SHANDONG CHENMING PAPER HOLDINGS LIMITED
Interim Financial Report 2020
August 2020
1SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
I. Auditors’ Report
Is the interim report audited
□ Yes √ No
The interim financial report is unaudited.II. Financial Statements
The unit in the notes to the financial statements is: RMB
1. Consolidated Balance Sheet
Prepared by: Shandong Chenming Paper Holdings Limited
30 Ju2020
Unit: RMB
Item 30 Ju2020 31 December 2019
CURRENT ASSETS:
Motary funds 19301761154.66 19306529473.33
Accounts receivable 2297695446.74 2525083311.03
Accounts receivable financial 1418702732.26 442915861.70
Prepayments 731403235.76 603573549.08
Other receivables 3129061804.47 2216654598.66
Dividend receivable 13000000.00 13000000.00
Inventories 5701570848.39 4774430110.81
Non-current assets due within oyear 6010580174.26 6974539613.30
Other current assets 8558407649.13 8108707394.70
Total current assets 47149183045.67 44952433912.61
Long-term receivables 763545520.11 1200575810.95
Long-term equity investments 3767254464.70 3606339023.74
Other non-current financial assets 147445653.55 147445653.55
Investment property 5198377514.70 5082362293.11
Fixed assets 38215983514.51 34439935032.69
Construction in progress 598051166.87 5476122928.95
Right-of-use assets 149450409.35 152141882.05
Intangible assets 1659117513.78 1781061904.51
Goodwill 5969626.57 5969626.57
Long-term prepaid expenses 50949493.93 48203408.71
Deferred income tax assets 960555695.05 892442631.04
Other non-current assets 368196053.27 173875826.67
Total non-current assets 51884896626.39 53006476022.54
Total assets 99034079672.06 97958909935.15
2 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
Item 30 Ju2020 31 December 2019
Short-term borrowings 38554311235.00 36883156014.19
Derivative financial liabilities
Bills payable 2747606761.17 1515048206.00
Accounts payable 4244906425.30 4351087581.98
Contract liabilities 1230606297.46 968082063.13
Employee befits payable 231418118.45 190229883.52
Taxes payable 383277519.38 311554116.73
Other payables 2453998030.51 2594249626.54
Including: Interest payable 149518233.84 208189699.15
Dividend payable 610109667.16
Non-current liabilities due within oyear 6936859454.99 5662958920.03
Other current liabilities 150686164.01 222402500.00
Total current liabilities 56933670006.27 52698768912.12
Long-term borrowings 7009361701.92 9140339693.56
Bonds payable 1628134192.59 1258270909.49
Lease liabilities 60271769.90 59697128.65
Long-term payables 2748780858.47 3321535538.94
Provisions 325259082.28 325259082.28
Deferred income 1692501835.30 1771013335.11
Deferred income tax liabilities 1411125.59
Other non-current liabilities 2384489390.18 3042841328.86
Total non-current liabilities 15848798830.64 18920368142.48
TOTAL LIABILITIES 72782468836.91 71619137054.60
II. Financial Statements (Cont’d)
1. Consolidated Balance Sheet (Cont’d)
3SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
Item 30 Ju2020 31 December 2019
Share capital 2984208200.00 2904608200.00
Other equity instruments 7465500000.00 7465500000.00
Including: Preference shares 4477500000.00 4477500000.00
Perpetual bonds 2988000000.00 2988000000.00
Capital reserves 5264000531.30 5086686427.30
Less: Treasury shares 226860000.00
Other comprehensive income -979734467.41 -879452135.10
Surplus reserves 1212009109.97 1212009109.97
Geral risk provisions 74122644.20 74122644.20
Retaid profit 9114386653.70 9306269617.38
Total equity attributable to owrs of the Company 24907632671.76 25169743863.75
Minority interest 1343978163.39 1170029016.80
Total owrs’ equity 26251610835.15 26339772880.55
TOTAL LIABILITIES AND OWNERS’ EQUITY 99034079672.06 97958909935.15
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
II. Financial Statements (Cont’d)
1. Consolidated Balance Sheet (Cont’d)
4 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company
Unit: RMB
Item 30 Ju2020 31 December 2019
CURRENT ASSETS:
Motary funds 7082756804.82 9001257324.52
Bills receivable 1618500000.00 3254460000.00
Accounts receivable 953020387.81 39204670.00
Accounts receivable financing 245133081.69 189873567.14
Prepayments 200265805.92 722472479.01
Other receivables 13615203417.43 13975590537.58
Inventories 1036370683.92 696487727.53
Non-current assets due within oyear 20557909.14 129546826.00
Other current assets 78459437.08 80815659.84
Total current assets 24850267527.81 28089708791.62
NON-CURRENT ASSETS:
Long-term receivables 418750862.51 418750862.51
Long-term equity investments 23695209348.94 23629780317.87
Investment in other equity instruments 3000000.00
Other non-current financial assets 147445653.55 147445653.55
Fixed assets 3809789595.98 3901007932.88
Construction in progress 336462019.25 350623821.42
Intangible assets 440462302.74 446430156.00
Deferred income tax assets 426746817.16 426711909.98
Other non-current assets 110930000.00 110930000.00
Total non-current assets 29385796600.13 29434680654.21
Total assets 54236064127.94 57524389445.83
CURRENT LIABILITIES:
Short-term borrowings 12202091264.37 11601509632.09
Bills payable 9145715195.57 9890041170.20
Accounts payable 809163079.28 833526295.40
Contract liabilities 3421108987.13 2096436345.90
Employee befits payable 78493509.03 71040017.13
Taxes payable 71924808.22 76872851.56
Other payables 4392332152.34 6426648847.95
Including: Interest payable 109263749.98 127278083.35
Dividend payable 610109667.16
Non-current liabilities due within oyear 2709973345.32 3695934663.30
Other current liabilities 301864166.67 932402500.00
Total current liabilities 33132666507.93 35624412323.53
5SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
Item 30 Ju2020 31 December 2019
NON-CURRENT LIABILITIES:
Long-term borrowings 350692035.94 150692035.94
Bonds payable 439943750.00 89070000.00
Long-term payables 751402372.22 1167426124.98
Provisions 325259082.28 325259082.28
Deferred income 39900252.91 42070840.27
Other non-current liabilities 1792083342.67 2789283340.67
Total non-current liabilities 3699280836.02 4563801424.14
TOTAL LIABILITIES 36831947343.95 40188213747.67
OWNERS’ EQUITY:
Share capital 2984208200.00 2904608200.00
Other equity instruments 7465500000.00 7465500000.00
Including: Preference shares 4477500000.00 4477500000.00
Perpetual bonds 2988000000.00 2988000000.00
Capital reserves 5099821539.19 4953557435.19
Less: Treasury shares 226860000.00
Surplus reserves 1199819528.06 1199819528.06
Retaid profit 881627516.74 812690534.91
Total owrs’ equity 17404116783.99 17336175698.16
TOTAL LIABILITIES AND OWNERS’ EQUITY 54236064127.94 57524389445.83
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
II. Financial Statements (Cont’d)
2. Balance sheet of the Company (Cont’d)
6 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
3. Consolidated Income Statement
Unit: RMB
Item January to Ju2020 January to Ju2019
I. Total revenue 13599805765.86 13348648113.70
Including: Revenue 13599805765.86 13348648113.70
II. Total operating costs 13331852506.55 12989921141.46
Including: Operating costs 10185300033.31 9754097799.82
Taxes and surcharges 107048098.21 134488545.06
Sales and distribution expenses 652742420.35 590584957.47
Geral and administrative expenses 491987245.33 562417399.25
Research and development expense 548557146.89 431483716.06
Finance expenses 1346217562.46 1516848723.80
Including: Interest expenses 1439500160.77 1576756279.30
Interest income 276115018.97 213994280.22
Plus: Other income 133433974.45 38831290.64
Investment income (“-” denotes loss) 136893482.97 -9467172.97
Including: Investment income from
associates and joint ventures 122749789.02 -9467172.97
Gain on change in fair value (“-” denotes loss) -9246743.86 -1883064.80
Credit impairment loss (“-” denotes loss) -257855903.60 -62440283.34
Loss on impairment of assets (“-” denotes loss) -163717.76 83464107.59
Gain on disposal of assets (“-” denotes loss) -4705886.89 22823551.43
III. Operating profit (“-” denotes loss) 266308464.62 430055400.79
Plus: Non-operating income 642400117.78 237472592.97
Less: Non-operating expenses 9007544.18 5050128.19
IV. Total profit (“-” denotes total loss) 899701038.22 662477865.57
Less: Income tax expenses 237960188.15 125877819.62
V. Net profit (“-” denotes t loss) 661740850.07 536600045.95
(I) Classification according to the continuity of operation
1. Net profit from continuing operations
(“-” denotes t loss) 661740850.07 536600045.95
2. Net profit from discontinued operations
(“-” denotes t loss)
(II) Classification according to owrship
1. Net profit attributable to shareholders
of the Company 516326703.48 509795572.29
2. Profit or loss of minority interest 145414146.59 26804473.66
VI. Net other comprehensive income after tax -108564087.60 -16016688.20
Net other comprehensive income after tax attributable
to shareholders of the Company -108564087.60 -16016688.20
(I) Other comprehensive income that cannot be reclassified
to profit and loss in subsequent periods
(II) Other comprehensive income that will be reclassified
to profit and loss in subsequent periods -108564087.60 -16016688.20
Translation differences of financial statements denominated
in foreign currency -108564087.60 -16016688.20
7SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
Item January to Ju2020 January to Ju2019
VII. Total comprehensive income 553176762.47 520583357.75
Total comprehensive income attributable to shareholders
of the Company 407762615.88 493778884.09
Total comprehensive income attributable to minority interest 145414146.59 26804473.66
IIX. Earnings per share:
(I) Basic earnings per share 0.051 0.013
(II) Diluted earnings per share 0.051 0.013
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
II. Financial Statements (Cont’d)
