controller of the Company and persons acting in concert
Nature of the beneficial controller: Regional state-owned assets administration authority
Type of the beneficial controller: legal person
Legal
representative/
Person in charge of Date of
Name of beneficial controller the unit establishment Enterprise code Principal business
State-owned Assets Supervision and N/A 1 August 1991 N/A Responsible for the management
Administration Bureau of Shouguang and capital operation of the state-
City owned assets of enterprises and
business units in Shouguang city.Shareholdings of beneficial controller who Save for the Company State-owned Assets Supervision and Administration Office of Shouguang City is
has control or holds shares in other also the beneficial controller of Shandong Molong Petroleum Machinery Co. Ltd. and Zhejiang Kingland
domestic or overseas listed companies Pipeline and Technologies Co. Ltd.during the reporting period
2023 ANNUAL REPORT 147IX Changes in Share Capital and Shareholders
III. Shareholders and beneficial controllers (Continued)
3. Beneficial controller of the Company and persons acting in concert (Continued)
Change of beneficial controller during the reporting period
□ Applicable □ Not applicable
There was no change in the beneficial owner of the Company during the reporting period.Chart illustrating the relationship between the Company and the beneficial controller
State-owned Assets Supervision and Administration
Commission of Shouguang City
100%
Shandong Shouguang Jinxin Investment
Development Holdings Group Co. Ltd.
45.21%
Chenming Holdings Company Limited
100%
Chenming Holdings (Hong Kong)
15.47%
Limited
12.32%
Shandong Chenming Paper Holdings Limited
Beneficial controller controlling the Company through trust or other asset management method
□ Applicable □ Not applicable
148 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIX Changes in Share Capital and Shareholders
III. Shareholders and beneficial controllers (Continued)
4. The number of shares pledged by the controlling shareholder or the largest shareholder of the
Company and persons acting in concert with it reaches 80% of the number of shares held by them in
aggregate
□ Applicable □ Not applicable
5. Other legal person shareholders interested in over 10% of the shares of the Company
□ Applicable □ Not applicable
6. Restrictions on decrease in shareholding by controlling shareholders beneficial controller
reorganising party and other undertaking parties
□ Applicable □ Not applicable
IV. The implementation of share repurchase during the reporting period
Progress of share repurchase
□ Applicable □ Not applicable
Progress of decrease in the holding of repurchased shares by way of bidding
□ Applicable □ Not applicable
2023 ANNUAL REPORT 149X Preference Shares
□ Applicable □ Not applicable
The Company had no preference shares during the reporting period.
150 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXI Bonds
□ Applicable □ Not applicable
2023 ANNUAL REPORT 151XII Financial Report
I. Auditors’ Report
Type of auditor’s opinion Standard and unqualified opinions
The date of the audit report signed 28 March 2024
Name of the auditor Grant Thornton (Special General Partnership)
Reference number of the auditor’s report Zhi Tong Shen Zi (2024) No. 371A005892
Name of certified public accountants Jiang Tao and Guo Dongmei
Text of the auditor’s report
To all shareholders of Shandong Chenming Paper Holdings Limited:
I. Auditor’s opinionWe have audited the financial statements of Shandong Chenming Paper Holdings Limited (hereinafter “ChenmingPaper”) which comprise the consolidated and the Company’s balance sheets as at 31 December 2023 the
consolidated and the Company’s profit and loss statements the consolidated and the Company’s cash flow
statements and the consolidated and the Company’s statements of changes in shareholders’ equity for 2023 and
notes to the relevant financial statements.In our opinion the accompanying financial statements were prepared in accordance with the Accounting Standards
for Business Enterprises in all material aspects and give a true and fair view of the consolidated and the Company’s
financial position of Chenming Paper as at 31 December 2023 and of its consolidated and the Company’s operating
results and cash flows for 2023.II. Basis of opinions
We have conducted our audit in accordance with the Chinese Auditing Standards issued by the Chinese Institute of
Certified Public Accountants. Our responsibilities under those standards are further described in the responsibilities
of certified public accountants for the audit of the financial statements section of the auditor’s report. We are
independent of Chenming Paper in accordance with the ethical codes of Chinese certified public accountants and
we have fulfilled our other ethical responsibilities in accordance with the codes. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.III. Key audit matters
Key audit matters are those matters that in our professional judgment were of most significance in our audit of the
financial statements for the current period. These matters were addressed in the context of our audit of the financial
statements as a whole and in forming our opinion thereon we do not provide a separate opinion on these matters.
152 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
(i) Impairment provision test for inventories of machine-made paper
For detailed disclosures of relevant information please see note V. 13 and note VII. 8 of the financial statements.
1. Details
The inventory balance of Chenming Paper as at the end of 2023 was RMB4977238900 of which
the balance of raw materials work in progress and goods in stock related to machine-made paper
business was RMB3493260800 with a provision for impairment of inventories of RMB19060900 and
a carrying value of RMB3474199900. As at the balance sheet date inventories of machine-made paper
are measured at the lower of cost or net realisable value by the management of Chenming Paper (the
“management”) and provision for impairment of inventories is made on the basis of the excess of the cost
of an individual inventory over its net realisable value. The management determines the estimated selling
price based on historical selling prices contracted selling prices etc. taking into account the purpose
for which the inventories are held and the net realisable value of inventories is determined by deducting
the estimated costs to be incurred to completion estimated selling expenses and related taxes from the
estimated selling price.We have identified impairment provision test for inventories of machine-made paper as a key audit matter
due to the significant amount of inventories of machine-made paper and the significant management
judgement involved in determining the net realisable value of inventories.
2. Application for auditing
We have carried out the following audit procedures for the impairment provision test for inventories of
machine-made paper:
(1) we identified and evaluated and tested the effectiveness of the design and operation of key internal
controls related to impairment provision for inventories of machine-made paper;
(2) we identified and evaluated whether the accounting policies and accounting estimates of Chenming
Paper for impairment provision for inventories of machine-made paper comply with the Accounting
Standards for Business Enterprises and industry practices;
(3) we supervised inventory taking and monitored the status of inventories of machine-made paper
and checked the identification of obsolete and aged inventories;
(4) we obtained an inventory ageing schedule of machine-made paper and performed a review of the
status and turnover of aged inventories; and
(5) we obtained a copy of the inventory impairment table of machine-made paper assessed the
reasonableness of the significant estimates made by management in determining the net realisable
value by reviewing subsequent selling prices and performed recalculations.
2023 ANNUAL REPORT 153XII Financial Report
(ii) Recognition of revenue from machine-made paper
For detailed disclosures of relevant information please see note V. 30 and note VII. 48 of the financial
statements.
1. Details
For the year 2023 Chenming Paper achieved operating revenue of RMB26608570200 of which
RMB23892883800 was from machine-made paper and pulp accounting for 89.79% of the operating
revenue. For domestic machine-made paper sales business Chenming Paper recognised the revenue
after the goods were delivered and signed by the customer for confirmation; for foreign machine-made
paper sales business Chenming Paper recognised the revenue after the goods were loaded on board and
declared.As revenue is one of the key performance indicators of Chenming Paper and the revenue from the sales
of machine-made paper accounts for a relatively huge proportion of the total revenue due to its enormous
sales volume there may be potential misstatement in relation to whether revenue recognition is accounted
for in the appropriate period of the financial statements which has a significant impact on the financial
statements. Therefore we have identified recognition of revenue from machine-made paper as a key audit
matter.
2. Application for auditing
We have carried out the following audit procedures for the recognition of revenue from machine-made
paper:
(1) we identified evaluated and tested the effectiveness of the design and operation of key internal
controls related to machine-made paper sales business of Chenming Paper;
(2) we conducted sampling inspections on sales contracts identified contract terms and conditions
related to the transfer of control of the goods assessed whether the timing of recognition of sales
revenue from Chenming Paper meets the requirements of the Accounting Standards for Business
Enterprises;
(3) we analysed revenue and gross profit by taking into account product types and identified whether
the abnormal fluctuations in the amount of revenue are reasonable in the current period;
(4) we inspected the occurrence of on-the-spot recognition of sales at the end of the inspection period
and inspected goods returns after the inspection period to determine the accuracy of revenue
recognition during the period;
(5) we collected samples from sales revenue recorded around the balance sheet date for cut-off
tests; verified delivery orders and other supporting documents to assess whether sales revenue is
recorded in the appropriate accounting period; and
(6) we sought external confirmations for clients with larger sales during the period.
154 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
IV. Other information
The management of Chenming Paper is responsible for other information. Other information includes the information
covered in the 2023 annual report of Chenming Paper but does not include the financial statements and our audit
report.Our audit opinions published in the financial statements do not cover other information and we do not publish any
form of assurance conclusion on other information.In conjunction with our audit of the financial statements our responsibility is to read other information during which
we consider whether there is significant inconsistency or other material misstatement of other information with the
financial statements or what we have learned during the audit.Based on the work we have performed if we determine that there is a material misstatement of other information we
should report that fact. In this regard we have nothing to report.V. Management and management responsibility for financial statements
The management of Chenming Paper is responsible for the preparation of financial statements in accordance with the
requirements of the Accounting Standards for Business Enterprises to enable them to achieve fair reflection and to
achieve the design implementation and maintenance of necessary internal controls so that the financial statements
are free of material misstatements due to fraud or errors.In the preparation of the financial statements the management is responsible for assessing the continuing operations
capabilities of Chenming Paper disclosing issues related to going concern (if applicable) and applying the going
concern assumption unless the management plans to liquidate Chenming Paper terminate operations or have no
other realistic options.The management is responsible for supervising the financial reporting process of Chenming Paper.VI. Auditor’s responsibility for auditing financial statements
Our objective is to obtain reasonable assurance as to whether the entire financial statements are free from material
misstatement due to fraud or errors and to issue an audit report containing audit opinions. Reasonable assurance is
a high level of assurance but it does not guarantee that an audit performed in accordance with auditing standards
can always discover a major misstatement when it exists. Misstatements may be caused by fraud or errors and are
generally considered to be material if it is reasonably expected that misstatements individually or in aggregate may
affect the economic decision made by users of financial statements based on the financial statements.
2023 ANNUAL REPORT 155XII Financial Report
In the process of conducting audit work in accordance with auditing standards we use professional judgment and
maintain professional suspicion. At the same time we also perform the following tasks:
(1) To identify and assess risks of material misstatement of financial statements due to fraud or errors design
and implement audit procedures to address these risks and obtain adequate and appropriate audit evidence
together perform as a basis for issuing audit opinions. Since fraud may involve collusion falsification intentional
omission misrepresentation or override of internal controls the risk of failing to detect a material misstatement
due to fraud is higher than the risk of failing to detect a material misstatement due to an error.
(2) To understand audit-related internal controls to design appropriate audit procedures.
(3) To evaluate the appropriateness of accounting policies adopted by the management and the reasonableness of
accounting estimates and related disclosures.
(4) To conclude on the appropriateness of management’s use of the continuing operation assumption. At the same
time according to the audit evidence obtained it may lead to conclusions as to whether there are significant
uncertainties in matters or circumstances that have significant doubts about the ability of Chenming Paper to
continue its operations. If we conclude that there are significant uncertainties the auditing standards require
us to request the users of the report to pay attention to the relevant disclosures in the financial statements in
the audit report; if the disclosure is not sufficient we should publish modified audit report. Our conclusions are
based on the information available as of the date of the audit report. However future events or conditions may
cause Chenming Paper to cease to continue as a going concern.
(5) Evaluate the overall presentation structure and content of the financial statements and evaluate whether the
financial statements fairly reflect the relevant transactions and matters.
(6) To obtain sufficient and appropriate audit evidence on the financial information of entities or business activities
in Chenming Paper to express opinions on the financial statements. We are responsible for guiding supervising
and executing group audits and take full responsibility for the audit opinion.We communicate with the management on planned audit scope time arrangements and major audit findings
including communication of the internal control deficiencies that we identified during the audit.We also provide statements to the management on compliance with ethical requirements related to independence
and communicate with the management on all relationships and other matters that may reasonably be considered to
affect our independence as well as related preventive measures (if applicable).
156 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
From the matters we communicated with the management we determine which matters are most important for the
audit of the financial statements for the current period and thus constitute the key audit matters. We describe these
matters in our audit report unless laws and regulations prohibit the public disclosure of these matters or in rare
cases if it is reasonably expected that the negative consequences of disclosing something in the audit report will
outweigh the benefits to the public interest we determine that the matter should not be reported in the audit report.Grant Thornton Chinese Certified Public Accountant
(Special General Partnership) (Project Partner)
Chinese Certified Public Accountant
Beijing China 28 March 2024
2023 ANNUAL REPORT 157XII Financial Report
II. Financial Statements
The unit in the notes to the financial statements is: RMB
1. Consolidated Balance Sheet
Prepared by: Shandong Chenming Paper Holdings Limited
31 December 2023
Unit: RMB
Item 31 December 2023 31 December 2022
CURRENT ASSETS:
Monetary funds 12124832831.30 14000434986.08
Financial assets held for trading 46294291.71 74708444.88
Bills receivable 411600000.00 –
Accounts receivable 2528507059.83 3212260445.96
Accounts receivable financing 215884249.97 924960384.16
Prepayments 825135156.21 788191626.82
Other receivables 2224904557.88 1717445443.44
Including: Interest receivable – –
Dividend receivable – –
Inventories 4958178000.36 6821916159.95
Non-current assets due within one year 4161725935.75 3998724415.85
Other current assets 1068826944.78 1180807801.62
Total current assets 28565889027.79 32719449708.76
158 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
Item 31 December 2023 31 December 2022
NON-CURRENT ASSETS:
Long-term receivables 339293533.35 1486807783.47
Long-term equity investments 4685199385.73 4277013369.56
Other non-current financial assets 781561040.57 786750761.62
Investment property 6049242696.36 6256723113.15
Fixed assets 33186248169.56 33797738695.30
Construction in progress 859617965.16 558866880.36
Bearer biological assets 17684687.36 13697336.80
Right-of-use assets 167815311.50 181614699.25
Intangible assets 2002360891.85 1831338830.92
Goodwill 35220543.80 26946905.38
Long-term prepaid expenses 39979161.49 44462851.45
Deferred income tax assets 1689857881.49 1335700565.60
Other non-current assets 1067082657.57 983905908.00
Total non-current assets 50921163925.79 51581567700.86
Total assets 79487052953.58 84301017409.62
2023 ANNUAL REPORT 159XII Financial Report
Item 31 December 2023 31 December 2022
CURRENT LIABILITIES:
Short-term borrowings 33475479021.62 36385048295.02
Bills payable 4618986463.95 3128595835.04
Accounts payable 3902620870.20 4114966767.76
Receipts in advance 16242921.65 14261436.67
Contract liabilities 1443680155.62 1306029389.80
Employee benefits payable 74337158.44 144925887.00
Taxes payable 99709707.56 261011669.09
Other payables 2414752127.19 1870403909.17
Including: Interest payable 15895930.51
Dividend payable – –
Non-current liabilities due within one year 3631937677.82 4673505241.86
Other current liabilities 100000000.00 –
Total current liabilities 49777746104.05 51898748431.41
160 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
Item 31 December 2023 31 December 2022
NON-CURRENT LIABILITIES:
Long-term borrowings 4681014489.64 3982236251.08
Lease liabilities 41987022.85 53596047.46
Long-term payables 2541095217.66 3160771126.31
Deferred income 1337864114.70 1469230468.46
Deferred income tax liabilities 9490159.05 8181264.29
Other non-current liabilities – –
Total non-current liabilities 8611451003.90 8674015157.60
Total liabilities 58389197107.95 60572763589.01
2023 ANNUAL REPORT 161XII Financial Report
Item 31 December 2023 31 December 2022
OWNERS’ EQUITY:
Share capital 2956813200.00 2979742200.00
Other equity instruments – 996000000.00
Including: Preference shares – –
Perpetual Bonds – 996000000.00
Capital reserves 5328790899.61 5361200522.29
Less: Treasury shares 63432450.00 128780100.00
Other comprehensive income -864881489.08 -821940694.57
Special reserves 23322829.57 15791710.95
Surplus reserves 1212009109.97 1212009109.97
General risk provisions 79370294.91 79900268.71
Retained profit 8020182801.55 9390642477.57
Total equity attributable to owners of the Company 16692175196.53 19084565494.92
Minority interest 4405680649.10 4643688325.69
Total owners’ equity 21097855845.63 23728253820.61
Total liabilities and owners’ equity 79487052953.58 84301017409.62
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
2. Balance sheet of the Company
Unit: RMB
Item 31 December 2023 31 December 2022
CURRENT ASSETS:
Monetary funds 4421608897.40 5661807164.72
Bills receivable 3024868267.23 3482822426.80
Accounts receivable 28216771.01 134755527.73
Prepayments 476746114.74 375206833.58
Other receivables 9237241240.86 9337019470.13
Including: Interest receivable – –
Dividend receivable – –
Inventories 554028121.69 692338698.67
Non-current assets due within one year 3428684.19 13434710.01
Other current assets 62834527.02 86159558.49
Total current assets 17808972624.14 19783544390.13
162 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
Item 31 December 2023 31 December 2022
NON-CURRENT ASSETS:
Long-term receivables 12485720.05 15914404.25
Long-term equity investments 18298999830.51 18826163036.33
Other non-current financial assets 122462024.19 123750761.62
Fixed assets 3415454701.17 3654340361.49
Construction in progress 38707761.30 24865009.58
Intangible assets 476297197.96 490533559.72
Deferred income tax assets 571194789.79 518171288.92
Other non-current assets 12692260.70 986260.70
Total non-current assets 22948294285.67 23654724682.61
Total assets 40757266909.81 43438269072.74
2023 ANNUAL REPORT 163XII Financial Report
Item 31 December 2023 31 December 2022
CURRENT LIABILITIES:
Short-term borrowings 13172491176.11 12885183530.81
Bills payable 6699118643.16 9455780407.30
Accounts payable 1817323321.03 1288578359.05
Contract liabilities 1454807158.83 1503256921.15
Employee benefits payable 38778024.93 65349838.50
Taxes payable 9022105.28 11729028.39
Other payables 1412965873.90 1856098294.14
Including: Interest payable – 15895930.51
Dividend payable – –
Non-current liabilities due within one year 734311029.42 1171869377.78
Total current liabilities 25338817332.66 28237845757.12
164 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
Item 31 December 2023 31 December 2022
NON-CURRENT LIABILITIES:
Long-term borrowings 1795000000.00 1698253561.10
Long-term payables 1281983636.99 150911348.00
Deferred income 31530836.20 33251328.04
Total non-current liabilities 3108514473.19 1882416237.14
Total liabilities 28447331805.85 30120261994.26
2023 ANNUAL REPORT 165XII Financial Report
Item 31 December 2023 31 December 2022
OWNERS’ EQUITY:
Share capital 2956813200.00 2979742200.00
Other equity instruments – 996000000.00
Including: Preference shares – –
Perpetual Bonds – 996000000.00
Capital reserves 5073338869.19 5147225041.11
Less: Treasury shares 63432450.00 128780100.00
Special reserves 4612641.99 2066138.15
Surplus reserves 1199819528.06 1199819528.06
Retained profit 3138783314.72 3121934271.16
Total owners’ equity 12309935103.96 13318007078.48
Total liabilities and owners’ equity 40757266909.81 43438269072.74
166 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
3. Consolidated Income Statement
Unit: RMB
Item 2023 2022
I. Total revenue 26608570228.20 32004367320.91
Including: Revenue 26608570228.20 32004367320.91
II. Total operating costs 28768694490.76 32046430688.65
Including: Revenue 24445486299.93 27373725707.00
Taxes and surcharges 227802365.12 243139315.06
Sales and distribution expenses 230999637.43 242181274.09
General and administrative expenses 690319782.01 750546703.34
Research and development expense 1164419698.13 1290281540.10
Finance expenses 2009666708.14 2146556149.06
Including: Interest expenses 1908394881.89 2081067895.66
Interest income 201101017.34 309987478.19
Plus: Other income 337324331.43 242223168.86
Investment income (“-” denotes loss) 505067035.78 -76042787.35
Including: Inv estment income from associates and
joint ventures 128934922.00 24116757.95
Ga ins on derecognition of financial
assets measured at amortised cost
(“-” denotes loss) -99744741.95 -137464855.58
Gain on change in fair value (“-” denotes loss) -25555304.50 -25253928.81
Credit impairment loss (“-” denotes loss) -319956249.39 -86076968.56
Loss on impairment of assets (“-” denotes loss) -45007299.22 -17659966.20
Gain on disposal of assets (“-” denotes loss) 14607428.91 161092513.76
III. Operating profit (“-” denotes loss) -1693644319.55 156218663.96
Plus: Non-operating income 2998769.41 77248685.76
Less: Non-operating expenses 19058851.67 51198001.72
IV. Total profit (“-” denotes total loss) -1709704401.81 182269348.00
Less: Income tax expenses -383061983.95 -135093343.41
2023 ANNUAL REPORT 167XII Financial Report
Item 2023 2022
V. Net profit (“-” denotes net loss) -1326642417.86 317362691.41
(i) Classification according to the continuity of operation
1. Net profit from continuing operations
(“-” denotes net loss) -1326642417.86 317362691.41
2. Net profit from discontinued operations
(“-” denotes net loss) – –
(ii) Classification according to ownership
1. Net profit attributable to shareholders of the
Company -1281289649.82 189290120.82
2. Profit or loss of minority interest -45352768.04 128072570.59
VI. Net other comprehensive income after tax -42940794.51 -376357965.21
Net other comprehensive income after tax attributable to
owners of the Company -42940794.51 -376357965.21
(i) Other comprehensive income that cannot be
reclassified to profit and loss – –
(ii) Other comprehensive income that will be reclassified
to profit and loss -42940794.51 -376357965.21
1. Exchange differences arising from translation
of financial statements denominated in foreign
currencies -41716787.49 -376954395.08
2. Other comprehensive income that may be
reclassified to profit and loss under the equity
method -1224007.02 596429.87
Other comprehensive income net of tax attributable to
minority interest – –
VII. Total comprehensive income -1369583212.37 -58995273.80
Total comprehensive income attributable to shareholders
of the Company -1324230444.33 -187067844.39
Total comprehensive income attributable to minority
interest -45352768.04 128072570.59
VIII. Earnings per share
(i) Basic earnings per share -0.45 0.03
(ii) Diluted earnings per share -0.45 0.03
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
168 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
4. Income statement of the Company
Unit: RMB
Item 2023 2022
I. Revenue 7579414619.45 7520064602.48
Less: Operating costs 7176479930.73 7046088687.44
Taxes and surcharges 37636362.13 33903732.08
Sales and distribution expenses 8462782.60 8097899.53
General and administrative expenses 140689667.12 143936740.47
Research and development expense 252057763.89 269160568.77
Finance expenses 274265017.24 775464172.57
Including: Interest expenses 469512534.61 942221009.81
Interest income 410504372.73 426232368.25
Plus: Other income 59642240.78 40656440.23
Investment income (“-” denotes loss) 357646522.46 673446949.24
Including: In vestment income from associates and
joint ventures 99693847.76 -314623.14
Ga ins on derecognition of financial
assets measured at amortised cost
(“-” denotes loss) -47421175.71 -63403215.00
Gain on change in fair value (“-” denotes loss) 310000.00 5350000.00
Credit impairment loss (“-” denotes loss) -8773992.60 10519416.80
Loss on impairment of assets (“-” denotes loss) -16979924.08 -12924176.52
Gain on disposal of assets (“-” denotes loss) -21301396.27 151386962.31
II. Operating profit (“-” denotes loss) 60366546.03 111848393.68
Plus: Non-operating income 541593.38 73996545.76
Less: Non-operating expenses 7382596.72 20105385.25
III. Total profit (“-” denotes total loss) 53525542.69 165739554.19
Less: Income tax expenses -53023500.87 -124253256.38
IV. Net profit (“-” denotes net loss) 106549043.56 289992810.57
(i) Net profit from continuing operations (“-” denotes
net loss) 106549043.56 289992810.57
(ii) Net profit from discontinued operations (“-” denotes
net loss) – –
V. Total comprehensive income 106549043.56 289992810.57
2023 ANNUAL REPORT 169XII Financial Report
5. Consolidated cash flow statement
Unit: RMB
Item 2023 2022
I. Cash flows from operating activities:
Cash received from sales of goods and rendering
of services 27966458590.37 34004940977.95
Tax rebates received 167475052.87 774636352.39
Cash received relating to other operating activities 1031185120.95 1438951565.79
Subtotal of cash inflows from operating activities 29165118764.19 36218528896.13
Cash paid for goods and services 20996101741.25 27914460565.12
Cash paid to and for employees 1355503347.12 1378611065.39
Payments of taxes and surcharges 866089499.58 1181977144.95
Cash paid relating to other operating activities 1557474867.42 2293655878.30
Subtotal of cash outflows from operating activities 24775169455.37 32768704653.76
Net cash flows from operating activities 4389949308.82 3449824242.37
II. Cash flows from investing activities:
Cash received from investments 1598737.43 1526241.63
Cash received from investment income 66558010.99 37543374.81
Net cash received from disposal of fixed assets intangible
assets and other long-term assets 210115150.25 232394062.31
Net cash received from disposal of subsidiaries and other
business units 99329954.44 –
Cash received relating to other investing activities – –
Subtotal of cash inflows from investing activities 377601853.11 271463678.75
Cash paid for purchase of fixed assets intangible
assets and other long-term assets 314376125.86 885436648.94
Cash paid on investments – 1463000000.00
Net cash paid for acquisition of subsidiaries and
other business units 4934751.03 367997918.78
Cash paid relating to other investing activities – –
Subtotal of cash outflows from investing activities 319310876.89 2716434567.72
Net cash flows from investing activities 58290976.22 -2444970888.97
170 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
Item 2023 2022
III. Cash flows from financing activities:
Cash received from investments 300000000.00 1400000000.00
Including: Ca sh received from subsidiaries from minority
investment 300000000.00 1400000000.00
Cash received from borrowings 32279984571.38 32477133959.53
Cash received relating to other financing activities 2697290383.69 3719090394.82
Subtotal of cash inflows from financing activities 35277274955.07 37596224354.35
Cash repayments of amounts borrowed 34204285275.28 31525777100.64
Cash paid for dividend and profit distribution or
interest payment 2244930422.38 2362284448.94
Including: Div idend and profit paid by subsidiaries to
minority shareholders 254313617.44 200352435.08
Cash paid relating to other financing activities 4611801356.33 5689222885.22
Subtotal of cash outflows from financing activities 41061017053.99 39577284434.80
Net cash flows from financing activities -5783742098.92 -1981060080.45
IV. Effect of foreign exchange rate changes on cash and
cash equivalents -59724593.02 -33248970.46
V. Net increase in cash and cash equivalents -1395226406.90 -1009455697.51
Plus: Ba lance of cash and cash equivalents as at the
beginning of the period 2159460149.51 3168915847.02
VI. Balance of cash and cash equivalents as at the end of the
period 764233742.61 2159460149.51
2023 ANNUAL REPORT 171XII Financial Report
6. Cash flow statement of the Company
Unit: RMB
Item 2023 2022
I. Cash flows from operating activities:
Cash received from sales of goods and rendering
of services 8501405410.34 9262082947.68
Tax rebates received 10186261.55 9335732.78
Cash received relating to other operating activities 455821934.12 546476129.29
Subtotal of cash inflows from operating activities 8967413606.01 9817894809.75
Cash paid for goods and services 7495797116.97 7950820408.32
Cash paid to and for employees 337462560.61 298994477.43
Payments of taxes and surcharges 53252740.71 200234241.01
Cash paid relating to other operating activities 474578098.99 876312163.51
Subtotal of cash outflows from operating activities 8361090517.28 9326361290.27
Net cash flows from operating activities 606323088.73 491533519.48
II. Cash flows from investing activities:
Cash received from investments 147471372.61 1526241.63
Cash received from investment income 112467060.62 918541961.59
Net cash received from disposal of fixed assets
intangible assets and other long-term assets 40668050.26 175178998.35
Subtotal of cash inflows from investing activities 300606483.49 1095247201.57
Cash paid for purchase of fixed assets intangible assets
and other long-term assets 20519612.30 30885811.90
Subtotal of cash outflows used in investing activities 20519612.30 30885811.90
Net cash flows from investing activities 280086871.19 1064361389.67
172 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
Item 2023 2022
III. Cash flows from financing activities:
Cash received from borrowings 19258041006.64 19328476282.36
Cash received relating to other financing activities 1590113157.73 771135279.77
Subtotal of cash inflows from financing activities 20848154164.37 20099611562.13
Cash repayments of amounts borrowed 19259308611.34 20169398149.54
Cash paid for dividend and profit distribution or
interest payment 471489436.79 612303611.03
Cash paid relating to other financing activities 1880449249.46 1533109819.21
Subtotal of cash outflows from financing activities 21611247297.59 22314811579.78
Net cash flows from financing activities -763093133.22 -2215200017.65
IV. Effect of foreign exchange rate changes on cash and cash
equivalents -6501936.29 -177257.07
V. Net increase in cash and cash equivalents 116814890.41 -659482365.57
Plus: Ba lance of cash and cash equivalents as at the
beginning of the period 233971948.99 893454314.56
VI. Balance of cash and cash equivalents as at the end of the
period 350786839.40 233971948.99
2023 ANNUAL REPORT 173XII Financial Report
174 SHANDONG CHENMING PAPER HOLDINGS LIMITED
7. Consolidated statement of changes in owners’ equity
Amount for the reporting period
Unit: RMB
2023
Equity attributable to owners of the Company
Other equity instruments Less: Other
Preference Perpetual Capital Treasury comprehensive Special Surplus General risk Total owners’
Item Share capital shares Bonds Others reserves shares income reserves reserves provisions Retained profit Others Subtotal Minority interest equity
I. Balance as at the end of the
prior year 2979742200.00 – 996000000.00 – 5361200522.29 128780100.00 -821940694.57 15791710.95 1212009109.97 79900268.71 9390642477.57 – 19084565494.92 4643688325.69 23728253820.61
Others – –
II. Balance as at the beginning of
the year 2979742200.00 – 996000000.00 – 5361200522.29 128780100.00 -821940694.57 15791710.95 1212009109.97 79900268.71 9390642477.57 – 19084565494.92 4643688325.69 23728253820.61
III. Changes in the period
(“-” denotes decrease) -22929000.00 – -996000000.00 – -32409622.68 -65347650.00 -42940794.51 7531118.62 – -529973.80 -1370459676.02 – -2392390298.39 -238007676.59 -2630397974.98
(i) Total comprehensive income – – – – – – -42940794.51 – – – -1281289649.82 -1324230444.33 -45352768.04 -1369583212.37
(ii) Capital paid in and reduced
by owners -22929000.00 – -996000000.00 – -32409622.68 -65347650.00 – – – – – – -985990972.68 51682676.42 -934308296.26
1. Ordinary shares paid by
owners – – – – – – – – – – – – – 51682676.42 51682676.42
2. Capital paid by holders of
other equity instruments – – -996000000.00 -4000000.00 – – – – – – – -1000000000.00 – -1000000000.00
3. Amount of share-based
payments recognised in
owners’ equity -22929000.00 – – – -69886171.92 -65347650.00 – – – – – – -27467521.92 – -27467521.92
4. Others – – – – 41476549.24 – – – – – – – 41476549.24 – 41476549.24
(iii) Profit distribution – – – – – – – – – -529973.80 -89170026.20 – -89700000.00 -254313617.44 -344013617.44
1. Transfer to general risk
provisions – – – – – – – – – -529973.80 529973.80 – – – –
2. Distribution to owners (or
shareholders) – – – – – – – – – – -89700000.00 -89700000.00 -254313617.44 -344013617.44
(iv) Transfer within owners’ equity – – – – – – – – – – – – – 9976032.47 9976032.47
1. Others – － – – – – – – – – – – – 9976032.47 9976032.47
(v) Special reserves – – – – – – – 7531118.62 – – – – 7531118.62 – 7531118.62
1. Withdrew in the period – – – – – – – 31146275.32 – – – 31146275.32 – 31146275.32
2. Used in the period – – – – – – – -23615156.70 – – – – -23615156.70 – -23615156.70
IV. Balance as at the end of the
period 2956813200.00 – – – 5328790899.61 63432450.00 -864881489.08 23322829.57 1212009109.97 79370294.91 8020182801.55 16692175196.53 4405680649.10 21097855845.63XII Financial Report
2023 ANNUAL REPORT 175
Amount for the prior period
Unit: RMB
2022
Equity attributable to owners of the Company
Other equity instruments Less: Other Total owners’
Preference Perpetual Capital Treasury comprehensive Special Surplus General risk Share capital
Item Share capital shares Bonds Others reserves shares income reserves reserves provisions Retained profit Others Subtotal Minority interest equity
I. Balance as at the end of the
prior year 2984208200.00 – 996000000.00 – 5227258100.41 226860000.00 -445582729.36 – 1212009109.97 76825918.60 9294126706.86 – 19117985306.48 3457050907.26 22575036213.74
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) -4466000.00 – – – 133942421.88 -98079900.00 -376357965.21 15791710.95 – 3074350.11 96515770.71 – -33419811.56 1186637418.43 1153217606.87
(i) Total comprehensive income – – – – – – -376357965.21 – – – 189290120.82 – -187067844.39 128072570.59 -58995273.80
(ii) Capital paid in and reduced
by owners -4466000.00 – – – 133942421.88 -98079900.00 – – – – – – 227556321.88 1258917282.92 1486473604.80
1. Ordinary shares paid by
owners – – – -8262100.00 – – – – – – – -8262100.00 1258917282.92 1250655182.92
2. Amount of share-based
payments recognised in
owners’ equity -4466000.00 – – – 1121804.80 -98079900.00 – – – – – – 94735704.80 – 94735704.80
3. Others – – – – 141082717.08 – – – – – – – 141082717.08 – 141082717.08
(iii) Profit distribution – – – – – – – – – 3074350.11 -92774350.11 – -89700000.00 -200352435.08 -290052435.08
1. Transfer to general risk
provisions – – – – – – – – – 3074350.11 -3074350.11 – – – –
2. Distribution to owners (or
shareholders) – – – – – – – – – – -89700000.00 -89700000.00 -200352435.08 -290052435.08
(iv) Special reserves – – – – – – – 15791710.95 – – – – 15791710.95 – 15791710.95
1. Withdrew in the period – – – – – – – 29147795.17 – – – – 29147795.17 – 29147795.17
2. Used in the period
(denoted by “-”) – – – – – – – -13356084.22 – – – – -13356084.22 – -13356084.22
IV. Balance as at the end of the
period 2979742200.00 996000000.00 5361200522.29 128780100.00 -821940694.57 15791710.95 1212009109.97 79900268.71 9390642477.57 19084565494.92 4643688325.69 23728253820.61XII Financial Report
176 SHANDONG CHENMING PAPER HOLDINGS LIMITED
8. Statement of changes in equity of owners of the Company
Amount for the reporting period
Unit: RMB
2023
Other equity instruments Less: Other
Preference Perpetual Capital Treasury comprehensive Special Surplus Retained Total owners’
Item Share capital shares Bonds Others reserves Shares income Reserves Reserves Profit Others equity
I. Balance as at the end of the
prior year 2979742200.00 – 996000000.00 – 5147225041.11 128780100.00 – 2066138.15 1199819528.06 3121934271.16 – 13318007078.48
II. Balance as at the beginning
of the year 2979742200.00 – 996000000.00 – 5147225041.11 128780100.00 – 2066138.15 1199819528.06 3121934271.16 – 13318007078.48
III. Changes in the period
(“-” denotes decrease) -22929000.00 – -996000000.00 – -73886171.92 -65347650.00 – 2546503.84 – 16849043.56 – -1008071974.52
(i) Total comprehensive
income – – – – – – – – – 106549043.56 – 106549043.56
(ii) Capital paid in and reduced
by owners -22929000.00 – -996000000.00 – -73886171.92 -65347650.00 – – – – – -1027467521.92
1. Capital paid by
holders of other equity
instruments – – -996000000.00 – -4000000.00 – – – – – – -1000000000.00
2. Amount of share-based
payments recognised in
owners’ equity -22929000.00 – – – -69886171.92 -65347650.00 – – – – – -27467521.92
(iii) Profit distribution – – – – – – – – – -89700000.00 – -89700000.00
1. Transfer to surplus
reserves – – – – – – – – – – – –
2. Distribution to owners
(or shareholders) – – – – – – – – – -89700000.00 – -89700000.00
(iv) Special reserves – – – – – – – 2546503.84 – – – 2546503.84
1. Withdrew in the period – – – – – – – 2569804.81 – – – 2569804.81
2. Used in the period – – – – – – – -23300.97 – – – -23300.97
IV. Balance as at the end of
the period 2956813200.00 – – – 5073338869.19 63432450.00 – 4612641.99 1199819528.06 3138783314.72 – 12309935103.96XII Financial Report
2023 ANNUAL REPORT 177
Amount for the prior period
Unit: RMB
2022
Other equity instruments Less: Other
Preference Perpetual Capital Treasury comprehensive Special Surplus Retained Total owners’
Item Share capital shares Bonds Others reserves Shares income reserves reserves profit Others 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) -4466000.00 -7140295.20 -98079900.00 2066138.15 200292810.57 288832553.52
(i) Total comprehensive
income 289992810.57 289992810.57
(ii) Capital paid in and
reduced by owners -4466000.00 -7140295.20 -98079900.00 86473604.80
1. Ordinary shares paid
by owners -8262100.00 -8262100.00
2. Capital paid by
holders of other equity
instruments
3. Amount of share-based
payments recognised in
owners’ equity -4466000.00 1121804.80 -98079900.00 94735704.80
(iii) Profit distribution -89700000.00 -89700000.00
1. Transfer to surplus
reserves
2. Distribution to owners
(or shareholders) -89700000.00 -89700000.00
(iv) Special reserves – 2066138.15 2066138.15
1. Withdrew in the period 2677407.09 2677407.09
2. Used in the period
(denoted by “-”) -611268.94 -611268.94
IV. Balance as at the end of
the period 2979742200.00 996000000.00 5147225041.11 128780100.00 2066138.15 1199819528.06 3121934271.16 13318007078.48XII Financial Report
III. General Information of the Company
1. Company overview
The predecessor of Shandong Chenming Paper Holdings Limited (hereinafter referred to as the “Company” a
joint-stock company incorporated in Shouguang City Shandong Province) was Shandong Shouguang Paper Mill
Corporation which was changed as a joint stock company with limited liability through offering to specific investors
in May 1993. In December 1996 with approval by Lu Gai Zi [1996] No. 270 issued by the People’s Government of
Shandong Province and Zheng Wei [1996] No. 59 of the Securities Committee of the State Council the Company was
changed as a joint stock company with limited liability established by share offer. The Company’s headquarters is
located at No. 2199 Nongsheng East Road Shouguang City Shandong Province.In May 1997 with approval by Zheng Wei Fa [1997] No. 26 issued by the Securities Committee of the State Council
the Company issued 115000000 domestic listed foreign shares (B shares) under public offering which were listed
and traded on Shenzhen Stock Exchange from 26 May 1997.In September 2000 with approval by Zheng Jian Gong Si Zi [2000] No. 151 issued by the China Securities Regulatory
Commission the Company issued 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 31 December 2023 the total share capital of the Company was 2956813200 shares. For details please refer
to Note VII. 39.Principal business activities: the Company is principally engaged in among other things processing and sale of paper
products (including machine-made paper and paper board) paper making raw materials machinery and chemicals;
generation and sale of electric power and thermal power; forestry saplings growing processing and sale of timber
and construction materials; manufacturing processing and sale of wood products; and hotel service and equipment
financial and operating leasing investment properties and property service etc.The financial statements and notes thereto were approved at the eighth meeting of the tenth session of the board of
directors of the Company (the “Board”) on 28 March 2024.
2. Scope of consolidation
Subsidiaries of the Company included in the scope of consolidation in 2023 totalled 77. For details please refer
to Note X “Interest in other entities”. The scope of consolidation of the Company during the year had two morecompanies included and three companies less compared to the prior year. For details please refer to Note IX “Changein scope of consolidation”.
178 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
IV. Basis of Preparation of the Financial Statements
1. Basis of preparation
These financial statements are prepared in accordance with the accounting standards for business enterprises the
application guidelines thereof interpretations and other related rules (collectively referred to as “ASBEs”) promulgated
by the Ministry of Finance. In addition the Company also discloses relevant financial information in accordance withthe “Preparation Rules for Information Disclosure by Companies Offering Securities to the Public No. 15 – GeneralProvisions on Financial Reports” (revised in 2023) of the CSRC.The financial statements are presented on a going concern.The Company’s financial statements have been prepared on an accrual basis. Except for certain financial instruments
the financial statements are prepared under the historical cost convention. In the event that impairment of assets
occurs a provision for impairment is made accordingly in accordance with the relevant regulations.
2. Going concern
No facts or circumstances comprise a material uncertainty about the Company’s going concern basis within 12
months since the end of the reporting period.V. Significant Accounting Policies and Accounting Estimates
Specific accounting policies and accounting estimates are indicated as follows:
The Company and its subsidiaries are principally engaged in machine-made paper electricity and steam construction
materials paper making chemical products processing of moulds hotel management and other operations. The Company
and its subsidiaries formulated certain specific accounting policies and accounting estimates for the transactions and
matters such as revenue recognition determination of performance progress and R&D expenses based on their actual
production and operation characteristics pursuant to the requirements under the relevant ASBEs. For details please refer to
this Note V. 30 “Revenue”. For the critical accounting judgments and estimates made by the management please refer to
Note V. 40 “Changes in 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 31 December 2023 and relevant information such as the
operating results and cash flows of the consolidated entity and the Company for 2023.
2. Accounting period
The accounting period of the Company is from 1 January to 31 December of each calendar year.
2023 ANNUAL REPORT 179XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
3. Operating cycle
The operating cycle of the Company lasts for 12 months.
4. Functional currency
The functional currency of the Company and its domestic subsidiaries is Renminbi (“RMB”). Overseas subsidiaries
of the Company recognise U.S. dollar (“USD” or “US$”) Japanese yen (“JPY”) Euro (“EUR”) and South Korean
Won (“KRW”) as their respective functional currency according to the general economic environment in which these
subsidiaries operate. The Company prepares the financial statements in RMB.