3. Consolidated Income Statement (Cont’d)
8 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
4. Income statement of the Company
Unit: RMB
Item January to Ju2020 January to Ju2019
I. Revenue 3847193657.53 2696012416.10
Less: Operating costs 3028473472.42 2103287151.64
Taxes and surcharges 20730087.42 22384520.78
Sales and distribution expenses 124148775.89 95933113.16
Geral and administrative expenses 159106436.16 160401795.91
Research and development expense 128662995.77 122265471.50
Finance expenses 380567325.04 851438574.25
Including: Interest expenses 803815024.42 1297180410.46
Interest income 512123486.08 524005473.68
Plus: Other income 4164682.46 2180872.36
Investment income (“-” denotes loss) 682669031.07 1010553143.57
Including: Investment income from associates
and joint ventures -1660968.93 -12799856.43
Impairment loss of credit (“-” denotes loss) 15237901.51 -844738.21
Impairment loss of assets (“-” denotes loss)
Gains from assets disposal (“-” denotes loss) 16102859.30 22416169.42
II. Operating profit (“-” denotes loss) 723679039.17 374607236.00
Plus: Non-operating income 54685565.61 77943339.00
Less: Non-operating expenses 1252862.97 4195926.11
III. Total profit (“-” denotes total loss) 777111741.81 448354648.89
Less: Income tax expenses -34907.18 -96575704.73
IV. Net profit (“-” denotes t loss) 777146648.99 544930353.62
(1) Net profit from continuing operations
(“-” denotes t loss) 777146648.99 544930353.62
(2) Net profit from discontinued operations
(“-” denotes t loss)
VI. Total comprehensive income 777146648.99 544930353.62
VII. Earnings per share:
(I) Basic earnings per share
(II) Diluted earnings per share
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
9SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement
Unit: RMB
Item January to Ju2020 January to Ju2019
I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 14322440708.60 14748713123.70
Tax rebates received 1619978.70 660483.85
Cash received relating to other operating activities 1563110217.95 2298196240.97
Subtotal of cash inflows from operating activities 15887170905.25 17047569848.52
Cash paid for goods and services 11303287012.69 11576281103.39
Cash paid to and for employees 550988794.51 674527204.40
Payments of taxes and surcharges 622011647.05 1096901907.86
Cash paid relating to other operating activities 1083849666.32 1000088741.18
Subtotal of cash outflows from operating activities 13560137120.57 14347798956.83
Net cash flows from operating activities 2327033784.68 2699770891.69
II. Cash flow from investing activities:
Cash received from investment income 1200000.00
Net cash received from disposal of fixed assets intangible
assets and other long-term assets 85956320.00 111235000.00
Net cash received from disposal of subsidiaries and other
busiss units 217547669.15
Cash received relating to other investing activities 129197968.06
Subtotal of cash inflows from investing activities 433901957.21 111235000.00
Cash paid for purchase of fixed assets intangible assets
and other long-term assets 143811622.89 376939086.06
Cash paid on investments 19266800.00 1639194479.24
Cash paid relating to other investing activities 176000000.00 189628400.00
Subtotal of cash outflows from investing activities 339078422.89 2205761965.30
Net cash flows from investing activities 94823534.32 -2094526965.30
10 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
Item January to Ju2020 January to Ju2019
III. Cash flows from financing activities:
Cash received from investments 294820000.00
Including: Cash received from by subsidiaries
from minority investment 67960000.00
Cash received from borrowings 15228878371.99 22550704467.77
Cash received relating to other financing activities 1356957000.00 3479693527.06
Subtotal of cash inflows from financing activities 16880655371.99 26030397994.83
Cash repayments of amounts borrowed 14282539084.68 18763676782.15
Cash paid for dividend and profit distribution
or interest payment 1710006370.47 1591133614.29
Including: Dividend and profit paid by subsidiaries
to minority shareholders 8375000.00
Cash paid relating to other financing activities 3982494113.94 6456564308.43
Subtotal of cash outflows from financing activities 19975039569.09 26811374704.87
Net cash flows from financing activities -3094384197.10 -780976710.04
IV. Effect of foreign exchange rate changes on cash
and cash equivalents -4518518.54 -196762227.50
V. Net increase in cash and cash equivalents -677045396.64 -372495011.15
Plus: Balance of cash and cash equivalents
at the beginning of the period 2890328027.40 2381558242.52
VI. Balance of cash and cash equivalents as
at the end of the period 2213282630.76 2009063231.37
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement (Cont’d)
11SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company
Unit: RMB
Item January to Ju2020 January to Ju2019
1. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 4646172812.15 4975401290.02
Cash received relating to other operating activities 155230403.66 974266183.30
Subtotal of cash inflows from operating activities 4801403215.81 5949667473.32
Cash paid for goods and services 2208540497.88 949039632.39
Cash paid to and for employees 174694134.98 232441602.15
Payments of taxes and surcharges 58848554.36 85040472.23
Cash paid relating to other operating activities 450670347.73 643575724.57
Subtotal of cash outflows from operating activities 2892753534.95 1910097431.34
Net cash flows from operating activities 1908649680.86 4039570041.98
II. Cash flows from investing activities:
Cash received from investments 217547669.15
Cash received from investment income 682430000.00
Net cash received from disposal of fixed assets
intangible assets and other long-term assets 85956320.00 55735000.00
Cash received relating to other investing activities 129197968.06
Subtotal of cash inflows from investing activities 1115131957.21 55735000.00
Cash paid for purchase of fixed assets intangible assets
and other long-term assets 5310913.00 17933778.78
Cash paid on investments 1147500000.00
Cash paid relating to other investing activities 39500000.00
Subtotal of cash outflows from investing activities 5310913.00 1204933778.78
Net cash flows from investing activities 1109821044.21 -1149198778.78
12 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
Item January to Ju2020 January to Ju2019
III. Cash flows from financing activities:
Cash received from investments 226860000.00
Cash received from borrowings 9807671284.37 6360366283.77
Cash received relating to other financing activities 794457000.00 1997263889.00
Subtotal of cash inflows from financing activities 10828988284.37 8357630172.77
Cash repayments of amounts borrowed 9591880585.58 5237801785.71
Cash paid for dividend and profit distribution
or interest payment 327204654.73 774396836.69
Cash paid relating to other financing activities 2963023405.21 5593391883.99
Subtotal of cash outflows from financing activities 12882108645.52 11605590506.39
Net cash flows from financing activities -2053120361.15 -3247960333.62
IV. Effect of foreign exchange rate changes on cash
and cash equivalents 86290.34 14127.62
V. Net increase in cash and cash equivalents 965436654.26 -357574942.80
Plus: Balance of cash and cash equivalents as at the
beginning of the period 136328721.71 607805063.02
VI. Balance of cash and cash equivalents as
at the end of the period 1101765375.97 250230120.22
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company (Cont’d)
13SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
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6
1.
Dis
trib
uti
on
to
ow
rs
(or
sh
are
ho
lde
rs)
-70
82
09
66
7.1
6
-70
82
09
66
7.1
6
-8
37
50
00
.00
-71
65
84
66
7.1
6
IV.
Ba
lan
ce
as
at
th
e e
nd
of
th
e p
eri
od
29
84
20
82
00
.00
44
77
50
00
00
.00
29
88
00
00
00
.00
–
52
64
00
05
31
.30
22
68
60
00
0.0
0
-97
97
34
46
7.4
1
–
12
12
00
91
09
.97
74
12
26
44
.20
91
14
38
66
53
.70
–
24
90
76
32
67
1.7
6
13
43
97
81
63
.39
26
25
16
10
83
5.1
5
14 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
II.
F
in
an
ci
al
S
ta
te
m
en
ts
(C
on
t’ d
)
7.
C
o
ns
o
lid
at
ed
s
ta
te
m
en
t
o
f
ch
an
g
es
in
o
w
rs
’ e
q
ui
ty
(C
on
t’ d
)
A
m
ou
nt
s
fo
r
th
e
p
rio
r
p
er
io
d
U
ni
t:
R
M
B
Ite
m
Ja
nu
ary
to
Ju
20
19
Eq
uit
y a
ttri
bu
tab
le
to
ow
rs
of
the
Co
mp
an
y
Ot
he
r e
qu
ity
in
str
um
en
ts
Sh
are
ca
pit
al
Pre
fer
en
ce
sh
are
s
Pe
rpe
tua
l
bo
nd
s
Ot
he
rs
Ca
pit
al
res
erv
es
Le
ss:
Tre
as
ury
sh
are
s
Ot
he
r
co
mp
reh
en
siv
e
inc
om
e
Sp
ec
ial
res
erv
es
Su
rpl
us
res
erv
es
Ge
ral
ris
k
pro
vis
ion
s
Re
tai
d p
rof
it
Ot
he
rs
Su
bto
tal
Mi
no
rity
int
ere
st
To
tal
ow
rs’
eq
uit
y
I.
Ba
lan
ce
as
at
th
e e
nd
of
th
e p
rio
r y
ea
r
29
04
60
82
00
.00
44
77
50
00
00
.00
29
88
00
00
00
.00
50
91
44
99
15
.14
-73
65
20
18
1.0
1
32
57
99
8.4
7
11
48
88
89
12
.11
64
12
39
19
.23
91
07
42
26
90
.85
25
04
87
31
45
4.7
9
82
29
59
77
3.3
0
25
87
16
91
22
8.0
9
II.
Ba
lan
ce
as
at
th
e b
eg
inn
ing
of
th
e y
ea
r
29
04
60
82
00
.00
44
77
50
00
00
.00
29
88
00
00
00
.00
–
50
91
44
99
15
.14
–
-73
65
20
18
1.0
1
32
57
99
8.4
7
11
48
88
89
12
.11
64
12
39
19
.23
91
07
42
26
90
.85
–
25
04
87
31
45
4.7
9
82
29
59
77
3.3
0
25
87
16
91
22
8.0
9
III.
Ch
an
ge
s in
th
e p
eri
od(“ -” d
en
ote
s d
ec
rea
se)
–
–
–
–
-4
76
34
87
.84
–
-14
29
31
95
4.0
9
-3
25
79
98
.47
63
12
01
97
.86
99
98
72
4.9
7
19
88
46
92
6.5
3
–
12
10
12
40
8.9
6
34
70
69
24
3.5
0
46
80
81
65
2.4
6
(I)
To
tal
co
mp
reh
en
siv
e in
co
me
-14
29
31
95
4.0
9
16
56
56
65
84
.88
15
13
63
46
30
.79
71
20
19
58
.49
15
84
83
65
89
.28
(II)
Ca
pit
al p
aid
in
an
d r
ed
uc
ed
by
ow
rs
–
–
–
–
-4
76
34
87
.84
–
–
–
–
–
–
–
-4
76
34
87
.84
29
51
29
78
5.0
1
29
03
66
29
7.1
7
1.
Or
din
ary
sh
are
s p
aid
by
sh
are
ho
lde
rs
–
43
94
47
22
5.7
7
43
94
47
22
5.7
7
2.
Ot
he
rs
-4
76
34
87
.84
-4
76
34
87
.84
-14
43
17
44
0.7
6
-14
90
80
92
8.6
0
(III)
Pr
ofi
t d
istr
ibu
tio
n
–
–
–
–
–
–
–
–
63
12
01
97
.86
99
98
72
4.9
7
-1
45
77
19
65
8.3
5
–
-1
38
46
00
73
5.5
-19
26
25
00
.00
-1
40
38
63
23
5.5
2
1.
Tra
nsf
er
to
sur
plu
s r
ese
rve
s
63
12
01
97
.86
-63
12
01
97
.86
–
–
2.
Tra
nsf
er
to
ge
ral
ris
k p
rov
isio
n
99
98
72
4.9
7
-9
99
87
24
.97
–
–
3.
Dis
trib
uti
on
to
ow
rs
(or
sh
are
ho
lde
rs)
-1
38
46
00
73
5.5
2
-1
38
46
00
73
5.5
2
-19
26
25
00
.00
-1
40
38
63
23
5.5
2
(IV
) Tr
an
sfe
r o
f o
wn
ers
’ e
qu
ity
-4
88
19
91
.84
-4
88
19
91
.84
-4
88
19
91
.84
1.
Ot
he
rs
-4
88
19
91
.84
-4
88
19
91
.84
-4
88
19
91
.84
(V)
Sp
ec
ial
res
erv
es
16
23
99
3.3
7
16
23
99
3.3
7
16
23
99
3.3
7
1.
Ap
pro
pri
ati
on
16
23
99
3.3
7
16
23
99
3.3
7
16
23
99
3.3
7
IV.
Ba
lan
ce
as
at
th
e e
nd
of
th
e p
eri
od
29
04
60
82
00
.00
44
77
50
00
00
.00
29
88
00
00
00
.00
–
50
86
68
64
27
.30
–
-87
94
52
13
5.1
0
–
12
12
00
91
09
.97
74
12
26
44
.20
93
06
26
96
17
.38
–
25
16
97
43
86
3.7
5
11
70
02
90
16
.80
26
33
97
72
88
0.5
5
Le
ga
l R
ep
re
se
nt
at
iv
e:
Fi
na
nc
ia
l c
on
tr
ol
le
r:
H
ea
d
o
f t
he
fi
na
nc
ia
l d
ep
ar
tm
en
t:
C
he
n
H
on
gg
uo
D
on
g
Li
an
m
in
g
Z
ha
ng
B
o
15SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
II.
F
in
an
ci
al
S
ta
te
m
en
ts
(C
on
t’ d
)
8.
S
ta
te
m
en
t
o
f
ch
an
g
es
in
o
w
rs
’ e
q
ui
ty
o
f
th
e
C
o
m
p
an
y
A
m
ou
nt
s
fo
r
th
e
p
er
io
d
U
ni
t:
R
M
B
Ite
m
Ja
nu
ary
to
Ju
20
20
Ot
he
r e
qu
ity
in
str
um
en
ts
Sh
are
ca
pit
al
Pr
efe
ren
ce
sh
are
s
Pe
rpe
tua
l
bo
nd
s
Ot
he
rs
Ca
pit
al
res
erv
es
Le
ss
:
Tre
as
ury
sh
are
s
Ot
he
r
co
mp
reh
en
siv
e
inc
om
e
Sp
ec
ial
re
se
rve
s
Su
rpl
us
re
se
rve
s
Re
tai
d p
rof
it
Ot
he
rs
To
tal
ow
rs’
eq
uit
y
I.
Ba
lan
ce
as
at
th
e e
nd
of
th
e p
rio
r y
ea
r
29
04
60
82
00
.00
44
77
50
00
00
.00
29
88
00
00
00
.00
49
53
55
74
35
.19
11
99
81
95
28
.06
81
26
90
53
4.9
1
17
33
61
75
69
8.1
6
II.
Ba
lan
ce
as
at
th
e b
eg
inn
ing
of
th
e y
ea
r
29
04
60
82
00
.00
44
77
50
00
00
.00
29
88
00
00
00
.00
–
49
53
55
74
35
.19
–
–
–
11
99
81
95
28
.06
81
26
90
53
4.9
1
–
17
33
61
75
69
8.1
6
III.
C
ha
ng
es
in
th
e p
eri
od(“ -” d
en
ote
s d
ec
rea
se
)
79
60
00
00
.00
–
–
–
14
62
64
10
4.0
0
22
68
60
00
0.0
0
–
–
–
68
93
69
81
.83
–
67
94
10
85
.83
(I)
To
tal
co
mp
reh
en
siv
e i
nc
om
e
77
71
46
64
8.9
9
77
71
46
64
8.9
9
(II)
C
ap
ita
l p
aid
in
an
d r
ed
uc
ed
by
ow
rs
79
60
00
00
.00
–
–
–
14
62
64
10
4.0
0
22
68
60
00
0.0
0
–
–
–
–
–
-99
58
96
.00
1.
Or
din
ary
sh
are
s p
aid
by
sh
are
ho
lde
rs
79
60
00
00
.00
14
62
64
10
4.0
0
22
68
60
00
0.0
0
-99
58
96
.00
(III
) Pr
ofi
t d
ist
rib
uti
on
-70
82
09
66
7.1
6
–
-70
82
09
66
7.1
6
1.
Dis
trib
uti
on
to
ow
rs
(or
sh
are
ho
lde
rs)
-70
82
09
66
7.1
6
-70
82
09
66
7.1
6
IV.
Ba
lan
ce
as
at
th
e e
nd
of
th
e p
eri
od
29
84
20
82
00
.00
44
77
50
00
00
.00
29
88
00
00
00
.00
50
99
82
15
39
.19
22
68
60
00
0.0
0
11
99
81
95
28
.06
88
16
27
51
6.7
4
17
40
41
16
78
3.9
9
16 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
II.
F
in
an
ci
al
S
ta
te
m
en
ts
(C
on
t’ d
)
8.
S
ta
te
m
en
t
o
f
ch
an
g
es
in
o
w
rs
’ e
q
ui
ty
o
f
th
e
C
o
m
p
an
y
(C
on
t’ d
)
A
m
ou
nt
s
fo
r
th
e
p
rio
r
p
er
io
d
U
ni
t:
R
M
B
Ite
m
Ja
nu
ary
to
Ju
20
19
Ot
he
r e
qu
ity
in
str
um
en
ts
Sh
are
ca
pit
al
Pr
efe
ren
ce
sh
are
s
Pe
rpe
tua
l
bo
nd
s
Ot
he
rs
Ca
pit
al
res
erv
es
Le
ss
:
Tre
as
ury
sh
are
s
Ot
he
r
co
mp
reh
en
siv
e
inc
om
e
Sp
ec
ial
re
se
rve
s
Su
rpl
us
re
se
rve
s
Re
tai
d p
rof
it
Ot
he
rs
To
tal
ow
rs’
eq
uit
y
I.
Ba
lan
ce
as
at
th
e e
nd
of
th
e p
rio
r y
ea
r
29
04
60
82
00
.00
44
77
50
00
00
.00
29
88
00
00
00
.00
49
53
55
74
35
.19
11
36
69
93
30
.20
16
29
20
94
89
.72
18
08
95
74
45
5.1
1
II.
Ba
lan
ce
as
at
th
e b
eg
inn
ing
of
th
e y
ea
r
29
04
60
82
00
.00
44
77
50
00
00
.00
29
88
00
00
00
.00
49
53
55
74
35
.19
11
36
69
93
30
.20
16
29
20
94
89
.72
18
08
95
74
45
5.1
1
III.
C
ha
ng
es
in
th
e p
eri
od(“ -” d
en
ote
s d
ec
rea
se
)
63
12
01
97
.86
-81
65
18
95
4.8
1
-75
33
98
75
6.9
5
(I)
To
tal
co
mp
reh
en
siv
e i
nc
om
e
63
12
01
97
8.5
7
63
12
01
97
8.5
7
(III
) Pr
ofi
t d
ist
rib
uti
on
63
12
01
97
.86
-1
44
77
20
93
3.3
8
-1
38
46
00
73
5.5
2
1.
Tra
ns
fer
to
su
rpl
us
re
se
rve
s
63
12
01
97
.86
-63
12
01
97
.86
2.
Dis
trib
uti
on
to
ow
rs
(or
sh
are
ho
lde
rs)
-1
38
46
00
73
5.5
2
-1
38
46
00
73
5.5
2
IV.
Ba
lan
ce
as
at
th
e e
nd
of
th
e p
eri
od
29
04
60
82
00
.00
44
77
50
00
00
.00
29
88
00
00
00
.00
49
53
55
74
35
.19
11
99
81
95
28
.06
81
26
90
53
4.9
1
17
33
61
75
69
8.1
6
Le
ga
l R
ep
re
se
nt
at
iv
e:
Fi
na
nc
ia
l c
on
tr
ol
le
r:
H
ea
d
o
f t
he
fi
na
nc
ia
l d
ep
ar
tm
en
t:
C
he
n
H
on
gg
uo
D
on
g
Li
an
m
in
g
Z
ha
ng
B
o
17SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
III. Geral Information of the Company
The predecessor of Shandong Chenming Paper Holdings Limited (hereinafter referred to as the “Company”) was Shandong
Shouguang Paper Mill Corporation which was changed as a joint stock company with limited liability through offering
to specific investors in May 1993. In December 1996 with approval by Lu Gai Zi [1996] No. 270) issued by the People’s
Government of Shandong Province and Zheng Wei [1996] No. 59 of the Securities Committee of the State Council the
Company was changed as a joint stock company with limited liability established by share offer.