5. Determination method and selection basis of importance standards
Item Importance standards
Significant accounts receivable with single Overdue accounts receivable and the amount of a single
provision for bad debt reserves receivable exceeds 0.5% of total assets
Write-off of significant accounts receivable during The amount of a single write-off exceeds 0.5% of net assets
the period
Significant prepayments aged more than one year Aged more than one year and the single amount exceeds 0.5%
of total assets
Significant receipts in advance aged more than Aged more than one year and the single amount exceeds 0.5%
one year of total assets
Significant other payables aged more than Aged more than one year and the single amount exceeds 0.5%
one year of total assets
Significant accounts payable aged more than Aged more than one year and the single amount exceeds 0.5%
one year of total assets
Bad debt provisions with significant amounts Individually identified or classified into the third stage the
reversed or recovered during the current period amount transferred or recovered exceeds 0.5% of total assets
Significant construction in progress Projects with budgets exceeding 0.5% of total assets
Significant non-wholly owned subsidiaries The total assets of the subsidiary exceed 10% of the Company
on a consolidated basis and the revenue or pre-tax profit
exceeds 10%
Significant investment activities Investment amount exceeds 0.5% of total assets
Significant joint ventures and associates The joint venture or associate operates normally with an
accounting amount exceeding 0.5% of total assets
Significant debt restructuring The restructuring amount exceeds 0.5% of total assets
6. Accounting treatment of business combinations under common control and not under common
control
(1) Business combination under common control
For the business combination involving entities under common control the assets and liabilities of the party
being merged that are obtained in the business combination by the absorbing party shall be measured at the
carrying amounts as recorded by the ultimate controlling party in the consolidated financial statements at the
combination date. The difference between the carrying amount of the consideration paid for the combination
and the carrying amount of the net assets obtained in the combination is charged to the capital reserve. If the
capital reserve is not sufficient to absorb the difference any excess shall be adjusted against retained earnings.
180 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
6. Accounting treatment of business combinations under common control and not under common
control (Continued)
(1) Business combination under common control (Continued)
Business combinations involving entities under common control and achieved in stages
The assets and liabilities of the party being merged that are obtained at the combination by the absorbing
party shall be measured at the carrying value as recorded by the ultimate controlling party in the consolidated
financial statements at combination date. The difference between the sum of the carrying value from original
shareholding portion and the new investment cost incurred at combination date and the carrying value of net
assets obtained at combination date shall be adjusted to capital reserve if the balance of capital reserve is
not sufficient to absorb the differences any excess is adjusted to retained earnings. The long-term investment
prior to the absorbing party obtaining the control of the party being merged the recognised profit or loss
comprehensive income and other change of owners’ equity at the closer date of the acquisition date and
combination date under common control shall separately offset the opening balance of retained earnings and
profit or loss during comparative statements.
(2) Business combination not under common control
For business combinations involving entities not under common control the cost for each combination is
measured at the aggregate fair value at acquisition date of assets given liabilities incurred or assumed and
equity securities issued by the acquirer in exchange for control of the acquiree. At acquisition date the acquired
assets liabilities or contingent liabilities of acquiree are measured at their fair value.Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net
assets the difference is recognised as goodwill and subsequently measured on the basis of its cost minus
accumulative impairment provision; Where the cost of combination is less than the acquirer’s interest in the fair
value of the acquiree’s identifiable net assets the difference is recognised in profit or loss for the current period
after reassessment.Business combinations involving entities not under common control and achieved in stages
The combination cost is the sum of consideration paid at acquisition date and fair value of the acquiree’s
equity investment held prior to acquisition date. The cost of equity of the acquiree held prior to acquisition
date shall be remeasured at the fair value at acquisition date and the difference between the fair value and
carrying amount shall be recognised as investment income or loss for the current period. Other comprehensive
income and changes of other owners’ equity related with acquiree’s equity held prior to acquisition date shall be
transferred to investment profit or loss for current period at acquisition date except for the other comprehensive
income incurred by the changes of net assets or net liabilities due to the remeasurement of defined benefit
plans and the other comprehensive income related to investments in non-trading equity instruments that were
previously designated as at fair value through other comprehensive income.
(3) Transaction fees attribution during business combination
The audit legal valuation advisory and other intermediary fees and other relevant administrative expenses
arising from business combinations are recognised in profit or loss when incurred. Transaction costs of equity
or debt securities issued as the considerations of business combination are included in the initial recognition
amounts.
2023 ANNUAL REPORT 181XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
7. Judgment criteria for control and preparation of consolidated financial statements
(1) Judgment criteria for control
The scope of consolidation of the consolidated financial statements is determined on the basis of control. The
term “control” refers to the fact that the Company has power over the investee and is entitled to variable returns
from its involvement with the investee and the ability to use its power over the investee to affect the amount of
those returns. The Company will reassess when changes in relevant facts and circumstances result in changes
in the relevant elements involved in the definition of control.When judging whether to include a structured entity into the scope of consolidation the Company
comprehensively considers all facts and circumstances including assessing the purpose and design of the
structured entity identifying the types of variable returns and assessing whether to control the structured entity
on the basis of whether it bears part or all of the return variability by participating in its related activities.
(2) Basis for preparation of the consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial statements of the
Company and its subsidiaries and other relevant information. In preparing the consolidated financial statements
the accounting policies and accounting periods of the Company and its subsidiaries shall be consistent and
intra-company significant transactions and balances are eliminated.A subsidiary and its business acquired through a business combination involving entities under common control
during the reporting period shall be included in the scope of the consolidation of the Company from the date
of being controlled by the ultimate controlling party and its operating results and cash flows from the date of
being controlled by the ultimate controlling party are included in the consolidated income statement and the
consolidated cash flow statement respectively.For a subsidiary and its business acquired through a business combination involving entities not under common
control during the reporting period its income expenses and profits are included in the consolidated income
statement and cash flows are included in the consolidated cash flow statement from the acquisition date to the
end of the reporting period.The shareholders’ equity of the subsidiaries that is not attributable to the Company is presented under
shareholders’ equity in the consolidated balance sheet as minority interest. The portion of net profit or loss of
subsidiaries for the period attributable to minority interest is presented in the consolidated income statement
under the “profit or loss of minority interest”. When the amount of loss attributable to the minority shareholders
of a subsidiary exceeds the minority shareholders’ portion of the opening balance of owners’ equity of the
subsidiary the excess amount shall be allocated against minority interest.
(3) Acquisition of non-controlling interests in subsidiaries
The difference between the long-term equity investments costs acquired by the acquisition of non-controlling
interests and the share of the net assets from subsidiaries from the date of acquisition or the date of
combination based on the new shareholding ratio as well as the difference between the proceeds from the
partial disposal of the equity investment without losing control over its subsidiary and the disposal of the
long-term equity investment corresponding to the share of the net assets of the subsidiaries from the date of
acquisition or the date of combination is adjusted to the capital reserve. If the capital reserve is not sufficient
any excess is adjusted to retained earnings.
182 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
7. Judgment criteria for control and preparation of consolidated financial statements (Continued)
(4) Accounting treatment for loss of control over subsidiaries
For the loss of control over a subsidiary due to disposal of a portion of the equity investment or other reasons
the remaining equity is measured at fair value on the date when the control is lost. The difference arising from
the sum of consideration received for disposal of equity interest and the fair value of remaining equity interest
over the sum of the share of the carrying amount of net assets of the former subsidiary calculated continuously
from the purchase date based on the shareholding percentage before disposal and the goodwill is recognised
as investment income in the period when the control is lost.Other comprehensive income related to equity investment in the former subsidiary shall be accounted for on
the same basis as the former subsidiary’s direct disposal of relevant assets or liabilities when the control is lost.Other changes in owners’ equity related to the former subsidiary that are accounted for using the equity method
shall be transferred to current profit or loss at the time when the control is lost
8. Classification of joint arrangements and accounting treatment for joint operations
A joint arrangement refers to an arrangement of two or more parties have joint control. The joint arrangements of the
Company comprise joint operations and joint ventures.
(1) Joint operations
Joint operations refer to a joint arrangement during which the Company is entitled to relevant assets and
obligations of this arrangement.The Company recognises the following items in relation to its interest in a joint operation and accounts for them
in accordance with the relevant ASBEs:
A. the assets held solely by it and assets held jointly according to its share;
B. the liabilities assumed solely by it and liabilities assumed jointly according to its share;
C. the revenue from sale of output from joint operations;
D. the revenue from sale of output from joint operations according to its share;
E. the fees solely incurred by it and fees incurred from joint operations according to its share.
(2) Joint ventures
Joint ventures refer to a joint arrangement during which the Company only is entitled to net assets of this
arrangement.The Company accounts for its investments in joint ventures in accordance with the requirements relating to
accounting treatment using equity method for long-term equity investments.
2023 ANNUAL REPORT 183XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
9. Standards for recognising cash and cash equivalents
Cash refers to cash on hand and deposits readily available for payment purpose. Cash equivalents refer to short-
term and highly liquid investments held by the Company which are readily convertible into known amount of cash and
which are subject to insignificant risk of value change.
10. Foreign currency operations and translation of statements denominated in foreign currency
(1) Foreign currency operations
The foreign currency operations of the Company are translated into the functional currency at the prevailing
spot exchange rate on the date of exchange.On the balance sheet date foreign currency monetary items shall be translated at the spot exchange rate on
the balance sheet date. The exchange difference arising from the difference between the spot exchange rate
on the balance sheet date and the spot exchange rate upon initial recognition or the last balance sheet date will
be recognised in profit or loss for the period. The foreign currency non-monetary items measured at historical
cost shall still be measured by the functional currency translated at the spot exchange rate on the date of the
transaction. Foreign currency non-monetary items measured at fair value are translated at the spot exchange
rate on the date of determination of the fair value. The difference between the amounts of the functional
currency before and after the translation will be recognised in profit or loss or other comprehensive income for
the period based on the nature of the non-monetary items.
(2) Translation of financial statements denominated in foreign currency
When translating the financial statements denominated in foreign currency of overseas subsidiaries assets and
liabilities on the balance sheet are translated at the spot exchange rate prevailing at the balance sheet date;
owner’s equity items except for “retained profit” are translated at the spot exchange rates at the dates on which
such items arose.Income and expenses items in the income statement are translated at the prevailing spot exchange rate on the
transaction date.All items in the cash flow statements shall be translated at the prevailing spot exchange rate on the date that
the cash flow transaction occurred. Effects arising from changes of exchange rate on cash shall be presented
separately as the “effect of foreign exchange rate changes on cash and cash equivalents” item in the cash flow
statements.The differences arising from translation of financial statements shall be included in the “other comprehensiveincome” item in owners’ equity in the balance sheet.On disposal of foreign operations and loss of control exchange differences arising from the translation of
financial statements denominated in foreign currencies related to the disposed foreign operations which has
been included in shareholders’ equity in the balance sheet shall be transferred to profit or loss in whole or in
proportionate share in the period in which the disposal took place.
184 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments
A financial instrument is a contract that gives rise to a financial asset of one party and a financial liability or equity
instrument of another party.
(1) Recognition and derecognition of financial instruments
Financial asset or financial liability will be recognised when the Company became one of the parties under a
financial instrument contract.Financial asset that satisfied any of the following criteria shall be derecognised:
* the contract right to receive the cash flows of the financial asset has terminated;
* the financial asset has been transferred and meets the derecognition criteria for the transfer of financial
asset as described below.A financial liability (or a part thereof) is derecognised only when the present obligation is discharged in full or in
part. If an agreement is entered between the Company (debtor) and a creditor to replace the existing financial
liabilities with new financial liabilities and the contractual terms of the new financial liabilities are substantially
different from those of the existing financial liabilities the existing financial liabilities shall be derecognised and
the new financial liabilities shall be recognised.Conventionally traded financial assets shall be recognised and derecognised at the trading date.
(2) Classification and measurement of financial assets
The Company classifies the financial assets according to the business model for managing the financial assets
and characteristics of the contractual cash flows as follows: financial assets measured at amortised cost
financial assets measured at fair value through other comprehensive income and financial assets measured at
fair value through profit or loss.Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair
value through profit or loss relevant transaction costs are directly recognised in profit or loss for the current
period. For other categories of financial assets relevant transaction costs are included in the amount initially
recognised. Accounts receivable arising from sales of goods or rendering services without significant financing
component are initially recognised based on the transaction price expected to be entitled by the Company.Financial assets measured at amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated
at fair value through profit or loss:
The Company’s business model for managing such financial assets is to collect contractual cash flows;
The contractual terms of the financial asset stipulate that cash flows generated on specific dates are solely
payments of principal and interest on the principal amount outstanding.Subsequent to initial recognition such financial assets are measured at amortised cost using the effective
interest method. A gain or loss on a financial asset that is measured at amortised cost and is not part of a
hedging relationship shall be recognised in profit or loss for the current period when the financial asset is
derecognised amortised using the effective interest method or with impairment recognised.
2023 ANNUAL REPORT 185XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(2) Classification and measurement of financial assets (Continued)
Financial assets measured at fair value through 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.
186 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(2) Classification and measurement of financial assets (Continued)
Financial assets measured at fair value through profit or loss (Continued)
All affected financial assets are reclassified on the first day of the first reporting period following the change in
the business model where the Company changes its business model for managing financial assets; otherwise
financial assets shall not be reclassified after initial recognition.Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair
value through profit or loss relevant transaction costs are directly recognised in profit or loss for the current
period. For other categories of financial assets relevant transaction costs are included in the amount initially
recognised. Accounts receivable arising from sales of goods or rendering services without significant financing
component are initially recognised based on the transaction price expected to be entitled by the Company.
(3) Classification and measurement of financial liabilities
At initial recognition financial liabilities of the Company are classified as financial liabilities measured at fair
value through profit or loss and financial liabilities measured at amortised cost. For financial liabilities not
classified as measured at fair value through profit or loss relevant transaction costs are included in the amount
initially recognised.Financial liabilities measured at fair value through profit or loss
Financial liabilities measured at fair value through profit or loss comprise held-for-trading financial liabilities and
financial liabilities designated at fair value through profit or loss upon initial recognition. Such financial liabilities
are subsequently measured at fair value and the gains or losses from the change in fair value and the dividend
or interest expenses related to the financial liabilities are included in the profit or loss of the current period.Financial liabilities measured at amortised cost
Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method
and the gains or losses arising from derecognition or amortisation are recognised in profit or loss for the current
period.
2023 ANNUAL REPORT 187XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(3) Classification and measurement of financial liabilities (Continued)
Classification between financial liabilities and equity instruments
A financial liability is a liability if:
* it has a contractual obligation to pay in cash or other financial assets to other parties.* it has a contractual obligation to exchange financial assets or financial liabilities under potential adverse
condition with other parties.* it is a non-derivative instrument contract which will or may be settled with the entity’s own equity
instruments and the entity will deliver a variable number of its own equity instruments according to such
contract.* it is a derivative instrument contract which will or may be settled with the entity’s own equity instruments
except for a derivative instrument contract that exchanges a fixed amount of cash or other financial asset
with a fixed number of its own equity instruments.Equity instruments are any contract that evidences a residual interest in the assets of an entity after deducting
all of its liabilities.If the Company cannot unconditionally avoid the performance of a contractual obligation by paying cash or
delivering other financial assets the contractual obligation meets the definition of financial liabilities.Where a financial instrument must or may be settled with the Company’s own equity instruments the
Company’s own equity instruments used to settle such instrument should be considered as to whether it is as
a substitute for cash or other financial assets or for the purpose of enabling the holder of the instrument to be
entitled to the remaining interest in the assets of the issuer after deducting all of its liabilities. For the former it is
a financial liability of the Company; for the latter it is the Company’s own equity instruments.
(4) Fair value of financial instruments
The methods for determining the fair value of the financial assets or financial liabilities are set out in Note V. 12.
188 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(5) Impairment of financial assets
The Company makes provision for impairment based on expected credit losses (ECLs) on the following items:
Financial assets measured at amortised cost;
Receivables and investment in debt instruments measured at fair value through other comprehensive income;
Contract assets as defined in the Accounting Standards for Business Enterprises No. 14 – Revenue;
Lease receivables;
Financial guarantee contracts (except those measured at fair value through profit or loss or formed by
continuing involvement of transferred financial assets or the transfer does not qualify for derecognition).Measurement of ECLs
ECLs are the weighted average of credit losses of financial instruments weighted by the risk of default. Credit
losses refer to the difference between all contractual cash flows receivable according to the contract and
discounted according to the original effective interest rate and all cash flows expected to be received i.e. the
present value of all cash shortages.The Company takes into account reasonable and well-founded information such as past events current
conditions and forecasts of future economic conditions and calculates the probability-weighted amount of
the present value of the difference between the cash flows receivable from the contract and the cash flows
expected to be received weighted by the risk of default.The Company measures ECLs of financial instruments at different stages. If the credit risk of the financial
instrument did not increase significantly upon initial recognition it is at the first stage and the Company makes
provision for impairment based on the ECLs within the next 12 months; if the credit risk of a financial instrument
increased significantly upon initial recognition but has not yet incurred credit impairment it is at the second
stage and the Company makes provision for impairment based on the lifetime ECLs of the instrument; if the
financial instrument incurred credit impairment upon initial recognition it is at the third stage and the Company
makes provision for impairment based on the lifetime ECLs of the instrument.For financial instruments with low credit risk on the balance sheet date the Company assumes that the credit
risk did not increase significantly upon initial recognition and makes provision for impairment based on the
ECLs within the next 12 months.Lifetime ECLs represent the ECLs resulting from all possible default events over the expected life of a financial
instrument. The 12-month ECLs are the ECLs resulting from possible default events on a financial instrument
within 12 months (or a shorter period if the expected life of the financial instrument is less than 12 months) after
the balance sheet date and is a portion of lifetime ECLs.
2023 ANNUAL REPORT 189XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(5) Impairment of financial assets (Continued)
Measurement of ECLs (Continued)
The maximum period to be considered when estimating ECLs is the maximum contractual period over which
the Company is exposed to credit risk including renewal options.For the financial instruments at the first and second stages and with low credit risks the Company calculates
the interest income based on the book balance and the effective interest rate before deducting the impairment
provisions. For financial instruments at the third stage interest income is calculated based on the amortised
cost after deducting impairment provisions made from the book balance and the effective interest rate.For receivables such as bills receivable accounts receivable accounts receivable financing other receivables
and contract assets if the credit risk characteristics of a customer are significantly different from other
customers in the portfolio or the credit risk characteristics of such customer change significantly the Company
will make a separate provision for bad debts for such receivables. In addition to the receivables for which bad
debt provisions are made individually the Company divides the receivables into portfolios based on credit risk
characteristics and calculates bad debt provisions on a combined basis.Bills receivable and accounts receivable
For bills receivable and accounts receivable regardless of whether there is a significant financing component
the Company always makes provision for impairment at an amount equal to lifetime ECLs.When the Company is unable to assess the information of ECLs for an individual financial asset at a reasonable
cost it classifies bills receivable and accounts receivable into portfolios based on the credit risk characteristics
and calculates the ECLs on a portfolio basis. The basis for determining the portfolios is as follows:
A. Bills receivable
Bills receivable portfolio 1: Bank acceptance bills
Bills receivable portfolio 2: Commercial acceptance bills
B. Accounts receivable
Accounts receivable portfolio 1: Due from related party customers
Accounts receivable portfolio 2: Due from non-related party customers
Accounts receivable portfolio 3: Factoring receivables
190 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(5) Impairment of financial assets (Continued)
Bills receivable and accounts receivable (Continued)
For bills receivable classified as a portfolio the Company refers to the historical credit loss experience
combined with the current situation and the forecast of future economic conditions to calculate the ECLs based
on default risk exposure and lifetime ECL rate.For accounts receivable classified as a portfolio the Company refers to the historical credit loss experience
combined with the current situation and the forecast of future economic conditions to prepare a comparison
table of the ageing/overdue days of accounts receivable and the lifetime ECL rate to calculate the ECLs. The
aging of accounts receivable is calculated from the date of recognition.Other receivables
The Company classifies other receivables into portfolios based on credit risk characteristics and calculates the
ECLs on a portfolio basis. The basis for determining the portfolios is as follows:
Other receivables portfolio 1: Amount due from government authorities
Other receivables portfolio 1: Amount due from related parties
Other receivables portfolio 3: Other receivables
For other receivables classified as a portfolio the Company calculates the ECLs based on default risk exposure
and the ECL rate over the next 12 months or the entire lifetime. For other receivables grouped by aging the
aging is calculated from the date of recognition.Long-term receivables
The Company’s long-term receivables include finance lease receivables and deposits receivable.
2023 ANNUAL REPORT 191XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(5) Impairment of financial assets (Continued)
Long-term receivables (Continued)
The Company classifies the finance lease receivables and deposits receivable into portfolios based on the credit
risk characteristics and calculates the ECLs on a portfolio basis. The basis for determining the portfolios is as
follows:
A. Finance lease receivables
Finance lease receivables portfolio 1: Receivables not past due
Finance lease receivables portfolio 2: Overdue receivables
B. Other long-term receivables
Other long-term receivables portfolio 1: Deposits receivable
Other long-term receivables portfolio 2: Other receivables
For accounts receivable financing and deposits receivable the Company refers to the historical credit loss
experience combined with the current situation and the forecast of future economic conditions and calculates
the ECLs based on default risk exposure and lifetime ECL rate.Except for those of finance lease receivables and deposits receivable the ECLs of other receivables and long-
term receivables classified as a portfolio are measured based on default risk exposure and ECL rate over the
next 12 months or the entire lifetime.Debt investments and other debt investments
For debt investments and other debt investments the Company measures the ECLs based on the nature of the
investment the types of counterparty and risk exposure and default risk exposure and ECL rate within the next
12 months or the entire lifetime.
192 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(5) Impairment of financial assets (Continued)
Assessment of significant increase in credit risk
In assessing whether the credit risk of a financial instrument has increased significantly upon initial recognition
the Company compares the risk of default of the financial instrument at the balance sheet date with that at the
date of initial recognition to determine the relative change in risk of default within the expected lifetime of the
financial instrument.In determining whether the credit risk has increased significantly upon initial recognition the Company considers
reasonable and well-founded information including forward-looking information which can be obtained without
unnecessary extra costs or efforts. Information considered by the Company includes:
The debtor’s failure to make payments of principal and interest on their contractually due dates;
An actual or expected significant deterioration in a financial instrument’s external or internal credit rating (if any);
An actual or expected significant deterioration in the operating results of the debtor;
Existing or expected changes in the technological market economic or legal environment that have a significant
adverse effect on the debtor’s ability to meet its obligation to the Company.Depending on the nature of the financial instruments the Company assesses whether there has been a
significant increase in credit risk on either an individual basis or a collective basis. When the assessment is
performed on a collective basis the financial instruments are grouped based on their common credit risk
characteristics such as past due information and credit risk ratings.The Company determines that the credit risk on a financial asset has increased significantly if it is more than 30
days past due.Credit-impaired financial assets
At balance sheet date the Company assesses whether financial assets measured at amortised cost and debt
investments measured at fair value through other comprehensive income are credit-impaired. A financial asset
is credit-impaired when one or more events that have an adverse effect on the estimated future cash flows
of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following
observable events:
Significant financial difficulty of the issuer or debtor;
A breach of contract by the debtor such as a default or delinquency in interest or principal payments;
2023 ANNUAL REPORT 193XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(5) Impairment of financial assets (Continued)
Credit-impaired financial assets (Continued)
For economic or contractual reasons relating to the debtor’s financial difficulty the Company having granted to
the debtor a concession that would not otherwise consider;
It becoming probable that the debtor will enter bankruptcy or other financial reorganisation;
The disappearance of an active market for that financial asset because of financial difficulties of the issuer or
debtor.Presentation of provisions for ECLs
ECLs are remeasured at each balance sheet date to reflect changes in the financial instrument’s credit risk
upon initial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit
or loss for the current period. For financial assets measured at amortised cost the provisions of impairment 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.
194 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Financial instruments (Continued)
(6) Transfer of financial assets
Transfer of financial assets refers to the transfer or delivery of financial assets to another party other than the
issuer of such financial assets (the transferee).If the Company transfers substantially all the risks and rewards of ownership of the financial asset to the
transferee the financial asset shall be derecognised. If the Company retains substantially all the risks and
rewards of ownership of a financial asset the financial asset shall not be derecognised.If the Company neither transfers nor retains substantially all the risks and rewards of ownership of the financial
asset it accounts for the transaction as follows: if the Company does not retain control it derecognises the
financial asset and recognises any resulting assets or liabilities; if the control over the financial asset is not
waived the relevant financial asset is recognised according to the extent of its continuing involvement in the
transferred financial asset and the relevant liability is recognised accordingly.
(7) Offset of financial assets and financial liabilities
If the Company owns the legitimate rights of offsetting the recognised financial assets and financial liabilities
which are enforceable currently and the Company plans to realise the financial assets or to clear off the
financial liabilities on a net amount basis or simultaneously the net amount of financial assets and financial
liabilities shall be presented in the balance sheet upon offsetting. Otherwise financial assets and financial
liabilities are presented separately in the balance sheet without offsetting.
12. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.The Company measures the relevant asset and liability at fair value based on the presumption that the orderly
transaction to sell the asset or transfer the liability takes place either in the principal market for the relevant asset or
liability or in the absence of a principal market in the most advantageous market for relevant the asset or liability. The
principal or the most advantageous market must be a trading market accessible by the Company at the measurement
date. The Company adopts the presumption that market participants would use when pricing the asset or liability in
their best economic interest.If there exists an active market for a financial asset or financial liability the Company uses the quotation on the active
market as its fair value. If the market for a financial instrument is inactive the Company uses valuation technique to
recognise its fair value.Fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic
benefits by using the asset in its best use or by selling it to another market participant that would use the asset in its
best use.The Company adopts valuation techniques that are appropriate in the current circumstance and for which sufficient
data and other information are available prioritises the use of relevant observable inputs and uses unobservable
inputs only under the circumstances where such relevant observable inputs cannot be obtained or practicably
obtained.
2023 ANNUAL REPORT 195XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
12. Fair value measurement (Continued)
Assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within
the fair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole.Level 1: based on quoted prices (unadjusted) in active markets for identical assets or liabilities obtainable at the
measurement date. Level 2: observable inputs for the relevant asset or liability either directly or indirectly except for
Level 1 input. Level 3: unobservable inputs for the relevant assets or liability.At each balance sheet date the Company reassesses assets and liabilities measured at fair value that are recognised
in the financial statements on a recurring basis to determine whether transfers have occurred between fair value
measurement hierarchy levels.
13. Inventories
(1) Classification of inventories
Inventories of the Company mainly include raw materials work in progress goods in stock development
products and consumable biological assets etc.
(2) Pricing of inventories dispatched
Inventories of the Company are measured at their actual cost when obtained. Cost of raw materials goods in
stock and others will be calculated with weighted average method when being dispatched.Consumable biological assets refer to biological assets held-for-sale which include growing timber. Consumable
biological assets without a stock are stated at historical cost at initial recognition and subsequently measured
at fair value when there is a stock. Changes in fair values shall be recognised as profit or loss in the current
period. The cost of self-planting self-cultivating consumable biological assets is the necessary expenses
directly attributable to such assets prior to canopy closure including borrowing costs eligible for capitalisation.Subsequent expenses such as maintenance cost incurred after canopy closure shall be included in profit or loss
for the current period.The cost of consumable biological assets shall at the time of harvest or disposal be carried forward at carrying
amount using the stock volume proportion method.
(3) Recognition of and provision for inventory impairment
At the balance sheet date inventories are measured at the lower of cost and net realisable value. If the net
realisable value is below the cost of inventories a provision for inventory impairment is made.Net realisable value refers to the amount of the estimated price of inventories less the estimated cost incurred
upon completion estimated sales expenses and taxes and levies. The realisable value of inventories shall be
determined on the basis of definite evidence purpose of holding the inventories and effect of after-balance-
sheet-date events.The Company usually makes provisions for inventory impairment on the basis of individual inventory items;
however for inventories with large quantities and lower unit prices these inventories are accrued impairment
according to inventory categories.At the balance sheet date in case the factors causing inventory impairment no longer exists the original
provision for inventory impairment shall be reversed.
196 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
13. Inventories (Continued)
(4) Inventory stock taking system
The Company implements permanent inventory system as its inventory stock taking system.
(5) Amortisation of low-value consumables and packaging materials
The low-value consumables of the Company are amortised when issued for use.Packaging materials for turnover are amortised when issued for use.
14. Long-term equity investments
Long-term equity investments include the equity investments in subsidiaries joint ventures and associates. Associates
of the Company are those investees that the Company imposes significant influence over.
(1) Determination of initial investment cost
Long-term equity investments acquired through business combinations: for a long-term equity investment
acquired through a business combination involving enterprises under common control the investment cost shall
be the absorbing party’s share of the carrying amount of the owners’ equity under the consolidated financial
statements of the ultimate controlling party on the date of combination. For a long-term equity investment
acquired through a business combination involving enterprises not under common control the investment cost
of the long-term equity investment shall be the cost of combination.Long-term equity investments acquired through other means: for a long-term equity investment acquired
by cash payment the initial investment cost shall be the purchase cost actually paid; for a long-term equity
investment acquired by issuing equity securities the initial investment cost shall be the fair value of equity
securities issued.
(2) Subsequent measurement and method for profit or loss recognition
Investments in subsidiaries shall be accounted for using the cost method. Except for the investments which
meet the conditions of holding for sale investments in associates and joint ventures shall be accounted for
using the equity method.For a long-term equity investment accounted for using the cost method the cash dividends or profits declared
by the investees for distribution shall be recognised as investment gains and included in profit or loss for the
current period except the case of receiving the actual consideration paid for the investment or the declared but
not yet distributed cash dividends or profits which is included in the consideration.
2023 ANNUAL REPORT 197XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
14. Long-term equity investments (Continued)
(2) Subsequent measurement and method for profit or loss recognition (Continued)
For a long-term equity investment accounted for using the equity method where the initial investment cost
exceeds the investor’s interest in the fair value of the investee’s identifiable net assets at the acquisition date
no adjustment shall be made to the investment cost of the long-term equity investment. Where the initial
investment cost is less than the investor’s interest in the fair value of the investee’s identifiable net assets at the
acquisition date adjustment shall be made to the carrying amount of the long-term equity investment and the
difference shall be charged to profit or loss for the current period.Under the equity method investment gain and other comprehensive income shall be recognised based on
the Company’s share of the net profits or losses and other comprehensive income made by the investee
respectively. Meanwhile the carrying amount of long-term equity investment shall be adjusted. The carrying
amount of long-term equity investment shall be reduced based on the Group’s share of profit or cash dividend
distributed by the investee. In respect of the other movement of net profit or loss other comprehensive income
and profit distribution of investee the carrying amount of long-term equity investment shall be adjusted and
included in the capital reserves (other capital reserves). The Group shall recognise its share of the investee’s net
profits or losses based on the fair values of the investee’s individual separately identifiable assets at the time of
acquisition after making appropriate adjustments thereto according to the accounting policies and accounting
periods of the Company.For additional equity investment made in order to obtain significant influence or common control over investee
without resulted in control the initial investment cost under the equity method shall be the aggregate of
fair value of previously held equity investment and additional investment cost on the date of transfer. For
investments in non-trading equity instruments that were previously classified as at fair value through other
comprehensive income the cumulative fair value changes associated with them that were previously included
in other comprehensive income are transferred to retained earnings upon the change to the equity method of
accounting.In the event of loss of common control or significant influence over investee due to partial disposal of equity
investment the remaining equity interest after disposal shall be accounted for according to the Accounting
Standard for Business Enterprises No. 22 – Recognition and measurement of Financial Instruments. The
difference between its fair value and carrying amount shall be included in profit or loss for the current period. In
respect of other comprehensive income recognised under previous equity investment using equity method it
shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or
liability by investee at the time when equity method was ceased to be used. Movement of other owners’ equity
related to the previous equity investment shall be transferred to profit or loss for the current period.
198 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
14. Long-term equity investments (Continued)
(2) Subsequent measurement and method for profit or loss recognition (Continued)
In the event of loss of control over investee due to partial disposal of equity investment the remaining equity
interest which can apply common control or impose significant influence over the investee after disposal shall
be accounted for using equity method. Such remaining equity interest shall be treated as accounting for using
equity method since it is obtained and adjustment was made accordingly. For the remaining equity interest
which cannot apply common control or impose significant influence over the investee after disposal it shall be
accounted for using the Accounting Standard for Business Enterprises No. 22 – Recognition and measurement
of Financial Instruments. The difference between its fair value and carrying amount as at the date of losing
control shall be included in profit or loss for the current period.If the shareholding ratio of the Company is reduced due to the capital increase of other investors and as a
result the Company loses the control of but still can apply common control or impose significant influence over
the investee the net asset increase due to the capital increase of the investee attributable to the Company shall
be recognised according to the new shareholding ratio and the difference with the original carrying amount of
the long-term equity investment corresponding to the shareholding ratio reduction part that should be carried
forward shall be recorded in the profit or loss for the current period; and then it shall be adjusted according to
the new shareholding ratio as if equity method is used for accounting when acquiring the investment.In respect of the transactions between the Company and its associates and joint ventures the share of
unrealised gain or loss arising from internal transactions shall be eliminated by the portion attributable to the
Company. Investment gain or loss shall be recognised accordingly. However any unrealised loss arising from
internal transactions between the Company and an investee is not eliminated to the extent that the loss is
impairment loss of the transferred assets.
(3) Basis for determining the common control and significant influence on the investee
Common control is the contractually agreed sharing of control over an arrangement which relevant activities
of such arrangement must be decided by unanimously agreement from parties who share control. When
determining if there is any common control it should first be identified if the arrangement is controlled by
all the participants or the group consisting of the participants and then determined if the decision on the
arranged activity can be made only with the unanimous consent of the participants sharing the control. If all the
participants or a group of participants can only decide the relevant activities of certain arrangement through
concerted action it can be considered that all the participants or a group of participants share common
control on the arrangement. If there are two or more participant groups that can collectively control certain
arrangement it does not constitute common control. When determining if there is any common control the
relevant protection rights will not be taken into account.Significant influence is the power of the investor to participate in the financial and operating policy decisions
of an investee but to fail to control or joint control the formulation of such policies together with other parties.When determining if there is any significant influence on the investee the influence of the voting shares of the
investee held by the investor directly and indirectly and the potential voting rights held by the investor and
other parties which are exercisable in the current period and converted to the equity of the investee including
the warrants stock options and convertible bonds that are issued by the investee and can be converted in the
current period shall be taken into account.
2023 ANNUAL REPORT 199XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
14. Long-term equity investments (Continued)
(3) Basis for determining the common control and significant influence on the investee (Continued)
When the Company holds directly or indirectly through the subsidiary 20% (inclusive) to 50% of the voting
shares of the investee it is generally considered to have significant influence on the investee unless there is
concrete evidence to prove that it cannot participate in the production and operation decision-making of the
investee and cannot pose significant influence in this situation. When the Company owns less than 20% of the
voting shares of the investee it is generally considered that it has not significantly influenced on the investee
unless there is concrete evidence to prove that it can participate in the production and operation decision-
making of the investee and can impose significant influence in this situation.
(4) Impairment test method and impairment provision
For the method for making impairment provision for the investment in subsidiaries associates and joint
ventures please refer to Note V. 23.
15. Investment property
Investment property refers to real estate held to earn rentals or for capital appreciation or both. The investment
property of the Company includes leased land use rights land use rights held for sale after appreciation and leased
buildings.The investment property of the Company is measured initially at cost upon acquisition and subject to depreciation or
amortisation in the relevant periods according to the relevant provisions on fixed assets or intangible assets.For the method for making impairment provision for the investment property adopted cost method for subsequent
measurement please refer to Note V. 23.When an investment property is sold transferred retired or damaged the amount of proceeds on disposal of the
property net of the carrying amount and related tax and surcharges is recognised in profit or loss for the current
period.
16. Fixed assets
(1) Conditions for recognition
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.
200 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
16. Fixed assets (Continued)
(2) Depreciation method
The Company adopts the straight-line method for depreciation. Provision for depreciation will be started
when the fixed asset reaches its expected usable state and stopped when the fixed asset is derecognised
or classified as a non-current asset held for sale. Without regard to the depreciation provision the Company
determines the annual depreciation rate by category estimated useful lives and estimated residual value of the
fixed assets as below:
Year of Estimated residual Annual depreciation
Category depreciation value rate
Housing and building structure 20-40 5-10 2.25-4.75
Machinery and equipment 8-20 5-10 4.50-11.88
Transportation equipment 5-8 5-10 11.25-19.00
Electronic equipment and others 5 5-10 18.00-19.00
Where for the fixed assets for which impairment provision is made to determine the depreciation rate the
accumulated amount of the fixed asset impairment provision that has been made shall be deducted.
(3) The impairment test method and impairment provision method of the fixed assets are set out in Note V. 23.
(4) The Company will review the useful lives estimated net residual value and depreciation method of the fixed
assets at the end of each year.When there is any difference between the useful lives estimate and the originally estimated value the useful
lives of the fixed asset shall be adjusted. When there is any difference between the estimated net residual value
estimate and the originally estimated value the estimated net residual value shall be adjusted.
(5) Disposal of fixed assets
A fixed asset is derecognised on disposal or when it is expected that there shall be no economic benefit arising
from using or after disposal. Where the fixed assets are sold transferred retired or damaged the income
received after disposal after deducting the carrying amount and related taxes are recognised in profit or loss for
the current period.The Company regards the fixed assets that have been replaced due to technological transformation or
elimination of outdated production capacity and have no subsequent plan for use but have not reached the
retirement standard as idle fixed assets. The depreciation method for idle fixed assets remains unchanged from
before it was idle.
2023 ANNUAL REPORT 201XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
17. Construction in progress
Construction in progress of the Company is recognised based on the actual construction cost including all necessary
expenditures incurred for construction projects capitalised borrowing costs for the construction in progress before it
has reached the working condition for its intended use and other related expenses during the construction period.A construction in progress is reclassified to fixed assets when it has reached the working condition for its intended
use. For technological transformation or new machine-made paper projects the projects will be put into trial operation
for a period of time (usually three months) upon completion of construction. After the internal acceptance is completed
during the trial operation period the construction in progress will be transferred to fixed assets.The method for impairment provision of construction in progress is set out in Note V. 23.
18. Materials for project
The materials for project of the Group refer to various materials prepared for construction in progress including
construction materials equipment not yet installed and tools for production.The purchased materials for project are measured at cost and the planning materials for project are transferred to
construction in progress. After the completion of the project the remaining materials for project are transferred to
inventory.The method for impairment provision of materials for project is set out in Note V. 23.The closing balance of materials for project is presented as “construction in progress” item in the balance sheet.
19. Borrowing costs
(1) Recognition principle for the capitalisation of the borrowing costs
The borrowing costs incurred by the Company directly attributable to the acquisition construction or production
of a qualifying asset will be capitalised and included in the cost of relevant asset. Other borrowing costs will be
recognised as expenses when incurred according to the incurred amount and included in the profit or loss for
the current period. When the borrowing costs meet all the following conditions capitalisation shall be started:
* The capital expenditure has been incurred which includes the expenditure incurred by paying cash
transferring non-cash assets or undertaking interest-bearing liabilities for acquiring constructing or
producing the qualifying assets;
* the borrowing costs have been incurred; and
* the acquisition construction or production activity necessary for the asset to be ready for its intended use
or sale has been started.
202 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
19. Borrowing costs (Continued)
(2) Capitalisation period of borrowing costs
When a qualifying asset acquired constructed or produced by the Company is ready for its intended use or
sale the capitalisation of the borrowing costs shall discontinue. The borrowing costs incurred after a qualifying
asset is ready for its intended use or sale shall be recognised as expenses when incurred according to the
incurred amount and included in the profit or loss for the current period.Capitalisation of borrowing costs shall be suspended during periods in which the acquisition construction or
production of a qualifying asset is interrupted abnormally when the interruption is for a continuous period of
more than 3 months. The capitalisation of the borrowing costs shall be continued in the normal interruption
period.
(3) Calculation methods for capitalisation rate and capitalised amount of the borrowing costs
Where funds are borrowed for a specific purpose the amount of interest to be capitalised shall be the actual
interest expense incurred on that borrowing for the period less any bank interest earned from depositing the
borrowed funds before being used into banks or any investment income on the temporary investment of those
funds. Where funds are borrowed for general purpose the Company shall determine the amount of interest
to be capitalised on such borrowings by applying a capitalisation rate to the weighted average of the excess
amounts of cumulative expenditures on the asset over and above the amounts of specific-purpose borrowings.The capitalisation rate shall be the weighted average of the interest rates applicable to the general-purpose
borrowings.During the capitalisation period exchange differences on a specific purpose borrowing denominated in foreign
currency shall be capitalised. Exchange differences related to general-purpose borrowings denominated in
foreign currency shall be included in profit or loss for the current period.
20. Biological assets
(1) Standards for recognising biological assets
Bearer biological assets refer to biological assets held for the purpose of producing agricultural products
providing labour services or renting including economic forests firewood forests productive livestock and
draught animals. The Company’s bearer biological assets are mainly tea trees. The cost of a planted or
propagated bearer biological asset includes the expenses directly attributable to the asset and necessarily
incurred before the asset is ready for its intended production and operation including the borrowing costs that
are eligible for capitalisation.The management protection and feeding costs of a biological asset subsequent to crown closure or after
the asset is ready for its intended production and operation are expensed and recognised in profit or loss as
incurred. According to experience the tea trees grown by the Company generally take 7 years to reach the
crown closure stage.Depreciation of bearer biological assets is calculated using the straight-line method over the estimated useful
life of each biological asset less its residual value as follows:
Type of bearer biological Estimated residual Annual depreciation
assets Useful life (year) value rate
Tea tree 20 5%
2023 ANNUAL REPORT 203XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
20. Biological assets (Continued)
(1) Standards for recognising biological assets (Continued)
The Company reviews the useful life and estimated net residual value of a bearer biological asset and the
depreciation method applied at least at each financial year-end. A change in the useful life or estimated
net residual value of a fixed asset or the depreciation method used shall be accounted for as a change in
accounting estimate.The difference between the disposal income of the sale loss death or damage of a bearer biological asset net
of its carrying amount and related taxes is recognised in profit or loss for the current period.The method for impairment provision of bearer biological assets is set out in Note V. 23.
21. Intangible assets
The intangible assets of the Company include land use rights software patents and certificates of third party right.The intangible asset is initially measured at cost and its useful life is determined upon acquisition. If the useful life
is finite the intangible asset will be amortised over the estimated useful life using the amortisation method that
can reflect the estimated realisation of the economic benefits related to the asset starting from the time when it is
available for use. If it is unable to reliably determine the estimated realisation straight-line method shall be adopted
for amortisation. The intangible assets with uncertain useful life will not be amortised.The amortisation methods for the intangible assets with finite useful life are as follows:
The basis for Method of
Type Useful life determining useful life amortisation Remark
Land use rights 50-70 Years of certificate Straight-line method
Software 5-10 Estimated years for Straight-line method
software replacement
Patents 5-20 Useful life of purchase Straight-line method
Certificates of third party right 3 Useful life of purchase Straight-line method
The Company reviews the useful life and amortisation method of the intangible assets with finite useful life at the end
of each year. If it is different from the previous estimates the original estimates will be adjusted and will be treated as
a change in accounting estimate.If it is estimated on the balance sheet date that certain intangible asset can no longer bring future economic benefit
to the company the carrying amount of the intangible asset will be entirely transferred into the profit or loss for the
current period.The impairment method for the intangible assets is set out in Note V. 23.