In May 1997 with approval by Zheng Wei Fa [1997] No. 26 issued by the Securities Committee of the State Council the
Company issued 115000000 domestic listed foreign shares (B shares) under public offering which were listed and traded on
Shenzhen Stock Exchange from 26 May 1997.In September 2000 with approval by Zheng Jian Gong Si Zi [2000] No. 151 issued by the China Securities Regulatory
Commission the Company issued an additional 70000000 RMB ordinary shares (A shares) which were listed and traded on
Shenzhen Stock Exchange from 20 November 2000.In Ju2008 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-owd
shareholder and converted into overseas listed foreign shares (H shares) for the purpose of reducing the number of
state-owd shares. The additional H shares issued were listed and traded on Hong Kong Stock Exchange on 18 Ju2008.
As at 30 Ju2020 the total share capital of the Company was 2984608200 shares. For details please refer to Note VII. 37.
The Company established a corporate governance structure comprising the geral meeting the board of directors and the
supervisory committee and has human resources department information technology department corporate management
department legal affairs department financial management department capital management department securities
investment department procurement department audit department and other departments.The Company and its subsidiaries (hereinafter referred to as the “Group”) are principally engaged in among other things
processing and sale of paper products (including machi-made paper and paper board) paper making raw materials and
machiry; geration and sale of electric power and thermal power; forestry saplings growing processing and sale of
timber; manufacturing processing and sale of wood products; and manufacturing and sale of laminated boards and fortified
wooden floorboards hotel service equipment financial and operating leasing magsite mining processing and sales of talc.The financial statements and notes thereto were approved by the board of directors of the Company (the “Board”) on 10
August 2020.
Subsidiaries of the Company wly included in the scope of consolidation in the reporting period totalled 2. For details
please refer to Note IX “Equity in other entities”. The scope of consolidation of the Company during the year had 2 companies
included and 2 companies excluded. For details please refer to Note VIII “Changes in the scope of consolidation”.IV. Basis of Preparation of the Financial Statements
1. Basis of preparation
The Company’s financial statements are prepared on a going concern and based on actual transactions and events
in accordance with the Accounting Standards for Busiss Enterprises-Basic Standards promulgated by the Ministry
of Finance (Order of Ministry of Finance No. 33 as amended by Order of Ministry of Finance No. 76) and 42 specific
accounting standards as promulgated and amended on and after 15 February 2006 the application guidelis of the
Accounting Standards for Busiss Enterprises interpretations and other related rules of the Accounting Standards for
Busiss Enterprises (hereinafter referred to as “ASBEs”) and the disclosure requirements of the “Regulation on the
Preparation of Information Disclosures of Companies Issuing Public Shares No. 15: Geral Requirements for FinancialReports” (revised in 2014) of China Securities Regulatory Commission.
18 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
IV. Basis of Preparation of the Financial Statements (Cont’d)
1. Basis of preparation (Cont’d)
The Company’s financial statements have been prepared on an accrual basis in accordance with the ASBEs. Except for
certain financial instruments the financial statements are prepared under the historical cost convention. Held-for-sale
non-current assets are measured at the lower of the difference of fair value less expected expenses or the original
carrying amount when meeting the conditions of holding for sale. In the event that depreciation of assets occurs a
provision for impairment is made accordingly in accordance with the relevant regulations.
2. Going concern
No facts or circumstances comprise a material uncertainty about the Company’s going concern basis within 12 months
since the end of the reporting period.V. Significant Accounting Policies and Accounting Estimates
Specific accounting policies and accounting estimates are indicated as follows:
The Company and its subsidiaries are principally engaged in machi-made paper electricity and heat construction
materials paper making chemical products financial leasing hotel management and other operations. The Company and its
subsidiaries formulated certain specific accounting policies and accounting estimates for the transactions and matters such
as revenue recognition determination of performance progress and R&D expenses based on their actual production and
operation characteristics pursuant to the requirements under the relevant accounting standards for busiss enterprises. For
details please refer to this Note V. 32 “Revenue”.
1. Statement of compliance with the Accounting Standards for Busiss Enterprises
These financial statements have been prepared in conformity with the ASBEs which truly and fully reflect the financial
position of the consolidated entity and the Company as at 30 Ju2020 and relevant information such as the operating
results and cash flows of the consolidated entity and the Company for the first half of 2020.
2. Accounting period
The accounting periods of the Company are divided into annual periods and interim periods. Interim periods refer to
reporting periods that are shorter than a full accounting year. The accounting year of the Company is from 1 January to
31 December of each calendar year.
3. Operating cycle
Ordinary operating cycle refers to the period from acquisition of assets used for processing by the Company until
their realisation in cash or cash equivalents. The operating cycle of the Company lasts for 12 months and acts as an
indicator for classification of liquidity of assets and liabilities.
4. Functional currency
The Company and its domestic subsidiaries recognise RMB as their functional currency according to the primary
economic environment in which they operate. 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$”) Japase yen (“JPY”)
Euro (“EUR”) and South Korean Won (“KRW”) as their respective functional currency according to the geral economic
environment in which these subsidiaries operate. The Company prepares its financial statements in RMB.
19SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
5. Accounting treatment of busiss combinations under common control and not under common control
Busiss combinations refer to the transactions or events in which two or more separate enterprises merged as a single
reporting entity. Busiss combinations are divided into busiss combinations under common control and not under
common control.
(1) Busiss combination under common control
A busiss combination involving enterprises under common control is a busiss combination in which all of the
combining enterprises are ultimately controlled by the same party or parties before and after the combination
and that control is not transitory. The party that on the combination date obtains control of another enterprise
participating in the combination is the absorbing party while that other enterprise participating in the combination
is a party being absorbed. The combination date is the date on which the absorbing party effectively obtains
control of the party being absorbed.
Assets and liabilities obtaid by the absorbing party are measured at their carrying amount at the combination
date as recorded by the party being merged. The difference between the carrying amount of the t assets
obtaid and the carrying amount of the consideration paid for the combination (or the aggregate nominal value of
shares issued as consideration) is charged to the capital reserve (share capital premium). If the capital reserve (share
capital premium) is not sufficient to absorb the difference any excess shall be adjusted against retaid earnings.
Cost incurred by the absorbing party that is directly attributable to the busiss combination shall be charged to
profit or loss in the period in which they are incurred.
(2) Busiss combination not under common control
A busiss combination not involving enterprises under common control is a busiss combination in which
all of the combining enterprises are not ultimately controlled by the same party or parties before and after the
combination. For a busiss combination not involving enterprises under common control the party that on the
acquisition date obtains control of another enterprise participating in the combination is the acquirer while that
other enterprise participating in the combination is the acquiree. The acquisition date is the date on which the
acquirer effectively obtains control of the acquiree.
For busiss combination involving entities not under common control the cost of a busiss combination is the
aggregate of the fair values on the date of acquisition of assets given liabilities incurred or assumed and equity
instruments issued by the acquirer to be paid by the acquirer in exchange for control of the acquire plus agency
fee such as audit legal service and evaluation consultation and other management fees charged to the profit or
loss for the period when incurred. Transaction cost attributable to equity or debt securities issued by the acquirer
as consideration is included in the initial costs. Contingent consideration involved is charged to the combination
cost at its fair value on the acquisition date in the event that adjustment on the contingent consideration is
required as a result of w or additional evidence in relation to circumstances existed on the acquisition date
emerges within 12 months from the acquisition date the combination goodwill shall also be adjusted. The
combination cost incurred by the acquirer and the identifiable t assets acquired from the combination are
measured at their fair values on the acquisition date. Where the cost of a busiss combination exceeds the
acquirer’s interest in the fair value of the acquiree’s identifiable t assets on the acquisition date the difference
is recognised as goodwill. Where the cost of a busiss combination is less than the acquirer’s interest in the
fair value of the acquiree’s identifiable t assets the acquirer shall first reassess the measurement of the fair
value of the acquiree’s identifiable assets liabilities and contingent liabilities and the measurement of the cost of
combination. If after such reassessment the cost of combination is still less than the acquirer’s interest in the fair
value of the acquiree’s identifiable t assets the difference is charged to profit or loss for the period.
20 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
5. Accounting treatment of busiss combinations under common control and not under common control
(Cont’d)
(2) Busiss combination not under common control (Cont’d)
In relation to the deductible temporary difference acquired from the acquiree which was not recognised as
deferred tax assets due to non-fulfilment of the recognition criteria at the date of the acquisition if w or
further information that is obtaid within 12 months after the acquisition date indicates that related conditions
at the acquisition date already existed and that the implementation of the economic befits brought by the
deductible temporary difference of the acquiree can be expected the relevant deferred tax assets shall be
recognised and goodwill shall be deducted. When the amount of goodwill is less than the deferred tax assets that
shall be recognised the difference shall be recognised in the profit or loss of the period. Except for the above
circumstances deferred tax assets in relation to busiss combination are recognised in the profit or loss of the
period.
For combination of busiss not under common control achieved by several transactions these several
transactions will be judged whether they belong to “transactions in a basket” in accordance with the judgement
standards on “transactions in a basket” as set out in the Notice of the Ministry of Finance on Issuing AccountingStandards for Busiss Enterprises Interpretation No. 5 (Cai Kuai [2012] No. 19) and Rule of 51 to “AccountingStandard for Busiss Enterprises No. 33 – Consolidated Financial Statements”. If they belong to “transactions ina basket” they are accounted for with reference to the descriptions as set out in the previous paragraphs of this
section and Note V. 17 “Long-term equity investments” and if they do not belong to “transactions in a basket”
they are accounted for in separate financial statements and consolidated financial reports:
In separate financial statements the initial equity investment cost is the aggregate of the carrying amount of the
equity investment in the acquiree held prior to the acquisition date and the investment cost wly added as at the
acquisition date. In respect of any other comprehensive income attributable to the equity interest in the acquiree
prior to the acquisition date other comprehensive income is accounted for on the same accounting treatment
as direct disposal of relevant asset or liability by the acquiree at the time of disposal (i.e. to be transferred to
investment income for the period except for the changes arising from remeasuring t assets or t liabilities of
defid befit plan using the equity method attributable to the acquiree).In consolidated financial statements the equity interest in the acquiree held prior to the acquisition date is
remeasured at fair value as at the acquisition date and the difference between the fair value and the carrying
amount is recognised as investment income for the current period. In respect of any other comprehensive income
attributable to the equity interest in the acquiree held prior to the acquisition date other comprehensive income is
accounted for on the same accounting treatment as direct disposal of relevant asset or liability by the acquiree (i.e.to be transferred to investment income at the acquisition date except for the changes arising from remeasuring
t assets or t liabilities of defid befit plan using the equity method attributable to the acquiree) is
transferred to investment income in the period of the acquisition date.
21SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
6. Preparation of consolidated financial statements
(1) Scope of consolidation
The scope of consolidation of the consolidated financial statements is determid on the basis of control. The
term “control” refers to the fact that the Company has power over the investee and is entitled to variable returns
from its involvement with the investee and the ability to use its power over the investee to affect the amount of
those returns. A subsidiary is an entity controlled by the Company (including an enterprise a separable part of an
investee a structured entity etc.).
(2) Basis for preparation of the consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial statements of the
Company and its subsidiaries and other relevant information. In preparing the consolidated financial statements
the accounting policies and accounting periods of the Company and its subsidiaries shall be consistent and
intra-company significant transactions and balances are eliminated.
A subsidiary and its busiss acquired through a busiss 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 busiss acquired through a busiss 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 t 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 owrs’ equity of the subsidiary
the excess amount shall be allocated against minority interest.
(3) Accounting treatment for loss of control over subsidiaries
For the loss of control over a subsidiary due to disposal of a portion of the equity investment or other reasons
the remaining equity is measured at fair value on the date when the control is lost. The difference arising from
the sum of consideration received for disposal of equity interest and the fair value of remaining equity interest
over the sun of the share of the carrying amount of t assets of the former subsidiary calculated continuously
from the purchase date based on the shareholding percentage before disposal and the goodwill is recognised as
investment income in the period when the control is lost.Other comprehensive income related to equity investment in the former subsidiary shall be transferred to current
profit or loss at the time when the control is lost except for other comprehensive income arising from changes in
t assets or t liabilities due to remeasurement of defid befit plan by the investee.
22 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
7. Classification of joint arrangements and accounting treatment for joint ventures
A joint arrangement refers to an arrangement of two or more parties have joint control. The joint arrangements of the
Group comprise joint operations and joint ventures.
(1) Joint operations
Joint operations refer to a joint arrangement during which the Group is entitled to relevant assets and obligations
of this arrangement.The Group recognises the following items in relation to its interest in a joint operation and accounts for them in
accordance with the relevant ASBEs:
A. the assets held solely by it and assets held jointly according to its share;
B. the liabilities assumed solely by it and liabilities assumed jointly according to its share;
C. the revenue from sale of output from joint operations;
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 t assets of this
arrangement.The Group accounts for its investments in joint ventures in accordance with the requirements relating to
accounting treatment using equity method for long-term equity investments.
8. Standards for recognising cash and cash equivalents
Cash refers to cash on hand and deposits readily available for payment purpose. Cash equivalents refer to short-term
and highly liquid investments held by the Group which are readily convertible into known amount of cash and which are
subject to insignificant risk of value change.
9. Foreign currency operations and translation of statements denominated in foreign currency
(1) Foreign currency operations
The foreign currency operations of the Group are translated into the functional currency at the prevailing spot
exchange rate on the date of exchange i.e. usually the middle price of RMB exchange rate published by the
People’s Bank of China on that date in geral and the same hereinafter.On the balance sheet date foreign currency motary 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-motary 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-motary items measured at fair value are translated at the spot exchange
rate on the date of determination of the fair value. The difference between the amounts of the functional currency
before and after the translation will be recognised in profit or loss for the period.
23SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
9. Foreign currency operations and translation of statements denominated in foreign currency (Cont’d)
(2) Translation of financial statements denominated in foreign currency
When translating the financial statements denominated in foreign currency of overseas subsidiaries assets and
liabilities on the balance sheet are translated at the spot exchange rate prevailing at the balance sheet date;
owr’s equity items except for “retaid profit” are translated at the spot exchange rates at the dates on which
such items arose.Income and expenses items in the income statement are translated at the average exchange rate for the period in
which the transaction occurred.
All items in the cash flow statements shall be translated at the average exchange rate for the period in which
the cash flow transaction occurred. Effects arising from changes of exchange rate on cash shall be presented
separately as the “effect of foreign exchange rate changes on cash and cash equivalents” item in the cash flow
statements.The differences arising from translation of financial statements shall be included in the “other comprehensiveincome” item in owrs’ 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 owrs’ equity in the balance sheet shall be transferred to profit or loss in whole or in proportionate share in the
period in which the disposal took place.
10. Financial instruments
A financial instrument is a contract that gives rise to a financial asset of oparty and a financial liability or equity
instrument of another party.
(1) Recognition and derecognition of financial instruments
Financial asset or financial liability will be recognised when the Group became oof the parties under a financial
instrument contract.
Financial asset that satisfied any of the following criteria shall be derecognised:
① the contract right to receive the cash flows of the financial asset has terminated;
② the financial asset has been transferred and meets the derecognition criteria for the transfer of financial
asset as described below.
A financial liability (or a part thereof) is derecognised only when the present obligation is discharged in full or
in part. If an agreement is entered between the Group (debtor) and a creditor to replace the existing financial
liabilities with w financial liabilities and the contractual terms of the w financial liabilities are substantially
different from those of the existing financial liabilities the existing financial liabilities shall be derecognised and the
w financial liabilities shall be recognised.
Conventionally traded financial assets shall be recognised and derecognised at the trading date.
24 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(2) Classification and measurement of financial assets
The Group classifies the financial assets according to the busiss model for managing the financial assets and
characteristics of the contractual cash flows as follows: financial assets measured at amortised cost financial
assets measured at fair value through other comprehensive income and financial assets measured at fair value
through profit or loss.
Financial assets measured at amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated
at fair value through other comprehensive income:
The Group’s busiss model for managing such financial assets is to collect contractual cash flows;
The contractual terms of the financial asset stipulate that cash flows gerated on specific dates are solely
payments of principal and interest on the principal amount outstanding.Subsequent to initial recognition such financial assets are measured at amortised cost using the effective interest
method. A gain or loss on a financial asset that is measured at amortised cost and is not part of a hedging
relationship shall be recognised in profit or loss for the current period when the financial asset is derecognised
amortised using the effective interest method or with impairment recognised.
Financial assets measured at fair value through other comprehensive income
A financial asset is classified as measured at fair value through other comprehensive income if it meets both of the
following conditions and is not designated at fair value through profit or loss:
The Group’s busiss 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 gerated 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.
25SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(2) Classification and measurement of financial assets (Cont’d)
Financial assets measured at fair value through profit or loss
The Group classifies the financial assets other than those measured at amortised cost and measured at fair value
through other comprehensive income as financial assets measured at fair value through profit or loss. Upon
initial recognition the Group irrevocably designates certain financial assets that are required to be measured at
amortised cost or at fair value through other comprehensive income as financial assets measured at fair value
through profit or loss in order to eliminate or significantly reduce accounting mismatch.Upon initial recognition such financial assets are measured at fair value. Except for those held for hedging
purposes gains or losses (including interests and dividend income) arising from such financial assets are
recognised in the profit or loss for the current period.The busiss model for managing financial assets refers to how the Group manages its financial assets in order to
gerate cash flows. That is the Group’s busiss model determis whether cash flows will result from collecting
contractual cash flows selling financial assets or both. The Group determis the busiss model for managing
financial assets on the basis of objective facts and specific busiss objectives for managing financial assets
determid by key management personl.The Group assesses the characteristics of the contractual cash flows of financial assets to determiwhether
the contractual cash flows gerated 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 moy for the credit risk
associated with the principal amount outstanding during a particular period of time and for other basic lending
risks costs and profits. In addition the Group evaluates the contractual terms that may result in a change in the
time distribution or amount of contractual cash flows from a financial asset to determiwhether it meets the
requirements of the above contractual cash flow characteristics.
All affected financial assets are reclassified on the first day of the first reporting period following the change in the
busiss model where the Group changes its busiss model for managing financial assets; otherwise financial
assets shall not be reclassified after initial recognition.
Financial assets other than accounts receivable without a significant financing compont 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 without significant
financing compont are initially recognised based on the transaction price expected to be entitled by the Group.
26 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(3) Classification and measurement of financial liabilities
At initial recognition financial liabilities of the Group are classified as financial liabilities measured at fair value
through profit or loss and financial liabilities measured at amortised cost. For financial liabilities not classified
as measured at fair value through profit or loss relevant transaction costs are included in the amount initially
recognised.
Financial liabilities measured at fair value through profit or loss
Financial liabilities measured at fair value through profit or loss comprise held-for-trading financial liabilities and
financial liabilities designated at fair value through profit or loss upon initial recognition. Such financial liabilities
are subsequently measured at fair value and the gains or losses from the change in fair value and the dividend or
interest expenses related to the financial liabilities are included in the profit or loss of the current period.
Financial liabilities measured at amortised cost
Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method
and the gains or losses arising from derecognition or amortisation are recognised in profit or loss for the current
period.
Classification between financial liabilities and equity instruments
A financial liability is a liability if:
① it has a contractual obligation to pay in cash or other financial assets to other parties.② it has a contractual obligation to exchange financial assets or financial liabilities under potential adverse
condition with other parties.③ it is a non-derivative instrument contract which will or may be settled with the entity’s own equity
instruments and the entity will deliver a variable number of its own equity instruments according to such
contract.④ it is a derivative instrument contract which will or may be settled with the entity’s own equity instruments
except for a derivative instrument contract that exchanges a fixed amount of cash or other financial asset
with a fixed number of its own equity instruments.