204 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
22. R&D expenses
The R&D expenses of the Company are expenses directly related to the R&D activities of the Company including the
wages R&D staff direct investment costs depreciation expenses and long-term prepaid expenses design expenses
equipment testing expenses amortisation expenses of intangible assets and outsourced R&D expenses and other
expenses. Among them the wages of R&D staff are included in R&D expenses based on working hours of related
projects. Equipment production lines and sites shared between R&D activities and other production and operation
activities are included in R&D expenses according to the proportion of working hours and the proportion of area.The Company divides the expenses on internal R&D projects into expenses in the research phase and expenses in the
development phase. All R&D expenses of the Company are included in the current profits and losses when incurred.
23. Asset impairment
Impairment of long-term equity investments in subsidiaries associates and joint ventures asset impairment on
investment property fixed assets construction in progress bearer biological assets measured at cost right-of-
use assets intangible assets goodwill and others (excluding inventories deferred tax assets and financial assets)
subsequently measured at cost is determined as follows:
The Company determines if there is any indication of asset impairment as at the balance sheet date. If there is any
evidence indicating that an asset may be impaired recoverable amount shall be estimated for impairment test.Goodwill arising from business combinations intangible assets with an indefinite useful life and intangible assets not
ready for use will be tested for impairment annually regardless of whether there is any indication of impairment.The recoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of the
future cash flows expected to be derived from the asset. The Company estimates the recoverable amount of an
individual asset. If it is not possible to estimate the recoverable amount of the individual asset the Company shall
determine the recoverable amount of the asset group to which the asset belongs. The determination of an asset group
is based on whether major cash inflows generated by the asset group are independent of the cash inflows from other
assets or asset groups.When the recoverable amount of an asset or an asset group is less than its carrying amount the carrying amount is
reduced to its recoverable amount. The reduction amount is charged to profit or loss and an impairment provision is
made accordingly.For the purpose of impairment test of goodwill the carrying amount of goodwill acquired in a business combination is
allocated to the relevant asset groups on a reasonable basis from the acquisition date; where it is difficult to allocate
to the related asset groups it is allocated to the combination of related asset groups. The related asset groups or
combination of asset groups are those which can benefit from the synergies of the business combination and are not
larger than the reportable segments identified by the Company.In the impairment test if there is any indication that an asset group or a combination of asset groups related to
goodwill may be impaired the Company first tests the asset group or set of asset groups excluding goodwill for
impairment calculates the recoverable amount and recognises the corresponding impairment loss. An impairment test
is then carried out on the asset group or combination of asset groups containing goodwill by comparing its carrying
amount with its recoverable amount. If the recoverable amount is lower than the carrying amount an impairment loss
is recognised for goodwill.An impairment loss recognised shall not be reversed in a subsequent period.
2023 ANNUAL REPORT 205XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
24. Long-term prepaid expenses
The long-term prepaid expenses incurred by the Company shall be recognised based on the actual cost and evenly
amortised over the estimated benefit period. For the long-term prepaid expense that cannot benefit the subsequent
accounting periods its value after amortisation shall be entirely included in the profit or loss for the current period.
25. Contract liabilities
A contract liability represents the Company’s obligation to transfer goods to a customer for which the Company has
received consideration (or an amount of consideration is due) from the customer. If the customer has already paid
the contract consideration before the Company transfers goods to the customer or the Company has obtained the
unconditional collection right the Company will recognise such amount received or receivable as contract liabilities
at earlier of the actual payment by the customer or the amount payable becoming due. Contract assets and contract
liabilities under the same contract are presented on a net basis and contract assets and contract liabilities under
different contracts are not offset.
26. Employee benefits
(1) Scope of employee benefits
Employee benefits are all forms of considerations or compensation given by an entity in exchange for
services rendered by employees or for the termination of employment. Employee benefits include short-term
staff remuneration post-employment benefits termination benefits and other long-term employee benefits.Employee benefits include benefits provided to employees’ spouses children other dependants survivors of
the deceased employees or other beneficiaries.Employee benefits are presented as “employee benefits payable” and “long-term employee benefits payable” in
the balance sheet respectively according to liquidity.
(2) Short-term staff remuneration
Employee wages or salaries actually incurred bonuses and social insurance contributions such as medical
insurance work injury insurance maternity insurance and housing fund contributed at the applicable
benchmarks and rates are recognised as a liability as the employees provide services with a corresponding
charge to profit or loss or included in the cost of assets where appropriate.
206 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
26. Employee benefits (Continued)
(3) Post-employment benefits
Post-employment benefit plans include defined contribution plans and defined benefit plans. A defined
contribution plan is a post-employment benefit plan under which the Company pays fixed contributions
into a separate fund and the Company has no further obligations for payment. A defined benefit plan is a
postemployment benefit plan other than a defined contribution plan.Defined contribution plans
Defined contribution plans include basic pension insurance unemployment insurance and enterprise annuity
plan (if any).During the accounting period in which an employee provides service the amount payable calculated according
to the defined contribution plan is recognised as a liability and included in the profit or loss for the current period
or the cost of relevant assets.Defined benefit plans
For defined benefit plans the actuarial valuation is carried out by an independent actuary on the annual
balance sheet date and the cost of providing benefits is determined by the expected cumulative benefit unit
method. The cost of staff remuneration arising from the Company’s defined benefit plans includes the following
components:
* Service cost including current service cost past service cost and settlement gain or loss. In particular
the current service cost refers to the increase in the present value of obligations of defined benefit plans
arising from the service provided by staff in the current period; the past service cost refers to the increase
or decrease in the present value of obligations of defined benefit plans related to the service of the staff in
the previous period arising from the revision of defined benefit plans.* Net interest on net liabilities or net assets of defined benefit plans including interest income from the
assets under the plans interest expense arising from the obligations of defined benefit plans and interest
affected by asset caps.* Changes arising from the remeasurement of net liabilities or net assets of defined benefit plans.Unless other accounting standards require or allow costs of staff welfare to be included in costs of assets
the Company will include the above items * and * in the current profit and loss; and include item * in other
comprehensive income which will not be transferred back to profit or loss in subsequent accounting periods.When the original defined benefit plan is terminated all the part originally included in other comprehensive
income shall be transferred to retained profit within the scope of equity.
2023 ANNUAL REPORT 207XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
26. Employee benefits (Continued)
(4) Termination benefits
When the Company provides termination benefits to employees employee benefits liabilities arising from
termination benefits are recognised in profit or loss for the current period at the earlier of the following dates:
when the Company cannot revoke unilaterally compensation for dismissal due to the cancellation of labour
relationship plans and employee redundant proposals; the Company recognises cost and expenses related to
payment of compensation for dismissal and restructuring.For the early retirement plans economic compensations before the actual retirement date were classified as
termination benefits. During the period from the date of cease of render of services to the actual retirement
date relevant wages and contribution to social insurance for the employees proposed to be paid are recognised
in profit or loss on a one-off basis. Economic compensation after the official retirement date such as normal
pension is accounted for as post-employment benefits.
(5) Other long-term benefits
Other long-term employee benefits provided by the Group to employees that meet the conditions for defined
contribution plans are accounted for in accordance with the relevant provisions relating to defined contribution
plans as stated above. If the conditions for defined benefit plans are met the benefits shall accounted for inaccordance with the relevant provisions relating to defined benefit plans but the “changes arising from theremeasurement of net liabilities or net assets of defined benefit plans” in the relevant employee benefits shall be
included in the current profit and loss or the relevant costs of assets.
27. Provisions
Obligations pertinent to the contingencies which satisfy the following conditions are recognised by the Company as
provisions:
(1) the obligation is a current obligation borne by the Company;
(2) it is likely that an outflow of economic benefits from the Company will be resulted from the performance of the
obligation;
(3) the amount of the obligation can be reliably measured.
The provisions shall be initially measured based on the best estimate for the expenditure required for the performance
of the current obligation after taking into account relevant risks uncertainties time value of money and other
factors pertinent to the contingencies. If the time value of money has significant influence the best estimates shall
be determined after discounting the relevant future cash outflow. The Company reviews the carrying amount of the
provisions on the balance sheet date and adjust the carrying amount to reflect the current best estimates.If all or some expenses incurred for settlement of recognised provisions are expected to be borne by the third party
the compensation amount shall on a recoverable basis be recognised as asset separately and compensation
amount recognised shall not be more than the carrying amount of provisions.
28. Share-based payments and equity instruments
(1) Category of share-based payment
The Company’s share-based payment is either equity-settled or cash-settled.
(2) Determination of fair value of equity instruments
For the existence of an active market for options and other equity instruments granted by the Company the
fair value is determined at the quoted price in the active market. For options and other equity instruments with
no active market option pricing model shall be used to estimate the fair value of the equity instruments. The
following factors shall be taken into account using option pricing models: A. the exercise price of the option; B.the validity period of the option; C. the current market price of the share; D. the expected volatility of the share
price; E. predicted dividend of the share; and F. risk-free rate of the option within the validity period.
208 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
28. Share-based payments and equity instruments (Continued)
(3) Recognition of vesting of equity instruments based on the best estimate
On each balance sheet date within the vesting period the estimated number of equity instruments expected to
vest is revised based on the best estimate made by the Company according to the latest available subsequent
information as to changes in the number of employees with exercisable rights. On the vesting date the final
estimated number of equity instruments expected to vest should equal the actual number of equity instruments
expected to vest.
(4) Accounting treatment of implementation modification and termination of share-based payment
Equity-settled share-based payment shall be measured at the fair value of the equity instruments granted to
employees. For those may immediately vest after the grant the fair value of equity instrument at the grant date
shall be included in the relevant costs or expenses and the capital reserve shall be increased accordingly.If the right may not be exercised until the vesting period comes to an end or until the specified performance
conditions are met on each balance sheet date within the vesting period the services obtained in the current
period shall based on the best estimate of the number of vested equity instruments be included in the relevant
costs or expenses and the capital reserve at the fair value of the equity instrument at the grant date. After the
vesting period relevant costs or expenses and total shareholders’ equity which have been recognised will not
be adjusted.Cash-settled share-based payment shall be measured in accordance with the fair value of liability calculated
and recognised based on the shares or other equity instruments undertaken by the Company. For those may
immediately vest after the grant the fair value of the liability undertaken by the Company shall on the date of the
grant be included in the relevant costs or expenses and the liabilities shall be increased accordingly. If the right
may not be exercised until the vesting period comes to an end or until the specified performance conditions
are met on each balance sheet date within the vesting period the services obtained in the current period shall
based on the best estimate of the information about the exercisable right be included in the relevant costs or
expenses and the corresponding liabilities at the fair value of the liability undertaken by the Company. For each
of the balance sheet date and settlement date before the settlement of the relevant liabilities fair value of the
liabilities shall be remeasured and the changes will be included in the profit or loss for the current period.When there are changes in Company’s share-based payment plans if the modification increases the fair value
of the equity instruments granted corresponding recognition of service increase in accordance with the increase
in the fair value of the equity instruments; if the modification increases the number of equity instruments
granted the increase in fair value of the equity instruments is recognised as a corresponding increase in service
achieved. An increase in the fair value of equity instruments refers to the difference between the fair values of
the modified date. If the modification reduces the total fair value of shares paid or not conductive to the use of
other employees share-based payment plans to modify the terms and conditions of service it will continue to
be accounted for in the accounting treatment as if the change had not occurred unless the Company cancelled
some or all of the equity instruments granted.During the vesting period if the cancelled equity instruments (except for failure to meet the conditions of the
non-market vesting conditions) granted by the Company to cancel the equity instruments granted amount
treated as accelerated vesting of the remaining period should be recognised immediately in profit or loss while
recognising capital reserves. If employees or other parties can choose to meet non-vesting conditions but they
are not met in the vesting period the Company will treat them as cancelled equity instruments granted.
(5) Restricted shares
If the Company grants the restricted shares to incentive participants under an equity incentive plan the incentive
participants shall subscribe for the shares first. If the unlocking conditions stipulated in the equity incentive
plan cannot be fulfilled subsequently the Company repurchase the shares at the predetermined price. If the
registration and other capital increase procedures for the restricted shares issued to employees are completed
in accordance with relevant regulations the Company recognises share capital and capital reserve (or capital
premium) based on the subscription money received from the employees on the grant date; and recognises
treasury shares and other payables for repurchase obligation.
2023 ANNUAL REPORT 209XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
29. Other financial instruments such as preference shares and Perpetual Bonds
(1) Classification of financial liabilities and equity instruments
Financial instruments issued by the Company are classified into financial assets financial liabilities or equity
instruments on the basis of the substance of the contractual arrangements and the economic nature not only
its legal form together with the definition of financial asset financial liability and equity instruments on initial
recognition.
(2) Accounting treatment of other financial instruments such as preference shares and Perpetual Bonds
Financial instruments issued by the Company are initially recognised and measured in accordance with the
financial instrument standards; thereafter interest or dividends are accrued on each balance sheet date
and accounted for in accordance with relevant specific ASBEs i.e. to determine the accounting treatment
for interest expenditure or dividend distribution of the instrument based on the classification of the financial
instrument issued. For financial instruments classified as equity instruments their interest expenses or dividend
distributions are treated as profit distribution of the Company and their repurchases and cancellations are
treated as changes in equity; for financial instruments classified as financial liabilities their interest expenses or
dividend distribution are in principle accounted for with reference to borrowing costs and the gains or losses
arising from their repurchases or redemption are included in the profit or loss for the current period.For the transaction costs such as fees and commissions incurred by the Company for issuing financial
instruments if such financial instruments are classified as debt instruments and measured at amortised cost
they are included in the initial measured amount of the instruments issued; if such financial instruments are
classified as equity instruments they are deducted from equity.
30. Revenue
(1) General principles
The Company recognises revenue when it satisfies a performance obligation in the contract i.e. when the
customer obtains control of the relevant goods or services.Where a contract has two or more performance obligations the Company allocates the transaction price to
each performance obligation based on the percentage of respective unit price of goods or services guaranteed
by each performance obligation and recognises as revenue based on the transaction price that is allocated to
each performance obligation.If one of the following conditions is fulfilled the Company performs its performance obligation within a certain
period; otherwise it performs its performance obligation at a point of time:
* when the customer simultaneously receives and consumes the benefits provided by the Company when
the Company performs its obligations under the contract;
* when the customer is able to control the goods in progress in the course of performance by the Company
under the contract;
* when the goods produced by the Company under the contract are irreplaceable and the Company has
the right to payment for performance completed to date during the whole contract term.
210 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
30. Revenue (Continued)
(1) General principles (Continued)
For performance obligations performed within a certain period the Company recognises revenue by measuring
the progress towards complete of that performance obligation within that certain period. When the progress
of performance cannot be reasonably determined if the costs incurred by the Company are expected to
be compensated the revenue shall be recognised at the amount of costs incurred until the progress of
performance can be reasonably determined.For performance obligation performed at a point of time the Company recognises revenue at the point of time
at which the customer obtains control of relevant goods or services. To determine whether a customer has
obtained control of goods or services the Company considers the following indications:
* The Company has the current right to receive payment for the goods which is when the customer has the
current payment obligations for the goods.* The Company has transferred the legal title of the goods to the customer which is when the client
possesses the legal title of the goods.* The Company has transferred the physical possession of goods to the customer which is when the
customer obtains physical possession of the goods.* The Company has transferred all of the substantial risks and rewards of ownership of the goods to the
customer which is when the customer obtain all of the substantial risks and rewards of ownership of the
goods to the customer.* The customer has accepted the goods or services.* Other information indicates that the customer has obtained control of the goods.
(2) Specific methods
The Company’s revenue mainly comes from the following types of business: sales of goods provision of hotel
and property services and provision of financial leasing and factoring services.Sales of goods
The Company produces and sells machine-made paper and raw materials electricity and steam construction
materials papermaking chemicals plastic automobile accessories moulds and other products.In terms of domestic sales revenue is recognised at a point in time when the control over the goods is
transferred after the Company has delivered the goods (other than electricity and steam) sold to the location as
specified in the contract and the customer has accepted the goods.In terms of overseas sales revenue is recognised on the day when the goods (other than electricity and steam)
sold are loaded on board and declared.
2023 ANNUAL REPORT 211XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
30. Revenue (Continued)
(2) Specific methods (Continued)
Sales of goods (Continued)
The sales of electricity and steam by the Company are performance obligations performed within a certain
period. For sales of electricity the Company recognises revenue from sales of electricity based on the quantity
of electricity delivered to customers every month at a price agreed in the contract. For sales of steam the
Company recognises revenue from sales of steam based on the amount of steam delivered to customers every
month at a price agreed in the contract.The credit periods granted by the Company to customers in various industries are consistent with the practices
of various industries therefore there is no significant financing component.The Company provides product quality assurance for the sales of products and recognises corresponding
provisions. The Company does not provide any additional services or additional quality assurance so the
product quality assurance does not constitute a separate fulfilment obligation.The Company’s cooperation model with distributors is outright sales and the recognition of sales revenue under
the distribution model is consistent with the direct sales model.Certain contracts between the Company and its customers contain arrangements on sales rebates which will
give rise to variable consideration. Where a contract contains variable consideration the Company determines
the best estimates on the variable consideration based on expected values or the most probable amount
provided that transaction prices including variable consideration shall not exceed the cumulative amount of
recognised revenue upon the removal of relevant uncertainties in connection with which a significant reversal is
highly unlikely.For sales of machine-made paper with sales return clauses the revenue recognised is subject to the cumulative
amount of recognised revenue in connection with which a significant reversal is highly unlikely. The Company
recognises the liabilities according to the expected amount of refund and recognises the carrying amount of the
goods returned at the time of transfer deducting the estimated cost of recovering the goods as an asset (including
the loss of the value of the returned goods).Provision of hotel and property services
The Company provides hotel and property services to external parties. Since the customers obtain and
consume the economic benefits brought by the Company’s performance of the contract while the Company
performs the contract the Company recognises revenue according to the progress of the contract performance.Since the performance progress occurs evenly the Company recognises revenue by amortising on a straight-
line basis over the service period.Provision of financial leasing and factoring services
The Company recognises revenue from external financial leasing and factoring services according to the
effective interest rate.For assets that have not experienced credit impairment the Company determines its interest income based
on the amount of the book balance of the financial asset (i.e. without considering the impact of impairment)
multiplied by the effective interest rate.
212 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
30. Revenue (Continued)
(2) Specific methods (Continued)
Provision of financial leasing and factoring services (Continued)
There are two cases for financial assets with credit impairment:
For financial assets that are not credit-impaired when purchased or originated but are credit-impaired in
subsequent periods the Company shall in the subsequent periods when impairment occurs determine its
income based on the amount of the amortised cost of the financial asset (i.e. the book balance minus the
accrued impairment) multiplied by the effective interest rate (the effective interest rate determined at the time of
initial recognition which does not change due to the occurrence of impairment).For financial assets that are credit-impaired when purchased or originated the Company shall upon initial
recognition determines its income based on the amount of the amortised cost of the financial asset multiplied
by the credit-adjusted effective interest rate (i.e. the interest rate at which the projected future cash flows after
impairment are discounted to the amortised cost at the time of purchase or origination).
31. Contract costs
Contract costs are either the incremental costs of obtaining a contract with a customer or the costs to fulfil a contract
with a customer.Incremental costs of obtaining a contract are those costs that the Company incurs to obtain a contract with a
customer that it would not have incurred if the contract had not been obtained e.g. sales commission. The Company
recognises the incremental costs of obtaining a contract with a customer as an asset if it expects to recover those
costs. Other costs of obtaining a contract are expensed when incurred.If the costs to fulfil a contract with a customer are not within the scope of inventories or other ASBEs the Company
recognises an asset from the costs incurred to fulfil a contract only if those costs meet all of the following criteria:
* the costs relate directly to an existing contract or to a specifically identifiable anticipated contract including
direct labour direct materials allocations of overheads (or similar costs) costs that are explicitly chargeable to
the customer and other costs that are incurred only because the Company entered into the contract;
* the costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to
satisfy) performance obligations in the future;
* the costs are expected to be recovered.
2023 ANNUAL REPORT 213XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
31. Contract costs (Continued)
Assets recognised for the incremental costs of obtaining a contract and assets recognised for the costs to fulfil
a contract (the “assets related to contract costs”) are amortised on a systematic basis that is consistent with the
transfer to the customer of the goods or services to which the assets relate and recognised in profit or loss for the
current period. If the amortisation period does not exceed one year it shall be recognised in profit or loss for the
current period.The Company recognises an impairment loss in profit or loss to the extent that the carrying amount of an asset related
to contract costs exceeds:
* remaining amount of consideration that the Company expects to receive in exchange for the goods or services
to which the asset relates;
* the cost estimated to be happened for the transfer of related goods or services.
32. Government grants
A government grant is recognised when the grant will be received and that the Company will comply with the
conditions attaching to the grant.If a government grant is in the form of a monetary asset it is measured at the amount received or receivable. If a
government grant is in the form of non-monetary asset it is measured at fair value; if the fair value cannot be obtained
in a reliable way it is measured at the nominal amount of RMB1.Government grants obtained for acquisition or construction of long-term assets or other forms of long-term asset
formation are classified as government grants related to assets while the remaining government grants are classified
as government grants related to revenue.Regarding the government grant not clearly defined in the official documents and can form long-term assets the
part of government grant which can be referred to the value of the assets is classified as government grant related
to assets and the remaining part is government grant related to revenue. For the government grant that is difficult to
distinguish the entire government grant is classified as government grant related to revenue.
214 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
32. Government grants (Continued)
A government grant related to an asset shall be recognised as deferred income and evenly amortised to profit or loss
over the useful life of the asset in a reasonable and systematic manner. For a government grant related to revenue if
the grant is a compensation for related costs expenses or losses incurred the grant shall be recognised in profit or
loss for the current period or used to offset related costs; if the grant is a compensation for related costs expenses
or losses to be incurred in subsequent periods the grant shall be recognised as deferred income and recognised in
profit or loss over the periods in which the related costs expenses or losses are recognised or used to offset related
costs. A government grant measured at nominal amount is directly included in profit or loss for the current period. The
Company adopts a consistent approach to the same or similar government grants.A government grant related to daily activities is recognised in other gains or used to offset related costs relying on
the essence of economic business; otherwise recognised in non-operating income or used to offset non-operating
expenses.For the repayment of a government grant already recognised if the carrying amount of relevant assets was written off
at initial recognition the carrying amount of the assets shall be adjusted; if there is any related deferred income the
repayment shall be offset against the carrying amount of the deferred income and any excess shall be recognised in
profit or loss for the current period; otherwise the repayment shall be recognised immediately in profit or loss for the
current period.
33. Deferred income tax assets/deferred income tax liabilities
Income tax comprises current income tax expense and deferred income tax expense which are included in profit or
loss for the current period as income tax expenses except for deferred tax related to transactions or events that are
directly recognised in owners’ equity which are recognised in owners’ equity and deferred tax arising from a business
combination which is adjusted against the carrying amount of goodwill.Temporary differences arising from the difference between the carrying amount of an asset or liability and its tax base
at the balance sheet date of the Company shall be recognised as deferred income tax using the balance sheet liability
method.All the taxable temporary differences are recognised as deferred income tax liabilities except for those incurred in the
following transactions:
(1) The initial recognition of goodwill and the initial recognition of an asset or liability in a transaction which is
neither a business combination nor affects accounting profit or taxable profit (or deductible loss) when the
transaction occurs (other than a single transaction that the initially recognised assets and liabilities result in an
equal amount of taxable temporary differences and deductible temporary differences);
(2) The taxable temporary differences associated with investments in subsidiaries associates and joint ventures
and the Company is able to control the timing of the reversal of the temporary difference and it is probable that
the temporary difference will not reverse in the foreseeable future.
2023 ANNUAL REPORT 215XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
33. Deferred income tax assets/deferred income tax liabilities (Continued)
The Company recognises a deferred income tax asset for the carry forward of deductible temporary differences
deductible losses and tax credits to subsequent periods to the extent that it is probable that future taxable profits
will be available against which the deductible temporary differences deductible losses and tax credits can be utilised
except for those incurred in the following transactions:
(1) The transaction is neither a business combination nor affects accounting profit or taxable profit (or deductible
loss) when the transaction occurs (other than a single transaction that the initially recognised assets and
liabilities result in an equal amount of taxable temporary differences and deductible temporary differences);
(2) The deductible temporary differences associated with investments in subsidiaries associates and joint ventures
the corresponding deferred income tax asset is recognised when both of the following conditions are satisfied:
it is probable that the temporary difference will reverse in the foreseeable future and it is probable that taxable
profits will be available in the future against which the temporary difference can be utilised.At the balance sheet date deferred income tax assets and deferred income tax liabilities are measured at the tax
rates that are expected to apply to the period when the asset is realised or the liability is settled and their tax effect is
reflected accordingly.At the balance sheet date the Company reviews the carrying amount of a deferred income tax asset. If it is probable
that sufficient taxable profits will not be available in future periods to allow the benefit of the deferred tax asset to be
utilised the carrying amount of the deferred tax asset is reduced. Any such reduction in amount is reversed when it
becomes probable that sufficient taxable profits will be available.At the balance sheet date deferred income tax assets and deferred income tax liabilities are presented as the net
amount after offsetting when the following conditions are met at the same time:
(1) The tax payer within the Company has the legal right to settle current income tax assets and current income tax
liabilities on a net basis;
(2) Deferred income tax assets and deferred income tax liabilities are related to income taxes levied by the same
tax collection and administration authority on the same taxpayer within the Company.
34. Lease
(1) Identification of leases
On the beginning date of the contract the Company (as a lessee or lessor) assesses whether the customer in
the contract has the right to obtain substantially all of the economic benefits from use of the identified asset
throughout the period of use and has the right to direct the use of the identified asset throughout the period of
use. If a contract conveys the right to control the use of an identified asset and multiple identified assets for a
period of time in exchange for consideration the Company identifies such contract is or contains a lease.
(2) The Company as lessee
On the beginning date of the lease the Company recognises right-of-use assets and lease liabilities for all
leases except for short-term lease and low-value asset lease with simplified approach.The accounting policy for right-of-use assets is set out in Note V. 35.
216 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
34. Lease (Continued)
(2) The Company as lessee (Continued)
The lease liability is initially measured at the present value of the lease payments that are not paid at the
beginning date of the lease using the interest rate implicit in the lease. Where the interest rate implicit in the
lease cannot be determined the incremental borrowing rate is used as the discount rate. Lease payments
include fixed payments and in-substance fixed payments less any lease incentives receivable; variable
lease payments that are based on an index or a rate; the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option; payments for terminating the lease if the lease term reflects the
lessee exercising that option of terminating; and amounts expected to be payable by the lessee under residual
value guarantees. Subsequently the interest expense on the lease liability for each period during the lease term
is calculated using a constant periodic rate of interest and is recognised in profit or loss for the current period.Variable lease payments not included in the measurement of lease liabilities are recognised in profit or loss for
the period in which they actually arise.Short-term lease
Short-term leases refer to leases with a lease term of less than 12 months from the commencement date
except for those with a purchase option.Lease payments on short-term leases are recognised in the cost of related assets or current profit or loss on a
straight-line basis over the lease term.For short-term leases the Company chooses to adopt the above simplified approach for the following types of
assets that meet the conditions of short-term lease according to the classification of leased assets.Low-value equipment
Transportation vehicles
Low-value asset lease
A low-value asset lease is a lease that the value of a single leased asset is below RMB40000 when it is a new
asset.Lease payments on low-value asset leases are recognised on a straight-line basis over the lease term and
either included in the cost of the related asset or charged to profit or loss for the current period.For a low-value asset lease the Company chooses the above simplified approach based on the specific
circumstances of each lease.
2023 ANNUAL REPORT 217XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
34. Lease (Continued)
(2) The Company as lessee (Continued)
Lease modification
The Company accounts for a lease modification as a separate lease when the modification occurs and the
following conditions are met: * the lease modification expands the scope of lease by adding the right to use
one or more of the leased assets; and * the increase in consideration is equivalent to the separate price for the
expanded scope of lease adjusted for that contractual situation.Where a lease modification is not accounted for as a separate lease at the effective date of the lease
modification the Company reallocates the consideration of the modified contract redetermines the lease term
and remeasures the lease liability based on the present value of the lease payments after the modification and
the revised discount rate.If a lease modification results in a reduction in the scope of the lease or a shortening of the lease term the
Company reduces the carrying amount of the right-of-use asset accordingly and includes in the profit or loss for
the period the gain or loss associated with the partial or complete termination of the lease.Where other lease modifications result in a remeasurement of the lease liability the Company adjusts the
carrying amount of the right-of-use asset accordingly.
(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.
218 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
34. Lease (Continued)
(3) The Company as lessor (Continued)
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.
(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.
2023 ANNUAL REPORT 219XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
34. Lease (Continued)
(5) Sale and leaseback
The lessee and the lessor shall assess and determine whether the transfer of assets in a sale and leaseback
transaction is a sale in accordance with the requirements of the Accounting Standard for Business Enterprises
No. 14 – Revenue.Where asset transfer under the sale and leaseback transactions is a sale the lessee shall measure the right-
of-use assets created by the sale and leaseback based on the portion of carrying amount of the original
assets related to right of use obtained upon leaseback and only recognise relevant profit or loss for the right
transferred to the lessor. The lessor shall account for the purchase of assets in accordance with other applicable
ASBEs and account for the lease of assets in accordance with this standard.Where asset transfer under the sale and leaseback transactions is not a sale the lessee shall continue to
recognise the transferred assets while recognising a financial liability equal to the transfer income and account
for such liability according to the Accounting Standard for Business Enterprises No. 22 – Recognition and
Measurement of Financial Instruments; or not to recognise the transferred assets but recognise a financial asset
equal to the transfer income and account for such asset according to the Accounting Standard for Business
Enterprises No. 22 – Recognition and Measurement of Financial Instruments.
35. Right-of-use assets
(1) Conditions for recognition of right-of-use assets
Right-of-use assets are defined as the right of underlying assets in the lease term for the Company as a lessee.Right-of-use assets are initially measured at cost at the commencement date of the lease. The cost includes the
amount of the initial measurement of lease liability; lease payments made at or before the inception of the lease
less any lease incentives enjoyed; initial direct costs incurred by the Company as lessee; costs to be incurred
in dismantling and removing the underlying assets restoring the site on which it is located or restoring the
underlying asset to the condition required by the terms and conditions of the lease incurred by the Company
as lessee. As a lessee the Company recognises and measures the costs of dismantling and restoration in
accordance with the Accounting Standard for Business Enterprises No. 13 – Contingencies. Subsequently the
lease liability is adjusted for any remeasurement of the lease liability.
(2) Depreciation method of right-of-use assets
The Company uses the straight-line method for depreciation. Where the Company as a lessee is reasonably
certain to obtain ownership of the leased asset at the end of the lease term such asset is depreciated over the
remaining useful life of the leased asset. Where ownership of the lease assets during the lease term cannot be
reasonably determined right-of-use assets are depreciated over the lease term or the remainder of useful lives
of the lease assets whichever is shorter.
(3) For the methods of impairment test and impairment provision of right-of-use assets please refer to Note V. 23.
220 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
36. Production safety expenses and maintenance costs
According to relevant provisions the Company makes provisions for production safety expenses based on the
revenue of the power plant in the previous year and the prescribed percentages. The specific provisions are as
follows: * if the revenue of the previous year did not exceed RMB10 million provisions would be made at 3%;
* if the revenue of the previous year exceeded RMB10 million but did not exceed RMB100 million provisions would
be made at 1.5%; * if the revenue of the previous year exceeded RMB100 million but did not exceed RMB1000
million provisions would be made at 1%; * if the revenue of the previous year exceeded RMB1000 million but did
not exceed RMB5000 million provisions would be made at 0.8%; * if the revenue of the previous year exceeded
RMB5000 million but did not exceed RMB10000 million provisions would be made at 0.6%; * if the revenue of the
previous year exceeded RMB10000 million provisions would be made at 0.2%.Provisions for production safety expenses are included in the cost of related products or profit or loss of the current
period and included in “special reserves” correspondingly.When the provisions for production safety expenses and maintenance costs are utilised within the prescribed scope
if such production safety expenses are applied and related to revenue expenditures specific reserve is directly offset.When fixed assets are incurred they are included in the “construction in progress” item and transferred to fixed
assets when the status of the assets is ready for intended use. They are then offset against specific reserve based on
the amount included in fixed assets while corresponding amount is recognised in accumulated depreciation. Such
fixed assets are no longer depreciated in subsequent periods.
37. Repurchase of shares
Prior to cancellation or transfer of shares repurchased the Company recognises all expenditures arising from share
repurchase as cost of treasury shares in the treasury share account. Considerations and transaction fee incurred from
the repurchase of shares shall lead to the elimination of owners’ equity and does not recognise profit or loss when
shares of the Company are repurchased transferred or cancelled.The difference between the actual amount received and the carrying amount of the treasury shares are recognised as
capital reserve when the treasury shares are transferred if the capital reserve is not sufficient to be offset the excess
amount shall be recognised to offset surplus reserve and retained profit. When the treasury shares are cancelled
the capital shall be eliminated according to the number of shares and par value of cancelled shares the difference
between the actual amount received and the carrying amount of the treasury shares are recognised as capital reserve
if the capital reserve is not sufficient to be offset the excess amount shall be recognised to offset surplus reserve and
retained profit.
38. Debt restructuring
(1) The Company as the debtor
The debt is derecognised when the current obligation of the debt is discharged. Specifically when the
uncertainty about the execution process and results of the debt restructuring agreement is eliminated the gains
and losses related to the debt restructuring are recognised.If debt restructuring is carried out by repaying debts with assets the Company shall derecognise the relevant
assets and the debts paid off when they meet the conditions for derecognition and the difference between the
book value of the debts paid off and the book value of the transferred assets shall be included in the current
profit and loss.If the debt is converted into equity instruments for debt restructuring the Company shall derecognise the
debts paid off when they meet the conditions for derecognition. When the Company initially recognises an
equity instrument it is measured based on the fair value of the equity instrument. If the fair value of the equity
instrument cannot be measured reliably it is measured based on the fair value of the debt paid off. The
difference between the book value of the debts paid off and the recognised amount of the equity instrument
shall be included in the current profit and loss.
2023 ANNUAL REPORT 221XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
38. Debt restructuring (Continued)
(1) The Company as the debtor (Continued)
When a debt restructuring involves the modification of other terms of a debt the Company shall recognise and
measure the restructured debts in accordance with the Accounting Standards for Business Enterprises No. 22 –
Recognition and Measurement of Financial Instruments and the Accounting Standards for Business Enterprises
No. 37 – Presentation of Financial Instruments.When a debt is settled by multiple assets or combination of various methods in a debt restructuring the
Company shall recognise and measure the equity instruments and restructured debts in accordance with the
aforementioned methods and the difference between the book value of the debts paid off and the sum of the
book value of the transferred assets and the recognised amount of the equity instruments and restructured
debts shall be included in the current profit and loss.
(2) The Company as the creditor
The debt receivable are derecognised when the contractual rights to receive the cash flows under the debt
receivable expire. Specifically when the uncertainty about the execution process and results of the debt
restructuring agreement is eliminated the gains and losses related to the debt restructuring are recognised.If debt restructuring is carried out by repaying debts with assets the Company shall initially recognise assets
other than the transferred financial assets at cost. In particular the cost of inventories includes the fair value
of the debt receivable and any directly attributable expenditure including taxes transportation costs handling
costs insurance and other costs for bringing the assets to the current position and condition; the cost
of investment in associates or joint ventures includes the fair value of the debt receivable and any directly
attributable expenditure including taxes; the cost of investment property includes the fair value of the debt
receivable and any directly attributable expenditure including taxes; the cost of fixed assets includes the fair
value of the debt receivable and any directly attributable expenditure including taxes transportation costs
handling costs installation costs professional service fees and other costs for bringing the assets to the status
for intended use; the cost of intangible assets includes the fair value of the debt receivable and any directly
attributable expenditure including taxes for bringing the assets to the status for intended use. The difference
between the fair value and the book value of the debt receivable is included in the current profit and loss.When the debt restructuring causes the Company to convert the debt receivable to an equity investment of joint
ventures or associates the Company shall measure the equity investment based on the sum of the fair value of
debt receivable and any directly attributable taxes and other costs of the investment. The difference between
the fair value and the book value of the debt receivable is recognised in the current profit and loss.When a debt restructuring involves the modification of other terms of a debt the Company recognises
and measures the restructured debt receivable in accordance with the Accounting Standards for Business
Enterprises No. 22 – Recognition and Measurement of Financial Instruments.When a debt is settled by multiple assets or combination of various methods in a debt restructuring the
Company first recognises and measures the financial assets received and restructured debt receivable in
accordance with the Accounting Standards for Business Enterprises No. 22 – Recognition and Measurement of
Financial Instruments and then allocates the net value which is the fair value of the debt receivable deducted
by the recognised amount of financial assets received and restructured debt receivable to the costs of non-
financial assets received based on their relative fair value. The difference between the fair value and the book
value of the debt receivable is recognised in the current profit and loss.
222 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
39. Critical accounting judgments and estimates
The Company gives continuous assessment on among other things the reasonable expectations of future events
and the critical accounting estimates and key assumptions adopted according to its historical experience and other
factors. The critical accounting estimates and key assumptions that are likely to lead to significant adjustment risks of
the carrying amount of assets and liabilities for the next financial year are listed as follows:
Classification of financial assets
Significant judgements involved in determining the classification of financial assets include the analysis of business
models and contractual cash flow characteristics.Factors considered by the Company in determining the business model for a group of financial assets include how the
asset’s performance is evaluated and reported to key management personnel how risks are assessed and managed
and how the relevant management personnel are compensated.When the Company assesses whether the contractual cash flows of the financial assets are consistent with basic
lending arrangements the main judgements are described as below: whether the principal amount may change over
the life of the financial asset (for example if there are repayments of principal); whether the interest includes only
consideration for the time value of money credit risk other basic lending risks and a profit margin and cost. For
example whether the amount repaid in advance reflects only the outstanding principal and interest thereon as well as
reasonable compensation paid for early termination of the contract.Measurement of the ECLs of accounts receivable
The Company calculates the ECLs of accounts receivable using the exposure to default risk and ECL rate of accounts
receivable and determines the ECL rate based on default probability and default loss rate. When determining the
ECL rate the Company adjusts its historical data by referring to information such as historical credit loss experience
as well as current situation and forward-looking information. When considering the forward-looking information
indicators used by the Company include the risk of economic downturn external market environment technology
environment and changes in customers. The assumptions relating to the ECL calculation are monitored and reviewed
by the Company on a regularly basis.Measurement of past due credit losses on finance lease receivables
The Company calculates the ECLs of accounts receivable using the exposure to default risk and ECL rate of accounts
receivable and determines the ECL rate based on default probability and default loss rate. When determining the ECL
rate the Company takes into account the current status and repayment ability of the counterparty while considering
the value of collateral guarantees and other credit enhancement measures related to the lease receivables.
2023 ANNUAL REPORT 223XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
39. Critical accounting judgments and estimates (Continued)
Deferred income tax assets
Deferred income tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit
will be available against which the losses can be utilised. Significant management judgement is required to determine
the amount of deferred income tax assets that can be recognised based upon the likely timing and level of future
taxable profits together with future tax planning strategies.Impairment of goodwill
The Company assesses the impairment of goodwill at least annually which requires estimates of the use value of
asset groups allocated with goodwill. When estimating the use value the Company is required to estimate the future
cash flows from such asset groups while selecting the appropriate discount rate to calculate the present value of
future cash flows.Impairment of inventories
On the balance sheet date the Company determines the net realisable value of its inventories based on the estimated
selling prices of the inventories less costs estimated to be incurred upon completion estimated selling expenses
and related taxes. The determination of net realisable value of inventories is based on conclusive evidence obtained
taking into account the purpose for which the inventories are held and the effect of events after the balance sheet
date. Provision for decline in value of inventories is made when their net realisable value is lower than the cost.Impairment of fixed assets and long-term equity investments
The Company assesses the impairment of fixed assets and long-term equity investments at least annually. When any
event or change in circumstances indicates that the carrying amount may not be recoverable the carrying amount
of such project is reviewed for impairment. If the carrying amount of an asset exceeds its recoverable amount
impairment loss is recognised for the difference. The recoverable amount is determined as the higher of the asset’s
fair value less costs of disposal and the present value of the asset’s estimated future cash flows. A number of
assumptions are made in estimating the recoverable amount of assets including future cash flows and discount rates
relating to non-current assets. If future events differ from these assumptions the recoverable amount shall be revised
which may have an impact on the operations or financial position of the Company.
224 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
40. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
* Interpretation No. 16 of the Accounting Standards for Business Enterprises
The Ministry of Finance issued Interpretation No. 16 of the Accounting Standards for Business Enterprises
(Cai Kuai [2022] No. 31) (“Interpretation No. 16”) in November 2022.
Interpretation No. 16 stipulates that for a single transaction that is not a business combination that
affects neither the accounting profits nor the taxable income (or deductible loss) upon the occurrence
of the transaction and that the initially recognised assets and liabilities result in an equal amount of
taxable temporary differences and deductible temporary differences the taxable temporary differences
and deductible temporary differences arising from the initial recognition of assets and liabilities in such
transaction shall be recognised for the corresponding deferred income tax liabilities and deferred income
tax assets upon the occurrence of the transaction in accordance with the Accounting Standard for
Business Enterprises No. 18 – Income Tax and other relevant provisions. For the above transactions
that occurred between the beginning of the earliest period for the presentation of financial statements
when the above provisions are first implemented and the implementation date of this interpretation the
enterprise shall in accordance with the above provisions adjust the cumulative impact number to the
opening retained earnings and other related financial statement items for the earliest period presented
in the financial statements. The above accounting treatment requirement became effective on 1 January
2023.
The leasing business of the Company mainly involves forestry companies. Since forestry companies do
not pay corporate income tax it is not necessary to make adjustments in accordance with Interpretation
No. 16.
(2) Changes in significant accounting estimates
The Company did not have any change in significant accounting estimates during the year.
2023 ANNUAL REPORT 225XII Financial Report
VI. Taxation
1. Main tax types and tax rates
Tax type Tax base Tax rate (%)
Value added tax (VAT) VAT payable (VAT payable is calculated by multiplying 13/9/6
taxable sales amount by the applicable tax rate less
current deductible input VAT)
Property tax Rental income and property price 1.2/12
Urban maintenance and construction tax Actual turnover tax paid 7
Enterprise income tax (EIT) Taxable income 25
Disclosure of taxable entities subject to different EIT tax rates
Name of taxable entity EIT tax rate (%)
Shandong Chenming Paper Holdings Limited 15
Shouguang Meilun Paper Co. Ltd. 15
Jilin Chenming Paper Co. Ltd. 15
Jiangxi Chenming Paper Co. Ltd. 15
Zhanjiang Chenming Pulp & Paper Co. Ltd. 15
Huanggang Chenming Pulp & Paper Co. Ltd. 15
Kunshan Tuoan Plastic Products Co. Ltd. 15
Shouguang Xinyuan Coal Co. Ltd. 20
Shouguang Chenming Papermaking Machine Co. Ltd. 20
Shouguang Wei Yuan Logistics Company Limited 20
Shouguang Shun Da Customs Declaration Co. Ltd. 20
Zhanjiang Chenming Arboriculture Development Co. Ltd. Exempt from EIT
Nanchang Chenming Arboriculture Development Co. Ltd. Exempt from EIT
Chenming Arboriculture Co. Ltd. Exempt from EIT
Yangjiang Chenming Arboriculture Development Co. Ltd. Exempt from EIT
2. Tax incentives
(1) Enterprise income tax
On 15 December 2021 the Company received a high and new technology enterprise certificate with a
certification number of GR202137005666. Pursuant to the requirements under the Law of the People’s Republic
of China on Enterprise Income Tax and the relevant policies the Company is subject to a corporate income tax
rate of 15% of taxable income and is entitled to the preferential treatment from 2021 to 2023.Shouguang Meilun Paper Co. Ltd. a subsidiary of the Company received a high and new technology
enterprise certificate with a certification number of GR202137005468 on 15 December 2021. Pursuant to the
requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant
policies Shouguang Meilun is subject to an enterprise income tax rate of 15% of taxable income and is entitled
to the preferential treatment from 2021 to 2023.Jilin Chenming Paper Co. Ltd. a subsidiary of the Company received a high and new technology enterprise
certificate with a certification number of GR202222000414 on 29 November 2022. Pursuant to the requirements
under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies Jilin
Chenming is subject to an enterprise income tax rate of 15% of taxable income and is entitled to the
preferential treatment from 2022 to 2024.
226 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VI. Taxation (Continued)
2. Tax incentives (Continued)
(1) Enterprise income tax (Continued)
Jiangxi Chenming Paper Co. Ltd. a subsidiary of the Company received a high and new technology enterprise
certificate with a certification number of GR202236000018 on 4 November 2022. Pursuant to the requirements
under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies Jiangxi
Chenming is subject to an enterprise income tax rate of 15% of taxable income and is entitled to the
preferential treatment from 2022 to 2024.Zhanjiang Chenming Pulp & Paper Co. Ltd. a subsidiary of the Company received a high and new technology
enterprise certificate with a certification number of GR202144001212 on 20 December 2021. Pursuant to the
requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant
policies Zhanjiang Chenming is subject to an enterprise income tax rate of 15% of taxable income and is
entitled to the preferential treatment from 2021 to 2023.Huanggang Chenming Pulp & Paper Co. Ltd. a subsidiary of the Company received a high and new
technology enterprise certificate with a certification number of GR202342003128 on 5 December 2023. Pursuant
to the requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant
policies Huanggang Chenming is subject to an enterprise income tax rate of 15% of taxable income and is
entitled to the preferential treatment from 2023 to 2025.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 1 December 2023. 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 2023 to 2025.Pursuant to the requirements of Rule 27(1) of Law of the People’s Republic of China on Enterprise Income Tax
and Rule 86(1) of regulations for the Implementation of Law of the People’s Republic of China on Enterprise
Income Tax Zhanjiang Chenming Arboriculture Development Co. Ltd. Yangjiang Chenming Arboriculture
Development Co. Ltd. Nanchang Chenming Arboriculture Development Co. Ltd. and Chenming Arboriculture
Co. Ltd. which are the subsidiaries of the Company have completed the filings for EIT reduction for exemption
from EIT.Shouguang Xinyuan Coal Co. Ltd. Shouguang Chenming Papermaking Machine Co. Ltd. Shouguang
Wei Yuan Logistics Company Limited and Shouguang Shun Da Customs Declaration Co Ltd. which are
subsidiaries of the Company are small and micro enterprises. Pursuant to the Announcement of the Ministry of
Finance and the State Administration of Taxation on Further Implementation of Preferential Income Tax Policies
for Small and Micro Enterprises (Cai Shui [2022] No. 13) and the Announcement of the Ministry of Finance and
the State Administration of Taxation on the Implementation of Preferential Income Tax Policies for Small and
Micro Enterprises and Individual Industrial and Commercial Business (Cai Shui [2023] No. 6) the annual taxable
income of a small low-profit enterprise that is less than RMB3 million shall be included in its taxable income at a
reduced rate of 25% with the applicable enterprise income tax rate of 20%.
(2) Value-added Tax (“VAT”)
Pursuant to Rule 10 of the Interim Regulation of the People’s Republic of China on Value Added Tax Zhanjiang
Chenming Arboriculture Development Co. Ltd. Yangjiang Chenming Arboriculture Development Co. Ltd.Nanchang Chenming Arboriculture Development Co. Ltd. and Chenming Arboriculture Co. Ltd. which are
subsidiaries of the Company are exempt from VAT and have completed the filings for VAT reduction for
exemption from VAT.
2023 ANNUAL REPORT 227XII Financial Report
VII. Notes to items of the consolidated financial statements
1. Monetary funds
Unit: RMB
Item Closing balance Opening balance
Treasury cash 3674805.36 3491219.08
Bank deposit 760558937.25 2155968930.43
Other monetary funds 11321241125.05 11756140645.56
Interest accrued on deposits 39357963.64 84834191.01
Total 12124832831.30 14000434986.08
Of which: Total deposits in overseas banks 261470228.68 593378097.70
Other explanations:
* Other monetary funds of RMB6783005857.83 were the guarantee deposit for the application for acceptance bills by the Company;
* Other monetary funds of RMB4165425137.12 were the guarantee deposit for the application for letter of credit with the banks by the
Company;
* Other monetary funds of RMB270390192.29 were the guarantee deposit for the application for loans with the banks by the Company;
* Other monetary funds of RMB54020000.00 were the Company’s statutory reserve deposits at the People’s Bank of China;
* Other monetary funds of RMB48399937.81 were locked-up due to reasons such as litigations or being unused for a long time resulting
in restriction on the use of that account’s balance.
2. Financial assets held for trading
Unit: RMB
Item Closing balance Opening balance
Financial assets measured at fair value through profit or loss 46294291.71 74708444.88
Of which:
Investment in equity instruments 46294291.71 74708444.88
Total 46294291.71 74708444.88
Explanation: Financial assets held for trading were shares of China Bohai Bank subscribed by the Company.
228 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
3. Bills receivable
(1) Bills receivable by category
Unit: RMB
Item Closing balance Opening balance
Bank acceptance bills
Commercial acceptance bills 411600000.00
Total 411600000.00
(2) Bills receivable endorsed or discounted by the Company but not yet due as at the balance sheet date
Unit: RMB
Amount
Amount not yet
derecognised derecognised
as at the end of as at the end of
Item the period the period
Bank acceptance bills
Commercial acceptance bills 409000000.00
Total 409000000.00
4. Accounts receivable
(1) Disclosure by ageing
Unit: RMB
Ageing Closing book balance Opening book balance
Within 1 year (including 1 year) 1561046809.05 2555600334.26
1 to 2 years 385112389.04 729245049.07
2 to 3 years 722669952.03 84102055.67
Over 3 years 408747914.19 331613405.79
Subtotal 3077577064.31 3700560844.79
Less: Bad debts provision 549070004.48 488300398.83
Total 2528507059.83 3212260445.96
The basis used by the ageing analysis of the accounts receivable of the Company: the ageing of accounts
receivable is the length of time of the Company’s outstanding accounts receivable based on invoice date. The
closing balance is recognised one by one from the end of the period onwards until the amounts add up to the
balance. It is also broken up by intervals of within 1 year 1-2 years 2-3 years and over 3 years.
2023 ANNUAL REPORT 229XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
4. Accounts receivable (Continued)
(2) Disclosure by bad debt provision method
Unit: RMB
Closing balance Opening balance
Book balance Bad debts provision Book balance Bad debts provision
Provision Provision
Percentage percentage Carrying Percentage percentage Carrying
Category Amount (%) Amount (%) amount Amount (%) Amount (%) amount
Accounts receivable
assessed
individually for bad
debt provision 201074254.68 6.53 193132546.68 96.05 7941708.00 226667597.47 6.13 226667597.47 100.00
Accounts receivable
assessed
collectively for bad
debt provision 2876502809.63 93.47 355937457.80 12.37 2520565351.83 3473893247.32 93.87 261632801.36 7.53 3212260445.96
Of which:
Due from related
party customers 2359.03 23.18 0.98 2335.85 8639295.98 0.23 1775510.01 20.55 6863785.97
Due from non-related
party customers 1545540409.94 50.22 81008019.20 5.24 1464532390.74 2081296530.28 56.24 52357160.25 2.52 2028939370.03
Factoring receivables 1330960040.66 43.25 274929415.42 20.66 1056030625.24 1383957421.06 37.40 207500131.10 14.99 1176457289.96
Total 3077577064.31 100.00 549070004.48 17.84 2528507059.83 3700560844.79 100.00 488300398.83 13.20 3212260445.96
Items assessed individually for bad debt provision:
Unit: RMB
Closing balance
Bad debts Provision
Name Book balance provision percentage (%) Provision reason
Hengfeng Hongyuan Real Estate Holdings
Co. Ltd. 45493811.40 45493811.40 100.00 Long outstanding
Foshan Shunde Xingchen Paper Co. Ltd. 26697528.70 26697528.70 100.00 Long outstanding
Wuhan Tianrui Paper Co. Ltd. 17600000.00 9658292.00 54.88 Long outstanding
Shandong Bisheng Printing Materials
Co. Ltd. 14813369.27 14813369.27 100.00 Long outstanding
Zhengzhou Hongyang Paper Products
Co. Ltd. 14753432.93 14753432.93 100.00 Long outstanding
Henan Yibang Technology Trading Co. Ltd. 13396601.22 13396601.22 100.00 Long outstanding
49 companies including Shandong Yiming
New Material Technology Corp Co. Ltd. 68319511.16 68319511.16 100.00 Long outstanding
Total 201074254.68 193132546.68 96.05
230 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
4. Accounts receivable (Continued)
(2) Disclosure by bad debt provision method (Continued)
Unit: RMB
Opening balance
Bad debts 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. 15113432.93 15113432.93 100.00 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
91 companies including Shandong Yiming
New Material Technology Corp Co. Ltd. 84013853.95 84013853.95 100.00 Long outstanding
Total 226667597.47 226667597.47 100.00
Explanation: Although Wuhan Tianrui Paper Co. Ltd. has not repaid the loan for a long time it has not fully provided for bad debts
because the company has paid a deposit when the transaction occurred and part of such deposit may offset part of the
losses.Items assessed collectively for bad debt provision: Due from related party customers
Unit: RMB
Closing balance
Name Book balance Bad debts provision Provision percentage (%)
Within 1 year 2359.03 23.18 0.98
Total 2359.03 23.18 0.98
2023 ANNUAL REPORT 231XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
4. Accounts receivable (Continued)
(2) Disclosure by bad debt provision method (Continued)
Items assessed collectively for bad debt provision: Receivables from non-related party customer
Unit: RMB
Closing balance
Name Book balance Bad debts provision Provision percentage (%)
Within 1 year 1458683180.60 16840049.45 1.15
1 to 2 years 27055122.42 7706275.20 28.48
2 to 3 years 2653285.39 1257903.84 47.41
Over 3 years 57148821.53 55203790.71 96.60
Total 1545540409.94 81008019.20 5.24
Items assessed collectively for bad debt provision: Factoring receivables
Closing balance
Name Book balance Bad debts provision Provision percentage (%)
Within 1 year 102361269.42 5889841.55 5.75
1 to 2 years 358057266.62 62541844.75 17.47
2 to 3 years 720016666.64 159286903.11 22.12
Over 3 years 150524837.98 47210826.01 31.36
Total 1330960040.66 274929415.42 20.66
If the bad debt provision of accounts receivable is made in accordance with the general model of ECLs:
□Applicable √ Not applicable
232 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
4. Accounts receivable (Continued)
(3) Provision recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMB
Changes in the period
Category Opening balance Provision Recovery or reversal Written-off Others Closing balance
Bad debts provision 488300398.83 122209693.68 25756340.18 28227331.68 -7456416.17 549070004.48
Total 488300398.83 122209693.68 25756340.18 28227331.68 -7456416.17 549070004.48
Explanation: “Others” includes an increase in bad debts of RMB80960.58 from subsidiaries newly included in the scope of
consolidation a decrease in bad debts of RMB7553635.68 from disposal of subsidiaries and an increase in bad debts
of RMB16258.93 due to changes in exchange rates.
(4) Actual write-off of accounts receivable for the period
Unit: RMB
Item Write-off amount
Actual write-off of accounts receivable 28227331.68
2023 ANNUAL REPORT 233XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
4. Accounts receivable (Continued)
(5) Top five accounts receivable and contract assets based on closing balance of debtors
The total amount of top five accounts receivable and contract assets based on closing balance of debtors
for the period amounted to RMB1128033226.63 in total accounting for 36.65% of the total closing balance
of accounts receivable and contract assets. The closing balance of the corresponding bad debt provision
amounted to RMB234168549.51 in total.Unit: RMB
As a percentage of
the closing balance Closing balance of
Closing balance of of the total accounts bad debt provision of
Name of entity accounts receivable receivable (%) accounts receivable
Customer 1 481810233.33 15.66 89484999.34
Customer 2 222656666.64 7.23 46862597.55
Customer 3 198805660.00 6.46 36107859.62
Customer 4 121908333.33 3.96 26743299.67
Customer 5 102852333.33 3.34 34969793.33
Total 1128033226.63 36.65 234168549.51
5. Accounts receivable financing
(1) Accounts receivable financing by category
Unit: RMB
Item Closing balance Opening balance
Bills receivable 215884249.97 924960384.16
Total 215884249.97 924960384.16
Explanation: All the accounts receivable financing of the Company were bank acceptance bills. Since the terms of the bank
acceptance bills did not exceed one year and both parties to the endorsement of the bills agreed to offset equal amounts
of accounts receivable and payable based on the face value of the bills fair value equalled amortised cost.Certain subsidiaries of the Company discount and endorse part of the bank acceptance bills based on their
daily capital management needs. Therefore the bank acceptance bills of the subsidiaries are classified as
financial assets measured at fair value through other comprehensive income.The Company has no bank acceptance bill assessed individually for impairment provision. At the end of the
period the Company believed that there is no significant credit risk in the bank acceptance bills held and no
major losses will be incurred due to default of banks.
234 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
5. Accounts receivable financing (Continued)
(2) Accounts receivable financing pledged by the Company as at the end of the period
Unit: RMB
Amount pledged as at
Item the end of the period
Bank acceptance bills 90551168.01
Total 90551168.01
(3) Accounts receivable financing endorsed or discounted but not yet due as at the balance sheet date
Unit: RMB
Amount Amount
derecognised not yet derecognised
as at the end of as at the end of
Item the period the period
Bank acceptance bills 8682068295.36
Total 8682068295.36
Explanation: The credit risk and deferred payment risk of bank acceptance bills used for discounting were very small and the interest
rate risk related to the bills had been transferred to the banks. It was determined that the major risks and rewards of the
ownership of the bills had been transferred so these bills were derecognised.
2023 ANNUAL REPORT 235XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
6. Other receivables
Unit: RMB
Item Closing balance Opening balance
Other receivables 2224904557.88 1717445443.44
Total 2224904557.88 1717445443.44
(1) Other receivables
1) Classification of other receivables by nature
Unit: RMB
Nature Closing book balance Opening book balance
Open credit 2691372170.61 2108991172.35
Reserve and borrowings 27444170.92 26270269.00
Guarantee deposit and deposit 12578821.54 12230367.80
Others 3445072.68 52332819.95
Subtotal 2734840235.75 2199824629.10
Bad debts provision 509935677.87 482379185.66
Total 2224904557.88 1717445443.44
2) Disclosure by ageing
Unit: RMB
Ageing Closing book balance Opening book balance
Within 1 year (including 1 year) 1052737595.00 617314987.00
1 to 2 years 291207253.53 257038289.93
2 to 3 years 204348508.24 702427199.71
Over 3 years 1186546878.98 623044152.46
Subtotal 2734840235.75 2199824629.10
Bad debts provision 509935677.87 482379185.66
Total 2224904557.88 1717445443.44
The basis used by the ageing analysis: the ageing of other receivables is the length of time of the
Company’s outstanding other receivables based on invoice date. The closing balance is recognised one
by one from the end of the period onwards until the amounts add up to the balance. It is also broken up
by intervals of within 1 year 1-2 years 2-3 years and over 3 years.
236 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
6. Other receivables (Continued)
(1) Other receivables (Continued)
3) Particulars of bad debt provisionWhen one or more of the following circumstances occurs it is considered as “a significant increase incredit risk upon initial recognition” and shall be assigned to stage 2: the payment has been overdue for
more than 30 days but not more than 90 days; the debtor encountered an adverse event that affected
its solvency; significant adverse changes in the value of collateral or the quality of guarantees or credit
enhancements provided by third parties.When one or more of the following circumstances occurs it is considered as “credit impairment hasoccurred” and shall be assigned to stage 3: the payment has been overdue for more than 90 days; the
debtor encountered major financial difficulties or was likely to go bankrupt or undergo other financial
restructuring; other situations that violate contractual agreements and indicate that there is objective
evidence of impairment of financial assets.Closing bad debt provision at stage 1:
ECL rate (%) for
Category Book balance the next 12 months Bad debts provision Carrying amount Reason
Bad debt provision assessed collectively 978497901.51 8.95 87540266.28 890957635.23
Amount due from government agencies 15932733.78 95.70 15247340.04 685393.74
Amount due from related parties 313234651.44 3.54 11094651.84 302139999.60
Other receivables 649330516.29 9.42 61198274.40 588132241.89
Total 978497901.51 8.95 87540266.28 890957635.23
As at the end of the period the Group did not have interest receivables dividends receivables and other
receivables in phase 2
As at the end of the period closing bad debt provision at stage 3:
ECL rate (%) over
Category Book balance the entire life Bad debts provision Carrying amount Reason
Bad debt provision assessed individually 1756342334.24 24.05 422395411.59 1333946922.65
Total 1756342334.24 24.05 422395411.59 1333946922.65
2023 ANNUAL REPORT 237XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
6. Other receivables (Continued)
(1) Other receivables (Continued)
3) Particulars of bad debt provision (Continued)
Bad debt provision assessed individually:
ECL rate (%)
over the Bad debts
Category Book balance entire life provision Carrying amount Reason
Customer 1 472854783.56 16.00 75656765.37 397198018.19 Uncertain recovery to a certain extent
Customer 2 453002316.85 32.00 144960741.39 308041575.46 Uncertain recovery to a certain extent
Customer 3 390000000.00 2.00 7800000.00 382200000.00 Uncertain recovery to a certain extent
Customer 4 143940305.63 50.00 71970152.82 71970152.81 Uncertain recovery to a certain extent
Customer 5 114840000.00 15.30 17569808.66 97270191.34 Uncertain recovery to a certain extent
Customer 6 38198114.75 51.07 19506495.10 18691619.65 Uncertain recovery to a certain extent
137 customers including
customer 7 143506813.45 59.18 84931448.25 58575365.20 Uncertain recovery to a certain extent
Total 1756342334.24 24.05 422395411.59 1333946922.65
Bad debt provision based on the general model of ECLs:
Unit: RMB
Stage 1 Stage 2 Stage 3
ECLs for the Lifetime ECLs Lifetime ECLs
Bad debts provision next 12 months (not credit-impaired) (credit-impaired) Total
Balance as at 1 January 2023 73559281.09 408819904.57 482379185.66
Balance as at 1 January 2023 for the period
– Transferred to stage 2
– Transferred to stage 3
– Reversed to stage 2
– Reversed to stage 1
Provision for the period 27532494.11 60200321.84 87732815.95
Reversal for the period 13599712.04 26769796.22 40369508.26
Transfer for the period
Write-off for the period
Other changes 48203.12 -19855018.60 -19806815.48
Balance as at 30 June 2023 87540266.28 422395411.59 509935677.87
Explanation: “Other changes” includes an increase in bad debts of RMB48557.76 from subsidiaries newly included in the scope
of consolidation and a decrease in bad debts of RMB19855373.24 from disposal of subsidiaries.
238 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
6. Other receivables (Continued)
(1) Other receivables (Continued)
3) Particulars of bad debt provision (Continued)
Changes in carrying book balances with significant changes in loss provision for the period
□Applicable √ Not applicable
4) Provision recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMB
Changes in the period
Opening Recovery or Transfer or Closing
Category balance Provision reversal write-off Others balance
Bad debts provision 482379185.66 87732815.95 40369508.26 -19806815.48 509935677.87
Total 482379185.66 87732815.95 40369508.26 -19806815.48 509935677.87
Explanation: “Other changes” includes an increase in bad debts of RMB48557.76 from subsidiaries newly included in the scope
of consolidation and a decrease in bad debts of RMB19855373.24 from disposal of subsidiaries.
2023 ANNUAL REPORT 239XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
6. Other receivables (Continued)
(1) Other receivables (Continued)
5) Top five other receivables according to closing balance of debtors
The total amount of the Company’s top five other receivables based on closing balance of debtors for the
year was RMB1923109802.01 which accounted for 70.32% of the closing balance of the total other
receivables. The closing balance of corresponding bad debt provision amounted to RMB228417506.76.Unit: RMB
As a
percentage of
the closing
balance of total Closing balance
other receivables of bad debt
Name of entity Nature Closing balance Ageing (%) provision
Customer 1 Consideration for 472854783.56 3 to 4 years 17.29 75656765.37
debt transfer
Customer 2 Consideration for 453002316.85 4 to 5 years 16.56 144960741.39
debt transfer
Customer 3 Consideration for 390000000.00 Within 1 year 14.26 7800000.00
debt transfer
Customer 4 Consideration for 380000000.00 Within 1 year 13.90
equity transfer
Customer 5 Financial support 227252701.60 Within 1 year 8.31
Total － 1923109802.01 － 70.32 228417506.76
240 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
7. Prepayments
(1) Prepayments by ageing
Unit: RMB
Closing balance Opening balance
Ageing Amount Percentage (%) Amount Percentage (%)
Within 1 year 790687918.61 95.83 749904460.45 95.14
1 to 2 years 34447237.60 4.17 38287166.37 4.86
Total 825135156.21 100.00 788191626.82 100.00
(2) Top five prepayments based on closing balance of prepaid parties
The total amount of top five prepayments based on closing balance of prepaid parties for the period amounted
to RMB274254687.28 accounting for 33.24% of the closing balance of the total prepayments.Unit: RMB
As a percentage
of the closing
Closing balance balance of the total
Name of entity of prepayments prepayments (%)
Customer 1 86127651.36 10.44
Customer 2 58175348.47 7.05
Customer 3 45563144.13 5.52
Customer 4 45025905.82 5.46
Customer 5 39362637.50 4.77
Total 274254687.28 33.24
2023 ANNUAL REPORT 241XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
8. Inventories
Whether the Company needs to comply with the disclosure requirements for real estate industries
No
(1) Categories of inventories
Unit: RMB
Closing balance Opening balance
Impairment Impairment
provision for provision for
inventories inventories
or performance or performance
Item Book balance costs Carrying amount Book balance costs Carrying amount
Raw materials 1977478797.85 18030837.14 1959447960.71 2488652200.15 18096641.64 2470555558.51
Work-in-process products 102415558.33 102415558.33 111248779.69 111248779.69
Goods in stock 1413366440.57 1030048.86 1412336391.71 1622062893.55 16737849.96 1605325043.59
Developing costs 1138178959.32 1138178959.32
Consumable biological assets 1483978089.61 1483978089.61 1496607818.84 1496607818.84
Total 4977238886.36 19060886.00 4958178000.36 6856750651.55 34834491.60 6821916159.95
Note: Consumable biological assets are forestry assets.
(2) Impairment provision for inventories
Unit: RMB
Increase during the period Decrease during the period
Item Opening balance Provision Others Reversal or transfer Others Closing balance
Raw materials 18096641.64 65804.50 18030837.14
Goods in stock 16737849.96 28276760.91 43984562.01 1030048.86
Total 34834491.60 28276760.91 44050366.51 19060886.00
Impairment provision for inventories or performance costs (continued)
Reason for reversal or written-off of impairment
Basis for recognition of net realisable value/ provision for inventories/performance costs during
Item residual consideration with future cost the period
Raw materials The cost of raw materials is higher than Written-off of impairment provision for inventories
their net realisable value due to sales of impaired spare parts during the period
Goods in stock The cost of goods in stock is higher than Written-off of impairment provision for inventories
their net realisable value due to sales of impaired goods in stock during the period
242 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
9. Non-current assets due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term receivables due within one year 4161725935.75 3998724415.85
Total 4161725935.75 3998724415.85
Explanations: * L ong-term receivables due within one year amounting to RMB4054545080.32 (amount for the beginning of the period:
RMB3920915510.01) were financial lease receivables;
* Long-term receivables due within one year amounting to RMB107180855.43 (amount for the beginning of the period:
RMB77808905.84) were deposits receivable.Significant receivables assessed individually for bad debt provision in financial lease receivables
Lifetime ECL Bad debts Carrying
Category Book balance rate (%) provision amount Reason
Customer 1 1556962582.20 16.90 263126676.39 1293835905.81 Uncertain recovery to a certain extent
Customer 2 922513485.88 25.00 230628375.00 691885110.88 Uncertain recovery to a certain extent
Customer 3 485296142.90 42.00 203824380.02 281471762.88 Uncertain recovery to a certain extent
Total 2964772210.98 23.53 697579431.41 2267192779.57
10. Other current assets
Unit: RMB
Item Closing balance Opening balance
Input tax amount to be deducted 119271427.68 141038575.79
Prepaid tax 47645192.37 92806690.76
Receivables under financial lease due within one year 400411532.31 340546803.50
Factoring receivables due within one year 261871191.52 298446276.63
Prepaid expenses 201963827.62 241313507.50
Other payments 37663773.28 66655947.44
Total 1068826944.78 1180807801.62
2023 ANNUAL REPORT 243XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
11. Long-term receivables
(1) Particulars of long-term receivables
Unit: RMB
Closing balance Opening balance
Bad debts Carrying Bad debts Carrying Discount
Item Book balance provision amount Book balance provision amount rate range
Finance lease payments 5329611463.14 1070429664.01 4259181799.13 6739718184.27 1302116713.90 5437601470.37 4%-12%
Less: Unrealised
financing income 66941274.36 66941274.36 271455622.37 271455622.37
Deposits for equipment
lease financing 329246696.64 329246696.64 351446696.64 351446696.64
Less: Unrealised
financing income 20467752.31 20467752.31 32060345.32 32060345.32
Subtotal 5571449133.11 1070429664.01 4501019469.10 6787648913.22 1302116713.90 5485532199.32
Less: Long-term
receivables due
within one year 5229345488.65 1067619552.90 4161725935.75 5075152713.36 1076428297.51 3998724415.85
Total 342103644.46 2810111.11 339293533.35 1712496199.86 225688416.39 1486807783.47
(2) Disclosure based on bad debt provision
Unit: RMB
Closing balance Opening balance
Book balance Bad debts provision Book balance Bad debts provision
Provision Provision
Percentage percentage Carrying Percentage percentage Carrying
Category Amount (%) Amount (%) amount Amount (%) Amount (%) amount
Accounts receivable
assessed individually
for impairment 1147177668.74 66.99 222451005.54 19.39 924726663.20
Of which:
Financial lease payments 1147177668.74 66.99 222451005.54 19.39 924726663.20
Accounts receivable
assessed collectively
for impairment 342103644.46 100.00 2810111.11 0.82 339293533.35 565318531.12 33.01 3237410.85 0.57 562081120.27
Of which:
Receivables not past due 140505555.56 41.07 2810111.11 2.00 137695444.45 323741085.64 18.90 3237410.85 1.00 320503674.79
Deposits receivable 201598088.90 58.93 201598088.90 241577445.48 14.11 241577445.48
Total 342103644.46 100.00 2810111.11 0.82 339293533.35 1712496199.86 100.00 225688416.39 13.18 1486807783.47
244 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
11. Long-term receivables (Continued)
(2) Disclosure based on bad debt provision (Continued)
Accounts receivable assessed individually for bad debt provision
Closing balance for prior year
Name Book balance Bad debts provision ECL rate (%) Provision reason
Customer 1 958754877.25 184502697.18 19.24 Uncertain to a certain extent in
respect of repayment
Customer 2 100094782.78 25000000.00 24.98 Uncertain to a certain extent in
respect of repayment
Customer 3 88328008.71 12948308.36 14.66 Uncertain to a certain extent in
respect of repayment
Total 1147177668.74 222451005.54 19.39 \
Accounts receivable assessed collectively for bad debt provision
Collectively assessed item: receivables not past due
Closing balance Closing balance for prior year
Long-term Bad debts ECL rate Long-term Bad debts ECL rate
receivables provision (%) receivables provision (%)
Within 1 year
1 to 2 years 140505555.56 2810111.11 2.00 183235530.08 1832355.30 1.00
2 to 3 years 140505555.56 1405055.55 1.00
Total 140505555.56 2810111.11 2.00 323741085.64 3237410.85 1.00
2023 ANNUAL REPORT 245XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
11. Long-term receivables (Continued)
(2) Disclosure based on bad debt provision (Continued)
Collectively assessed item: Deposits receivable
Closing balance Closing balance for prior year
Long-term Bad debts ECL rate Long-term Bad debts ECL rate
receivables provision (%) receivables provision (%)
Within 1 year
1 to 2 years 136426669.75 108284310.81
2 to 3 years 38434359.53 113937377.76
Over 3 years 26737059.62 19355756.91
Total 201598088.90 241577445.48
(3) Provision recovery or reversal of bad debt provision for the period
Unit: RMB
Changes in the period
Recovery or Transfer or
Category Opening balance Provision reversal write-off Others Closing balance
Bad debts provision 225688416.39 52530733.38 12948308.36 -262460730.30 2810111.11
Total 225688416.39 52530733.38 12948308.36 -262460730.30 2810111.11
246 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
12. Long-term equity investments
Unit: RMB
Change for the period
Investment Distribution
Opening gain or loss Adjustment Other of cash Closing
balance of recognised of other change in dividend balance of
Opening balance impairment Additional Withdrawn under equity comprehensive equity or profit Impairment Closing balance impairment
Investee (carrying amount) provision contribution contribution method income interest declared provision Others (carrying amount) provision
I. Joint ventures
Shouguang Chenming Huisen
New-style Construction
Materials Co. Ltd. 7892659.42 2107624.17 2600000.00 7400283.59
Weifang Port Wood Chip Terminal
Co. Ltd. 74848570.73 4293509.83 79142080.56
Shouguang Meite Environmental
Technology Co. Ltd. 8921843.88 10144679.91 19066523.79
Shouguang Jintou Industrial
Investment Partnership
(Limited Partnership) 2359998661.67 -15428414.12 2344570247.55
Weifang Xingxing United
Chemical Co. Ltd. 91874385.12 91874385.12
Subtotal 2543536120.82 1117399.79 2600000.00 2542053520.61
II. Associates
Zhuhai Dechen New Third
Board Equity Investment
Fund Company (Limited
Partnership) 36776710.91 487093.45 10000000.00 27263804.36
Ningbo Kaichen Huamei Equity
Investment Fund Partnership
(Limited Partnership) 197218318.77 90910511.36 10000000.00 278128830.13
Nanchang Tianchen Port Co.Ltd. 59345429.05 3230480.64 4428403.30 58147506.39
Goldtrust Futures Co. Ltd. 178389182.83 9397443.45 187786626.28
Xuchang Chenming Paper Co.Ltd. 5994545.96 5994545.96
Chenming (Qingdao) Asset
Management Co. Ltd. 6482035.69 1895108.96 8377144.65
Wuhan Chenming Hanyang Paper
Holdings Co. Ltd. 254998849.78 -3079947.47 251918902.31
Guangdong Nanyue Bank Co.Ltd. 1314611000.54 24976831.82 -1224007.02 -6840774.34 1331523051.00
Subtotal 1733477248.74 5994545.96 314344278.83 127817522.21 -1224007.02 -6840774.34 24428403.30 2143145865.12 5994545.96
Total 4277013369.56 5994545.96 314344278.83 128934922.00 -1224007.02 -6840774.34 27028403.30 4685199385.73 5994545.96
Explanation:
* As the Company disposed part of its equity interest in Wuhan Chenming Hanyang Paper Holdings Co. Ltd. the Company lost its
control over Wuhan Chenming Hanyang Paper Holdings Co. Ltd. but still exert its significant influence on Wuhan Chenming Hanyang
Paper Holdings Co. Ltd. which has been accounted for using equity method from the date of loss of control.* Weifang Xingxing United Chemical Co. Ltd. was completely shut down due to demolition and relocation and each of the shareholders
planned to withdraw their investments. The Company ceased to account for Weifang Xingxing United Chemical Co. Ltd. using the
equity method and the carrying amount as at the end of the period was basically in line with the expected recoverable amount.
2023 ANNUAL REPORT 247XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
12. Long-term equity investments (Continued)
Determination of net amount of recoverable amount measure at fair value after deducting disposal expenses
□ Applicable √ Not applicable
Determination of present value of recoverable amount based on expected cash flows
□ Applicable √ Not applicable
13. Other non-current financial assets
Unit: RMB
Item Closing balance Opening balance
Investment in debt instruments 659099016.38 663000000.00
Investment in equity instruments 122462024.19 123750761.62
Total 781561040.57 786750761.62
248 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
14. Investment property
(1) Investment property under the cost method
√ Applicable □ Not applicable
Unit: RMB
Housing and Land use Construction
Item building structure rights in progress Total
I. Original carrying amount
1. Opening balance 7160214568.83 7160214568.83
2. Increase during the period
3. Decrease during the period 17293354.96 17293354.96
(1) Disposal 17293354.96 17293354.96
4. Closing balance 7142921213.87 7142921213.87
II. Accumulated depreciation and
accumulated amortisation
1. Opening balance 903491455.68 903491455.68
2. Increase during the period 198074211.59 198074211.59
(1) Provision or amortisation 198074211.59 198074211.59
3. Decrease during the period 7887149.76 7887149.76
(1) Disposal 7887149.76 7887149.76
4. Closing balance 1093678517.51 1093678517.51
III. Impairment provision
IV. Carrying amount
1. Closing carrying amount 6049242696.36 6049242696.36
2. Opening carrying amount 6256723113.15 6256723113.15
2023 ANNUAL REPORT 249XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
14. Investment property (Continued)
(1) Investment property under the cost method (Continued)
Note: Investment properties under the Company primarily include:
* Pujiang International Finance Plaza located at No. 1098 Dongdaming Road Hongkou District Shanghai is a long-term
held office property of Shanghai Hongtai Real Estate Co. Ltd. a subsidiary of the Company and leasehold land mainly
used for external rental or office purposes;
* Jinan Chenming Finance Building (濟南晨鳴金融大廈) located in No. 7 Zone Hanyu Financial Business Center No. 7000
Jingshi Road Jinan Innovation Zone is a long-term held office property of Shandong Chenming Investment Limited a
subsidiary of the Company and leasehold land mainly used for external rental or office purposes;
* Fatum Apartment (法朵公寓) located at No. 463 Anbo Road No. 22 Lane 467 Anbo Road Yangpu District Shanghai is
a long-term held apartment property of Shanghai Herui Investment Co. Ltd. a subsidiary of the Company and leasehold
land mainly used for external rental purposes;
* Guangzhou Zhengjia Plaza (廣州正佳廣場) located at Room 3901-3926 No. 372 Huanshi East Road Yuexiu District
Guangzhou is a long-term held office property of Guangzhou Chenming Property Management Co. Ltd. a subsidiary of
the Company and leasehold land mainly used for external rental purposes;
* Shenzhen Zhuoyue Baozhong Times Square (深圳卓越寶中時代廣場) located at Room 3201-3210 Building C Zhuoyue
Baozhong Times Square (Phase 2) Xin’an Sub-district Bao’an District Shenzhen is a long-term held office property of
Guangzhou Chenming Property Management Co. Ltd. a subsidiary of the Company and leasehold land mainly used for
external rental purposes.* Shanghai Xizang South Road shop located at No. 518-528 Xizang South Road Shanghai is a long-term store held by
Wuhan Junheng Property Management Co. Ltd. a subsidiary and leasehold land mainly for external rental purposes.Determination of net amount of recoverable amount measure at fair value after deducting disposal expenses
□ Applicable √ Not applicable
Determination of present value of recoverable amount based on expected cash flows
□ Applicable √ Not applicable
15. Fixed assets
Unit: RMB
Item Closing balance Opening balance
Fixed assets 33186248169.56 33527978754.73
Disposal of fixed assets 269759940.57
Total 33186248169.56 33797738695.30
250 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
15. Fixed assets (Continued)
(1) Particulars of fixed assets
Unit: RMB
Electronic
Housing and Machinery and equipment
Item building structure equipment Vehicles and others Total
I. Original carrying amount:
1. Opening balance 10286809124.89 43106182009.60 288801665.32 400465471.75 54082258271.56
2. Increase during the period 1547575077.33 373389718.69 7782054.09 6209501.78 1934956351.89
(1) Acquisition 30905046.40 249956542.06 6181518.12 5780797.31 292823903.89
(2) Transferred from construction
in progress 20992423.25 118922052.86 139914476.11
(3) Debt restructuring 188209727.08 1532574.49 189742301.57
(4) Transferred to development
costs 1158940672.86 1158940672.86
(5) Increase due to business
combination 148527207.74 2978549.28 1600535.97 428704.47 153534997.46
3. Decrease during the period 111431095.81 345835134.14 1771393.41 7800454.92 466838078.28
(1) Disposal or retirement 111431095.81 345835134.14 1771393.41 7800454.92 466838078.28
(2) Other decrease
4. Closing balance 11722953106.41 43133736594.15 294812326.00 398874518.61 55550376545.17
II. Accumulated depreciation
1. Opening balance 2329752339.57 17561160193.98 200474107.77 258849412.20 20350236053.52
2. Increase during the period 308572377.43 1763232299.25 22205873.23 11213814.61 2105224364.52
(1) Provision 264930957.46 1762561992.57 21496925.01 11008850.97 2059998726.01
(2) Increase due to business
combination 43641419.97 670306.68 708948.22 204963.64 45225638.51
3. Decrease during the period 14059134.79 273890699.14 674877.67 6750794.14 295375505.74
(1) Disposal or retirement 14059134.79 273890699.14 674877.67 6750794.14 295375505.74
(2) Other decrease
4. Closing balance 2624265582.21 19050501794.09 222005103.33 263312432.67 22160084912.30
III. Provision for impairment
1. Opening balance 27808852.79 168785487.47 13889.13 7435233.92 204043463.31
2. Increase during the period
(1) Provision
(2) Other increase
3. Decrease during the period
(1) Disposal or retirement
(2) Other decrease
4. Closing balance 27808852.79 168785487.47 13889.13 7435233.92 204043463.31
IV. Carrying amount
1. Closing carrying amount 9070878671.41 23914449312.59 72793333.54 128126852.02 33186248169.56
2. Opening carrying amount 7929247932.53 25376236328.15 88313668.42 134180825.63 33527978754.73
2023 ANNUAL REPORT 251XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
15. Fixed assets (Continued)
(2) Particulars of temporarily idle fixed assets
Unit: RMB
Original carrying Accumulated Provision for Carrying
Item amount depreciation impairment amount Remark
Housing and building structure 72585434.37 33948818.80 3093008.64 35543606.93
Machinery and equipment 893315387.76 572845720.42 147850636.46 172619030.88
Electronic equipment 478399.18 430559.49 7187.27 40652.42
Total 966379221.31 607225098.71 150950832.37 208203290.23
(3) Particulars of fixed assets without obtaining property right certificates
Unit: RMB
Reason for not yet
Carrying obtaining property right
Item amount certificates
Housing and building structure (Zhanjiang Chenming Pulp & Paper Co. Ltd.) 980913613.30 Under application
Housing and building structure (Huanggang Chenming Pulp & Paper Co. Ltd.) 546905052.22 Under application
Housing and building structure (Shouguang Meilun Paper Co. Ltd.) 481677913.32 Under application
Housing and building structure (Jilin Chenming Paper Co. Ltd.) 363470359.61 Under application
Housing and building structure (Jiangxi Chenming Paper Co. Ltd.) 194225965.02 Under application
Housing and building structure (Shandong Chenming Paper Holdings Limited) 110999633.48 Under application
Total 2678192536.95
(5) Impairment test on fixed assets
□ Applicable √ Not applicable
252 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
15. Fixed assets (Continued)
(6) Disposal of fixed assets
Unit: RMB
Item Closing balance Opening balance
Machinery equipment electronic and other equipment in
production workshop of Wuhan Chenming 3457743.88
Housing and office equipment of Wuhan Chenming
management integrated office 168170645.13
Generator machinery equipment of Qianneng Electric
Power factory area 59225154.99
Boiler room and other structures of Qianneng Electric
Power factory area 38801269.05
Transportation and others of Qianneng Electric Power
factory area 105127.52
Total 269759940.57
16. Construction in progress
Unit: RMB
Item Closing balance Opening balance
Construction in progress 852139418.48 551020785.44
Materials for project 7478546.68 7846094.92
Total 859617965.16 558866880.36
2023 ANNUAL REPORT 253XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
16. Construction in progress (Continued)
(1) Particulars of construction in progress
Unit: RMB
Closing balance Opening balance
Impairment Impairment
Item Book balance provision Carrying amount Book balance provision Carrying amount
Relocation of Wuhan 4800 papermaking
machine project (Zhanjiang) 533417722.83 533417722.83 303942703.51 303942703.51
Technological transformation project 130674807.30 662764.60 130012042.70 121193391.56 121193391.56
Integrated forestry pulp and paper project
(Huanggang Pulp & Paper) 156604031.76 156604031.76 45538442.78 45538442.78
300000 tonnes softwood pulp project
(Shandong Chenming) 8941631.08 8941631.08
Others 44302661.87 21138671.76 23163990.11 101484919.35 21138671.76 80346247.59
Total 873940854.84 21801436.36 852139418.48 572159457.20 21138671.76 551020785.44
254 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
16. Construction in progress (Continued)
(2) Changes in material construction in progress projects for the period
Unit: RMB
Of which: Capitalisation
Transfer to Other Capitalised rate of the
fixed asset deductions Accumulated Accumulated interest interest
Opening Increase during the during the Closing investment to Construction capitalised amount during amount for Source of
Project name Budget balance during the period period period balance budget progress interest the period the period fund
Relocation of Wuhan
4800 papermaking Self-owned
machine project funds and
(Zhanjiang) 800000000.00 303942703.51 229475019.32 533417722.83 66.68% 70.00% borrowings
300000 tonnes Self-owned
softwood pulp project funds and
(Shandong Chenming) 1488980000.00 8941631.08 8941631.08 0.60% 0.60% borrowings
Total 2288980000.00 303942703.51 238416650.40 542359353.91 － －
(3) Impairment provision for construction in progress for the period
Unit: RMB
Opening Increase for Decrease for Reason for
Item balance the period the period Closing balance provision
Closed deodorisation project at
wastewater treatment plant
(Shandong Chenming) 5061399.69 5061399.69
Automation upgrade for water
treatment (Jilin Chenming) 662764.60 662764.60
Differentiated viscose fibre and
spinning and chemical project
(Huanggang Pulp & Paper) 12609724.89 12609724.89
Others 3467547.18 3467547.18
Total 21138671.76 662764.60 21801436.36 －
Explanation: Projects with impairment provision made are suspended projects that have not been put into operation for long-term.