Equity instruments are any contract that evidences a residual interest in the assets of an entity after deducting all
of its liabilities.If the Group cannot unconditionally avoid the performance of a contractual obligation by paying cash or delivering
other financial assets the contractual obligation meets the definition of financial liabilities.Where a financial instrument must or may be settled with the Group’s own equity instruments the Group’s own
equity instruments used to settle such instrument should be considered as to whether it is as a substitute for cash
or other financial assets or for the purpose of enabling the holder of the instrument to be entitled to the remaining
interest in the assets of the issuer after deducting all of its liabilities. For the former it is a financial liability of the
Group; for the latter it is the Group’s own equity instruments.
27SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(4) Derivative financial instruments
The Group’s derivative financial instruments are mainly forward foreign exchange contracts which are initially
recognised at fair value on the date a derivative contract is entered into and are subsequently measured at their
fair value. A derivative financial instrument is recognised as an asset when the fair value is positive and as a
liability when the fair value is gative. Any gain or loss arising from changes in fair value and not complying with
the accounting requirements on hedging shall be recognised in profit or loss for current period.
(5) Fair value of financial instruments
The methods for determining the fair value of the financial assets or financial liabilities are set out in Note V. 10.
(6) Impairment of financial assets
The Group makes provision for impairment based on expected credit losses (ECLs) on the following items:
Financial assets measured at amortised cost;
Debt investments measured at fair value through other comprehensive income;
Measurement of ECLs
ECLs are the weighted average of credit losses of financial instruments weighted by the risk of default. Credit
losses refer to the difference between all contractual cash flows receivable according to the contract and
discounted according to the original effective interest rate and all cash flows expected to be received i.e. the
present value of all cash shortages.The Group takes into account reasonable and well-founded information such as past events current conditions
and forecasts of future economic conditions and calculates the probability-weighted amount of the present value
of the difference between the cash flows receivable from the contract and the cash flows expected to be received
weighted by the risk of default.The Group measures ECLs of financial instruments at different stages. If the credit risk of the financial instrument
did not increase significantly upon initial recognition it is at the first stage and the Group makes provision for
impairment based on the ECLs within the xt 12 months; if the credit risk of a financial instrument increased
significantly upon initial recognition but has not yet incurred credit impairment it is at the second stage and the
Group makes provision for impairment based on the lifetime ECLs of the instrument; if the financial instrument
incurred credit impairment upon initial recognition it is at the third stage and the Group makes provision for
impairment based on the lifetime ECLs of the instrument.
For financial instruments with low credit risk on the balance sheet date the Group assumes that the credit risk did
not increase significantly upon initial recognition and makes provision for impairment based on the ECLs within
the xt 12 months.
28 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(6) Impairment of financial assets (Cont’d)
Measurement of ECLs (Cont’d)
Lifetime ECLs represent the ECLs resulting from all possible default events over the expected life of a financial
instrument. The 12-month ECLs are the ECLs resulting from possible default events on a financial instrument
within 12 months (or a shorter period if the expected life of the financial instrument is less than 12 months) after
the balance sheet date and is a portion of lifetime ECLs.The maximum period to be considered when estimating ECLs is the maximum contractual period over which the
Group is exposed to credit risk including rewal options.
For the financial instruments at the first and second stages and with low credit risks the Group calculates the
interest income based on the book balance and the effective interest rate before deducting the impairment
provisions. For financial instruments at the third stage interest income is calculated based on the amortised cost
after deducting impairment provisions made from the book balance and the effective interest rate.
For bills receivable accounts receivable and contract assets regardless of whether there is a significant financing
compont the Group always makes provision for impairment at an amount equal to lifetime ECLs.When the Group is unable to assess the information of ECLs for an individual financial asset at a reasonable cost
it classifies bills receivable and accounts receivable into portfolios based on the credit risk characteristics and
calculates the ECLs on a portfolio basis. The basis for determining the portfolios is as follows:
A. Bills receivable
Bills receivable portfolio 1: Bank acceptance bills
Bills receivable portfolio 2: Commercial acceptance bills
B. Accounts receivable
Accounts receivable portfolio 1: Factoring receivables
Accounts receivable portfolio 2: Receivables from non-related party customers
Accounts receivable portfolio 3: Due from related party customers
For bills receivable classified as a portfolio the Group refers to the historical credit loss experience combid
with the current situation and the forecast of future economic conditions to calculate the ECLs based on default
risk exposure and lifetime ECL rate.
For accounts receivable classified as a portfolio the Group refers to the historical credit loss experience
combid 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.
29SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(6) Impairment of financial assets (Cont’d)
Other receivables
The Group classifies other receivables into portfolios based on credit risk characteristics and calculates the ECLs
on a portfolio basis. The basis for determining the portfolios is as follows:
Other receivables portfolio 1: Amount due from government authorities
Other receivables portfolio 2: Amount due from related parties
Other receivables portfolio 3: Other receivables
For other receivables classified as a portfolio the Group calculates the ECLs based on default risk exposure and
the ECL rate over the xt 12 months or the entire lifetime.Long-term receivables
The Group’s long-term receivables include finance lease receivables and deposits receivable.The Group classifies the finance lease receivables deposits receivable and other receivables into portfolios based
on the credit risk characteristics and calculates the ECLs on a portfolio basis. The basis for determining the
portfolios is as follows:
A. Finance lease receivables
Finance lease receivables portfolio 1: Receivables not past due
Finance lease receivables portfolio 2: Overdue receivables
B. Other long-term receivables
Other long-term receivables portfolio 1: Deposits receivable
Other long-term receivables portfolio 2: Other receivables
For deposits receivable and other receivables the Group refers to the historical credit loss experience combid
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 xt 12
months or the entire lifetime.
Debt investments and other debt investments
For debt investments and other debt investments the Group measures the ECLs based on the nature of the
investment the types of counterparty and risk exposure and default risk exposure and ECL rate within the xt
12 months or the entire lifetime.
30 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(6) Impairment of financial assets (Cont’d)
Assessment of significant increase in credit risk
In assessing whether the credit risk of a financial instrument has increased significantly upon initial recognition
the Group compares the risk of default of the financial instrument at the balance sheet date with that at the date
of initial recognition to determithe relative change in risk of default within the expected lifetime of the financial
instrument.In determining whether the credit risk has increased significantly upon initial recognition the Group considers
reasonable and well-founded information including forward-looking information which can be obtaid without
uncessary extra costs or efforts. Information considered by the Group includes:
The debtor’s failure to make payments of principal and interest on their contractually due dates;
An actual or expected significant deterioration in a financial instrument’s external or internal credit rating (if any);
An actual or expected significant deterioration in the operating results of the debtor;
Existing or expected changes in the technological market economic or legal environment that have a significant
adverse effect on the debtor’s ability to meet its obligation to the Group.
Depending on the nature of the financial instruments the Group assesses whether there has been a significant
increase in credit risk on either an individual basis or a collective basis. When the assessment is performed on a
collective basis the financial instruments are grouped based on their common credit risk characteristics such as
past due information and credit risk ratings.The Group determis that the credit risk on a financial asset has increased significantly if it is more than 30 days
past due.
Credit-impaired financial assets
At balance sheet date the Group assesses whether financial assets measured at amortised cost and debt
investments measured at fair value through other comprehensive income are credit-impaired. A financial asset is
credit-impaired when oor more events that have an adverse effect on the estimated future cash flows of the
financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable
events:
Significant financial difficulty of the issuer or debtor;
A breach of contract by the debtor such as a default or delinquency in interest or principal payments;
For economic or contractual reasons relating to the debtor’s financial difficulty the Group having granted to the
debtor a concession that would not otherwise consider;
It becoming probable that the debtor will enter bankruptcy or other financial reorganisation;
The disappearance of an active market for that financial asset because of financial difficulties of the issuer or
debtor.
31SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(6) Impairment of financial assets (Cont’d)
Presentation of provisions for ECLs
ECLs are remeasured at each balance sheet date to reflect changes in the financial instrument’s credit risk upon
initial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit or loss for
the current period. For financial assets measured at amortised cost the provisions of impairment is deducted
from the carrying amount of the financial assets presented in the balance sheet; for debt investments at fair value
through other comprehensive income the Group makes provisions of impairment in other comprehensive income
without reducing the carrying amount of the financial asset.Write-offs
The book balance of a financial asset is directly written off to the extent that there is no realistic prospect of
recovery of the contractual cash flows of the financial asset (either partially or in full). Such write-off constitutes
derecognition of such financial asset. This is gerally the case when the Group determis that the debtor does
not have assets or sources of income that could gerate sufficient cash flows to repay the amounts subject to
the write-off. However financial assets that are written off could still be subject to enforcement activities in order
to comply with the Group’s procedures for recovery of amounts due.If a write-off of financial assets is later recovered the recovery is credited to profit or loss in the period in which
the recovery occurs.
(7) Transfer of financial assets
Transfer of financial assets refers to the transfer or delivery of financial assets to another party other than the
issuer of such financial assets (the transferee).If the Group transfers substantially all the risks and rewards of owrship of the financial asset to the transferee
the financial asset shall be derecognised. If the Group retains substantially all the risks and rewards of owrship
of a financial asset the financial asset shall not be derecognised.If the Group ither transfers nor retains substantially all the risks and rewards of owrship of the financial asset
it accounts for the transaction as follows: if the Group does not retain control it derecognises the financial asset
and recognises any resulting assets or liabilities; if the control over the financial asset is not waived the relevant
financial asset is recognised according to the extent of its continuing involvement in the transferred financial asset
and the relevant liability is recognised accordingly.
(8) Offset of financial assets and financial liabilities
If the Group owns the legitimate rights of offsetting the recognised financial assets and financial liabilities which
are enforceable currently and the Group plans to realise the financial assets or to clear off the financial liabilities
on a t amount basis or simultaously the t amount of financial assets and financial liabilities shall be
presented in the balance sheet upon offsetting. Otherwise financial assets and financial liabilities are presented
separately in the balance sheet without offsetting.
32 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. Bills receivable
Method for determining the ECLs of bills receivable
The Company measures the loss provisions for bills receivable in accordance with the ECLs amount for the entire
period. Based on the credit risk characteristics of bills receivable bills receivable are divided into different groups:
Item Basis for determining the groups
Bank acceptance bills The acceptance party is a bank with less credit risk
Commercial acceptance bills The acceptance party is a company with higher credit risk
12. Accounts receivable
Method for determining the ECLs of accounts receivable
For receivables and contract assets that do not contain significant financing componts the Company measures loss
provisions based on the ECL amount for the entire period.