2023 ANNUAL REPORT 255XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
16. Construction in progress (Continued)
(4) Impairment test on construction in progress
√ Applicable □ Not applicable
Determination of net amount of recoverable amount measured at fair value after deducting disposal expenses
√ Applicable □ Not applicable
Unit: RMB
Basis of
determination
Recoverable Determination of fair value and Key of key
Item Book value amount Impairment disposal expenses parameters parameters
Automation 662764.60 0.00 662764.60 As the project has been
upgrade for abandoned and no longer be
water used the fair value is zero
treatment
Total 662764.60 0.00 662764.60
(5) Materials for project
Unit: RMB
Closing balance Opening balance
Book Impairment Carrying Book Impairment Carrying
Item balance provision amount balance provision amount
Special materials 7478546.68 7478546.68 7846094.92 7846094.92
Total 7478546.68 7478546.68 7846094.92 7846094.92
256 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
17. Bearer biological assets
(1) Bearer biological assets under the cost method
√ Applicable □ Not applicable
Unit: RMB
Item Tea trees Total
I. Original carrying amount
1. Opening balance 13697336.80 13697336.80
2. Increase during the period 3987350.56 3987350.56
(1) Planting 3987350.56 3987350.56
3. Decrease during the period
4. Closing balance 17684687.36 17684687.36
II. Accumulated depreciation
III. Impairment provision
IV. Carrying amount
1. Closing carrying amount 17684687.36 17684687.36
2. Opening carrying amount 13697336.80 13697336.80
(2) Impairment test on bearer biological assets under the cost method
□ Applicable √ Not applicable
(3) Bearer biological assets measured at fair value
□ Applicable √ Not applicable
2023 ANNUAL REPORT 257XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
18. Right-of-use assets
(1) Particulars of right-of-use assets
Unit: RMB
Housing
and building
Item Land use rights structure Total
I. Original carrying amount
1. Opening balance 205820222.41 5546607.90 211366830.31
2. Increase during the period
3. Decrease during the period 7731015.40 24770.64 7755786.04
(1) Transfer or held for sale 7483309.00 7483309.00
(2) Other decreases 247706.40 24770.64 272477.04
4. Closing balance 198089207.01 5521837.26 203611044.27
II. Accumulated depreciation
1. Opening balance 28702609.31 1049521.75 29752131.06
2. Increase during the period 7399535.57 275452.75 7674988.32
(1) Provision 7399535.57 275452.75 7674988.32
3. Decrease during the period 1631386.61 1631386.61
(1) Transfer or held for sale 1631386.61 1631386.61
4. Closing balance 34470758.27 1324974.50 35795732.77
III. Impairment provision
IV. Carrying amount
1. Closing carrying amount 163618448.74 4196862.76 167815311.50
2. Opening carrying amount 177117613.10 4497086.15 181614699.25
Explanation: The reason for other decreases is that the original recognised amount of right-of-use assets was tax included and as the
invoices for leasing have been received the input tax amount offset the original carrying amount of the right-of-use assets.
(2) Impairment test on right-of-use assets
□ Applicable √ Not applicable
258 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
19. Intangible assets
(1) Particulars of intangible assets
Unit: RMB
Certificates
of third
Item Land use rights Software Patents party right Total
I. Original carrying amount
1. Opening balance 2317286177.57 22054431.73 27493613.05 15908674.87 2382742897.22
2. Increase during the period 242900438.53 1278301.89 244178740.42
(1) Acquisition 148906631.36 1278301.89 150184933.25
(2) Increase due to business
combination 11046650.67 11046650.67
(3) Increase due to debt
restructuring 82947156.50 82947156.50
3. Decrease during the period 35028784.28 23584.91 35052369.19
(1) Disposal
(2) Disposal of subsidiary 35028784.28 23584.91 35052369.19
4. Closing balance 2525157831.82 23309148.71 27493613.05 15908674.87 2591869268.45
II. Accumulated amortisation
1. Opening balance 512384814.26 22054431.73 1056145.44 15908674.87 551404066.30
2. Increase during the period 55399655.46 969137.52 94950.00 56463742.98
(1) Provision 52839764.79 969137.52 94950.00 53903852.31
(2) Increase due to business
combination 2559890.67 2559890.67
3. Decrease during the period 18335847.77 23584.91 18359432.68
(1) Disposal
(2) Disposal of subsidiary 18335847.77 23584.91 18359432.68
4. Closing balance 549448621.95 22999984.34 1151095.44 15908674.87 589508376.60
III. Impairment provision
IV. Carrying amount
1. Closing carrying amount 1975709209.87 309164.37 26342517.61 2002360891.85
2. Opening carrying amount 1804901363.31 26437467.61 1831338830.92
Explanation: (1) For details of restricted ownership please refer to note VII. 24.
(2) Impairment test on intangible assets
□ Applicable √ Not applicable
2023 ANNUAL REPORT 259XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
20. Goodwill
(1) Original carrying amount of goodwill
Unit: RMB
Increase during Decrease during
the period the period
Arising from
Name of investee or event Opening business
generating goodwill balance combinations Disposal Closing balance
Jilin Chenming Paper Co. Ltd. 14314160.60 14314160.60
Kunshan Tuoan Plastic Products
Co. Ltd. 26946905.38 26946905.38
Jiangxi Chenming Port Co. Ltd. 8273638.42 8273638.42
Total 41261065.98 8273638.42 49534704.40
(2) Provision for impairment of goodwill
Unit: RMB
Increase during Decrease during
Name of investee or event Opening the period the period
generating goodwill balance Provision Disposal Closing balance
Jilin Chenming Paper Co. Ltd. 14314160.60 14314160.60
Total 14314160.60 14314160.60
Explanation: Goodwill for Kunshan Tuoan Plastic Products Co. Ltd. was arose from the acquisition of Kunshan Tuoan Plastic Products
Co. Ltd. by the Company on 31 August 2020. With the category of the principal activities as the basis for determining the
reporting segments the Company regarded Kunshan Tuoan Plastic Products Co. Ltd. and Jiangxi Chenming Port Co.Ltd. as an asset group.Goodwill for Jiangxi Chenming Port Co. Ltd. was arose from the acquisition of Jiangxi Chenming Port Co. Ltd. by
the Company on 30 April 2023. With the category of the principal activities as the basis for determining the reporting
segments the Company regarded Jiangxi Chenming Port Co. Ltd. as an asset group.The Company intends to dispose of Kunshan Tuoan Plastic Products Co. Ltd. According to the transfer consideration of
RMB143.73 million determined in the valuation report as of 31 December 2023 the transfer consideration is higher than
the book value of the corresponding asset group (including goodwill). The management is of the view that no impairment
provision shall be made by the Company for such asset group. An equity transfer agreement was entered into in January
2024 for the transfer.
The Company conducted profit forecast on Jiangxi Chenming Port Co. Ltd. in general. The recoverable amount was
determined based on the present value of the estimated future cash flows. Future cash flows were determined based
on the financial budget for 2024 to 2028 with weighted average asset cost of 6.23%. Other key assumptions used in
estimating future cash flows included 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 book value of the asset group Jiangxi Chenming
Port Co. Ltd. exceeding its recoverable amount. Upon assessment the management is of the view that no impairment
provision shall be made by the Company for such asset group.
260 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
20. Goodwill (Continued)
(3) Relevant information on goodwill for asset group or combination of asset groups
Whether it
Composition and basis of asset group or Operating segment is consistent
Name combination of asset groups and basis with prior year
Kunshan Tuoan The related asset groups or combination of Other segment with Yes
Plastic asset groups are those which can benefit the Company
Products from the synergies of the business classified operating
Co. Ltd. combination and are not larger than the segments based
reportable segments identified by the on financial
Company. performance
Jiangxi Chenming The related asset groups or combination of Other segment N/A
Port Co. Ltd. asset groups are those which can benefit with the Company
from the synergies of the business classified operating
combination and are not larger than the segments based
reportable segments identified by the on financial
Company. performance
Jilin Chenming The related asset groups or combination of Machine-made paper Yes
Paper Co. Ltd. asset groups are those which can benefit segment with the
from the synergies of the business Company classified
combination and are not larger than the operating segments
reportable segments identified by the based on financial
Company. performance
(4) Specific determination of recoverable amount
Determination of net amount of recoverable amount measured at fair value after deducting disposal expenses
√ Applicable □ Not applicable
Unit: RMB
Basis of
Determination of fair determination
Recoverable value and disposal Key of key
Item Book value amount Impairment expenses parameter parameter
Kunshan Tuoan Plastic Contract price for the
Products Co. Ltd. 134612042.38 143730000.00 proposed disposal
Total 134612042.38 143730000.00
2023 ANNUAL REPORT 261XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
20. Goodwill (Continued)
(4) Specific determination of recoverable amount (Continued)
Determination of present value of recoverable amount based on expected cash flows
√ Applicable □ Not applicable
Unit: RMB
Basis of
determination
of key
Term of Key parameter Key parameter parameter
Recoverable forecast for forecast for stabilisation for stabilisation
Item Book value amount Impairment period period period period
Jiangxi Chenming 17490391.21 34244524.41 5 Interest rate Revenue growth Estimation
Port Co. Ltd. ranged from rate of 0%
26.05%-26.26%
Total 17490391.21 34244524.41
21. Long-term prepaid expenses
Unit: RMB
Opening Increase during Amortisation Other Closing
Item balance the period during the period deductions balance
Woodland expenses 7233827.75 1281727.98 5952099.77
Others 37229023.70 96528.96 3298490.94 34027061.72
Total 44462851.45 96528.96 4580218.92 39979161.49
262 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
22. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before offsetting
Unit: RMB
Closing balance Opening balance
Deductible Deferred Deductible Deferred
temporary income temporary income
Item difference tax assets difference tax assets
Provision for impairment of assets 2170702373.93 509035457.40 2344419524.10 549431097.40
Unrealised profit arising from
intra-group transactions 7605345.40 1901336.35 47231691.32 11807922.83
Outstanding payables 121528026.20 18553482.43 169723942.88 26380462.69
Deferred income 144721508.43 21708225.98 193822821.65 29673699.36
Deductible loss 7008265437.96 1138659379.33 4578592243.20 716030918.97
Debt restructuring 30831.05 7707.76
Special reserves 15791710.95 2368756.59
Total 9452822691.92 1689857881.49 7349612765.15 1335700565.60
(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 37960636.20 9490159.05 19104051.04 4776012.76
Debt restructuring 13621006.12 3405251.53
Total 37960636.20 9490159.05 32725057.16 8181264.29
2023 ANNUAL REPORT 263XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
22. Deferred income tax assets/deferred income tax liabilities (Continued)
(3) The breakdown of unrecognised deferred income tax assets
Unit: RMB
Item Closing balance Opening balance
Deductible temporary difference 53265395.05 10365962.12
Deductible loss 721381744.55 808569643.83
Total 774647139.60 818935605.95
(4) Expiry of deductible loss of unrecognised deferred income tax assets falls in the years as follows
Unit: RMB
Year Closing balance Opening balance Remark
2023—189187446.57
2024158265081.51178453991.84
2025226672646.51251671920.26
202661481717.71119959990.04
202777967748.7369296295.12
2028196994550.09—
Total 721381744.55 808569643.83
23. Other non-current assets
Unit: RMB
Closing balance Opening balance
Book Impairment Carrying Book Impairment Carrying
Item balance provision amount balance provision amount
Payments for engineering and
equipment 1055195141.00 1055195141.00 981293657.32 981293657.32
Others 11887516.57 11887516.57 2612250.68 2612250.68
Total 1067082657.57 1067082657.57 983905908.00 983905908.00
264 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
24. Assets with restricted ownerships or right to use
Unit: RMB
Closing balance Opening balance
Type of Type of
Item Book balance Carrying amount restriction Restriction Book balance Carrying amount restriction Restriction
Monetary 11360599088.69 11360599088.69 Pledged As deposits for bank 11840974836.57 11840974836.57 Pledged As deposits for bank
funds acceptance bills and acceptance bills and
letters of credit deposits letters of credit deposits
for letter of guarantee for letter of guarantee
security deposits for security deposits for
loans deposit reserves loans deposit reserves
interest receivable etc. interest receivable etc.(Note VII. 1) (Note VII. 1)
Fixed assets 9411111670.62 6303095864.20 Pledged As collateral for bank 15651057538.84 10063641052.69 Pledged As collateral for bank
borrowings and borrowings and
long-term payables long-term payables
(Note VII. 15) (Note VII. 14)
Investment 5941741699.60 5004776921.76 Pledged As collateral for bank 5650386492.30 4895514630.65 Pledged As collateral for bank
property borrowings (Note VII. 14) borrowings (Note VII. 13)
Intangible 865105844.99 665784045.39 Pledged As collateral for bank 1367006629.88 1033897418.27 Pledged As collateral for bank
assets borrowings and borrowings and
long-term payables long-term payables
(Note VII. 19) (Note VII. 18)
Accounts 403349324.55 398710807.32 Pledged As collateral for borrowings 100563153.66 100000000.00 Pledged As collateral for
receivable (Note VII. 4) borrowings (Note VII. 3)
Accounts 90551168.01 90551168.01 Pledged As collateral for letters of 8497931.30 8497931.30 Pledged As collateral for letters of
receivable credit (Note VII. 5) credit (Note VII. 4)
financing
Total 28072458796.46 23823517895.37 34618486582.55 27942525869.48
Other explanation:
As at 31 December 2023 housing building structure and equipment with the carrying amount of RMB6303095864.20 (31 December 2022:
carrying amount of RMB10063641052.69) investment properties with the carrying amount of RMB5004776921.76 (31 December 2022:
carrying amount of RMB4895514630.65) and intangible assets with the carrying amount of RMB665784045.39 (31 December 2022:
carrying amount of RMB1033897418.27) were pledged as collateral for long-term borrowings of RMB4262800469.08 (31 December 2022:
RMB3118508092.17) and short-term borrowings of RMB85000000.00 (31 December 2022: RMB65000000.00).
2023 ANNUAL REPORT 265XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
25. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMB
Item Closing balance Opening balance
Discounted borrowings 12270872000.00 16207640000.00
Credit borrowings 9908287425.27 9613884197.48
Guaranteed borrowings 9785629371.41 9757184167.65
Pledged borrowings 1425690224.94 741339929.89
Mortgage borrowings 85000000.00 65000000.00
Total 33475479021.62 36385048295.02
Explanation of the classification of short-term borrowings:
* For classification and amount of mortgage borrowings and mortgage assets please see 1. Monetary funds and 24. Assets with
restricted ownerships or right to use in Note VII.* For classification and amount of pledged borrowings and mortgage assets please see 1. Monetary funds and 24. Assets with
restricted ownerships or right to use in Note VII.* Overdue outstanding short-term borrowings: total outstanding short-term borrowings overdue as at the end of the year
amounted to RMB0.00.* Short-term borrowings included accrued interest of RMB27736656.82.
26. Bills payable
Unit: RMB
Category Closing balance Opening balance
Commercial acceptance bills 3604737193.92 1206234201.21
Bank acceptance bills 1014249270.03 1922361633.83
Total 4618986463.95 3128595835.04
Total overdue bills payable by counterparties as at the end of the period amounted to RMB205710.00.
266 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
27. Accounts payable
(1) Particulars of accounts payable
Unit: RMB
Item Closing balance Opening balance
Payment for goods 3329807929.61 3619549023.04
Payment for engineering 222541200.98 146144102.25
Payment for equipment 107663951.56 100493461.51
Others 242607788.05 248780180.96
Total 3902620870.20 4114966767.76
(2) Disclosure by ageing
Unit: RMB
Ageing Closing balance Opening balance
Within 1 year (including 1 year) 3361203746.72 3746315716.20
1 to 2 years 267905274.76 98287651.12
2 to 3 years 30677976.15 52080919.33
Over 3 years 242833872.57 218282481.11
Total 3902620870.20 4114966767.76
The basis used by the ageing analysis of the accounts payable of the Company: the ageing of accounts payable
is the length of time of the Company’s outstanding accounts payable based on invoice date. The closing
balance is recognised one by one from the end of the period onwards until the amounts add up to the balance.It is also broken up by intervals of within 1 year 1-2 years 2-3 years and over 3 years.
2023 ANNUAL REPORT 267XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
28. Other payables
Unit: RMB
Item Closing balance Opening balance
Other payables 2414752127.19 1854507978.66
Interest payable 15895930.51
Total 2414752127.19 1870403909.17
(1) Interest payable
Unit: RMB
Item Closing balance Opening balance
Interest of corporate bonds 15895930.51
Total 15895930.51
(2) Other payables
1) Other payables by nature
Unit: RMB
Item Closing balance Opening balance
Open credit 1090141993.83 490279690.52
Deposit 785572067.82 788792126.26
Accrued expenses 381781932.14 355492234.45
The obligation to repurchase shares under the
share incentive scheme 63764745.74 129112395.74
Others 93491387.66 90831531.69
Total 2414752127.19 1854507978.66
2) Significant other payables aged over 1 year
Unit: RMB
Reason for outstanding
Item Closing balance or not transfer
MCC Fujian Investment Construction Co. Ltd. 570000000.00 Project deposits
268 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
29. Receipts in advance
(1) Particulars of receipts in advance
Unit: RMB
Item Closing balance Opening balance
Prepaid rents and property fees 16242921.65 14261436.67
Total 16242921.65 14261436.67
30. Contract liabilities
Unit: RMB
Item Closing balance Opening balance
Payment for goods in advance 1443680155.62 1306029389.80
Total 1443680155.62 1306029389.80
31. Staff remuneration payables
(1) Particulars of staff remuneration payables
Unit: RMB
Increase Decrease
Opening during the during the
Item balance period period Closing balance
I. Short-term remuneration 99353543.41 1082596707.91 1108043017.50 73907233.82
II. Retirement benefit plan-defined
contribution scheme 45572343.59 203505721.08 248648140.05 429924.62
III. Termination benefits 152351.89 152351.89
Total 144925887.00 1286254780.88 1356843509.44 74337158.44
2023 ANNUAL REPORT 269XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
31. Staff remuneration payables (Continued)
(2) Particulars of short-term remuneration
Unit: RMB
Increase Decrease
Opening during the during the Closing
Item balance period period balance
1. Salaries bonuses allowance and
subsidies 84374864.77 823172363.65 853121590.71 54425637.71
2. Staff welfare 58944163.88 58944163.88
3. Social insurance premium 4072690.50 98996593.54 101670060.72 1399223.32
Of which: Medical insurance
premium 669598.55 89789715.14 89964841.01 494472.68
Work-related injury
insurance premium 2514203.46 7549514.50 10048082.22 15635.74
Maternity insurance
premium 888888.49 1657363.90 1657137.49 889114.90
4. Housing provident funds 7500937.80 77494674.79 78063498.29 6932114.30
5. Union funds and workers’
education 463017.47 19910718.33 12559977.02 7813758.78
6. Other short-term remuneration 2942032.87 4078193.72 3683726.88 3336499.71
Total 99353543.41 1082596707.91 1108043017.50 73907233.82
(3) Defined contribution plan
Unit: RMB
Increase Decrease
Opening during the during the Closing
Item balance period period balance
1. Basic pension insurance premiums 43615129.42 195522255.19 238722102.34 415282.27
2. Unemployment insurance
premiums 1957214.17 7983465.89 9926037.71 14642.35
Total 45572343.59 203505721.08 248648140.05 429924.62
270 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
32. Tax payables
Unit: RMB
Item Closing balance Opening balance
Value added tax 40076417.59 128305607.36
Property tax 15486094.67 34531806.76
Land use tax 11149858.80 10659878.19
Stamp duty 10875401.17 12987679.08
Enterprise income tax 6720397.49 51538384.55
Environmental protection tax 3698248.00 3674817.23
Resource tax 3000000.00 3500000.00
Urban maintenance and construction tax 2396420.76 5069014.46
Individual income tax 2184712.31 4765040.27
Educational surcharges and others 2062463.52 3955412.99
Land appreciation tax 2059693.25 2024028.20
Total 99709707.56 261011669.09
33. Non-current liabilities due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term payables due within one year 2354342454.51 2398150298.72
Long-term borrowings due within one year 1273902656.06 1920748225.56
Lease liabilities due within one year 3692567.25 4606717.58
Bonds payable due within one year 350000000.00
Total 3631937677.82 4673505241.86
2023 ANNUAL REPORT 271XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
34. Other non-current liabilities
Unit: RMB
Item Closing balance Opening balance
Short-term financial leasing borrowings 100000000.00
Total 100000000.00
35. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMB
Item Closing balance Opening balance
Mortgage borrowings 4262800469.08 3118508092.17
Guaranteed borrowings 857571273.74 1378621266.53
Credit borrowings 834545402.88 1405855117.94
Less: Long-term borrowings due within one year 1273902656.06 1920748225.56
Total 4681014489.64 3982236251.08
Explanation of the types of long-term borrowings:
* For classification and amount of mortgage assets of mortgage borrowings please see 1. Monetary funds and 24. Assets with
restricted ownerships or right to use in Note VII.* Long-term borrowings included accrued interest of RMB0.00.
272 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
36. Lease liabilities
Unit: RMB
Item Closing balance Opening balance
Lease payments payable 64264374.68 76929509.38
Less: Unrecognised financing expenses 18584784.58 18726744.34
Less: Lease liabilities due within one year 3692567.25 4606717.58
Total 41987022.85 53596047.46
37. Long-term payables
Unit: RMB
Item Closing balance Opening balance
Long-term payables 2541095217.66 3160771126.31
Total 2541095217.66 3160771126.31
(1) By nature
Unit: RMB
Item Closing balance Opening balance
Financial leasing borrowings 4345793513.95 4928891190.81
China Development Bank Special Fund 343750000.00 412500000.00
Contributions by other partners 199894158.22 211530234.22
Retention for the financial leasing operations 6000000.00 6000000.00
Less: Long-term payables due within one year 2354342454.51 2398150298.72
Total 2541095217.66 3160771126.31
Other explanation:
Contributions by other partners refer to the contributions made by other partners to Weifang Chenming Growth Driver Replacement
Equity Investment Fund Partnership (Limited Partnership) and Weifang Chendu Equity Investment Partnership (Limited Partnership) and
such contributions are reclassified as financial liabilities on a consolidation basis.
2023 ANNUAL REPORT 273XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
38. Deferred income
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance Reason
Government grants 1469230468.46 1730000.00 133096353.76 1337864114.70 Financial provision
Total 1469230468.46 1730000.00 133096353.76 1337864114.70 －
Items in respect of government grants:
Unit: RMB
Include in Amount
New grants non-operating Include in charged
Opening during the income for other income against Asset-related/
Liability item balance period the period for the period cost expenses Other changes Closing balance income-related
Funding for environmental protection 576455283.80 51761248.56 524694035.24 Asset-related
Huanggang forestry-pulp-paper
project 470994523.05 25026217.80 445968305.25 Asset-related
Infrastructure and environmental
protection engineering 208320966.69 11517589.44 196803377.25 Asset-related
Financial subsidies for technological
transformation project 132614525.64 1730000.00 39238509.96 95106015.68 Asset-related
Zhanjiang forestry-pulp-paper project 46711964.27 4094632.92 42617331.35 Asset-related
Project fund for National Key
Technology Research and
Development Program 958425.00 164700.00 793725.00 Asset-related
Others 33174780.01 1293455.08 31881324.93 Asset-related
Total 1469230468.46 1730000.00 133096353.76 1337864114.70
274 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
39. Share capital
Unit: RMB
Increase/decrease during the year (+/-)
Repurchase Shares
of restricted converted
Opening balance shares Bonus issue from reserves Others Subtotal Closing balance
Total number of shares 2979742200.00 -22929000.00 -22929000.00 2956813200.00
Explanation: On 17 July 2023 the Company convened the ninth extraordinary meeting of the tenth session of the Board and the fifth
extraordinary meeting of the tenth session of the Supervisory Committee at which the Resolution on the Failure Fulfilment of the
Unlocking Conditions for the Second Unlocking Period under the 2020 Restricted A Share Incentive Scheme and Repurchase
and Cancellation of Certain Restricted Shares was considered and approved. Grant Thornton (Special General Partnership)
issued a Capital Verification Report (Zhi Tong Yan Zi (2023) No. 371C000518) for the repurchase of restricted shares during the
period. Upon the completion of share repurchase the total number of shares of the Company changed from 2979742200 to
2956813200.
40. Other equity instruments
(1) Changes in preference shares Perpetual Bonds and other financial instruments outstanding at the end of
the period
Unit: RMB
Beginning of the period Increase during the period Decrease during the period End of the period
Carrying Carrying Carrying Carrying
Outstanding financial 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
Explanation: Repayment for Perpetual Bonds which are accounted for as equity instruments was made during the year.
2023 ANNUAL REPORT 275XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
41. Capital reserves
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance
Share premium 4604712413.16 48955941.22 53898041.98 4599770312.40
Other capital reserves 756488109.13 27467521.92 729020587.21
Total 5361200522.29 48955941.22 81365563.90 5328790899.61
Explanation:
* Perpetual bonds being the equity instruments were repaid during the year resulting in a decrease in capital reserves of
RMB4000000.00;
* Strategic investors made capital injection to Zhanjiang Chenming Pulp & Paper Co. Ltd. resulting in decrease in shareholding of the
Company but without loss in control and an increase in capital reserves of RMB48955941.22;
* The shareholding of Guangdong Nanyue Bank Co. Ltd. an associate of the Company in the Company was diluted as other
shareholders had made investment resulting in decrease in capital reserves of RMB6840774.34;
* Due to the failure to fulfil the unlocking conditions for restricted shares in prior years the Company had made repurchase during the
year resulting in a corresponding decrease in capital reserves of RMB42418650.00;
* As the management estimated that the remaining restricted shares will not be able to fulfil the unlocking conditions the capital reserves
recognised in prior period were reversed resulting in a decrease in capital reserves of RMB27467521.92;
* The Company acquired partial equity interest in Shouguang Meilun Paper Co. Ltd. a subsidiary from minority shareholders resulting in
a decrease in capital reserves of RMB638617.64.
42. Treasury shares
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance
Share incentive 128780100.00 65347650.00 63432450.00
Total 128780100.00 65347650.00 63432450.00
Explanation: Due to failure in fulfilling the unlocking conditions the Company repurchased certain restricted shares with a reduction of
RMB65347650.00 in treasury shares.
276 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
43. Other comprehensive income
Other comprehensive income attributable to the Company in the balance sheet is as follows:
Unit: RMB
During the period
Less: Transferred
from other
comprehensive
Attributable to income in
the parent prior periods to
Opening company retained earnings Closing
Item balance after tax during the period balance
I. Other comprehensive income that cannot be
reclassified to profit or loss in subsequent
periods
II. Other comprehensive income that will be
reclassified to profit and loss in subsequent
periods -821940694.57 -42940794.51 -864881489.08
1. Other comprehensive income that may be
reclassified to profit and loss under the
equity method -9916102.69 -1224007.02 -11140109.71
2. Translation differences of financial
statements denominated in foreign
currency -812024591.88 -41716787.49 -853741379.37
Total other comprehensive income -821940694.57 -42940794.51 -864881489.08
2023 ANNUAL REPORT 277XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
43. Other comprehensive income (Continued)
Other comprehensive income attributable to the parent company in the income statement:
Unit: RMB
During the period
Less: Transferred
from other
comprehensive
income in prior Less: Attributable
Incurred before periods to profit to minority Attributable to
income tax for or loss during Less: Income shareholders parent company
Item the period the period tax expenses after tax after tax
I. Other comprehensive income that
cannot be reclassified to profit or loss in
subsequent periods
II. Other comprehensive income that will
be reclassified to profit and loss in
subsequent periods -42940794.51 -42940794.51
1. Other comprehensive income that may
be reclassified to profit and loss under
the equity method -1224007.02 -1224007.02
2. Translation differences of financial
statements denominated in foreign
currency -41716787.49 -41716787.49
Total other comprehensive income -42940794.51 -42940794.51
44. Special reserves
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance
Production safety expenses 15791710.95 31146275.32 23615156.70 23322829.57
Total 15791710.95 31146275.32 23615156.70 23322829.57
45. Surplus reserves
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance
Statutory surplus reserves 1212009109.97 1212009109.97
Total 1212009109.97 1212009109.97
278 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
46. General risk provisions
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance
General risk provisions 79900268.71 529973.80 79370294.91
Total 79900268.71 529973.80 79370294.91
Explanation: The general risk provisions are accrued by the Company’s subsidiaries Shandong Chenming Group Finance Co. Ltd. and
Shandong Chenming Commercial Factoring Co. Ltd. based on 1% of the receivables. Accordingly the balance of the general
risk provisions was adjusted based on the balance of the receivables.
47. Retained profit
Unit: RMB
Item The period The prior period
Retained profit as at the end of the prior year before adjustment 9390642477.57 9294126706.86
Adjustment to opening balance of retained earnings
(increase + decrease -)
Opening balance of retained profit after adjustment 9390642477.57 9294126706.86
Plus: Net profit for the period attributable to shareholders
of the parent company -1281289649.82 189290120.82
Less: Transfer of general risk provisions -529973.80 3074350.11
Perpetual Bonds interest payable 89700000.00 89700000.00
Retained profit as at the end of the period 8020182801.55 9390642477.57
2023 ANNUAL REPORT 279XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
48. Revenue and operating costs
Unit: RMB
Amount for the year Amount for the prior year
Item Revenue Costs Revenue Costs
Principal activities 26368633225.48 24241469338.15 31425116857.83 26878943649.28
Other activities 239937002.72 204016961.78 579250463.08 494782057.72
Total 26608570228.20 24445486299.93 32004367320.91 27373725707.00
Whether the lower of the audited net profit before or after deducting extraordinary gains or losses is a negative
number
√ Yes □ No
Unit: RMB
Item Current year Specific deductions Prior year Specific deductions
Revenue 26608570228.20 32004367320.91
Total deductions from revenue 986216965.96 Revenue from sales of materials of 1030770460.26 Revenue from sales of materials
RMB900376053.88 and other of RMB903160256.93
revenue of RMB85840912.08. and other revenue of
RMB127610203.33.Proportion of total deductions from revenue to 3.71% 3.22%
revenue
I. Revenue from operations not related to
principal operations
1. Revenue from operations other than 986216965.96 Revenue from sales of materials of 1030770460.26 Revenue from sales of materials
normal operation such as revenue RMB900376053.88 and other of RMB903160256.93
realised from leasing fixed assets revenue of RMB85840912.08. and other revenue of
intangible assets packaging materials RMB127610203.33.sales of materials exchanges for non-
monetary assets with materials engaging
in entrusted management business and
revenue included in revenue from principal
operations but generated from operations
other than normal operation of the
Company.Subtotal of revenue from operations not related 986216965.96 Revenue from sales of materials of 1030770460.26 Revenue from sales of materials
to principal operations RMB900376053.88 and other of RMB903160256.93
revenue of RMB85840912.08. and other revenue of
RMB127610203.33.Revenue after deductions 25622353262.24 Revenue from sales of materials of 30973596860.65 Revenue from sales of materials
RMB900376053.88 and other of RMB903160256.93
revenue of RMB85840912.08. and other revenue of
RMB127610203.33.
280 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
48. Revenue and operating costs (Continued)
Breakdown of revenue and operating costs:
Unit: RMB
Machine-made paper Financial services Hotel and property rentals Others Total
Category of contract Revenue Operating costs Revenue Operating costs Revenue Operating costs Revenue Operating costs Revenue Operating costs
Type of business 25702327302.60 23725017263.15 164338689.66 1346144.03 219640822.73 225430819.61 522263413.21 493692073.14 26608570228.20 24445486299.93
Including:
Machine-made paper 23892883773.10 22038839089.61 23892883773.10 22038839089.61
Chemical pulp 551886319.48 549401517.97 551886319.48 549401517.97
Processing of moulds 204029538.47 198297579.81 204029538.47 198297579.81
Electricity and steam 223450300.54 212089570.22 223450300.54 212089570.22
Construction materials 222788884.78 216481504.04 222788884.78 216481504.04
Hotel and property rentals 212364573.64 202364469.60 212364573.64 202364469.60
Paper chemicals 128495469.03 118581502.40 128495469.03 118581502.40
Others 905611440.45 806105582.95 164338689.66 1346144.03 7276249.09 23066350.01 95444989.96 78912989.29 1172671369.16 909431066.28
By geographical area 25702327302.60 23725017263.15 164338689.66 1346144.03 219640822.73 225430819.61 522263413.21 493692073.14 26608570228.20 24445486299.93
Including:
Mainland China 19176105106.76 17602028904.63 164338689.66 1346144.03 219640822.73 225430819.61 522263413.21 493692073.14 20082348032.36 18322497941.41
Other countries and regions 6526222195.84 6122988358.52 6526222195.84 6122988358.52
By the timing of delivery 25702327302.60 23725017263.15 164338689.66 1346144.03 219640822.73 225430819.61 522263413.21 493692073.14 26608570228.20 24445486299.93
Including:
Goods (at a point in time) 25473285738.85 23511944280.45 19828475.28 8894628.69 522040076.01 493692073.14 26015154290.14 24014530982.28
Services (within a certain
period) 229041563.75 213072982.70 164338689.66 1346144.03 199812347.45 216536190.92 223337.20 593415938.06 430955317.65
By sales channel 25702327302.60 23725017263.15 164338689.66 1346144.03 219640822.73 225430819.61 522263413.21 493692073.14 26608570228.20 24445486299.93
Including:
Distribution 18126061624.64 16782843186.05 18126061624.64 16782843186.05
Direct sales 7576265677.96 6942174077.10 164338689.66 1346144.03 219640822.73 225430819.61 522263413.21 493692073.14 8482508603.56 7662643113.88
2023 ANNUAL REPORT 281XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
48. Revenue and operating costs (Continued)
Breakdown of revenue from principal activities
* By industry
Amount for the year Amount for the prior year
Name of industry Revenue Costs Revenue Costs
Machine-made paper 23892883773.10 22038839089.61 28398850766.51 24448024979.32
Chemical pulp 551886319.48 549401517.97 1043284411.27 816562733.50
Electricity and steam 223450300.54 212089570.22 288447315.51 270073907.31
Construction materials 222788884.78 216481504.04 265496913.56 228492849.08
Hotel and property rentals 212364573.64 202364469.60 238020274.82 213632078.62
Processing of moulds 204029538.47 198297579.81 308596084.40 277645763.64
Paper chemicals 128495469.03 118581502.40 169232476.00 146042699.79
Others 932734366.44 705414104.50 713188615.76 478468638.02
Total 26368633225.48 24241469338.15 31425116857.83 26878943649.28
* Machine-made paper by main product type
Amount for the year Amount for the prior year
Name of industry Revenue Costs Revenue Costs
Duplex press paper 7702426452.75 6929011543.24 8449759248.92 7407821676.66
White paper board 5477558929.56 5673086405.12 9061724789.41 7826962810.39
Electrostatic paper 4005559008.36 3410527141.51 4077351284.38 3497341216.24
Coated paper 3925663395.23 3389639629.49 4149820827.47 3457680224.04
Anti-sticking raw paper 1127626969.18 947141370.39 973542096.46 791528667.30
Thermal paper 553666757.69 484068025.05 582687847.45 489261009.24
Others 1100382260.33 1032967683.96 1103964672.42 977429375.45
Production interruption loss 172397290.85
Total 23892883773.10 22038839089.61 28398850766.51 24448024979.32
282 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
48. Revenue and operating costs (Continued)
* Machine-made paper by geographical segment
Amount for the year Amount for the prior year
Name of industry Revenue Costs Revenue Costs
Mainland China 17366661577.26 15915850731.09 20254734795.51 17354744592.14
Other countries and regions 6526222195.84 6122988358.52 8144115971.00 7093280387.18
Total 23892883773.10 22038839089.61 28398850766.51 24448024979.32
* Revenue from top 5 customers
Percentage of the
Total revenue from total revenue in the
Period top 5 customers same period (%)
20235966203769.1422.42%
20226798742733.1321.24%
Information related to performance obligations:
Company’s
Nature of goods Whether the commitments
Time for fulfilment that the Company person is the expected to Types of quality assurance
of performance Significant terms of undertakes to primary person be refunded to offered by the Company and
Item obligations payment transfer in charge customers related obligations
Machine-made Domestic sales on the Domestic sales tend Produces easily Yes None Guaranteed quality assurance
paper day of delivery to the to be provided on distinguishable should there be objections to
customer; foreign an invoice basis; product quality within 7 days
sales on the day of foreign sales tend of arrival the products can
customs clearance to be prepaid. be returned and exchanged.Other explanations: The Company’s performance obligations for sales of machine-made paper are generally less than one year and the
Company takes advance payments or provides credit terms depending on the customer. When the Company is the
primary responsible party for a sale it generally obtains the unconditional right to receive payment when control of the
merchandise is transferred to the customer either at the time of shipment or upon delivery to the destination specified by
the customer.Information related to the transaction price allocated to residual performance obligations:
As at the end of the reporting period the amount of revenue with signed contracts but unfulfilled or uncompleted
performance obligation was RMB1443680155.62 in which RMB1443680155.62 was expected to be recognised in
2024.
2023 ANNUAL REPORT 283XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
49. Taxes and surcharges
Unit: RMB
Amount for Amount for
Item the period the prior period
Property tax 88246740.83 84937624.08
Stamp duty 42431971.88 50855100.84
Land use tax 34743967.04 21896525.68
Urban maintenance and construction tax 18839445.01 30844441.65
Resource tax 13725384.40 12151246.70
Environmental tax 13009450.64 13153239.01
Educational surcharges 8522314.82 13065472.17
Local education surcharges 5859476.27 9672799.88
Water conservation funds 848092.68 941851.21
Others 1575521.55 5621013.84
Total 227802365.12 243139315.06
50. General and administrative expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Wages and surcharges 229206077.91 230961622.37
Business hospitality expenses 94404109.34 90219924.17
Depreciation expenses 91759528.87 92141979.66
Welfare expenses 58663557.66 60931519.54
Amortisation of intangible assets and long-term expenses 48832351.39 50808836.96
Repair cost and consumption of materials 23468894.14 24983894.65
Intermediary service expenses 21621384.60 27065168.09
Legal costs 20252237.24 24306211.03
Insurance premium 16758186.64 17343722.19
Travel expenses 15150365.49 10066215.41
Office expenses 3871812.80 6827412.53
Termination benefits expenses 2091062.84 26059173.11
Others 64240213.09 88831023.63
Total 690319782.01 750546703.34
284 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
51. Sales and distribution expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Wages and surcharges 109381728.48 120855156.29
Business hospitality expenses 51126929.37 55312453.05
Travel expenses 28631831.59 21514621.65
Rental expenses 7343527.12 6048188.50
Selling commissions 6940887.40 11571414.61
Depreciation expenses 4677235.58 6524594.65
Office expenses 4241864.88 2465867.66
Warehouse expenses 411253.96 669554.18
Others 18244379.05 17219423.50
Total 230999637.43 242181274.09
52. Research and development expense
Unit: RMB
Amount for Amount for
Item the period the prior period
Consumption of materials 781407604.78 872932892.44
Utilities 155276067.70 181428197.66
Wages and surcharges 129508833.28 146671151.98
Depreciation expenses 56914306.41 45016402.19
Insurance premium 26981737.42 28028216.33
Housing provident funds 4435343.17 4848051.84
Welfare expenses 3362929.39 4448785.76
Union funds 1323605.61 1159873.86
Other expenses 5209270.37 5747968.04
Total 1164419698.13 1290281540.10
2023 ANNUAL REPORT 285XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
53. Finance expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Interest expenses 1908394881.89 2081067895.66
Less: Capitalised interest amount
Interest income 201101017.34 309987478.19
Foreign exchange gains and losses -25018964.43 46654427.89
Less: Capitalisation of foreign exchange gains and losses
Bank charges and others 327391808.02 328821303.70
Total 2009666708.14 2146556149.06
54. Other income
Unit: RMB
Amount for Amount for
Source of other income the period the prior period
Additional deduction of VAT 154495020.82 25116.70
Government grants – amortised deferred income included in profit or loss 133096353.76 104451215.79
Government grants – directly included in profit or loss 36809925.69 136241934.69
Gain on debt restructuring 10400321.83 1030353.24
Refund of handling fees for withholding and payment of individual
income tax 2522709.33 474548.44
Total 337324331.43 242223168.86
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
Gain on change in fair value of consumable biological assets
measured at fair value 6775808.38 9924233.72
Other non-current financial assets -3590983.62 5350000.00
Financial assets held for trading -28740129.26 -40528162.53
Total -25555304.50 -25253928.81
286 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
56. Investment income
Unit: RMB
Amount for Amount for
Item the period the prior period
Investment gain on disposal of long-term equity investments 391450223.81 -856627.60
Income from long-term equity investments accounted for using the
equity method 128934922.00 24116757.95
Investment gain on debt restructuring 44897024.23 -62888.33
Dividend on financial assets held for trading and other noncurrent
financial assets 39529607.69 38224826.21
Investment gain on derecognition of financial assets -99744741.95 -137464855.58
Total 505067035.78 -76042787.35
57. Credit impairment loss
Unit: RMB
Amount for Amount for
Item the period the prior period
Bad debt loss of other receivables -47363307.69 54677374.62
Bad debt loss of accounts receivable -96453353.50 -38857265.91
Bad debt loss of financial lease payments -176139588.20 -101897077.27
Total -319956249.39 -86076968.56
58. Loss on impairment of assets
Unit: RMB
Amount for Amount for
Item the period the prior period
Impairment losses on construction in progress -662764.60
Loss on inventory impairment -44344534.62 -17659966.20
Total -45007299.22 -17659966.20
2023 ANNUAL REPORT 287XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
59. Asset disposal income
Unit: RMB
Amount for Amount for
Source of asset disposal income the period the prior period
Gain on disposal of fixed assets (“-” denotes loss) 11090813.00 54255232.29
Sublease (“-” denotes loss) 3780766.85
Gain on disposal of intangible assets (“-” denotes loss) -264150.94 106837281.47
Total 14607428.91 161092513.76
60. Non-operating income
Unit: RMB
Included in
non-recurring
Amount for Amount for profit or loss
Item the period the prior period in the period
Fine income 1965328.23 2334679.24 1965328.23
Gain on damage and retirement of non-current
assets 450007.54 82413.79 450007.54
Exempted debts 222676.32 94894.96 222676.32
Government grants 72000.00 73741500.00 72000.00
Others 288757.32 995197.77 288757.32
Total 2998769.41 77248685.76 2998769.41
(1) For details of government grant please see Note XI. Government grants.
(2) For the specific reason for government grants as recurring profit or loss please refer to Note XX.
288 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
61. Non-operating expenses
Unit: RMB
Included in
non-recurring
Amount for Amount for profit or loss
Item the period the prior period in the period
Utilisation cancellation and trading of carbon
emission quota 13613560.97 23662741.81 13613560.97
Loss on damage and retirement of non-current
assets 4940010.70 10382099.66 4940010.70
Donation 505280.00 805000.00 505280.00
Litigation 16348160.25
Total 19058851.67 51198001.72 19058851.67
62. Income tax expenses
(1) Particulars of income tax expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Current income tax calculated according to tax law and related
regulations 26624910.52 90855030.56
Deferred income tax expenses -409686894.47 -225948373.97
Total -383061983.95 -135093343.41
2023 ANNUAL REPORT 289XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
62. Income tax expenses (Continued)
(2) The reconciliation between accounting profit and income tax expenses
Unit: RMB
Amount for
Item the period
Total profit -1709704401.81
Income tax expenses calculated at statutory (or applicable) tax rates -256455660.27
Effect of different tax rates applicable to certain subsidiaries -11581202.24
Adjustments to income tax for prior periods -18527039.58
Profit and loss of joint ventures and associates accounted for using the equity method -16009557.52
Income not subject to tax (listed with “-”) -9106680.52
Non-deductible costs expenses and losses 20316855.92
The impact of tax rate changes on the opening deferred income tax balance 4499969.53
Tax effect of utilisation of unrecognised deductible losses and deductible temporary
differences in the previous year (listed with “-”) -36012580.06
Tax effect of utilisation of unrecognised deductible losses and deductible temporary
differences 74768856.53
Tax effect of R&D fee deduction (listed with“-”) -116004399.19
The pre-tax deduction of the interest on Perpetual Bonds accounted as equity -13455000.00
Tax incentives such as equipment credits -5715006.49
Deferred income taxes that have not been recognised as deductible losses and
deductible temporary differences in previous years are reversed in the current period. 219459.94
Income tax expense -383061983.95
Explanation: The amount listed in “the impact of tax rate changes on the opening deferred income tax balance” for the period is the
difference caused by the different applicable tax rates of Wuhan Chenming Hanyang Paper Holdings Co. Ltd. (disposed
of during the period) from a high-tech enterprise to a non-high-tech enterprise.
63. Items on statements of cash flow
(1) Cash relating to operating activities
Cash received relating to other operating activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Net proceedings from the financial leasing business 615990074.21 184749056.18
Finance expenses – Interest income 192639004.29 305772280.83
Open credit and other income 185197937.53 745295349.96
Government grants related to revenue 36369756.40 202165244.17
Default penalty and fine 988348.52 969634.65
Total 1031185120.95 1438951565.79
290 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
63. Items on statements of cash flow (Continued)
(1) Cash relating to operating activities (Continued)
Cash paid relating to other operating activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Transportation expenses 827892596.27 944022266.88
Financial institutions charge 231394529.58 241125513.70
Business hospitality expenses 126982128.56 117853387.22
Travel expenses 44024694.22 32480740.17
Intermediary service expenses 42941628.90 54437645.94
Repair expenses 23853382.84 23053205.98
Cargo handling charges 16197187.56 21869006.27
Insurance premium 16063115.65 15288347.78
Waste disposal expenses 15654882.06 15891052.20
Leasing expenses 13911319.46 12038349.86
Office expenses 8375443.12 10681717.81
Litigation 368296784.84
Net investment in factoring business 250000000.00
Others 190183959.20 186617859.65
Total 1557474867.42 2293655878.30
(2) Cash relating to investing activities
Significant cash received relating to investing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Demolition or relocation compensation received 138000000.00 163509091.00
Net cash received from disposal of subsidiaries 99329954.44
Disposal of properties or property assets 61500000.00 50500000.00
Total 298829954.44 214009091.00
2023 ANNUAL REPORT 291XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
63. Items on statements of cash flow (Continued)
(2) Cash relating to investing activities (Continued)
Significant cash paid relating to investing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Expenses on construction projects land and fixed assets 314376125.86 885436648.94
Net cash paid for acquisition of subsidiaries 4934751.03 367997918.78
External investment expenses 1463000000.00
Total 319310876.89 2716434567.72
(3) Cash relating to financing activities
Cash received relating to other financing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Equipment leaseback 2116532500.00 3684590394.82
Net recovery of guarantee deposit 434899520.51
Current accounts 135100000.00
Deposit for finance lease 10758363.18 34500000.00
Total 2697290383.69 3719090394.82
292 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
63. Items on statements of cash flow (Continued)
(3) Cash relating to financing activities (Continued)
Cash paid relating to other financing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Repayment of equipment leaseback 2761859486.35 2237763312.31
Repayment of Perpetual Bonds 1000000000.00
Repayment of bonds 350000000.00 1078685100.00
Acquisition of non-controlling interests 200000000.00
Repayment of Perpetual Bonds interest 89700000.00 89700000.00
Equity in China Development Bank funds 68750000.00 75500000.00
Security deposit for financial leasing 68250000.00 76000000.00
Share repurchase under the share incentive scheme 66228770.38 11757730.78
Lease payable 7013099.60
Repayment of short-term commercial paper and MTN 1200000000.00
Net expense of guarantee deposit 919816742.13
Total 4611801356.33 5689222885.22
Changes in liabilities arising from financing activities
√ Applicable □ Not applicable
Unit: RMB
Increase during the period Decrease during the period
Non-cash Non-cash
Item Opening balance Cash changes changes Cash changes changes Closing balance
Short-term borrowings 36385048295.02 27901920633.13 790297925.31 31601787831.84 33475479021.62
Long-term borrowings 5902984476.64 3035002236.00 139321559.07 3122391126.01 5954917145.70
Bonds payable 350000000.00 350000000.00
Long-term payables 5558921425.03 2116532500.00 184700254.21 2964716507.07 4895437672.17
Lease liabilities 58202765.04 7013099.60 5510075.34 45679590.10
Other payables (financing) 282524750.00 282524750.00
Long-term receivables (deposit for financial leasing) 319386351.32 10758363.18 46884229.83 68250000.00 308778944.33
Other monetary funds (net change of guarantee deposit) 11756140645.56 434899520.51 11321241125.05
Other equity instrument investments (Perpetual Bonds) 996000000.00 89700000.00 1085700000.00
Capital reserve (Perpetual Bonds) 4000000.00 4000000.00
Total 61330683958.61 33781638002.82 1250903968.42 39203858564.52 5510075.34 56284058248.97
2023 ANNUAL REPORT 293XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
64. Supplementary information on cash flow statement
(1) Supplementary information on cash flow statement
Amount for Amount for
Supplementary information the period the prior period
1. Reconciliation of net profit as cash flows from operating
activities:
Net profit -1326642417.86 317362691.41
Plus: Provision for impairment of assets 364963548.61 103736934.76
Depreciation of fixed assets depletion of oil and gas assets
and depreciation of bearer biological assets 2258072937.60 2255505392.35
Depreciation of right-of-use assets 7674988.32 7737284.20
Amortisation of intangible assets 53903852.31 54698978.50
Amortisation of long-term prepaid expenses 4580218.92 4678921.69
Loss on disposal of fixed assets intangible assets and
other long-term assets (“-” denotes gain) -14607428.91 -161092513.76
Loss on scrapped fixed assets (“-” denotes gain) 4490003.16 10299685.87
Loss on changes in fair value (“-” denotes gain) 25555304.50 25253928.81
Finance expenses (“-” denotes gain) 1908394881.89 2081067895.66
Investment loss (“-” denotes gain) -505067035.78 76042787.35
Decrease in deferred income tax assets (“-” denotes increase) -354157315.89 -220919108.82
Increase in deferred income tax liabilities (“-” denotes decrease) 1308894.76 -5029265.45
Decrease in inventories (“-” denotes increase) 741332805.87 -406337116.14
Decrease in operating receivables (“-” denotes increase) 348500778.63 332267872.35
Increase in operating payables (“-” denotes decrease) 871645292.69 -1025450126.41
Others
Net cash flows from operating activities 4389949308.82 3449824242.37
2. Major investing and financing activities not involving cash
settlements
3. Net change in cash and cash equivalents:
Closing balance of cash 764233742.61 2159460149.51
Less: Opening balance of cash 2159460149.51 3168915847.02
Plus: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -1395226406.90 -1009455697.51
294 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
64. Supplementary information on cash flow statement (Continued)
(2) Net Cash of Acquisition Subsidiaries Paid in Current Period
Unit: RMB
Amount
Cash or cash equivalents paid in the current period for business combinations that occurred
during the period 5400000.00
Of which: Jiangxi Chenming Port Co. Ltd. 5400000.00
Less: Cash and cash equivalents held by the subsidiary on the acquisition date 465248.97
Of which: Jiangxi Chenming Port Co. Ltd. 465248.97
Plus: Cash or cash equivalents paid in the current period for business combinations that
occurred during previous periods
Of which:
Net cash paid for acquisition of subsidiaries 4934751.03
(3) Net Cash from Disposal of Subsidiaries Received in Current Period
Unit: RMB
Amount
Cash or cash equivalents received in the current period from disposal of subsidiaries during
the period 100000000.00
Of which: Wuhan Chenming Hanyang Paper Holdings Co. Ltd. 100000000.00
Less: Cash and cash equivalents held by the subsidiary on the date of loss of control 670045.56
Of which: Wuhan Chenming Hanyang Paper Holdings Co. Ltd. 670045.56
Plus: Cash or cash equivalents received in the current period from disposal of subsidiaries
during previous periods
Of which:
Net cash received from disposal of subsidiaries 99329954.44
(4) Cash and cash equivalents composition
Unit: RMB
Item Closing balance Opening balance
I. Cash 764233742.61 2159460149.51
Of which: Treasury cash 3674805.36 3491219.08
Bank deposit that can be used for payment at any time 760558937.25 2155968930.43
III. Balance of cash and cash equivalent at end of period 764233742.61 2159460149.51
Of which: Restricted cash and cash equivalents used by the
Company or subsidiaries within the Group
2023 ANNUAL REPORT 295XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
64. Supplementary information on cash flow statement (Continued)
(5) Monetary funds other than cash and cash equivalents
Unit: RMB
Amount for Amount for Reasons why it is not cash
Item the period the prior period and cash equivalents
Other monetary funds 11321241125.05 11756140645.56 See Note VII.1 for details
Interest accrued on deposits 39357963.64 84834191.01 See Note VII.1 for details
Total 11360599088.69 11840974836.57
65. Notes to items of statements of changes in owners’ equity
Nil
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 57899568.50 7.0827 410085273.80
EUR 1308213.22 7.8592 10281509.34
HKD 2253743.55 0.9062 2042387.48
GBP 1475.74 9.0411 13342.31
JPY 1197.00 0.0502 60.10
Accounts receivable
Of which: USD 5433637.49 7.0827 38484824.25
EUR 4163139.45 7.8592 32718945.57
JPY 146734998.00 0.0502 7368004.45
Other receivables
Of which: USD 1043685.64 7.0827 7392112.28
EUR 7100.59 7.8592 55804.96
Accounts payable
Of which: USD 83066527.52 7.0827 588335294.47
EUR 807997.69 7.8592 6350215.45
Short-term borrowings
Of which: USD 2000000.00 7.0827 14165400.00
EUR 1050000.00 7.8592 8252160.00
296 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
66. Foreign currency items (Continued)
(2) Explanation on overseas operating entities (including major overseas operating entities) which shall disclose
their overseas principal places of business functional currency and basis. Reasons shall be disclosed if
there is any change in the functional currency.√ Applicable □ Not applicable
Principal place of Place of Functional
No. Name of subsidiary business incorporation currency
1 Chenming GmbH Hamburg Germany Hamburg Germany EUR
2 Chenming Paper Korea Co. Ltd. Seoul Korea Seoul Korea KRW
3 Chenming International Co. Ltd. Los Angeles USA Los Angeles USA USD
4 Chenming Paper Japan Co. Ltd. Tokyo Japan Tokyo Japan JPY
5 Chenming Paper United States Co. Ltd. Los Angeles USA Los Angeles USA USD
6 Chenming (Overseas) Limited Hong Kong China Hong Kong China USD
7 Chenming (Singapore) Limited Singapore Singapore USD
8 Chenming (HK) Limited Hong Kong China Hong Kong China USD
67. Leases
(1) The Company as a lessee
Unit: RMB
Item Amount for the period
Short-term lease expenses 8017898.94
(2) The Company as a lessor
Operating lease as a lessor
√ Applicable □ Not applicable
Lease income
Unit: RMB
Item Amount for the period
Lease income 205849883.65
2023 ANNUAL REPORT 297XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
67. Leases (Continued)
(2) The Company as a lessor (Continued)
Financial lease as a lessor
□ Applicable √ Not applicable
Undiscounted lease payments for each of the next five years
√ Applicable □ Not applicable
Unit: RMB
Annual undiscounted lease payments
Item Closing balance Opening balance
The first year 179905002.33 199136847.34
The second year 168651189.37 192606625.78
The third year 167585064.63 166116775.62
The fourth year 162996827.55 142350767.99
The fifth year 159887562.91 132326292.11
Five years later 165396559.34 131251761.59
Total 1004422206.13 963789070.43
VIII. R&D expenses
Unit: RMB
Amount during Amount during
Item the period the prior period
Consumption of raw materials 781407604.78 872932892.44
Utilities 155276067.70 181428197.66
Wages and surcharges 129508833.28 146671151.98
Depreciation expenses 56914306.41 45016402.19
Insurance premium 26981737.42 28028216.33
Housing provident funds 4435343.17 4848051.84
Welfare expenses 3362929.39 4448785.76
Union funds 1323605.61 1159873.86
Other expenses 5209270.37 5747968.04
Total 1164419698.13 1290281540.10
Of which: R&D expenses included in profit or loss 1164419698.13 1290281540.10
Capitalised R&D expenses
298 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
IX. Change in scope of consolidation
1. Business combination not under common control
(1) Business combination not under common control during the current period
Unit: RMB
The income of
acquiree from The net profit of The cash flow of
The basis for the date of acquiree from the acquiree from the
Date of Consideration The way of determining acquisition to date of acquisition date of acquisition
acquiring the for acquiring the Shareholding acquiring the Acquisition the date of the end of the to the end of the to the end of the
Acquiree shareholding shareholding ratio acquired shareholding date acquisition period period period
Jiangxi Chenming
Port Co. Ltd. 2023.4.30 5400000.00 100.00% Acquisition 2023.4.30 Control 3659154.57 -1234456.79 -13656465.04
(2) Cost of combination and goodwill
Unit: RMB
Cost of combination Jiangxi Chenming Port Co. Ltd.– Cash 5400000.00
Total cost of combination 5400000.00
Less: the interest in the fair value of the identifiable net assets acquired -2873638.42
Amount of goodwill/cost of combination being less than the interest
in the fair value of the identifiable net assets acquired 8273638.42
Method for determining the fair value of the cost of combination:
The Company adopted the asset-based appraisal method and determined the equity acquisition price of Jiangxi
Chenming Port Co. Ltd. on the appraisal benchmark date to be RMB5.4 million.The main reason for the formation of significant goodwill: the Company did not control Jiangxi Chenming Port
Co. Ltd. under common control and the acquisition consideration is greater than the identifiable net assets.
2023 ANNUAL REPORT 299XII Financial Report
IX. Change in scope of consolidation (Continued)
1. Business combination not under common control (Continued)
(3) Acquiree’s identifiable assets or liabilities as at the acquisition date
Unit: RMB
Jiangxi Chenming Port Co. Ltd.Fair value as at the Carrying amount as at the
acquisition date acquisition date
Assets: 188785445.09 91440229.40
Monetary funds 465248.97 465248.97
Accounts receivable 3080417.76 3080417.76
Payments in advance 232725.00 232725.00
Other receivables 194231.04 194231.04
Long-term equity investments 59345429.05 2450000.00
Fixed assets 111076981.66 74175345.69
Intangible assets 14358032.02 10809881.35
Deferred income tax assets 32379.59 32379.59
Liabilities: 191659083.51 185591615.51
Accounts payable 4684349.81 4684349.81
Employee benefits payable 11000.00 11000.00
Taxes payable 35123.62 35123.62
Other payables 179933386.60 179933386.60
Long-term borrowings 927755.48 927755.48
Deferred income tax liabilities 6067468.00
Net assets -2873638.42 -94151386.11
Less: minority interest
Net assets acquired from combination -2873638.42 -94151386.11
Method for determining the fair value of identifiable assets and liabilities:
The Company adopted the asset-based method valuation technique to determine the fair value of the assets
and liabilities of Jiangxi Chenming Port Co. Ltd. on the acquisition date.Contingent liabilities of the acquiree assumed in a business combination:
Nil
300 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
IX. Change in scope of consolidation (Continued)
1. Business combination not under common control (Continued)
(4) Gains or losses arising from remeasurement of equity held before the acquisition date at fair value
Any transaction that realises the business combination step by step through multiple transactions and obtains
control during the reporting period
□ Yes √ No
(5) Relevant explanation on the inability to reasonably determine the consideration of combination or the fair
value of the acquiree’s identifiable assets and liabilities on the acquisition date or at the end of the current
period of combination
□ Applicable √ Not applicable
2. Disposal of a subsidiary
Any transaction or event that results in the loss of control of any subsidiary during the period
√ Yes □ No
Unit: RMB
Determination
and key
Carrying amount assumption
Difference between of remaining Fair value of of fair value Relevant other
consideration and shareholding as remaining of remaining comprehensive
share of net assets of the date of shareholding as of shareholding as income of
Disposal Disposal The basis for of relevant Remaining loss of control the date of loss of the date of loss former
Disposal percentage method at determining subsidiary as per shareholding as per of control as per Gain or loss in of control as per subsidiary
consideration at the date the date of Date of the date of consolidated as of the date consolidated consolidated fair value of consolidated transferred to
at the date of of loss of loss of loss of loss of financial of loss of financial financial remaining financial profit or loss or
Name of subsidiary loss of control control (%) control control control statements control (%) statements statements shareholding statements retained profit
Wuhan Chenming Hanyang 480000000.00 65.21 Transfer 2023.9.30 Loss of 391450124.89 34.64 410000000.00 254998849.78 -155001150.22 Backflushing the
Paper Holdings Co. Ltd. control corresponding
proportion of
equity interest
disposed of
Any situation where investments in subsidiaries are disposed of step by step through multiple transactions and control
is lost during the period
□ Yes √ No
3. Change in scope of consolidation due to other reasons
During the year 1 subsidiary was newly established namely Shouguang Kunhe Trading Co. Ltd. 1 subsidiary was
deregistered namely Beijing Chenming Financial Leasing Co. Ltd.
2023 ANNUAL REPORT 301XII Financial Report
X. Interest in other entities
1. Interest in subsidiaries
(1) Constitution of the Group
Unit: RMB’0000
Principle Shareholding Issued Issued
Register place of Place of Nature of Direct Indirect debt share
Name of subsidiary capital business incorporation business Type of legal person (%) (%) Acquisition securities capital
Zhanjiang Chenming Pulp & 691357.24 Zhanjiang Zhanjiang Paper making For-profit corporation 80.28 Establishment 0 0
Paper Co. Ltd.Shouguang Meilun Paper 480104.55 Shouguang Shouguang Paper making For-profit corporation 64.87 Establishment 0 0
Co. Ltd.Jilin Chenming Paper Co. Ltd. 150000.00 Jilin Jilin Paper making For-profit corporation 100 Acquisition 0 0
Huanggang Chenming Pulp & 335000.00 Huanggang Huanggang Pulp production For-profit corporation 70.15 29.85 Establishment 0 0
Paper Co. Ltd.Shandong Chenming Paper 10000.00 Shouguang Shouguang Sales of paper For-profit corporation 100 Establishment 0 0
Sales Co. Ltd. product
Shouguang Chenming Import 70000.00 Shouguang Shouguang Trading For-profit corporation 35.71 64.29 Establishment 0 0
and Export Trade Co. Ltd.Jiangxi Chenming Supply Chain 200.00 Jiangxi Jiangxi Trading For-profit corporation 70 Establishment 0 0
Management Co. Ltd.Chenming GmbH 65.00 Germany Germany Paper product For-profit corporation 100 Establishment 0 0
(USD) trading
Shouguang Chenming 200.00 Shouguang Shouguang Machinery For-profit corporation 100 Establishment 0 0
Papermaking Machine manufacturing
Co. Ltd.Shouguang Hongxiang Printing 80.00 Shouguang Shouguang Printing and For-profit corporation 100 Acquisition 0 0
and Packaging Co. Ltd. packaging
Shouguang Chenming Modern 1000.00 Shouguang Shouguang Transportation For-profit corporation 100 Establishment 0 0
Logistic Co. Ltd.Jinan Chenming Paper Sales 10000.00 Jinan Jinan Investment For-profit corporation 100 Establishment 0 0
Co. Ltd. management/
Paper product
trading
Huanggang Chenming 7000.00 Huanggang Huanggang Arboriculture For-profit corporation 100 Establishment 0 0
Arboriculture Development
Co. Ltd.Chenming Arboriculture 10000.00 Wuhan Wuhan Arboriculture For-profit corporation 100 Establishment 0 0
Co. Ltd.Chenming Paper Korea 100.00 Korea Korea Paper product For-profit corporation 100 Establishment 0 0
Co. Ltd. (USD) trading
Shouguang Shun Da Customs 150.00 Shouguang Shouguang Customs For-profit corporation 100 Establishment 0 0
Declaration Co. Ltd. declaration
Shanghai Chenming Industry 370000.00 Shanghai Shanghai Property For-profit corporation 100 Establishment 0 0
Co. Ltd. investment and
management
Shanghai Chenyin Trading 41000.00 Shanghai Shanghai Trading For-profit corporation 51 Establishment 0 0
Co. Ltd.Shandong Chenming Group 500000.00 Jinan Jinan Finance For-profit corporation 80 20 Establishment 0 0
Finance Co. Ltd.Jiangxi Chenming Paper 32673.32 Nanchang Nanchang Paper making For-profit corporation 100 Establishment 0 0
Co. Ltd. (USD)
302 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
X. Interest in other entities (Continued)
1. Interest in subsidiaries (Continued)
(1) Constitution of the Group (Continued)
Principle Shareholding Issued Issued
Register place of Place of Nature of Direct Indirect debt share
Name of subsidiary capital business incorporation business Type of legal person (%) (%) Acquisition securities capital
Nanchang Shengheng Trading 1000.00 Nanchang Nanchang Trading For-profit corporation 100 Establishment 0 0
Co. Ltd.Nanchang Kunheng Trading 1000.00 Nanchang Nanchang Trading For-profit corporation 100 Establishment 0 0
Co. Ltd.Jiangxi Chenming Port Co. Ltd. 1507.00 Jiangxi Jiangxi Cargo For-profit corporation 100 Merger and 0 0
transportation acquisition
Shouguang Chenming Art 2000.00 Shouguang Shouguang Paper making For-profit corporation 75 Establishment 0 0
Paper Co. Ltd. (USD)
Hailaer Chenming Paper 1600.00 Hailaer Hailaer Paper making For-profit corporation 75 Establishment 0 0
Co. Ltd.Shandong Grand View Hotel 4192.48 Shouguang Shouguang Catering For-profit corporation 90.05 Establishment 0 0
Co. Ltd. (USD)
Shandong Chenming Financial 587200.00 Jinan Jinan Financial leasing For-profit corporation 100 Establishment 0 0
Leasing Co. Ltd.Qingdao Chenming Nonghai 500000.00 Qingdao Qingdao Financial leasing For-profit corporation 100 Establishment 0 0
Financial Leasing Co. Ltd
Chenming (HK) Limited 9990.00 Hong Kong Hong Kong Paper product For-profit corporation 100 Establishment 0 0
(USD) trading
Shouguang Hongyi Decorative 200.00 Shouguang Shouguang Packaging For-profit corporation 100 Merger and 0 0
Packaging Co. Ltd. acquisition
Shouguang Xinyuan Coal 300.00 Shouguang Shouguang Coal For-profit corporation 100 Merger and 0 0
Co. Ltd. acquisition
Shouguang City Run Sheng 2380.00 Shouguang Shouguang Purchase and For-profit corporation 100 Merger and 0 0
Wasted Paper Recycle sale of waste acquisition
Co. Ltd.Shouguang Wei Yuan Logistics 393.00 Shouguang Shouguang Logistics For-profit corporation 100 Merger and 0 0
Company Limited acquisition
Shandong Chenming 20000.00 Jinan Jinan Investment For-profit corporation 100 Establishment 0 0
Investment Limited
Chenming Paper Japan 150.00 Japan Japan Paper product For-profit corporation 100 Establishment 0 0
Co. Ltd. (USD) trading
Chenming International Co. Ltd. 100.00 the United the United Paper product For-profit corporation 100 Establishment 0 0
(USD) States States trading
Zhanjiang Chenming 130000.00 Zhanjiang Zhanjiang Arboriculture For-profit corporation 100 Establishment 0 0
Arboriculture Development
Co. Ltd.Yangjiang Chenming 22000.00 Yangjiang Yangjiang Arboriculture For-profit corporation 100 Establishment 0 0
Arboriculture Development
Co. Ltd.Nanchang Chenming 1000.00 Nanchang Nanchang Arboriculture For-profit corporation 100 Establishment 0 0
Arboriculture Development
Co. Ltd.
2023 ANNUAL REPORT 303XII Financial Report
X. Interest in other entities (Continued)
1. Interest in subsidiaries (Continued)
(1) Constitution of the Group (Continued)
Principle Shareholding Issued Issued
Register place of Place of Nature of Direct Indirect debt share
Name of subsidiary capital business incorporation business Type of legal person (%) (%) Acquisition securities capital
Guangdong Huirui Investment 25800.00 Zhanjiang Zhanjiang Investment For-profit corporation 100 Establishment 0 0
Co. Ltd.Jilin Chenming New-style Wall 1000.00 Jilin Jilin Wall materials For-profit corporation 100 Establishment 0 0
Materials Co. Ltd
Jilin Chenming Logistics 500.00 Jilin Jilin Logistics For-profit corporation 100 Establishment 0 0
Co. Ltd.Jiangxi Chenming Logistics 500.00 Nanchang Nanchang Logistics For-profit corporation 100 Establishment 0 0
Co. Ltd.Fuyu Chenming Paper Co. Ltd. 30800.00 Fuyu Fuyu Paper making For-profit corporation 100 Establishment 0 0
Zhanjiang Meilun Pulp & Paper 10000.00 Zhanjiang Zhanjiang Paper making For-profit corporation 100 Establishment 0 0
Co. Ltd.Shanghai Chenming Financial 100000.00 Shanghai Shanghai Financial For-profit corporation 100 Establishment 0 0
Leasing Co. Ltd. leasing
Wuhan Junheng Property 39600.00 Wuhan Wuhan Property For-profit corporation 100 Merger and 0 0
Management Co. Ltd. acquisition
Guangzhou Chenming Property 100000.00 Guangzhou Guangzhou Property For-profit corporation 100 Establishment 0 0
Management Co. Ltd.Shanghai Hongtai Real Estate 60391.77 Shanghai Shanghai Real estate For-profit corporation 100 Merger and 0 0
Co. Ltd. acquisition
Shanghai Hongtai Property 200.00 Shanghai Shanghai Property For-profit corporation 100 Merger and 0 0
Management Co. Ltd. acquisition
Shandong Chenming 20000.00 Jinan Jinan Business For-profit corporation 100 Establishment 0 0
Commercial Factoring factoring
Co. Ltd
Guangzhou Chenming 10000.00 Guangzhou Guangzhou Business For-profit corporation 51 Establishment 0 0
Commercial Factoring factoring
Co. Ltd.Jiangxi Chenming Tea Co. Ltd. 1000.00 Jiangxi Jiangxi Tea business For-profit corporation 100 Establishment 0 0
Zhanjiang Chenming Port 10000.00 Zhanjiang Zhanjiang Port services For-profit corporation 100 Establishment 0 0
Co. Ltd.Chenming Paper United States 100.00 (USD) the United the United Paper product For-profit corporation 100 Establishment 0 0
Co. Ltd. States States trading
Guangdong Chenming Panels 1000.00 Guangdong Guangdong Panels For-profit corporation 100 Establishment 0 0
Co. Ltd.Shanghai Chenming Pulp & 10000.00 Shanghai Shanghai Paper product For-profit corporation 100 Establishment 0 0
Paper Sales Co. Ltd. trading
Meilun (BVI) Limited 5.00 (USD) Cayman Cayman Commerce For-profit corporation 100 Establishment 0 0
Weifang Chenming Growth 100000.00 Weifang Weifang Fund For-profit corporation 79 Establishment 0 0
Driver Replacement Equity
Investment Fund Partnership
(Limited Partnership)
304 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
X. Interest in other entities (Continued)
1. Interest in subsidiaries (Continued)
(1) Constitution of the Group (Continued)
Principle Shareholding Issued Issued
Register place of Place of Nature of Direct Indirect debt share
Name of subsidiary capital business incorporation business Type of legal person (%) (%) Acquisition securities capital
Nanjing Chenming Culture 500.00 Nanjing Nanjing Marketing For-profit corporation 100 Establishment 0 0
Communication Co. Ltd.Chenming (Overseas) Limited 2000.00 (USD) Hong Kong Hong Kong Paper product For-profit corporation 100 Establishment 0 0
trading
Chenming (Singapore) Limited 2000.00 (USD) Singapore Singapore Paper product For-profit corporation 100 Establishment 0 0
trading
Kunshan Tuoan Plastic Products 5000.00 Kunshan Kunshan Rubber and For-profit corporation 100 Merger and 0 0
Co. Ltd. plastic acquisition
Hubei Changjiang Chenming 200100.00 Huanggang Huanggang Fund For-profit corporation 59.97 Establishment 0 0
Huanggang Equity Investment
Fund Partnership (Limited
Partnership)
Hainan Chenming Technology 20000.00 Haikou Haikou Wholesale and For-profit corporation 100 Establishment 0 0
Co. Ltd. retail
Foshan Chenming Import and 20000.00 Foshan Foshan Trading For-profit corporation 100 Establishment 0 0
Export Trade Co. Ltd.Shanghai Herui Investment 30150.00 Shanghai Shanghai Business For-profit corporation 100 Merger and 0 0
Co. Ltd. services acquisition
Hubei Huanggang Chenming 300.00 Huanggang Huanggang Capital market For-profit corporation 60 Establishment 0 0
Equity Investment Fund services
Management Co. Ltd.Shandong Dingkun Asset 100100.00 Shouguang Shouguang Business For-profit corporation 100 Establishment 0 0
Management Partnership services
(Limited Partnership)
Huanggang Chenming Paper 100000.00 Huanggang Huanggang Paper making For-profit corporation 100 Establishment 0 0
Technology Co. Ltd.Huanggang Chenming Port 5000.00 Huanggang Huanggang Port services For-profit corporation 100 Establishment 0 0
Co. Ltd.Weifang Chendu Equity 32000.00 Shouguang Shouguang Capital market For-profit corporation 79.69 Establishment 0 0
Investment Partnership services
(Limited Partnership)
Huanggang Chenming Pulp & 5000.00 Huanggang Huanggang Trading For-profit corporation 100 Establishment 0 0
Fiber Trading Co. Ltd.Shanxi Fuyin Industrial Trading 36000.00 Taiyuan Taiyuan Wholesale and For-profit corporation 100 Acquisition 0 0
Co. Ltd. retail
Chongmin Culture Development 20000.00 Shanghai Shanghai Leasing and For-profit corporation 100 Acquisition 0 0
(Shanghai) Co. Ltd. business
services
Shouguang Meichen Energy 100.00 Shouguang Shouguang Electricity For-profit corporation 100 Establishment 0 0
Technology Co. Ltd.Shouguang Kunhe Trading 1000.00 Shouguang Shouguang Trading For-profit corporation 100 Establishment 0 0
Co. Ltd.
2023 ANNUAL REPORT 305XII Financial Report
X. Interest in other entities (Continued)
1. Interest in subsidiaries (Continued)
(2) Major non-wholly owned subsidiaries
Unit: RMB
Gain or loss Dividend to
attributable to minority interest
Minority interest minority interest declared during Closing balance
Name of subsidiary (%) during the period the period of minority interest
Shouguang Meilun
Paper Co. Ltd. 35.13 55142614.09 149313617.44 2202990923.91
Zhanjiang Chenming Pulp
& Paper Co. Ltd. 19.72 -89947577.95 105000000.00 1570159835.18
(3) Key financial information of major non-wholly owned subsidiaries
Unit: RMB
Closing balance Opening balance
Non-current Current Non-current Non-current Current Non-current
Name of subsidiary Current assets assets Total assets liabilities liabilities Total liabilities Current assets assets Total assets liabilities liabilities Total liabilities
Shouguang Meilun Paper Co.Ltd. 5534633307.08 10096140872.04 15630774179.12 6282312497.46 888031988.48 7170344485.94 5271560197.74 10517781981.22 15789342178.96 5706873517.18 1592276073.16 7299149590.34
Zhanjiang Chenming Pulp &
Paper Co. Ltd. 12562782806.69 13116686959.25 25679469765.94 14866141937.07 1876669919.47 16742811856.54 12177003083.15 13209726474.81 25386729557.96 14522121479.88 1696026289.09 16218147768.97
Unit: RMB
Amount for the period Amount for the prior period
Total Total
comprehensive Cash flows from comprehensive Cash flows from
Name of subsidiary Revenue Net profit income operating activities Revenue Net profit income operating activities
Shouguang Meilun Paper
Co. Ltd. 9084559413.98 153008366.72 153008366.72 1528677090.76 8877750999.39 384015682.06 384015682.06 1662815139.80
Zhanjiang Chenming Pulp
& Paper Co. Ltd. 11000808231.98 -541888245.61 -543112252.63 1332553432.65 12333411837.39 162214497.02 162810926.89 1863903466.34
306 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
X. Interest in other entities (Continued)
2. Transaction changing shareholding in but not causing to loss of control over subsidiaries
(1) Changing in shareholding in subsidiaries
The Company previously held 62.49% equity interest in Shouguang Meilun Paper Co. Ltd. In 2023 the
Company and Dongxing Securities Investment Co. Ltd. entered into an equity transfer agreement in relation to
the transfer of 2.38% equity interest in Shouguang Meilun Paper Co. Ltd to the Company. The equity transfer
transaction did not result in the loss of control over Shouguang Meilun Paper Co. Ltd. by the Company. As
at 31 December 2023 the equity transfer agreement was completed and the transaction consideration paid
was RMB200 million. The transaction resulted in a decrease in minority interest by RMB199.3614 million and a
decrease in capital reserves by RMB638600.The Company previously held 82.67% equity interest in Zhanjiang Chenming Pulp & Paper Co. Ltd. In 2023
the Company and Shandong Caixin Investment Co. Ltd. entered into a capital increase agreement in relation to
Zhanjiang Chenming Pulp & Paper Co. Ltd. and Shandong Caixin Investment Co. Ltd. acquired 2.89% equity
interest in Zhanjiang Chenming Pulp & Paper Co. Ltd. As at 31 December 2023 the capital increase agreement
was completed and the additional capital contribution paid was RMB300 million. The transaction resulted in
an increase in minority interest by RMB251.0441 million and an increase in capital reserves by RMB48.9559
million.
(2) Effect of the transactions on minority interest and equity attributable to the owners of the parent company
Unit: RMB
Shouguang Meilun Paper
Item Co. Ltd.Cost of acquisition 200000000.00
– Cash 200000000.00
– Fair value of non-cash assets
Total cost of acquisition 200000000.00
Less: Share of net assets of the subsidiary calculated based on the proportion
of equity interest acquired/disposed of 199361382.36
Difference 638617.64
Of which: Capital reserve adjustment 638617.64
Unit: RMB
Zhanjiang Chenming Pulp
Item & Paper Co. Ltd.Amount of capital increase 300000000.00
– Cash 300000000.00
– Fair value of non-cash assets
Total amount of capital increase 300000000.00
Share of the subsidiary’s net assets after the capital increase 6689694348.03
Less: Share of the subsidiary’s net assets before the capital increase 6640738406.81
Difference 48955941.22
Of which: Capital reserve adjustment 48955941.22
2023 ANNUAL REPORT 307XII Financial Report
X. Interest in other entities (Continued)
3. Interest in joint arrangements or associates
(1) Major joint ventures and associates
Shareholding Accounting method
Principle place Place of Direct Indirect for investment in joint
Name of joint venture and associate of business incorporation Nature of business (%) (%) ventures or associates
I. Joint venture
Shouguang Jintou Industrial
Investment Partnership (Limited
Partnership) Shouguang Shouguang Investment 49.57 Equity method
II. Associate
Guangdong Nanyue Bank Co. Ltd. Guangdong Guangdong Bank 4.46 Equity method
The Company holds 4.46% equity interest in Guangdong Nanyue Bank Co. Ltd. but is the second largest
shareholder and is able to exercise significant influence over Guangdong Nanyue Bank Co. Ltd. by appointing
one director to the board of directors (out of a total of nine directors on the board of directors).
308 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
X. Interest in other entities (Continued)
3. Interest in joint arrangements or associates (Continued)
(2) Key financial information of major joint ventures
Unit: RMB
Closing balance/ Opening balance/
amount for the period amount for the prior period
Shouguang Jintou Shouguang Jintou
Industrial Investment Industrial Investment
Partnership (Limited Partnership (Limited
Partnership) Partnership)
Current assets 1775433885.35 1373114822.27
Of which: Cash and cash equivalents 1047090.41 98300.08
Non-current assets 408884578.74 992000000.00
Total assets 2184318464.09 2365114822.27
Current liabilities 104387199.50 1000.00
Non-current liabilities 5805542.05
Total liabilities 110192741.55 1000.00
Minority interest
Equity interest attributable to shareholders of the
parent company 2074125722.54 2365113822.27
Share of net assets based on shareholding 1028131675.91 1172372731.02
Adjustments
－Goodwill
－Unrealised profit arising from intra-group
transactions
－Others 1316438571.64 1187625930.65
Carrying amount of equity investment in joint
ventures 2344570247.55 2359998661.67
Fair value of equity investment in joint ventures
where publicly quoted prices exist
Revenue 857541982.94
Finance expenses 765662.12 2699.92
Income tax expenses
Net profit -15428414.12 -2699.92
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income -15428414.12 -2699.92
Dividends received from joint ventures during
the year
2023 ANNUAL REPORT 309XII Financial Report
X. Interest in other entities (Continued)
3. Interest in joint arrangements or associates (Continued)
(3) Key financial information of major associates
Unit: RMB
Closing balance/ Opening balance/
amount for the period amount for the prior period
Guangdong Nanyue Bank Guangdong Nanyue Bank
Co. Ltd. Co. Ltd.Current assets 194828415917.54 153109778598.66
Non-current assets 111581185310.11 74753438649.12
Total assets 306409601227.65 227863217247.78
Current liabilities 250233916389.30 181929537932.08
Non-current liabilities 26252549634.28 26407317751.35
Total liabilities 276486466023.58 208336855683.43
Minority interest 68358275.97 65058817.68
Equity interest attributable to shareholders of the
parent company 29854776928.10 19461302746.67
Share of net assets based on shareholding 1331523051.00 1314611000.54
Adjustments
－Goodwill
－ Unrealised profit arising from intra-group
transactions
－Others
Carrying amount of equity investment in associates 1331523051.00 1314611000.54
Fair value of equity investment in associates
where publicly quoted prices exist
Revenue 2739283882.64 2704071331.52
Net profit 416331873.52 383800672.37
Net profit from discontinued operations
Other comprehensive income -9346709.52 9399591.65
Total comprehensive income 406985164.00 393200264.02
Dividends received from associates during the year
310 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
X. Interest in other entities (Continued)
3. Interest in joint arrangements or associates (Continued)
(4) Summary financial information of non-major joint ventures and associates
Unit: RMB
Closing balance/ Opening balance/
amount for the period amount for the prior period
Joint ventures:
Total carrying amount of investment 197483273.06 183537459.15
Total amount of the following items based on
shareholding
－Net profit 16545813.91 1023678.08
－Other comprehensive income
－Total comprehensive income 16545813.91 1023678.08
Associates:
Total carrying amount of investment 811622814.12 418866248.20
Total amount of the following items based on
shareholding
－Net profit 102840690.39 -6845264.34
－Other comprehensive income
－Total comprehensive income 102840690.39 -6845264.34
2023 ANNUAL REPORT 311XII Financial Report
XI. Government grants
1. Government grants recognised at the end of the reporting period at the amount receivable
□ Applicable √ Not applicable
Reasons for not receiving the estimated amount of government grants at the estimated time
□ Applicable √ Not applicable
2. Liabilities in respect of government grants:
√ Applicable □ Not applicable
Unit: RMB
Include in
New grants non-operating Include in other
Accounting during the income for the income for the Other changes Asset-related/
Subsidy item item Opening balance period period period for the period Closing balance income-related
Funding for environmental protection Deferred 576455283.80 51761248.56 524694035.24 Asset-related
income
Huanggang pulp-forestry-paper project Deferred 470994523.05 25026217.80 445968305.25 Asset-related
income
Infrastructure and environmental Deferred 208320966.69 11517589.44 196803377.25 Asset-related
protection engineering transformation income
project
Financial subsidies for technical Deferred 132614525.64 1730000.00 39238509.96 95106015.68 Asset-related
transformation project income
Zhanjiang forestry-pulp-paper project Deferred 46711964.27 4094632.92 42617331.35 Asset-related
income
Project fund for National Key Technology Deferred 958425.00 164700.00 793725.00 Asset-related
Research and Development Program income
Others Deferred 33174780.01 1293455.08 31881324.93 Asset-related
income
Total 1469230468.46 1730000.00 133096353.76 1337864114.70
312 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XI. Government grants (Continued)
3. Government grants included in profit or loss for the period:
√ Applicable □ Not applicable
Unit: RMB
Amount for the Amount for the
Subsidy item Accounting item period prior period
Funding for environmental protection Other gains 51761248.56 50592141.88
Financial subsidies for technical transformation Other gains 39699264.96 52395702.39
project
Huanggang pulp-forestry-paper project Other gains 25026217.80 25026217.80
Government awards Other gains 13580000.00 7494600.00
Sewage treatment and water conservation Other gains 11517589.44 11778260.39
transformation project
Subsidies for social insurance Other gains 11140000.00 1000000.00
Afforestation subsidy Other gains 4487983.85 2695823.49
Zhanjiang forestry-pulp-paper project Other gains 4094632.92 4094632.92
Immediate VAT refund Other gains 3186241.18 8346328.57
Employment stabilisation subsidy Other gains 1143782.30 3012954.63
Enterprise reform and development subsidies Other gains 904184.00 66394161.00
Project Funding for National Key Technology Other gains 164700.00 164700.00
Research and Development Program
Subsidies for foreign trade projects Other gains 46689.71 116915.50
R&D subsidy Other gains 4000.00 500000.00
Special subsidy from the Bureau of Finance Non-operating 73730000.00
income
One-time job retention subsidies Other gains 2125800.00
Refund of tax Other gains 762888.19
Others Other gains 3221744.73 4203523.72
non-operating
income
Total 169978279.45 314434650.48
XII. Risk relating to financial instruments
Main financial instruments of the Group include monetary funds bills receivable accounts receivable accounts receivable
financing other receivables non-current assets due within one year financial assets held for trading other current assets
long-term receivables other non-current financial assets bills payable accounts payable other payables short-term
borrowings non-current liabilities due within one year long-term borrowings bonds payable lease liabilities and long-term
payables. Details of financial instruments refer to related notes. The risks associated with these financial instruments and
the risk management policies adopted by the Company to mitigate these risks are described below. The management of the
Company manages and monitors these exposures to ensure that the above risks are controlled in a limited extent.