For receivables contract assets and lease receivables that contain significant financing componts the Company
chooses to always measure the loss provision based on the ECL amount for the entire period.In addition to accounts receivable and contract assets which are individually assessed for credit risk they are also
classified into different groups based on their credit risk characteristics:
Item Basis for determining the groups
Amount due from related parties This group comprises amounts due from related parties with lower risks.
Factoring receivables This group comprises factoring receivables with special risks.
Amount due from distributor
customers
This group comprises receivables with their ageing as credit risk characteristics.
33SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
13. Other receivables
Determination and accounting treatment of ECLs of other receivables
The Company measures impairment losses using the ECL amount in the xt 12 months or the entire duration based
on whether the credit risk of other receivables has increased significantly upon initial recognition. In addition to other
receivables which are individually assessed for credit risk they are also classified into different groups based on their
credit risk characteristics:
Item Basis for determining the groups
Dividends receivable This group comprises dividends receivable.
Interest receivable This group comprises interest due from financial institutions.
Amount due from government
agencies
This group comprises amount due from government agencies with less risks.
Amount due from related parties This group comprises amount due from related parties with less risks.
Other receivables This group comprises for all types of deposits advances and premiums receivable
during daily and recurring activities.
14. Inventories
Whether the Company eds to comply with the disclosure requirements for specific industries
No
(1) Classification of inventories
Inventories of the Group mainly include raw materials work in progress goods in stock development products
and consumable biological assets etc.
(2) Pricing of inventories dispatched
Inventories of the Group are measured at their actual cost when obtaid. 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 cessary 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.
34 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
14. Inventories (Cont’d)
(3) Recognition of t realisable value of inventories and provision for inventory impairment
Net realisable value of inventories refers to the amount of the estimated price of inventories less the estimated
cost incurred upon completion estimated sales expenses and taxes and levies. The realisable value of
inventories shall be determid on the basis of definite evidence purpose of holding the inventories and effect of
after-balance-sheet-date events.
At the balance sheet date provision for inventory impairment is made when the cost is higher than the t
realisable value. The Group usually make provision for inventory impairment based on categories of inventories. At
the balance sheet date in case the factors causing inventory impairment no longer exists the original provision for
inventory impairment shall be reversed.
(4) Inventory stock taking system
The Group implements permant inventory system as its inventory stock taking system.
(5) Amortisation of low-value consumables and packaging materials
The low-value consumables of the Group are amortised when issued for use.Packaging materials for turnover are amortised when issued for use.
15. Held for sale and discontinued operations
(1) Classification and measurement of non-current assets or disposal groups held for sale
A non-current asset or disposal group is classified as held for sale if its carrying amount will be recovered
principally through a sale transaction (including a non-motary asset exchange with commercial substance)
rather than through continuing use.The aforesaid non-current asset does not include the investment property subsequently measured at fair value
the biological assets measured at the t amount of the fair value deducting the sales expense the assets
gerated from remuration financial assets deferred income tax assets and rights from insurance contract.
A disposal group is a group of assets to be disposed of together as a whole by sale or other means in a
transaction and liabilities directly associated with those assets that will be transferred in the transaction. In certain
circumstances the disposal group includes the goodwill acquired in the busiss combination.
A non-current asset or a disposal group is classified as held for sale if it meets all of the following conditions: the
non-current asset or disposal group is available for immediate sale in its present condition subject only to terms
that are usual and customary for sales of such asset or disposal group; the sale is highly probable i.e. a sale plan
has been resolved and a firm purchase commitment has been obtaid and the sale is expected to be completed
within oyear. When the Group loses control of a subsidiary due to reasons such as disposal of investment in
a subsidiary regardless of whether the Group retains part of the equity investment after the disposal when the
investment in a subsidiary intended to be disposed of meets the conditions for classification as held for sale the
investment in a subsidiary is classified as held for sale as a whole in the separate financial statements and all
assets and liabilities of the subsidiary are classified as held for sale in the consolidated financial statements.
35SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
15. Held for sale and discontinued operations (Cont’d)
(1) Classification and measurement of non-current assets or disposal groups held for sale (Cont’d)
When the non-current assets or disposal groups held for sale are initially measured or remeasured at the balance
sheet date the excess of the carrying amount over the t amount of the fair value less selling expenses is
recognised as asset impairment loss. For the amount of impairment loss recognised on disposal groups held
for sale the carrying amount of the goodwill of the disposal group shall be offset against first and then be
offset against the carrying amount of non-current assets according to the proportion of the carrying amount of
non-current assets.If the t amount of the fair value of the non-current assets or disposal groups held for sale less the selling
expenses increases on the subsequent balance sheet date the amount previously written down shall be
recovered and reversed in the amount of asset impairment loss recognised after be classified as held for sale and
the reversed amount shall be included in the current profit and loss. The carrying amount of goodwill written off
shall not be reversed.Non-current assets held for sale and assets in disposal group held for sale are not depreciated or amortised.Interest and other expenses of a disposal group classified as held for sale continue to be recognised. For all or
part of an investment in an associate or a joint venture that is classified as held for sale the part of being classified
as held for sale shall cease to be accounted for using the equity method while any retaid portion (not classified
as held for sale) shall continue to be accounted for using the equity method; The Group ceases to use the equity
method from the date when the Group ceases to have significant influence over an associate or a joint venture.If a non-current asset or disposal group is classified as held for sale but subsequently no longer meets the criteria
for being classified as held for sale the Group shall cease to classify it as held for sale and measure it at the lower
of:
① the carrying amount of the asset or disposal group before being classified as held for sale is adjusted by the
depreciation amortisation or impairment that would have been recognised if the asset or disposal group
had not been classified as held for sale;
② recoverable amount.
(2) Discontinued operations
A discontinued operation is a compont of the Group that either has been disposed of or is classified as held for
sale and can be distinguished separately and meets oof the following conditions:
① The compont represents a separate major liof busiss or geographical area of operations.② The compont is part of a related plan to dispose of a separate major liof busiss or geographical area
of operations.③ The compont is a subsidiary acquired exclusively with a view to resale.
36 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
15. Held for sale and discontinued operations (Cont’d)
(3) PresentationThe Group presents the non-current assets held for sale or the assets in the disposal group held for sale as “assetsheld-for-sale” and the liabilities in the disposal group held for sale as “liabilities held-for-sale” in the balance sheet.The Group presents profit or loss from continuing operations and profit or loss from discontinued operations in
the income statement. For non-current assets and disposal groups held for sale that do not meet the definition
of discontinued operation their impairment losses and reversal amounts and gains or losses are presented as
profit or loss from continuing operations. Operating profit or loss such as impairment loss and reversal amount of
discontinued operation and disposal gain or loss is presented as profit or loss from discontinued operation.
Disposal groups that are intended to be closed for use rather than for sale and meet the conditions for the
componts in the definition of discontinued operations are presented as discontinued operations from the date
of cessation of use.
For the discontinued operations presented in the current period the information originally presented as profit
or loss from continuing operations in the current financial statements is re-presented as profit or loss from
discontinued operations in the comparable accounting period. If the discontinued operations no longer meet
the conditions for being classified of held-for-sale the information originally presented as profit or loss from
discontinued operations in the current financial statements shall be re-presented as profit or loss from continuing
operations in the comparable accounting period.
16. Long-term receivables
The Company measures the impairment loss of long-term receivables at an amount equal to the ECLs in the xt 12
months or the lifetime ECLs depending on whether its credit risk has significantly increased upon initial recognition.Other than the long-term receivables assessed individually for credit risks long-term receivables are classified into
different groups based on their credit risk characteristics:
Item Basis for determining the groups
Long-term receivables
not yet past due
This group is comprised of long-term receivables not yet past due with normal
exposures.Long-term receivables overdue This group is comprised of long-term receivables with higher past due exposures.
37SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Long-term equity investments
Long-term equity investments include the equity investments in subsidiaries joint ventures and associates. Associates
of the Group are those investees that the Group imposes significant influence over.
(1) Determination of initial investment cost
Long-term equity investments acquired through busiss combinations: for a long-term equity investment
acquired through a busiss combination involving enterprises under common control the investment cost shall
be the absorbing party’s share of the carrying amount of the owrs’ 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 busiss combination involving enterprises not under common control the investment cost of
the long-term equity investment shall be the cost of combination.Long-term equity investments acquired through other means: for a long-term equity investment acquired by cash
payment the initial investment cost shall be the purchase cost actually paid; for a long-term equity investment
acquired by issuing equity securities the initial investment cost shall be the fair value of equity securities issued.
(2) Subsequent measurement and method for profit or loss recognition
Investments in subsidiaries shall be accounted for using the cost method. Except for the investments which meet
the conditions of holding for sale investments in associates and joint ventures shall be accounted for using the
equity method.
For a long-term equity investment accounted for using the cost method the cash dividends or profits declared by
the investees for distribution shall be recognised as investment gains and included in profit or loss for the current
period except the case of receiving the actual consideration paid for the investment or the declared but not yet
distributed cash dividends or profits which is included in the consideration.
For a long-term equity investment accounted for using the equity method where the initial investment cost
exceeds the investor’s interest in the fair value of the investee’s identifiable t 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 t 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 t 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 t 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 t profits or
losses based on the fair values of the investee’s individual separately identifiable assets at the time of acquisition
after making appropriate adjustments thereto according to the accounting policies and accounting periods of the
Group.