1. Risk management goals and policies
The Company aims to seek the appropriate balance between the risks and benefits in order to mitigate the adverse
effects on the Company’s financial performance from financial risk. Based on such objectives the Company’s risk
management policies are established to identify and analyse the risks faced by the Company to set appropriate risk
limits and devise corresponding internal control procedures and to monitor risks faced by the Company. Such risk
management policies and internal control systems are reviewed regularly to adapt to changes in market conditions
and the Company’s activities. The internal audit department of the Company undertakes both regular and ad-hoc
reviews of risk management controls and procedures
2023 ANNUAL REPORT 313XII Financial Report
XII. Risk relating to financial instruments (Continued)
1. Risk management goals and policies (Continued)
Risks associated with the financial instrument of the Company mainly include credit risk liquidity risk market risk
(including exchange rate risk interest rate risk and commodity price risk).The board of directors is responsible to plan and establish the Company’s risk management structure make risk
management policies and related guidelines and supervise the implementation of risk management. The Company
has already made risk management risks to identify and analyse risks that the Company face. These policies
mentioned specific risks covering market credit risk and liquidity risk etc. The Company regularly assesses market
environment and the operation of the Company changes to determine if to make alteration to risk management policy
and systems. The Company’s risk management is implemented by Risk Management Committee according to the
approval of the board of directors. The Risk Management Committee works closely with other business department of
the Company to identify evaluating and avoiding certain risks. The Company’s internal audit department will audit the
risk management control and procedures regularly and report the result to audit committee of the Company.The Company spreads risks through diverse investment and business lines and through making risk management
policy to reduce risks of single industry specific area and counterpart.
(1) Credit risk
Credit risk refers to risk associated with the default of contract obligation of a transaction counterparty resulting
in financial losses to the Company.The Company manages credit risk based category. Credit risks mainly arose from bank deposit bills receivable
accounts receivable other receivables and long-term receivables etc.The Company’s bank deposit mainly deposits in state-owned banks and other large and medium-sized listed
banks. The Company anticipated that the bank deposit does not have significant credit risk.For accounts receivables other receivables and long-term receivables the Company set related policies to
control exposure of credit risks. The Company evaluates client’s credit quality and set related credit period
based on the client’s financial status credit records and other factors such as current market situation etc. The
Company keeps monitor the client’s credit record and for client with deteriorate credit records the Company
will ensure the credit risk is under control in whole by means of written notice of payment collection shorten or
cancel credit period.The Company’s debtor spread over different industry and area. The Company continued to assess the credit
evaluation to receivables and purchase credit guarantee insurance if necessary.The biggest credit risk exposure of the Company is the carrying amount of each financial asset in the balance
sheet. The Company did not provide financial guarantee which resulted in credit risks.The amount of top 5 accounts receivable of the Company accounted for 36.65% (2022: 30.43%) of the
Company’s total accounts receivables. The amount of top 5 other receivable of the Company accounted for
70.32% (2022: 64.05%) of the Company’s total other receivables.
314 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XII. Risk relating to financial instruments (Continued)
1. Risk management goals and policies (Continued)
(2) Liquidity risk
Liquidity risk refers to the risks that the Company will not be able to meet its obligations associated with its
financial liabilities that are settled by delivering cash or other financial assets.To manage the liquidity risk the Company monitors and maintains a level of cash and cash equivalents to
finance the Company’s operations and mitigate the effects of fluctuations in cash flows. The management of
the Company monitors the usage of bank borrowings and ensures compliance with the borrowing agreements.In the meantime we obtain commitments from major financial institutions to provide sufficient standby funds to
meet short-term and long-term funding needs.Operating cash of the Company was generated from capital and bank and other borrowings. As at 31
December 2023 the Company’s unused bank loan credit was RMB44131.5478 million (31 December 2022:
RMB42790.5450 million). The closing balance of financial assets of the Company due within one year amounted
to RMB24568.6892 million while the closing balance of financial liabilities due within one year amounted to
RMB48230.6088 million. The financial assets due within one year was less than that of financial liabilities. To
manage liquidity risk in 2024 the Company will focus on its major operations actively divest or dispose non-
major operations and put greater efforts in recovery of financial lease payment. In addition to controlling its
capital expenditures the Company will also strengthen internal control and further lower its costs. The Company
will enhance market operations boost sales volume and enhance corporate efficiency.As at the end of the period the financial assets financial liabilities and off balance sheet guarantee held by the
Company are analysed by their maturity date as below at their remaining undiscounted contractual cash flows (in
RMB’0000):
Closing balance
Item Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Financial assets:
Monetary funds 1208547.49 1208547.49
Financial assets held for trading 4629.43 4629.43
Bills receivable 41160.00 41160.00
Accounts receivable 307757.71 307757.71
Accounts receivable financing 21588.42 21588.42
Other receivables 273484.02 273484.02
Long-term receivables 29478.61 6700.00 36178.61
Other non-current financial assets 78156.10 78156.10
Other current assets 69994.65 69994.65
Non-current assets due within one year 529707.20 529707.20
Total financial assets 2456868.92 29478.61 6700.00 78156.10 2571203.63
Financial liabilities:
Short-term borrowings 3344774.24 3344774.24
Bills payable 461898.65 461898.65
Accounts payable 390262.09 390262.09
Other payables 241475.21 241475.21
Non-current liabilities due within one year 374650.69 374650.69
Other current liabilities 10000.00 10000.00
Long-term borrowings 84962.58 115780.76 267358.11 468101.45
Lease liabilities 453.22 354.01 5249.95 6057.18
Long-term payables 149201.63 112355.62 261557.25
Total financial liabilities and contingent
liabilities 4823060.88 234617.43 228490.39 272608.06 5558776.76
2023 ANNUAL REPORT 315XII Financial Report
XII. Risk relating to financial instruments (Continued)
1. Risk management goals and policies (Continued)
(2) Liquidity risk (Continued)
As at the end of the prior year the financial assets financial liabilities and off-balance sheet guarantee held by
the Company are analysed by their maturity date as below at their remaining undiscounted contractual cash
flows (in RMB’0000):
Balance as at the end of the prior year
Item Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Financial assets:
Monetary funds 1391560.08 1391560.08
Financial assets held for trading 7470.84 7470.84
Accounts receivable 370056.08 370056.08
Accounts receivable financing 92496.04 92496.04
Other receivables 219982.47 219982.47
Long-term receivables 139749.85 34634.23 174384.08
Other non-current financial assets 78675.08 78675.08
Other current assets 70564.90 70564.90
Non-current assets due within one year 492071.00 492071.00
Total financial assets 2644201.41 139749.85 34634.23 78675.08 2897260.57
Financial liabilities:
Short-term borrowings 3635232.46 3635232.46
Bills payable 312859.58 312859.58
Accounts payable 411496.68 411496.68
Other payables 185450.80 185450.80
Non-current liabilities due within one year 487609.74 487609.74
Long-term borrowings 102329.00 181247.82 114646.81 398223.63
Lease liabilities 408.73 1338.55 5485.00 7232.28
Long-term payables 169345.00 105959.87 59653.02 334957.89
Total financial liabilities and contingent
liabilities 5032649.26 272082.73 288546.24 179784.83 5773063.06
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.
316 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XII. Risk relating to financial instruments (Continued)
1. Risk management goals and policies (Continued)
(3) Market risk
Market risk includes interest rate risk and currency risk refers to the risk that the fair value or future cash flow of
a financial instrument will be fluctuated due to the changes in market price.Interest rate risk
Interest rate risk refers to the risk that the fair value or future cash flow of a financial instrument will be fluctuated
due to the floating rate. Interest rate risk arises from recognised interest-bearing financial instrument and
unrecognised financial instrument (e.g. loan commitments).The Company’s interest rate risk arises from long-term interest-bearing liabilities including long-term borrowing
and bonds payable. Financial liabilities issued at floating rate expose the Company to cash flow interest rate
risk. Financial liabilities issued at fixed rate expose the Company to fair value interest rate risk. The Company
determines the relative proportions of its fixed rate and floating rate contracts depending on the prevailing
market conditions and to maintain an appropriate combination of financial instruments at fixed rate and floating
rate through regular reviews and monitors.The Company continuously monitors the interest rate position of the Company. The Company did not enter
into any interest rate hedging arrangements. But the management is responsible to monitor the risks of interest
rate and consider to hedge significant interest risk if necessary. Increase in interest rates will increase the cost
of new borrowing and the interest expenses with respect to the Company’s outstanding floating rate interest-
bearing borrowings and therefore could have a material adverse effect on the Company’s financial result. The
management will make adjustments with reference to the latest market conditions. These adjustments may
include enter into interest swap agreement to mitigate its exposure to the interest rate risk.Interest bearing financial instrument held by the Company are as follows (in RMB’0000):
Balance for Balance for
Item the year the prior year
Financial instrument with fixed interest rate
Financial liabilities
Of which: Short-term borrowings 3344774.24 3635232.46
Long-term borrowings 468101.45 398223.63
Bonds payable
Long-term borrowings due within one year 127390.27 190887.34
Bonds payable due within one year 35000.00
Total 3940265.96 4259343.43
Financial instrument with float interest rate
Financial assets
Of which: Monetary funds 1208180.01 1391210.96
Total 1208180.01 1391210.96
2023 ANNUAL REPORT 317XII Financial Report
XII. Risk relating to financial instruments (Continued)
1. Risk management goals and policies (Continued)
(3) Market risk (Continued)
As at 31 December 2023 if the interest rates of borrowings at floating interest rates increase or decrease by
25 basis points with all other factors remain unchanged the Company’s net profit and shareholders’ equity will
increase or decrease by RMB3733100 (31 December 2022: RMB3007800). The bank’s interest settlement
date is generally the 20th of each month according to the accounting period so you need to consider the
interest rate for the next 11 days the balance of the current loan * the average borrowing rate for the year *
25%/360*11*25%.
The financial instruments held by the Company at the reporting date expose the Company to fair value interest
rate risk. This sensitivity analysis as above has been determined assuming that the change in interest rates had
occurred at the reporting date and arisen from the recalculation of the above financial instrument issued at new
interest rates. The non-derivative tools issued at floating interest rate held by the Company at the reporting
date expose the Company to cash flow interest rate risk. The effect to the net profit and shareholder’s equity
illustrated in the sensitivity analysis as above is arisen from the effect to the annual estimate amount of interest
expenses or revenue at the floating interest rate. The analysis is performed on the same basis for prior year.Exchange rate risk
Exchange risk refers to the risk that the fair value or future cash flows of a financial instrument will be fluctuated
due to the changes in foreign currency rates. Foreign currency risk arises on financial instruments that are
denominated in a currency other than the functional currency in which they are measured.The principal business of the Company is situated within the PRC and is denominated in RMB. However
foreign exchange risks still exist for the assets and liabilities in foreign currencies and future foreign currency
transactions as recognised by the Company (assets and liabilities in foreign currencies and foreign currency
transactions are mainly denominated in US dollar Japanese yen South Korean Won Euro Hong Kong dollar
and British pound).The following table details the financial assets and liabilities held by the Company which denominated in foreign
currencies and amounted to RMB as at 31 December 2023 are as follows (in RMB’0000):
Liabilities denominated Asset denominated
in foreign currency in foreign currency
Closing balance Closing balance
Item Closing balance of the prior year Closing balance of the prior year
USD 60628.27 130604.70 45596.22 88289.61
EUR 1460.24 20033.37 4305.63 14744.91
HKD 204.24 100.71
KRW
JPY 736.80 768.90
GBP 1.33 1.37
Total 62088.51 150638.07 50844.22 103905.50
The Group continuously monitors the size of the Group’s foreign currency transactions and foreign currency
assets and liabilities to minimise the foreign exchange risks it faces and for this reason the Group may aim to
avoid foreign exchange risk by signing forward foreign exchange contracts or currency swap contracts.
318 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XII. Risk relating to financial instruments (Continued)
1. Risk management goals and policies (Continued)
(3) Market risk (Continued)
Exchange rate risk (Continued)
With other variables unchanged the after-tax effect of the possible reasonable changes in the exchange rate of
foreign currency to RMB on the current profit and loss of the Company is as follows (in RMB’0000):
Increase (decrease) in after-tax profits Balance for the period Balance for the prior period
Increase in exchange rate of USD 5% -751.60 5% -2115.75
Decrease in exchange rate of USD -5% 751.60 -5% 2115.75
Increase in exchange rate of Euro 5% 142.27 5% -264.42
Decrease in exchange rate of Euro -5% -142.27 -5% 264.42
Other price risks
Other price risks refer to the risk of fluctuations caused by changes in market prices other than exchange rate
risks and interest rate risks whether arising from factors related to a single financial instrument or its issuer or
from factors related to all similar financial instruments traded on the market. Other price risks can stem from
changes in commodity prices stock market indexes equity instrument prices and other risk variables.Listed equity instrument investments held by the Company classified as financial assets held for trading other
non-current financial assets and other equity instrument investments are measured at fair value on the balance
sheet date. Therefore the Company is subject to the risk of changes in the securities market.The Company monitors closely the impact of price changes on the price risk of the Company’s investment
in equity securities. The Company has not taken any measures to avoid other price risks. However the
management is responsible for monitoring other price risks and will consider holding multiple equity securities
portfolios to reduce the price risk of equity securities investment when necessary.With other variables unchanged the after-tax effect of the change of -38.03% (last year: -32.63%) in equity
securities investment prices on the Company’s current profit and loss and other comprehensive income is as
follows (unit: RMB’0000):
Increase (decrease) in Increase (decrease) in other
after-tax profits comprehensive income
Balance for Balance for
Balance for the prior Balance for the prior
Item the period period the period period
Due to the rise in the price of equity securities
investment
Due to the decline in the price of equity securities
investment -2841.42 -3617.77
2023 ANNUAL REPORT 319XII Financial Report
XII. Risk relating to financial instruments (Continued)
2. Capital management
The objective of the Company’s capital risk management is to safeguard the Company’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.In order to maintain or adjust the capital structure the Company may adjust its financing methods adjust the number
of dividends paid to shareholders return capital to shareholders issue new shares 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 31 December 2023 the Company’s gearing ratio is 73.46% (31 December 2022: 71.85%).
3. Financial assets
(1) By transfer method
√ Applicable □ Not applicable
Unit: RMB
Nature of financial Amount of financial Confirmation of
Transfer Method assets transferred assets transferred derecognition Basis for derecognition
Transfer Agreement Financial lease receivables 369762057.02 Derecognised If the Company transfers substantially
all the risks and rewards of ownership
of the financial asset to the transferee
Transfer Agreement Factoring receivables 27600041.68 Derecognised If the Company transfers substantially
all the risks and rewards of ownership
of the financial asset to the transferee
Total 397362098.70
(2) Financial assets derecognised due to transfer
√ Applicable □ Not applicable
Unit: RMB
Gains or losses
Method of financial Amount of financial associated with
Item assets transfer assets derecognised derecognition
Financial lease receivables from Ningxia
Jianlong Special Steel Co Ltd Transfer Agreement 369762057.02 30237942.98
Factoring receivables from Yueqing Zhongneng
Commercial Management Co. Ltd. Transfer Agreement 27600041.68
Total 397362098.70 30237942.98
320 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XII. Risk relating to financial instruments (Continued)
3. Financial assets (Continued)
(3) Continuous involvement in the transferred financial asset
□ Applicable √ Not applicable
XIII. Fair value disclosure
1. Fair value of assets and liabilities measured at fair value as at the end of the period
Based on the inputs of the lowest level that are of great significance to the measurement as a whole in the fair value
measurement the fair value can be categorised as:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.Level 2: Observable inputs other than the quoted market price of assets or liabilities in Level 1 either directly (the
prices) or indirectly (derived from prices).Level 3: Any input that is not based on observable market data (unobservable inputs) is used for assets or liabilities.
(1) Items and amounts measured at fair value
As at the end of the period assets and liabilities measured at fair value are listed as follows based on the three
hierarchies as set out above:
Unit: RMB
Fair value Fair value Fair value
measurements measurements measurements
categorised into categorised into categorised into
Item Level 1 Level 2 Level 3 Total
I. Measurement of fair value on an ongoing
basis
(i) Financial assets held for trading 46294291.71 46294291.71
1. Debt instruments investments
2. Equity instrument investments 46294291.71 46294291.71
(ii) Accounts receivable financing 215884249.97 215884249.97
(iii) Other non-current financial assets 781561040.57 781561040.57
(iv) Biological assets 1483978089.61 1483978089.61
1. Consumable biological assets 1483978089.61 1483978089.61
Total assets measured at fair value on an
ongoing basis 46294291.71 2481423380.15 2527717671.86
II. Non-continuous measurement of fair value
Identifiable assets of the acquiree acquired
in a business combination not under
common control 183330768.93 183330768.93
Total assets measured at fair value not on
an ongoing basis 183330768.93 183330768.93
Identifiable liabilities of the acquiree
acquired in a business combination
not under common control 182760158.04 182760158.04
Total liabilities measured at fair value not on
an ongoing basis 182760158.04 182760158.04
2023 ANNUAL REPORT 321XII Financial Report
XIII. Fair value disclosure (Continued)
1. Fair value of assets and liabilities measured at fair value as at the end of the period (Continued)
(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
Item end of the period Valuation techniques Unobservable inputs Range
Equity instrument investments:
Shandong Hongqiao Venture Capital Co. Ltd. 78170000.00 Cost method
Weifang Chenchuang Equity Investment Fund 400041731.59 See explanation for
Partnership (Limited Partnership) details
Jiaohui Chenming Zhuli (Suzhou) Emerging 259057284.79 See explanation for
Industry Development Fund Partnership details
(Limited Partnership)
Consumable biological assets:
Forestry 1483978089.61 Roll back method of Unit price per tonne of Eucalyptus RMB560
market price wood RMB555
Unit price per tonne of wet pine RMB625
Unit price per tonne of fir wood
Explanation: The Company has no active trading market for Weifang Chenchuang Equity Investment Fund Partnership (Limited
Partnership) and Jiaohui Chenming Zhuli (Suzhou) Emerging Industry Development Fund Partnership (Limited
Partnership). Due to the withdrawal or entry of shareholders of the underlying companies during the period the Company
calculates their fair values at the end of the period with reference to the changes in transaction prices of shareholders.XIV. Related parties and related party transactions
1. Parent company of the Company
Shareholding of the Voting right of the
Place of parent company parent company
Name of parent company incorporation Business Business nature Registered capital in the Company in the Company
Chenming Holdings Co. Ltd. Shouguang Investment in manufacture of paper electricity 1238787700 27.78% 27.78%
steam and arboriculture
Description of the parent company of the Company:
The ultimate controller of the Company is Shouguang State-owned Assets Supervision and Administration Office.
2. Subsidiaries of the Company
For details of the Company’s subsidiaries please refer to Note IX. 1.
322 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XIV. Related parties and related party transactions (Continued)
3. Joint ventures and associates of the Company
For details of material joint ventures and associates of the Company 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 Port Wood Chip Terminal Co. Ltd. A joint venture of the Company
Shouguang Meite Environmental Technology Co. Ltd. A joint venture of the Company
Weifang Xingxing United Chemical Co. Ltd. A joint venture of the Company
Shouguang Chenming Huisen New-style Construction A joint venture of the Company
Materials Co. Ltd.Wuhan Chenming Hanyang Paper Holdings Co. Ltd. An associate of the Company
Chenming (Qingdao) Asset Management Co. Ltd. An associate of the Company
Guangdong Nanyue Bank Co. Ltd. An associate of the Company
Xuchang Chenming Paper Co. Ltd. An associate of the Company
4. Other related parties
Name of other related parties Relation
Shouguang Huixin Construction Materials Co. Ltd. A subsidiary of a company invested by the Directors
and Senior Management of the Company
Lide Technology Co. Ltd. A subsidiary of a company invested by the Directors
and Senior Management of the Company
Shouguang Chenming Guangyuan Real Property A subsidiary of a company invested by the Directors
Company Limited and Senior Management of the Company
Chen Hongguo Hu Changqing Li Xingchun Li Weixian Key management personnel of the Company
Li Xueqin Li Feng Dong Lianming Yuan Xikun
Li Zhenzhong Li Mingtang Ge Guangming Li Kang
Qiu Lanju and Sang Ailing
2023 ANNUAL REPORT 323XII Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions
(1) Purchase and sales of goods and rendering and receiving services
Table on purchase of goods/receiving of services
Unit: RMB
Whether the
transaction
Details of related Amount for Transaction facility is Amount for
Related party party transaction the period facility approved exceeded the prior period
Weifang Port Wood Chip Port miscellaneous
Terminal Co. Ltd. expenses 78803278.24 N/A No 63328942.04
Table on sales of goods/providing of services
Unit: RMB
Details of related party Amount for Amount for
Related party transaction the period the prior period
Shouguang Chenming Huisen
New-style Construction Materials
Co. Ltd. Sales of electricity and steam 16738082.47 18254341.50
Shouguang Huixin Construction
Materials Co. Ltd. Sales of cement coal oil etc. 141035.23 190846.21
(2) Related party leasing
The Company as lessor:
Unit: RMB
Lease income Lease income
recognised recognised
for the current for the previous
Name of lessee Type of leased asset period period
Shouguang Meite Environmental
Technology Co. Ltd. Housing 1467889.91 1467889.91
Chenming (Qingdao) Asset Management
Co. Ltd. Housing 789102.99 769053.72
Lide Technology Co. Ltd. Housing 1898020.91 1795618.08
Shouguang Chenming Huisen New-style
Construction Materials Co. Ltd. Land 222477.07 220183.49
Shouguang Huixin Construction
Materials Co. Ltd. Land 123853.21 123853.21
324 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(3) Related party guarantee
The Company as guarantor
Unit: RMB
Whether
performance
Amount under Commencement Expiry date of guarantee
Party being guaranteed guarantee date of guarantee of guarantee is completed
Weifang Port Wood Chip Terminal Co. Ltd. 95600000.00 2017-12-20 2027-12-20 No
Shouguang Meilun Paper Co. Ltd. 364394014.75 2023-6-19 2024-6-19 No
Shouguang Meilun Paper Co. Ltd. 88180874.40 2023-6-27 2024-6-27 No
Shouguang Meilun Paper Co. Ltd. 99947491.87 2023-7-5 2024-7-5 No
Shouguang Meilun Paper Co. Ltd. 91760456.12 2023-7-25 2024-7-25 No
Shouguang Meilun Paper Co. Ltd. 20000000.00 2023-8-25 2024-8-24 No
Shouguang Meilun Paper Co. Ltd. 10000000.00 2023-2-28 2024-2-27 No
Shouguang Meilun Paper Co. Ltd. 205066883.19 2023-7-12 2024-1-9 No
Shouguang Meilun Paper Co. Ltd. 34000000.00 2023-7-28 2024-7-27 No
Shouguang Meilun Paper Co. Ltd. 34967515.54 2023-8-9 2024-2-6 No
Shouguang Meilun Paper Co. Ltd. 20000000.00 2023-8-25 2024-8-23 No
Shouguang Meilun Paper Co. Ltd. 200000000.00 2023-4-25 2024-4-24 No
Shouguang Meilun Paper Co. Ltd. 50000000.00 2023-7-12 2024-7-12 No
Shouguang Meilun Paper Co. Ltd. 285000000.00 2023-12-15 2024-6-12 No
Shouguang Meilun Paper Co. Ltd. 90000000.00 2023-10-23 2024-10-23 No
Shouguang Meilun Paper Co. Ltd. 189952001.13 2023-12-18 2024-6-17 No
Shouguang Meilun Paper Co. Ltd. 43000000.00 2023-12-19 2024-12-18 No
Shouguang Meilun Paper Co. Ltd. 10000000.00 2023-12-26 2024-4-10 No
Shouguang Meilun Paper Co. Ltd. 10000000.00 2023-12-26 2024-4-10 No
Hainan Chenming Technology Co. Ltd. 50000000.00 2023-3-30 2024-3-30 No
Hainan Chenming Technology Co. Ltd. 71500000.00 2023-11-28 2024-5-26 No
Hainan Chenming Technology Co. Ltd. 28500000.00 2023-11-30 2024-5-28 No
Hainan Chenming Technology Co. Ltd. 43000000.00 2023-8-10 2024-2-2 No
Hainan Chenming Technology Co. Ltd. 29000000.00 2023-8-16 2024-2-5 No
Hainan Chenming Technology Co. Ltd. 100000000.00 2023-9-28 2024-3-27 No
Hainan Chenming Technology Co. Ltd. 100000000.00 2023-11-30 2024-5-29 No
Huanggang Chenming Pulp & Paper Co. Ltd. 90000000.00 2023-5-23 2024-5-22 No
Huanggang Chenming Pulp & Paper Co. Ltd. 20000000.00 2023-4-27 2024-4-26 No
Huanggang Chenming Pulp & Paper Co. Ltd. 30000000.00 2023-7-18 2024-7-17 No
Huanggang Chenming Pulp & Paper Co. Ltd. 45000000.00 2023-8-10 2024-8-9 No
Huanggang Chenming Pulp & Paper Co. Ltd. 20000000.00 2023-8-18 2024-8-16 No
Huanggang Chenming Pulp & Paper Co. Ltd. 120000000.00 2023-7-12 2024-7-11 No
2023 ANNUAL REPORT 325XII Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(3) Related party guarantee (Continued)
Whether
performance
Amount under Commencement Expiry date of guarantee
Party being guaranteed guarantee date of guarantee of guarantee is completed
Huanggang Chenming Pulp & Paper Co. Ltd. 50000000.00 2023-9-28 2024-9-28 No
Huanggang Chenming Pulp & Paper Co. Ltd. 50000000.00 2023-10-13 2024-10-13 No
Huanggang Chenming Pulp & Fiber Trading Co. Ltd. 10000000.00 2023-8-31 2024-8-30 No
Huanggang Chenming Pulp & Fiber Trading Co. Ltd. 10000000.00 2023-9-26 2024-9-26 No
Huanggang Chenming Pulp & Fiber Trading Co. Ltd. 10000000.00 2023-11-13 2024-11-13 No
Huanggang Chenming Pulp & Fiber Trading Co. Ltd. 10000000.00 2023-11-24 2024-11-22 No
Jilin Chenming Paper Co. Ltd. 18000000.00 2023-6-27 2024-5-10 No
Jilin Chenming Paper Co. Ltd. 63999300.00 2023-9-14 2024-3-7 No
Jilin Chenming Paper Co. Ltd. 200000000.00 2023-12-15 2025-12-15 No
Jilin Chenming Paper Co. Ltd. 63640000.00 2023-10-13 2024-4-13 No
Jilin Chenming Paper Co. Ltd. 100000000.00 2023-12-29 2024-6-27 No
Jiangxi Chenming Paper Co. Ltd. 70000000.00 2023-4-20 2024-4-19 No
Jiangxi Chenming Paper Co. Ltd. 160000000.00 2023-5-24 2024-5-22 No
Jiangxi Chenming Paper Co. Ltd. 60000000.00 2023-5-25 2024-5-22 No
Jiangxi Chenming Paper Co. Ltd. 10000000.00 2023-6-12 2024-6-7 No
Jiangxi Chenming Paper Co. Ltd. 30000000.00 2023-6-13 2024-6-11 No
Jiangxi Chenming Paper Co. Ltd. 80000000.00 2023-6-16 2024-6-15 No
Jiangxi Chenming Paper Co. Ltd. 50000000.00 2023-6-19 2024-5-22 No
Jiangxi Chenming Paper Co. Ltd. 250000000.00 2023-6-19 2024-6-13 No
Jiangxi Chenming Paper Co. Ltd. 20000000.00 2023-6-20 2024-6-17 No
Jiangxi Chenming Paper Co. Ltd. 20000000.00 2023-6-21 2024-6-17 No
Jiangxi Chenming Paper Co. Ltd. 17924293.14 2023-6-25 2024-6-20 No
Jiangxi Chenming Paper Co. Ltd. 10000000.00 2023-6-29 2024-6-24 No
Jiangxi Chenming Paper Co. Ltd. 250000000.00 2023-6-30 2024-6-28 No
Jiangxi Chenming Paper Co. Ltd. 13682900.00 2023-8-16 2024-2-16 No
Jiangxi Chenming Paper Co. Ltd. 8238396.39 2023-9-12 2024-3-8 No
Jiangxi Chenming Paper Co. Ltd. 100000000.00 2023-7-5 2024-7-4 No
Jiangxi Chenming Paper Co. Ltd. 1636736.70 2023-8-8 2024-6-20 No
Jiangxi Chenming Paper Co. Ltd. 10000000.00 2023-9-5 2024-8-30 No
Jiangxi Chenming Paper Co. Ltd. 438970.16 2023-9-5 2024-6-20 No
Jiangxi Chenming Paper Co. Ltd. 97400000.00 2023-9-20 2024-3-18 No
Jiangxi Chenming Paper Co. Ltd. 96050000.00 2023-9-20 2024-3-18 No
Jiangxi Chenming Paper Co. Ltd. 12000000.00 2023-9-26 2024-3-22 No
Jiangxi Chenming Paper Co. Ltd. 14000000.00 2023-12-18 2024-6-14 No
Jiangxi Chenming Paper Co. Ltd. 3339000.00 2023-12-25 2024-9-30 No
Jiangxi Chenming Paper Co. Ltd. 10000000.00 2023-9-27 2024-9-20 No
326 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(3) Related party guarantee (Continued)
Whether
performance
Amount under Commencement Expiry date of guarantee
Party being guaranteed guarantee date of guarantee of guarantee is completed
Shouguang Chenming Import and Export Trade Co. Ltd. 150000000.00 2023-12-21 2024-6-19 No
Shandong Chenming Paper Sales Co. Ltd. 50000000.00 2023-1-5 2024-1-2 No
Shandong Chenming Paper Sales Co. Ltd. 50000000.00 2023-1-12 2024-1-8 No
Shandong Chenming Paper Sales Co. Ltd. 330033668.83 2023-4-6 2024-4-8 No
Shandong Chenming Paper Sales Co. Ltd. 129933410.35 2023-4-6 2024-4-8 No
Shandong Chenming Paper Sales Co. Ltd. 150000000.00 2023-8-9 2024-2-5 No
Shandong Chenming Paper Sales Co. Ltd. 296829334.44 2023-8-14 2024-8-14 No
Shandong Chenming Paper Sales Co. Ltd. 111125326.61 2023-9-18 2024-9-18 No
Shandong Chenming Paper Sales Co. Ltd. 54723975.97 2023-9-26 2024-9-26 No
Shandong Chenming Paper Sales Co. Ltd. 181517502.43 2023-10-7 2024-10-7 No
Shandong Chenming Paper Sales Co. Ltd. 198262078.03 2023-10-7 2024-10-7 No
Shandong Chenming Paper Sales Co. Ltd. 50000000.00 2023-10-18 2024-10-11 No
Shandong Chenming Paper Sales Co. Ltd. 40000000.00 2023-11-28 2024-11-28 No
Shandong Chenming Paper Sales Co. Ltd. 160000000.00 2023-12-19 2024-6-17 No
Shandong Chenming Paper Sales Co. Ltd. 260000000.00 2023-12-19 2024-6-17 No
Shanghai Chenming Pulp & Paper Sales Co. Ltd. 10000000.00 2023-5-29 2024-5-25 No
Shanghai Chenming Pulp & Paper Sales Co. Ltd. 50000000.00 2023-8-24 2024-2-23 No
Shanghai Chenming Pulp & Paper Sales Co. Ltd. 4500000.00 2023-11-21 2024-11-20 No
Kunshan Tuoan Plastic Products Co. Ltd 20000000.00 2023-2-27 2024-2-26 No
Kunshan Tuoan Plastic Products Co. Ltd 5000000.00 2023-9-8 2024-2-26 No
Kunshan Tuoan Plastic Products Co. Ltd 10000000.00 2023-8-9 2024-2-9 No
Kunshan Tuoan Plastic Products Co. Ltd 5000000.00 2023-9-27 2024-3-26 No
Kunshan Tuoan Plastic Products Co. Ltd 5000000.00 2023-9-27 2024-9-26 No
Chenming (HK) Limited 15480000.00 2023-12-7 2024-2-2 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 21000000.00 2023-1-16 2024-1-15 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 15000000.00 2023-1-20 2024-1-19 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 14000000.00 2023-1-30 2024-1-29 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 125000000.00 2023-2-23 2024-3-20 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 80000000.00 2023-2-23 2024-3-20 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2023-3-23 2024-3-21 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 68000000.00 2023-4-24 2024-4-20 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 72000000.00 2023-4-21 2024-4-19 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 74500000.00 2023-5-25 2024-5-24 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 209000000.00 2023-6-8 2024-5-26 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2023-6-25 2024-6-24 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 81200000.00 2023-6-19 2024-6-19 No
2023 ANNUAL REPORT 327XII Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(3) Related party guarantee (Continued)
Whether
performance
Amount under Commencement Expiry date of guarantee
Party being guaranteed guarantee date of guarantee of guarantee is completed
Zhanjiang Chenming Pulp & Paper Co. Ltd. 70000000.00 2023-6-21 2024-6-20 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 67000000.00 2023-7-14 2024-1-10 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 45000000.00 2023-7-19 2024-1-15 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2023-7-20 2024-1-10 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 65000000.00 2023-7-19 2024-1-15 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 200000000.00 2023-7-21 2024-7-20 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 40000000.00 2023-7-24 2024-7-23 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2023-7-28 2024-7-27 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 200000000.00 2023-7-26 2024-1-22 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2023-8-8 2024-8-7 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2023-8-11 2024-8-10 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 3900000.00 2023-8-11 2024-8-10 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 67000000.00 2023-8-14 2024-8-13 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 59000000.00 2023-8-14 2024-8-13 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2023-8-24 2024-8-23 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2023-9-27 2024-9-26 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 6000000.00 2023-9-27 2024-3-5 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 10500000.00 2023-9-27 2024-3-26 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 200000000.00 2023-10-11 2024-4-8 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 78000000.00 2023-10-11 2024-10-11 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 113000000.00 2023-10-12 2024-10-12 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 30000000.00 2023-11-10 2024-4-29 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 98700000.00 2023-11-17 2024-5-16 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2023-11-21 2024-5-20 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 40000000.00 2023-11-28 2024-5-27 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 85500000.00 2023-11-29 2024-11-21 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 50290000.00 2023-11-29 2024-5-29 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 6000000.00 2023-12-4 2024-11-26 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 6000000.00 2023-12-8 2024-6-5 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2023-12-9 2024-12-8 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 40000000.00 2023-12-19 2024-6-18 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 50290000.00 2023-12-11 2024-4-23 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 65000000.00 2023-7-12 2024-1-12 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 85000000.00 2023-7-17 2024-1-17 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 10500000.00 2023-7-24 2024-1-24 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 70000000.00 2023-8-7 2024-2-7 No
328 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(3) Related party guarantee (Continued)
Whether
performance
Amount under Commencement Expiry date of guarantee
Party being guaranteed guarantee date of guarantee of guarantee is completed
Zhanjiang Chenming Pulp & Paper Co. Ltd. 186000000.00 2023-9-27 2024-3-27 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 39600000.00 2023-10-7 2024-4-7 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2023-10-12 2024-4-12 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 98000000.00 2023-10-13 2024-4-13 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 60200000.00 2023-11-23 2024-5-23 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 40000000.00 2023-11-24 2024-5-24 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 65000000.00 2023-11-23 2024-5-23 No
Jiangxi Chenming Paper Co. Ltd. 30000000.00 2023-9-8 2026-8-22 No
Jiangxi Chenming Paper Co. Ltd. 29450000.00 2023-3-31 2024-9-30 No
Jiangxi Chenming Paper Co. Ltd. 31350000.00 2023-3-31 2024-9-30 No
Jiangxi Chenming Paper Co. Ltd. 2422500.00 2023-5-9 2024-9-30 No
Jiangxi Chenming Paper Co. Ltd. 5300000.00 2023-6-27 2024-9-30 No
Jiangxi Chenming Paper Co. Ltd. 3359000.00 2023-8-7 2024-9-30 No
Jiangxi Chenming Paper Co. Ltd. 20988806.62 2022-7-1 2024-7-1 No
Jiangxi Chenming Paper Co. Ltd. 30000000.00 2023-12-4 2025-6-3 No
Shanghai Chenming Pulp & Paper Sales Co. Ltd. 9750000.00 2023-2-13 2026-2-12 No
Kunshan Tuoan Plastic Products Co. Ltd 10000000.00 2023-9-27 2024-10-26 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 98000000.00 2021-1-5 2024-1-4 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 85000000.00 2022-5-31 2024-5-30 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 20000000.00 2022-6-17 2024-6-16 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 20000000.00 2022-6-17 2024-12-16 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 120000000.00 2022-6-17 2025-6-16 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 42300000.00 2022-10-25 2024-10-19 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 33900000.00 2023-12-26 2025-1-24 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 104316080.98 2022-6-29 2025-6-29 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 77000000.00 2023-3-31 2026-3-29 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 150000000.00 2023-6-2 2026-6-2 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 84770798.65 2023-6-20 2026-6-20 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 300000000.00 2023-7-12 2026-7-12 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. 200000000.00 2023-11-8 2028-11-8 No
Total 12524711316.30
2023 ANNUAL REPORT 329XII Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(4) Related party lending and borrowing
Unit: RMB
Commencement
Related party Borrowing amount date Expiry date Description
Borrowing
Chenming Holdings Co. Ltd. 364700000.00 2023-1-1 2023-12-31 Controlling
shareholder
Guangdong Nanyue Bank Co. Ltd. 2069060000.00 2023-1-1 2023-12-31 Associate
(5) Remuneration of key management staff
The Company has 23 key management staff for the period and 24 for the prior period. The remuneration
payment is as follows:
Unit: RMB’0000
Amount during Amount during
Item the period the prior period
Remuneration of key management staff 2361.67 2752.06
* Distribution band of remuneration of key management staff
Amount during Amount during
the year the prior year
Band of annual remuneration (RMB’0000) (RMB’0000)
Total 2361.67 2752.06
Of which: (number of staff in each band of amount)
RMB4.80-5.20 million 1
RMB4.00-4.80 million 1
RMB3.60-4.00 million
RMB3.20-3.60 million 1
RMB2.80-3.20 million 1
RMB2.40-2.80 million 1
RMB2.00-2.40 million 2 1
RMB1.60-2.00 million 1 5
RMB1.20-1.60 million 4 1
RMB0.80-1.20 million 2
Below RMB0.80 million 12 14
330 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(5) Remuneration of key management staff (Continued)
* Breakdown of remuneration of key management staff
Amount during the year (RMB’0000)
Social welfare contribution
Salaries Of which:
allowances Social Pension Housing Total
Key management staff Fees Bonuses and benefits insurance insurance fund (RMB’0000)
Yin Meiqun 20.00 20.00
Yang Biao 20.00 20.00
Sun Jianfei 20.00 20.00
Li Zhihui 20.00 20.00
Subtotal of independent
non-executive Directors 80.00 80.00
Li Chuanxuan 20.00 20.00
Han Tingde 20.00 20.00
Subtotal of non-executive
Directors 40.00 40.00
Chen Hongguo 308.90 6.93 4.42 1.59 317.42
Hu Changqing 188.78 9.93 6.04 2.54 201.25
Li Xingchun 420.00 420.00
Li Feng 135.86 6.93 4.42 1.59 144.38
Li Weixian 216.56 11.32 6.79 5.08 232.96
Subtotal of executive Directors 1270.10 35.11 21.67 10.80 1316.01
Li Kang 75.78 6.93 4.42 1.59 84.30
Pan Ailing 10.00 10.00
Zhang Hong 10.00 10.00
Qiu Lanju 66.95 6.46 4.07 1.62 75.03
Sang Ailing 17.60 3.64 2.27 0.85 22.09
Total of Supervisors 180.33 17.03 10.76 4.06 201.42
Subtotal of other Senior
Management members 674.44 40.17 25.47 9.63 724.24
Total 2244.87 92.31 57.90 24.49 2361.67
2023 ANNUAL REPORT 331XII Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(5) Remuneration of key management staff (Continued)
* Breakdown of remuneration of key management staff (Continued)
Amount during the year (RMB’0000)
Social welfare contribution
Salaries Of which:
allowances Social Pension Housing Total
Key management staff Fees Bonuses and benefits insurance insurance fund (RMB’0000)
Yin Meiqun 20.00 20.00
Yang Biao 20.00 20.00
Sun Jianfei 20.00 20.00
Li Zhihui 10.00 10.00
Subtotal of independent
non-executive Directors 70.00 70.00
Li Chuanxuan 20.00 20.00
Han Tingde 20.00 20.00
Subtotal of non-executive Directors 40.00 40.00
Chen Hongguo 352.24 6.22 3.95 1.53 359.99
Hu Changqing 216.85 6.22 3.95 1.58 224.65
Li Xingchun 480.00 480.00
Li Feng 187.28 6.22 3.95 1.53 195.03
Li Weixian 240.81 10.54 6.26 4.69 256.04
Subtotal of executive Directors 1477.18 29.20 18.11 9.33 1515.71
Li Kang 59.20 6.23 3.95 1.53 66.96
Pan Ailing 10.00 10.00
Zhang Hong 10.00 10.00
Qiu Lanju 54.86 6.16 3.82 1.53 62.55
Sang Ailing 18.00 3.65 2.28 0.85 22.50
Total of Supervisors 152.06 16.04 10.05 3.91 172.01
Subtotal of other Senior
Management 904.93 39.61 24.88 9.80 954.34
Total 2644.17 84.85 53.04 23.04 2752.06
Note: Social welfare contribution includes basic pension insurance medical insurance work-related injury insurance maternity
insurance and unemployment insurance
332 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XIV. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(5) Remuneration of key management staff (Continued)
* The 5 highest paid individuals of the Company during the year included 4 directors of the Company
and 1 other senior management personnel. The remuneration range of 1 senior management personnel
was RMB1.6 million to RMB2 million with an annual salary of RMB1.6967 million social insurance of
RMB64600 (including pension insurance of RMB40700) and housing provident fund of RMB16200.A. Remuneration of the five highest paid individuals
Amounts during Amounts during
Item the period the prior year
Salaries allowances and benefits 1295.83 1477.18
Housing provident fund 10.83 9.33
Social welfare contribution 34.64 29.20
Of which: Pension insurance 21.32 18.11
Total 1341.30 1515.71
B. Distribution band of remuneration of the five highest paid individuals
Number of individuals Number of individuals
Band of annual remuneration during the year during the prior year
RMB4.80-5.20 million 1
RMB4.00-4.80 million 1
RMB3.20-3.60 million 1
RMB2.80-3.20 million 1
RMB2.40-2.80 million 1
RMB2.00-2.40 million 2 1
RMB1.60-2.00 million 1 1
RMB1.20-1.60 million
* For the financial year ended 31 December 2023 no other bonuses which are discretionary or are based
on the Company’s the Company’s or any member of the Company’s performance were paid to or
receivable by the 5 highest paid individuals and no other emoluments were paid by the Company to the
Directors of the Company and the 5 highest paid individuals as an inducement to join or upon joining the
Company or as compensation for loss of office. None of the Directors waived any emoluments during the
year.
2023 ANNUAL REPORT 333XII Financial Report
XIV. Related parties and related party transactions (Continued)
6. Related party accounts receivable and accounts payable
(1) Accounts receivables
Unit: RMB
Closing balance Opening balance
Bad debt Bad debt
Item Related party Book balance provision Book balance provision
Accounts receivable Shouguang Chenming Huisen New-style 1856833.50 1392.06
Construction Materials Co. Ltd.Accounts receivable Shouguang Meite Environmental 6782462.48 1774117.95
Technology Co. Ltd.Accounts receivable Chenming (Qingdao) Asset Management 2359.03 23.18
Co. Ltd.Other receivables Weifang Port Wood Chip Terminal 75554749.84 8991998.46 71722249.85 3755227.15
Co. Ltd.Other receivables Shouguang Meite Environmental 10427200.00 2102653.38 18291242.68 1779523.20
Technology Co. Ltd.Other receivables Xuchang Chenming Paper Co. Ltd. 327400.00 6791.28
Other receivables Wuhan Chenming Hanyang Paper 227252701.60
Holdings Co. Ltd.Payments in advance Shouguang Meite Environmental 6370726.99
Technology Co. Ltd.
(2) Accounts payable
Unit: RMB
Closing book Opening book
Item Related party balance balance
Accounts payable Weifang Port Wood Chip Terminal Co. Ltd. 6932747.45 19479518.82
Accounts payable Shouguang Meite Environmental Technology Co. Ltd. 12973303.12
Accounts payable Weifang Xingxing United Chemical Co. Ltd. 26905494.34 26905494.34
Accounts payable Wuhan Chenming Hanyang Paper Holdings Co. Ltd 14334304.63
Accounts payable Wuhan Chenming Qianneng Electric Power Co. Ltd. 72483.77
Other payables Weifang Xingxing United Chemical Co. Ltd. 16860000.00 16860000.00
Other payables Chenming Holdings Co. Ltd. 135612917.24
Other payables Lide Technology Co. Ltd. 559897.05 508619.46
Other payables Chenming (Qingdao) Asset Management Co. Ltd. 115583.42 116656.55
Other payables Wuhan Chenming Hanyang Paper Holdings Co. Ltd. 305000000.00
Contract liabilities Shouguang Huixin Construction Materials Co. Ltd. 20000.00
Payments in advance Chenming (Qingdao) Asset Management Co. Ltd. 2000.00
334 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XIV. Related parties and related party transactions (Continued)
6. Related party accounts receivable and accounts payable (Continued)
(3) Deposits with related parties
Unit: RMB
Item Related party Closing balance Opening balance
Bank deposit Guangdong Nanyue Bank Co. Ltd. 7189314.62 10069515.51
Other monetary funds Guangdong Nanyue Bank Co. Ltd. 1311200000.00 927400000.00
(4) Loans from related parties
Unit: RMB
Item Related party Closing balance Opening balance
Short-term borrowings Guangdong Nanyue Bank Co. Ltd. 2069060000.00 1909100000.00
2023 ANNUAL REPORT 335XII Financial Report
XV. Share-based Payment
1. General information of share-based payment
√ Applicable □ Not applicable
Unit: RMB
Granted during the period Exercised during the period Unlocked during the period Lapsed during the period
Grant Item Category Quantity Amount Quantity Amount Quantity Amount Quantity Amount
Management 22645800.00 22645800.00
Total 22645800.00 22645800.00
Share options or other equity instruments outstanding at the end of the period.√ Applicable □ Not applicable
Share options outstanding at the
end of the period Other equity instruments issued at the end of the period
Remaining
Range of duration of Range of
Grant Item Category exercise prices the contract exercise prices Remaining duration of the contract
Management – Restricted shares eligible for the first release
period of the 2020 A Share Restricted
Share Incentive Plan were unlocked in
July 2022 the conditions for the release
of restricted shares for the second
release period were not fulfilled and the
procedure was carried out to consider
the repurchase of the registrations in July
2023 and the time for the third release
period was July 2025.Other explanation:
1. The Company held the ninth extraordinary meeting of the ninth session of the Board of Directors on 30 March 2020 and on 15 May
2020 the Company convened the second extraordinary shareholders’ meeting for 2020 the first shareholders’ meeting for 2020 for the
domestic listed share class and the first shareholders’ meeting for 2020 for the overseas listed share class at which matters relating
to the Company’s 2020 Restricted A Share Incentive Scheme were considered and approved. Matters relating to the Company’s
2020 Restricted A Share Incentive Scheme were considered and approved and 79600000 A Restricted Shares were granted to 111
incentive objects at a grant price of RMB2.85 per share on 29 May 2020.
2. On 15 July 2020 79600000 A Restricted Shares granted to the incentive objects were issued and listed.
3. On 18 July 2022 the Company convened the Second Interim Meeting of the Tenth Session of the Board of Directors and the FirstInterim Meeting of the Tenth Session of the Supervisory Board at which the Company considered and approved the “Resolution onthe Adjustment to the Repurchase Price of the 2020 Restricted A Share Incentive Scheme and Repurchase and Cancellation of CertainRestricted Shares.” the number of the target group for the unlocking of the restricted shares is 96 and the number of shares available
for unlocking is 29948000
336 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XV. Share-based Payment (Continued)
1. General information of share-based payment (Continued)
On 27 July 2022 29948000 A shares of restricted shares released from restricted sale were listed for trading. On 18 October 2022 the
Company completed the repurchase and cancellation procedures of 4466000 A shares of restricted shares at the Shenzhen Branch of
China Securities Depository and Clearing Corporation Limited.
4. On 17 July 2023 the Company convened the Ninth Interim Meeting of the Tenth Session of the Board of Directors and the Fifth InterimMeeting of the Tenth Session of the Supervisory Board and considered and passed the “Resolution Regarding the Failure to Achieve theConditions for Unlocking the Restricted Shares during the Second Unlocking Period of the Restricted Share Incentive Scheme for 2020AShares and the Repurchase and Registration of Part of the Restricted Shares” which was approved by the Board of Directors and the
Supervisory Board of the Company. At the same time 5 incentive objects were disqualified from incentive status due to their departure
from the Company. The Board of Directors of the Company repurchased 22929000 A-share restricted shares which had been granted
to the registered incentive targets but had not been released from restriction on sale at a repurchase price of RMB2.5184172/share
(exclusive of the interest rate of the bank’s loan for the same period). On 20 November 2023 the Company completed the repurchase
and cancellation procedures of 22929000 A-share restricted shares at the Shenzhen Branch of China Securities Depository and
Clearing Corporation Limited.
2. Equity-settled share-based payment
√ Applicable □ Not applicable
Unit: RMB
Ex-right price of
The method of determining the fair value of equity instrument on the grant date grant of share
The significant parameters of determining the fair value of equity instrument on the grant date
Basis for determining the quantity of exercisable equity instruments See explanation
for details
Reasons for significant difference between the current estimate and previous estimate
Accumulated amount of equity-settled share-based payment included in the capital reserve 58698080.00
Total amount of equity-settled share-based payment recognised in the current period -27467521.92
Explanation: At each balance sheet date during the vesting period the Company based on the latest information such as the latest update on
the change in the number of entitled employees will make best estimates to adjust the expected number of equity instruments
that can be vested. As at the exercise date the final estimated number of exercisable equity instruments should equal the actual
number of exercisable equity instruments.
3. Share-based payment expense for the period
Unit: RMB
Equity-settled share-based Cash-settled share-based
Category of items granted payment expenses payment expenses
Management -27467521.92
Total -27467521.92
2023 ANNUAL REPORT 337XII Financial Report
XVI. Undertaking and contingency
1. Significant commitments
(1) Capital commitments
Unit: RMB
Capital commitments contracted for but not yet Balance as at the
necessary to be recognised on the balance sheet Closing balance end of the prior year
Commitments in relation to acquisition and construction of
long-term assets 288776312.58 184833000.27
(2) Other commitments
As at 31 December 2023 the Company has no other commitments that should be disclosed.
2. Contingency
(1) Contingent liabilities arising from pending litigation and arbitration and their financial impacts
As at 31 December 2023 the Company had no contingent items such as outstanding litigation and external
guarantees that should be disclosed.
(2) Contingent liabilities arising from debt guarantees given in favour of other entities and their financial effects
As at 31 December 2023 the Company has no contingent liabilities arising from debt guarantees provided to
other entities.
(3) Other contingent liabilities (excluding contingent liabilities that are highly unlikely to result in an outflow of
economic benefits to the enterprise)
As at 31 December 2023 the Company has no other contingencies that should be disclosed.XVII. Post-balance sheet event
Description of significant non-adjustments to post-balance sheet event
Effect on financial position and results of
Item Description operations
Transfer of an Associate Disposal of Goldtrust Futures The consideration for this transaction was
Co. Ltd. RMB197000000 with a carrying value
of RMB187780000 as at the balance
sheet date which is expected to generate
an investment income of approximately
RMB9220000.Transfer of a subsidiary Disposal of Kunshan Tuoan The consideration for this transaction was
Plastic Products Co. Ltd. RMB143.73 million and the carrying value
of the asset group containing goodwill at
the balance sheet date was RMB141.48
million resulting in an investment gain of
approximately RMB9.12 million
338 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XVIII. Other Material Matters
1. Transfer and Disposal of Significant Assets
In order to further optimise the asset structure revitalise inefficient assets improve asset utilisation efficiency
expedite capital recovery increase cash inflow focus on the main business of pulping and paper making and
enhance the Company’s profitability the Company externally transferred its 65.21% equity interest in Wuhan
Chenming Hanyang Paper Company Limited (corresponding to 137822000 shares) for RMB480.0 million during the
period resulting in an investment gain of RMB391.45 million.
2. Segment information
(1) Basis for determination and accounting policies
According to the Company’s internal organisational structure management requirements and internal reporting
system the Company’s operating business is divided into 4 reporting segments. These report segments are
determined based on the financial information required by the company’s daily internal management. The
management of the Group regularly evaluates the operating results of these reporting segments to determine
the allocation of resources to them and evaluate their performance.The Company’s reporting segments include:
(1) Machine paper segment which is responsible for production and sales of machine paper;
(2) Financial services segment which provides financial services;
(3) Hotels and property rentals segment which is responsible for hotel services and property rental;
(4) Other segments which is responsible for the above segments otherwise.
The transfer prices of the transfer transactions between the Company’s segments are based on market prices.Segment report information is disclosed in accordance with the accounting policies and measurement standards
adopted by each segment when reporting to management. These accounting policies and measurement basis
are consistent with the accounting policies and measurement basis used in preparing the financial statements.
2023 ANNUAL REPORT 339XII Financial Report
XVIII. Other Material Matters (Continued)
2. Segment information (Continued)
(2) Financial Information of Reporting Segment
Unit: RMB
Machine-made Financial Hotels and
Current period or end of current period paper services property rentals Others Offset Total
Revenue 26058035388.40 301292707.38 254837443.63 1219004554.91 1224599866.12 26608570228.20
Of which: Revenue from external transactions 25702327302.60 164338689.66 219640822.73 522263413.21 26608570228.20
Revenue from inter-segment transactions 355708085.80 136954017.72 35196620.90 696741141.70 1224599866.12
Of which: Revenue from principal activities 25788767491.17 301198367.76 243565800.51 849762727.46 814661161.42 26368633225.48
Operating costs 24386288002.52 204302382.76 130727028.36 1168316010.65 1444147124.36 24445486299.93
Of which: Costs of principal activities 23814132560.42 204302382.76 122251073.59 794535943.46 693752622.08 24241469338.15
Operating expenses 200500812.07 145808.06 23056705.85 7298824.54 2513.09 230999637.43
Of which: Wages 96356812.71 72901.73 8678304.12 2861300.98 107969319.54
Depreciation expenses 1512250.48 3152288.23 12696.87 4677235.58
Office expenses 2423476.31 312114.69 2058.20 2737649.20
Travel expenses 27622492.10 12886.33 401223.13 595230.03 28631831.59
Selling commissions 806731.10 5681138.21 6487869.31
Rental expenses 7258810.13 84716.99 7343527.12
Hospitality expenses 49883644.70 60020.00 8206.24 1046790.23 50998661.17
Warehouse expenses 411253.96 411253.96
Others 14636594.54 4823431.23 2284777.28 2513.09 21742289.96
Operating profit/(loss) -1160171360.20 -136565046.01 -155575612.67 -77629857.27 163702443.40 -1693644319.55
Total assets 86100280962.71 22071239021.47 9506827255.33 8256043256.86 46447337542.79 79487052953.58
Total liabilities 64520459199.32 4546731289.22 4386780705.48 2745589649.10 17810363735.17 58389197107.95
Total cost of construction in progress incurred
for the current period 475949831.35 2547924.54 478497755.89
Fixed assets purchased 295923899.03 273136.94 2265531.65 5638663.73 292823903.89
Intangible assets purchased 148906631.36 1278301.89 150184933.25
340 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XVIII. Other Material Matters (Continued)
2. Segment information (Continued)
(2) Financial Information of Reporting Segment (Continued)
Machine-made Financial Hotels and
Current period or end of current period paper services property rentals Others Offset Total
Revenue 31060902199.96 513737457.49 407708595.77 1078425733.98 1056406666.29 32004367320.91
Of which: Revenue from external transactions 30831898263.48 209378132.90 252786565.21 710304359.32 32004367320.91
Revenue from inter-segment transactions 229003936.50 304359324.59 154922030.55 368121374.65 1056406666.29
Of which: Revenue from principal activities 30351334966.47 510812929.20 392942305.38 1040599028.05 870572371.27 31425116857.83
Operating costs 26519303991.97 24127622.19 245767473.54 981659808.74 397133189.44 27373725707.00
Of which: Costs of principal activities 26141672045.97 24127622.19 243578769.09 928299382.58 458734170.55 26878943649.28
Operating expenses 330862031.95 2027775.3 20781250.46 7378140.91 118867924.53 242181274.09
Of which: Wages 111959367.65 1083950.72 5011031.36 2800806.56 120855156.29
Depreciation expenses 2762233.83 21086.38 3726869.93 14404.51 6524594.65
Office expenses 2457473.42 109.34 7972.90 312.00 2465867.66
Travel expenses 20739647.05 293464.76 22399.36 459110.48 21514621.65
Selling commissions 5186161.75 5719346.53 665906.33 11571414.61
Rental expenses 5963156.39 85032.11 6048188.50
Hospitality expenses 53909040.66 629164.1 45498 728750.29 55312453.05
Warehouse expenses 110697.41 558856.77 669554.18
Others 127774253.79 6248132.38 2064961.86 118867924.53 17219423.50
Operating profit/(loss) 185030101.36 177059466.81 -50760342.83 -8455442.51 146655118.87 156218663.96
Total assets 93381574480.43 19836405559.58 7691848679.66 9918047942.60 46526859252.65 84301017409.62
Total liabilities 68282718766.38 6492021313.81 3712424442.27 3442492189.85 21356893123.30 60572763589.01
Total cost of construction in progress incurred
for the current period 773725786.03 499590.09 774225376.12
Fixed assets purchased 150507691.34 96748.87 173040.68 3589925.25 154367406.14
Intangible assets purchased 307004863.50 578112.98 307582976.48
2023 ANNUAL REPORT 341XII Financial Report
XVIII. Other Material Matters (Continued)
3. Others
(1) CHENMING HOLDINGS (HONG KONG) LIMITED (hereinafter referred to as “Hong Kong Chenming Holdings”)a wholly-owned subsidiary of Chenming Holdings Company Limited (hereinafter referred to as “ ChenmingHoldings S”) has commenced an equity financing business with three overseas organisations (hereinafter
referred to as “Lenders”) in order to meet its own funding needs. In order to satisfy its funding needs Hong
Kong Chenming Holdings has commenced equity financing business with three overseas organisations
(hereinafter referred to as the “Lenders”). Hong Kong Chenming Holdings deposited 210.72 million B shares
(representing 7.07% of the total share capital of the Company) and 153.41 million H shares (representing 5.15%
of the total share capital of the Company) held by Hong Kong Chenming Holdings with custodian designated by
the Lenders who provided the loan to Hong Kong Chenming Holdings/
After repaying the entire loan from one of the Lenders Hong Kong Chenming Holdings requested for the return
of the shares but the lender refused to co-operate in the return of the 110 million B shares and 95 million H
shares on the grounds that there had been a breach of contract of default during the life of the loan. Chenming
Hong Kong Holdings verified the custody of the shares with the other two lenders who have not yet fully repaid
the loans and the lenders have not yet provided the required documentary proof of the safe custody of the
shares.After the Lender refused to return the Shares and failure in negotiation Chenming Holdings is of the view that
there is a risk of improper infringement on the legitimate rights and interests of Hong Kong Chenming Holdings
and it immediately sought help from the Chinese public security bureau and Hong Kong lawyers to collect
effective evidence. As of the date of this announcement Chenming Holdings is under normal production and
operation and is actively safeguarding its legitimate rights and interests through legal channels.There is a risk that the shares involved may not be returned which may result in a decrease in the percentage
of shareholding of Chenming Holdings in the Company but will have no impact on the status of Chenming
Holdings as the largest shareholder and will have no impact on the control of the Company.
(2) On 14 June 2022 the Hong Kong Court of Final Appeal handed down its judgment in the case of H-share
liquidation filed by ArjowigginsHKK2Limited (“HKK2 Company”) in relation to the Company’s Joint Venture
dispute and the Company has paid the relevant amount of compensation.On 25 October 2022 the Company instructed its legal adviser in Hong Kong to apply to the Court of First
Instance to seek the dismissal or adjournment of the winding-up petition filed by HKK2 against the Company
On 25 July 2023 the Court of First Instance held a hearing on the said application.On 10 August 2023 the Company received a judgment from the judge of the Court of First Instance Mr. Justice
Harris which ruled that the winding-up petition be stayed and the relevant arbitration hearing will take place in
May 2024 given that the Company’s arbitration petition filed in the Hong Kong International Arbitration Centre
in June 2022 against the Joint Venture Contracts formed the basis of the Company’s cross claim against HKK2
in the winding-up proceedings.
342 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XIV. Major Item Notes of the Parent Company’s Financial Statements
1. Accounts receivable
(1) Disclosure by ageing
Unit: RMB
Ageing Closing balance Opening balance
Within 1 year (including 1 year) 18345187.32 136390102.96
1 to 2 years 11500000.00
2 to 3 years
Over 3 years 3002821.17 3002821.17
Total 32848008.49 139392924.13
(2) Disclosure by bad debt provision method
Unit: RMB
Closing balance Opening balance
Book balance Bad debts provision Book balance Bad debts provision
Provision Provision
Percentage percentage Carrying percentage Carrying
Category Amount (%) Amount (%) amount Amount Percentage Amount (%) amount
Accounts receivable assessed individually
for bad debt provision
Accounts receivable assessed collectively
for bad debt provision 32848008.49 100.00 4631237.48 14.10 28216771.01 139392924.13 100.00 4637396.40 3.33 134755527.73
Of which:
Due from related party customers 10453076.75 31.82 10453076.75 101246295.74 72.63 101246295.74
Due from non-related party customers 22394931.74 68.18 4631237.48 20.68 17763694.26 38146628.39 27.37 4637396.40 12.16 33509231.99
Total 32848008.49 100.00 4631237.48 14.10 28216771.01 139392924.13 100.00 4637396.40 3.33 134755527.73
2023 ANNUAL REPORT 343XII Financial Report
XIV. Major Item Notes of the Parent Company’s Financial Statements (Continued)
1. Accounts receivable (Continued)
(2) Disclosure by bad debt provision method (Continued)
Items assessed collectively for bad debt provision: Due from related party customers
Unit: RMB
Closing balance
Bad debts Provision
Name Book balance provision percentage (%)
Within 1 year 453076.75
1 to 2 years 10000000.00
Total 10453076.75 －
Items assessed collectively for bad debt provision: Receivables from non-related party customer
Unit: RMB
Closing balance
Bad debts Provision
Name Book balance provision percentage (%)
Within 1 year 17892110.57 128416.31 0.72
1 to 2 years 1500000.00 1500000.00 100.00
2 to 3 years
Over 3 years 3002821.17 3002821.17 100.00
Total 22394931.74 4631237.48 20.68
If the bad debt provision of accounts receivable is made in accordance with the general model of ECLs:
□ Applicable √ Not applicable
344 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XIV. Major Item Notes of the Parent Company’s Financial Statements (Continued)
1. Accounts receivable (Continued)
(3) Provision recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMB
Changes in the period
Opening Recovery or Closing
Category balance Provision reversal Write-off Others balance
Bad debt provision 4637396.40 274431.92 280590.84 4631237.48
Total 4637396.40 274431.92 280590.84 4631237.48
(4) Top five accounts receivable and contract assets based on closing balance of debtors
The total amount of top five accounts receivable and contract assets based on closing balance of debtors
for the period amounted to RMB32584552.66 in total accounting for 99.19% of the total closing balance
of accounts receivable and contract assets. The closing balance of the corresponding bad debt provision
amounted to RMB4546562.13 in total.Unit: RMB
Percentage to total Closing balance of
Closing balance of closing balance of bad debt provision of
Name of entity accounts receivable accounts receivable (%) accounts receivable
Customer 1 12119163.23 36.89 84834.14
Customer 2 10000000.00 30.44
Customer 3 5589712.68 17.02 39127.99
Customer 4 4422600.00 13.46 4422600.00
Customer 5 453076.75 1.38
Total 32584552.66 99.19 4546562.13
2. Other receivables
Unit: RMB
Item Closing balance Opening balance
Interest receivable
Dividend receivable
Other receivables 9237241240.86 9337019470.13
Total 9237241240.86 9337019470.13
2023 ANNUAL REPORT 345XII Financial Report
XIV. Major Item Notes of the Parent Company’s Financial Statements (Continued)
2. Other receivables (Continued)
(1) Other receivables
1) Classification of other receivables by nature
Unit: RMB
Nature Closing book balance Opening book balance
Open credit 9304134372.16 9391199670.38
Guarantee deposit and deposit 740000.00 850000.00
Reserve and borrowings 22523648.60 15112113.60
Others 1793548.63 13027863.16
Sub-total 9329191569.39 9420189647.14
Bad debt provision 91950328.53 83170177.01
Total 9237241240.86 9337019470.13
2) Disclosure by ageing
Unit: RMB
Ageing Closing balance Opening balance
Within 1 year 9165796778.41 9332813880.83
1 to 2 years 76289024.67 7536768.10
2 to 3 years 7386768.10 4626771.34
Over 3 years 79718998.21 75212226.87
Sub-total 9329191569.39 9420189647.14
Less: bad debt provision 91950328.53 83170177.01
Total 9237241240.86 9337019470.13
3) Particulars of bad debt provision
Unit: RMB
ECL rate (%)
for the next Bad debt
Category Book balance 12 months provision Carrying amount Reason
Bad debt provision assessed
collectively 9279097598.72 0.45 41856357.86 9237241240.86
Amount due from government
agencies 14571387.14 99.61 14513987.39 57399.75
Amount due from related parties 8842259445.82 0.10 8991998.46 8833267447.36
Other receivables 422266765.76 4.35 18350372.01 403916393.75
Total 9279097598.72 0.45 41856357.86 9237241240.86
346 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XIV. Major Item Notes of the Parent Company’s Financial Statements (Continued)
2. Other receivables (Continued)
(1) Other receivables (Continued)
3) Particulars of bad debt provision (Continued)
Closing bad debt provision at phase 2:
As at the end of the period the Company had no interest receivable dividend receivable and other
receivables at phase 2.Closing bad debt provision at phase 3:
Unit: RMB
Lifetime ECL Bad debt
Category Book balance rate (%) provision Carrying amount Reason
Bad debt provision assessed
individually 50093970.67 100.00 50093970.67 0.00
Total 50093970.67 100.00 50093970.67 0.00
Bad debt provision assessed individually:
Unit: RMB
Lifetime ECL Bad debt
Category Book balance rate (%) provision Carrying amount Reason
Valtra Inc. of Finland 5526048.24 100.00 5526048.24 0.00 Overdue for a
prolonged
period and
unlikely to be
recovered
Metso Paper Machinery (China) 4725039.89 100.00 4725039.89 0.00 Overdue for a
Co. Ltd. prolonged
period and
unlikely to be
recovered
78 entities including Andritz 39842882.54 100.00 39842882.54 0.00 Overdue for a
prolonged
period and
unlikely to be
recovered
Total 50093970.67 100.00 50093970.67 0.00
2023 ANNUAL REPORT 347XII Financial Report
XIV. Major Item Notes of the Parent Company’s Financial Statements (Continued)
2. Other receivables (Continued)
(1) Other receivables (Continued)
3) Particulars of bad debt provision (Continued)
Provision for bad debts made on a general model of ECL:
Unit: RMB
Stage 1 Stage 2 Stage 3
ECLs for the Lifetime ECLs Lifetime ECLs
Bad debts provision next 12 months (not credit-impaired) (credit-impaired) Total
Balance as at 1 January 2023 34208745.74 48961431.27 83170177.01
Balance as at 1 January 2023 for the period
– Transferred to stage 2
– Transferred to stage 3
– Reversed to stage 2
– Reversed to stage 1
Provision for the period 7647612.12 1132539.40 8780151.52
Reversal for the period
Transfer for the period
Write-off for the period
Other changes
Balance as at 31 December 2023 41856357.86 50093970.67 91950328.53
Changes in carrying book balances with significant changes in loss provision for the period
□ Applicable √ Not applicable
4) Provision recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMB
Changes in the period
Opening Recovery or Transfer or Closing
Category balance Provision reversal Write-off Others balance
Bad debt provision 83170177.01 8780151.52 91950328.53
Total 83170177.01 8780151.52 91950328.53
348 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XIV. Major Item Notes of the Parent Company’s Financial Statements (Continued)
2. Other receivables (Continued)
(1) Other receivables (Continued)
5) Top five accounts receivable based on closing balance of debtors
The total amount of top five other receivables based on closing balance of debtors for the period
amounted to RMB5633038306.52 in total accounting for 60.38% of the total closing balance of other
receivables. The closing balance of the corresponding bad debt provision amounted to RMB0.00 in total.Unit: RMB
Percentage to total
closing balance Closing balance of
Name of entity Nature Closing balance Ageing of other receivables (%) bad debt provision
Customer 1 Open credit 1298000000.00 Within 1 year 13.91
Customer 2 Open credit 1319906791.36 Within 1 year 14.15
Customer 3 Open credit 1087487475.00 Within 1 year 11.66
Customer 4 Open credit 1032000000.00 Within 1 year 11.06
Customer 5 Open credit 895644040.16 Within 1 year 9.60
Total － 5633038306.52 － 60.38
3. Long-term equity investments
Unit: RMB
Closing balance Opening balance
Impairment Impairment
Item Book balance provision Book value Book balance provision Book value
Investment in subsidiaries 17898687687.22 17898687687.22 18502944740.81 18502944740.81
Investment in joint ventures 86542364.15 86542364.15 82741230.15 82741230.15
Investment in associates 319764325.10 5994545.96 313769779.14 246471611.33 5994545.96 240477065.37
Total 18304994376.47 5994545.96 18298999830.51 18832157582.29 5994545.96 18826163036.33
2023 ANNUAL REPORT 349XII Financial Report
XIV. Major Item Notes of the Parent Company’s Financial Statements (Continued)
3. Long-term equity investments (Continued)
(1) Investment in subsidiaries
Unit: RMB
Opening Change for the period Closing
balance of balance of
Opening balance impairment Additional Withdrawn Impairment Closing balance impairment
Investee (Book value) provision contribution contribution provision Others (book value) provision
Chenming Paper Korea Co. Ltd. 6143400.00 6143400.00
Chenming GmbH 4083235.00 4083235.00
Hailaer Chenming Paper Co. Ltd. 12000000.00 12000000.00
Huanggang Chenming Pulp & Paper
Co. Ltd. 2350000000.00 2350000000.00
Huanggang Chenming Arboriculture
Development Co. Ltd. 70000000.00 70000000.00
Jinan Chenming 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 200000000.00 280500000.00
Zhanjiang Chenming Pulp & Paper Co. Ltd. 5137500000.00 68750000.00 5206250000.00
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 200000000.00 4649441979.31
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 Hongxiang Printing and
Packaging Co. Ltd. 3730000.00 3730000.00
Shandong Chenming Group Finance
Co. Ltd. 4000000000.00 4000000000.00
Chenming Arboriculture Co. Ltd. 45000000.00 45000000.00
Chenming Paper United States Co. Ltd. 6407800.00 6407800.00
Weifang Chenming Growth Driver
Replacement Equity Investment Fund
Partnership (Limited Partnership) 592500340.53 32778016.57 559722323.96
Weifang Chendu Equity Investment
Partnership (Limited Partnership) 241387503.76 13094618.61 228292885.15
Total 18502944740.81 468750000.00 1073007053.59 17898687687.22
350 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XIV. Major Item Notes of the Parent Company’s Financial Statements (Continued)
3. Long-term equity investments (Continued)
(2) Investment in associates and joint ventures
Unit: RMB
Change for the period
Investment Distribution
Opening gain or loss Adjustment Other of cash Closing
Opening balance of recognised of other change dividend or Closing balance of
balance impairment Additional Withdrawn under equity comprehensive in equity profit Impairment balance impairment
Investee (book value) provision contribution contribution method income interest declared provision Others (book value) provision
I. Joint Ventures
Zhuhai Dechen New Third
Board Equity Investment
Fund Company (Limited
Partnership) 36776710.91 487093.45 10000000.00 27263804.36
Ningbo Kaichen Huamei
Equity Investment Fund
Partnership (Limited
Partnership) 197218318.77 90910511.36 10000000.00 278128830.13
Chenming (Qingdao) Asset
Management Co. Ltd. 6482035.69 1895108.96 8377144.65
Xuchang Chenming Paper
Co. Ltd. 5994545.96 5994545.96
Subtotal 240477065.37 5994545.96 93292713.77 20000000.00 313769779.14 5994545.96
II. Associates
Shouguang Chenming
Huisen New-style
Construction Materials
Co. Ltd. 7892659.42 2107624.17 2600000.00 7400283.59
Weifang Port Wood Chip
Terminal Co. Ltd. 74848570.73 4293509.83 79142080.56
Subtotal 82741230.15 6401134.00 2600000.00 86542364.15
Total 323218295.52 5994545.96 99693847.77 22600000.00 400312143.29 5994545.96
Determination of net amount of recoverable amount measured at fair value after deducting disposal expenses
□ Applicable √ Not applicable
Determination of present value of recoverable amount based on expected cash flows
□ Applicable √ Not applicable
2023 ANNUAL REPORT 351XII Financial Report
XIV. Major Item Notes of the Parent Company’s Financial Statements (Continued)
4. Revenue and operating costs
Unit: RMB
Amount for the period Amount for the prior period
Item Operating Revenue Operating Costs Operating Revenue Costs
Principal activities 5560666894.03 5556483312.72 6270637334.30 6040121665.12
Other activities 2018747725.42 1619996618.01 1249427268.18 1005967022.32
Total 7579414619.45 7176479930.73 7520064602.48 7046088687.44
Breakdown information of operating revenues and operating costs:
Unit: RMB
Machine-made paper Others Total
Category of contract Operating Revenue Operating Costs Operating Revenue Operating Costs Operating Revenue Operating Costs
Type of goods 7200349780.38 6986898810.46 379064839.07 189581120.27 7579414619.45 7176479930.73
Including:
Machine-made paper 5560666894.03 5556483312.72 5560666894.03 5556483312.72
Others 1639682886.35 1430415497.74 379064839.07 189581120.27 2018747725.42 1619996618.01
By geographical area 7200349780.38 6986898810.46 379064839.07 189581120.27 7579414619.45 7176479930.73
Including:
Mainland China 6048307215.69 5804923689.77 379064839.07 189581120.27 6427372054.76 5994504810.04
Other countries and regions 1152042564.69 1181975120.69 1152042564.69 1181975120.69
By the timing of delivery 7200349780.38 6986898810.46 379064839.07 189581120.27 7579414619.45 7176479930.73
Including:
Goods (at a point in time) 7200349780.38 6986898810.46 255627989.04 87223462.50 7455977769.42 7074122272.96
Services (within a certain
period) 123436850.03 102357657.77 123436850.03 102357657.77
By sales channels 7200349780.38 6986898810.46 379064839.07 189581120.27 7579414619.45 7176479930.73
Including:
Distribution 4804123673.23 4816398489.33 4804123673.23 4816398489.33
Direct sales 2396226107.15 2170500321.13 379064839.07 189581120.27 2775290946.22 2360081441.40
352 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XIV. Major Item Notes of the Parent Company’s Financial Statements (Continued)
4. Revenue and operating costs (Continued)
Information related to performance obligations:
Company’s
Whether the commitments
Nature of goods that the person is the expected to Types of quality assurance
Time for fulfilment of Company undertakes primary person be refunded offered by the Company and
Item performance obligations Significant terms of payment to transfer in charge to customers related obligations
Machine-made Domestic sales on the day of Domestic sales tend to be Produces easily distinguishable Yes None Guaranteed quality assurance
paper delivery to the customer; provided on an invoice basis; should there be objections to
foreign sales on the day of foreign sales tend to be product quality within 7 days
customs clearance prepaid. of arrival the products can be
returned and exchanged.Other explanations: The Company’s performance obligations for sales of machine-made paper are generally less than one year and the
Company takes advance payments or provides credit terms depending on the customer. When the Company is the primary responsible party
for a sale it generally obtains the unconditional right to receive payment when control of the merchandise is transferred to the customer either
at the time of shipment or upon delivery to the destination specified by the customer.Information related to the transaction price allocated to residual performance obligations:
At the end of the reporting period the amount of revenue with signed contracts but unfulfilled or uncompleted
performance obligation was RMB1454807158.83 in which RMB1454807158.83 was expected to be recognised in
2024.
5. Investment income
Unit: RMB
Amount for Amount for
Item the period the period
Investment gain on disposal of long-term equity investments 215506789.79 751679.56
Income from long-term equity investments accounted for
using the equity method 99693847.76 -314623.14
Income from long-term equity investments accounted for
using the cost method 88000000.00 731666286.45
Investment gain on holding other non-current financial assets 1867060.62 4746821.37
Investment gain on derecognition of financial assets -47421175.71 -63403215.00
Total 357646522.46 673446949.24
2023 ANNUAL REPORT 353XII Financial Report
XX. Supplementary information
1. Breakdown of extraordinary gains or losses for the current period
√ Applicable □ Not applicable
Unit: RMB
Item Amount Remark
Profit or loss from disposal of non-current assets (including write-off of
provision for assets impairment) 431805592.54
Government grants (except for the government grants closely related to
the normal operation of the Company granted in accordance with an
established standard and having an ongoing effect on the Company’s
profit or loss in compliance with national policies and regulations)
accounted for in profit or loss for the current period 117211489.25
Except for effective hedging activities conducted in the ordinary course
of business of the Company gain or loss arising from the change in fair
value of financial assets and financial liabilities held by a non-financial
company as well as gain or loss arising from disposal of its financial
assets and financial liabilities 58579398.48
Reversal of provision for impairment of receivables individually tested for
impairment 99483459.63
Profit or loss from debt restructuring 55297346.06
Profit or loss from changes in the fair value of consumable biological
assets subsequently measured at fair value 6775808.38
Other non-operating income and expenses other than the above items -11642079.10
Total extraordinary gains or losses 757511015.24
Less: Effect of income tax of extraordinary gains or losses 89176973.22
Net extraordinary gains or losses 668334042.02
Less: Net effect of extraordinary gains or losses attributable to minority
interest (after tax) 7503507.14
Extraordinary gains or losses attributable to ordinary shareholders of the
Company 660830534.88
Other profit or loss items consistent with the definition of extraordinary items:
□ Applicable √ Not applicable
The Company does not have other profit or loss items consistent with the definition of extraordinary items.Explanation on classification of non-recurring profit and loss listed in Explanatory Announcement No. 1 on Information
Disclosure of Companies Offering Their Securities to the Public – Non-recurring Profit and Loss as non-recurring profit
and loss
√ Applicable □ Not applicable
354 SHANDONG CHENMING PAPER HOLDINGS LIMITEDXII Financial Report
XX. Supplementary information (Continued)
1. Breakdown of extraordinary gains or losses for the current period (Continued)An explanation of the definition of non-recurring profit and loss items listed in the “Interpretative Bulletin No. 1 onDisclosure of Information by Publicly Traded Companies – Non-Recurring Profits and Losses (Revised 2023)” as
recurring in accordance with the definitions and principles:
Unit: RMB
Item During the period Reasons
Other income 52766790.28 Government grants related to assets that are closely related to the
Company’s normal operations are subsequently amortised to other
income which has a continuing effect on the Company’s profit or loss
and is therefore accounted for as recurring profit or loss.Impact of the implementation of Interpretative Announcement No. 1 on Information Disclosure by Companies with
Public Securities – Non-Recurring Gains and Losses (Revised 2023) on the amount of non-recurring gains and losses
for the year 2022:
Unit: RMB
Item Revised Unrevised Amount Impacted
Profit or loss from disposal of non-current assets 161509859.17 161509859.17
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 259087092.47 314934315.62 -55847223.15
Profit or loss from debt restructuring 967464.91 967464.91
Except for effective hedging activities conducted in the ordinary course
of business of the Company gains or losses arising from changes in
the fair value of financial assets held for trading derivative financial
assets financial liabilities held for trading derivative financial liabilities
and investment gains on disposal of financial assets held for trading
derivative financial assets financial liabilities held for trading derivative
financial liabilities and other creditor investments -35178162.53 -35178162.53
Reversal of impairment loss on receivables tested individually for
impairment 275585463.86 275585463.86
Profit or loss from changes in the fair value of consumable biological
assets subsequently measured at fair value 9924233.72 9924233.72
Other non-operating income and expenses other than the above items -37391130.09 -37391130.09
Total extraordinary gains or losses 634504821.51 690352044.66 -55847223.15
Less: Effect of income tax of extraordinary gains or losses 128956830.19 137333913.66 -8377083.47
Net extraordinary gains or losses 505547991.32 553018131.00 -47470139.68
Less: Net effect of extraordinary gains or losses attributable to minority
interest (after tax) 1202165.88 2268633.02 -1066467.14
Extraordinary gains or losses attributable to ordinary shareholders of the
Company 504345825.44 550749497.98 -46403672.54
2023 ANNUAL REPORT 355XII Financial Report
XX. Supplementary information (Continued)
2. Return on net assets and earnings per share
Earnings per share
Rate of return on net assets Basic Diluted
Profit for the reporting period on weighted average basis (RMB per share) (RMB per share)
Net profit attributable to ordinary shareholders of the
Company -7.65 -0.45 -0.45
Net profit after extraordinary gains or losses attributable to
ordinary shareholders of the Company -11.45 -0.68 -0.68
3. Accounting data difference under accounting standard at home and abroad
(1) Differences of net profit and net assets disclosed in financial reports prepared under IAS and Chinese
accounting standards
□ Applicable √ Not applicable
(2) Differences of net profit and net assets disclosed in financial reports prepared under oversea and Chinese
accounting standards
□ Applicable √ Not applicable
(3) Reasons for the differences in figures under domestic and foreign accounting standards. The name of
the foreign audit institution shall be indicated if the data audited by the foreign audit institution has been
regulated differently.□ Applicable √ Not applicable
The Board of Shandong Chenming Paper Holdings Limited
28 Mar 2024
356 SHANDONG CHENMING PAPER HOLDINGS LIMITED
沪公网安备31011802005267号