38 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Long-term equity investments (Cont’d)
(2) Subsequent measurement and method for profit or loss recognition (Cont’d)
For additional equity investment made in order to obtain significant influence or common control over investee
without resulted in control the initial investment cost under the equity method shall be the aggregate of fair
value of previously held equity investment and additional investment cost on the date of transfer. The difference
between the fair value and carrying amount of previously held equity investment on the date of transfer and the
accumulated change in fair value originally included in other comprehensive income shall be recognised in the
profit or loss for the current period under the equity method.In the event of loss of common control or significant influence over investee due to partial disposal of equity
investment the remaining equity interest after disposal shall be accounted for according to the Accounting
Standard for Busiss 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 owrs’ equity related to the
previous equity investment shall be transferred to profit or loss for the current period.In the event of loss of control over investee due to partial disposal of equity investment the remaining equity
interest which can apply common control or impose significant influence over the investee after disposal shall be
accounted for using equity method. Such remaining equity interest shall be treated as accounting for using equity
method since it is obtaid 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 Busiss 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 t asset increase due to the capital increase of the investee attributable to the Company shall be
recognised according to the w 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 w
shareholding ratio as if equity method is used for accounting when acquiring the investment.In respect of the transactions between the Group and its associates and joint ventures the share of unrealised
gain or loss arising from internal transactions shall be eliminated by the portion attributable to the Group.Investment gain shall be recognised accordingly. However any unrealised loss arising from internal transactions
between the Group and an investee is not eliminated to the extent that the loss is impairment loss of the
transferred assets.(In case of using accounting policy options the following disclosure should be added:
The Group’s long-term equity investments in associates and joint ventures which are held indirectly by venture
capital institutions mutual funds trust companies or similar entities including investment-linked insurance funds
are measured at fair value and their changes are included in the profit or loss.)
39SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Long-term equity investments (Cont’d)
(3) Basis for determining the common control and significant influence on the investee
Common control is the contractually agreed sharing of control over an arrangement which relevant activities of
such arrangement must be decided by unanimously agreement from parties who share control. When determining
if there is any common control it should first be identified if the arrangement is controlled by all the participants
or the group consisting of the participants and then determid if the decision on the arranged activity can be
made only with the unanimous consent of the participants sharing the control. If all the participants or a group
of participants can only decide the relevant activities of certain arrangement through concerted action it can
be considered that all the participants or a group of participants share common control on the arrangement. If
there are two or more participant groups that can collectively control certain arrangement it does not constitute
common control. When determining if there is any common control the relevant protection rights will not be taken
into account.Significant influence is the power of the investor to participate in the financial and operating policy decisions of
an investee but to fail to control or joint control the formulation of such policies together with other parties. When
determining if there is any significant influence on the investee the influence of the voting shares of the investee
held by the investor directly and indirectly and the potential voting rights held by the investor and other parties
which are exercisable in the current period and converted to the equity of the investee including the warrants
stock options and convertible bonds that are issued by the investee and can be converted in the current period
shall be taken into account.When the Company holds directly or indirectly through the subsidiary 20% (inclusive) to 50% of the voting shares
of the investee it is gerally considered to have significant influence on the investee unless there is concrete
evidence to prove that it cannot participate in the production and operation decision-making of the investee and
cannot pose significant influence in this situation. When the Group owns less than 20% of the voting shares of the
investee it is gerally considered that it has not significantly influenced on the investee unless there is concrete
evidence to prove that it can participate in the production and operation decision-making of the investee and
cannot pose significant influence in this situation.
(4) Method for impairment test and measurement of impairment provision
For the method for making impairment provision for the investment in subsidiaries associates and joint ventures
please refer to Note V. 25.
18. Investment property
Measurement of investment property
Measured by using the cost method
Investment property refers to real estate held to earn rentals or for capital appreciation or both. The investment property
of the Group includes leased land use rights land use rights held for sale after appreciation and leased buildings.The investment property of the Group is measured initially at cost upon acquisition and subject to depreciation or
amortisation in the relevant periods according to the relevant provisions on fixed assets or intangible assets.
For the method for making impairment provision for the investment property adopted cost method for subsequent
measurement please refer to Note V. 25.When an investment property is sold transferred retired or damaged the amount of proceeds on disposal of the
property t of the carrying amount and related tax and surcharges is recognised in profit or loss for the current period.
40 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
19. Fixed assets
(1) Conditions for recognition of fixed assets
Fixed assets of the Group are tangible assets that are held for use in the production or supply of goods or
services for rental to others or for administrative purposes; and have a useful life of more than oaccounting
year.
Fixed assets are recognised only if the Company is very likely to receive economic befits from the asset and its
cost can be measured reliably.
A fixed asset of the Group shall be initially measured at actual cost when acquired.
(2) Depreciation method of various types of fixed assets
The Group adopts the straight-limethod for depreciation. Provision for depreciation will be started when the
fixed asset reaches its expected usable state and stopped when the fixed asset is derecognised or classified as
a non-current asset held for sale. Without regard to the depreciation provision the Group determis the annual
depreciation rate of various types of fixed assets by category estimated useful lives and estimated residual value
of the fixed assets as shown below:
Category
Useful lives
(Year)
Estimated
residual value
(%)
Annual
depreciation
rate (%)
Housing and building structure 20-40 5-10 2.25-4.75
Machiry 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 depreciation provision is made to determithe depreciation rate the
accumulated amount of the fixed asset depreciation 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. 25.
(4) The Group will recheck the useful lives estimated t 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 t residual value
estimate and the originally estimated value the estimated t residual value of the fixed asset shall be adjusted.
(5) Overhaul expense
For the overhaul expense incurred by the Group during the regular inspection on the fixed assets if there is
concrete evidence to prove that it meets the fixed asset recognition condition it shall be included in the cost of
fixed asset; if it does not meet the fixed asset recognition condition it shall be included in the profit or loss for the
current period. The depreciation of fixed assets shall be continued in the intervals of the regular overhaul of the
fixed asset.
41SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
20. Construction in progress
Construction in progress of the Group is recognised based on the actual construction cost including all cessary
expenditures incurred for construction projects capitalised borrowing costs for the construction in progress before it
has reached the working condition for its intended use and other related expenses during the construction period.
A construction in progress is reclassified to fixed assets when it has reached the working condition for its intended use.
The method for impairment provision of construction in progress is set out in Note V. 25.
21. Borrowing costs
(1) Recognition principle for the capitalisation of the borrowing costs
The borrowing costs incurred by the Group directly attributable to the acquisition construction or production
of a qualifying asset will be capitalised and included in the cost of relevant asset. Other borrowing costs will be
recognised as expenses when incurred according to the incurred amount and included in the profit or loss for the
current period. When the borrowing costs meet all the following conditions capitalisation shall be started:
① The capital expenditure has been incurred which includes the expenditure incurred by paying cash
transferring non-cash assets or undertaking interest-bearing liabilities for acquiring constructing or
producing the qualifying assets;
② The borrowing costs have been incurred;
③ The acquisition construction or production activity cessary for the asset to be ready for its intended use
or sale has been started.
(2) Capitalisation period of borrowing costs
When a qualifying asset acquired constructed or produced by the Group is ready for its intended use or sale
the capitalisation of the borrowing costs shall discontinue. The borrowing costs incurred after a qualifying asset
is ready for its intended use or sale shall be recognised as expenses when incurred according to the incurred
amount and included in the profit or loss for the current period.
Capitalisation of borrowing costs shall be suspended during periods in which the acquisition construction or
production of a qualifying asset is interrupted abnormally when the interruption is for a continuous period of more
than 3 months. The capitalisation of the borrowing costs shall be continued in the normal interruption period.
(3) Calculation methods for capitalisation rate and capitalisation 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 eard 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 geral purpose the Company shall determithe 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 geral-purpose
borrowings.
During the capitalisation period exchange differences on a specific purpose borrowing denominated in foreign
currency shall be capitalised. Exchange differences related to geral-purpose borrowings denominated in foreign
currency shall be included in profit or loss for the current period.
42 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
22. Biological assets
Consumable biological assets refer to biological assets held-not-for-sale which include forest trees being grown.
Consumable biological assets are stated at cost at initial recognition. The cost of self-planting self-cultivating
self-breeding or self-farming consumable biological assets is the cessary expenses directly attributable to such assets
prior to canopy closure including borrowing costs eligible for capitalisation. Subsequent expenses such as maintenance
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 batch averaging method.On the balance sheet date consumable biological assets are measured at the lower of cost and t realisable value
and the impairment provision for consumable biological assets is made using the same approach as that used for the
recognition of impairment provision for inventories. In case the factors causing impairment no longer exists the reduced
amount shall be recovered and reversed in the provision amount originally provided for impairment. The reversed
amount shall be recognised in profit or loss for the current period.
23. Right-of-use assets
(1) Conditions for recognition of right-of-use assets
Right-of-use assets of the Group are defid as the right of underlying assets in the lease term for the Group as a
lessee.Right-of-use assets are initially measured at cost at the commencement date of the lease. The cost includes the
amount of the initial measurement of lease liability; lease payments made at or before the inception of the lease
less any lease incentives enjoyed; initial direct costs incurred by the Group as lessee; costs to be incurred in
dismantling and removing the underlying assets restoring the site on which it is located or restoring the underlying
asset to the condition required by the terms and conditions of the lease incurred by the Group as lessee. As
a lessee the Group recognises and measures the costs of dismantling and restoration in accordance with the
Accounting Standard for Busiss Enterprises No. 13 – Contingencies. Subsequently the lease liability is adjusted
for any remeasurement of the lease liability
(2) Depreciation method of right-of-use assets
The Group uses the straight-limethod for depreciation. Where the Group as a lessee is reasonably certain to
obtain owrship 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 owrship of the lease assets during the lease term cannot be reasonably
determid 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. 25.
43SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
24. Intangible assets
The intangible assets of the Group include land use rights software and certificates of third party right.The intangible asset is initially measured at cost and its useful life is determid 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 befits related to the asset starting from the time when it is available for use.If it is unable to reliably determithe estimated realisation straight-limethod shall be adopted for amortisation. The
intangible assets with uncertain useful life will not be amortised.The amortisation methods for the intangible assets with finite useful life are as follows:
Type Useful life Method of amortisation
Land use rights 50-70 Straight-limethod
Software 5-10 Straight-limethod
Certificates of third party right 3 Straight-limethod
The Group reviews the useful life and amortisation method of the intangible assets with finite useful life at the end of
each year. If it is different from the previous estimates the original estimates will be adjusted and will be treated as a
change in accounting estimate.If it is estimated on the balance sheet date that certain intangible asset can no longer bring future economic befit 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. 25.
25. Asset impairment
Impairment of long-term equity investments in subsidiaries associates and joint ventures investment property fixed
assets construction in progress intangible assets goodwill and others (excluding inventories deferred tax assets and
financial assets) subsequently measured at cost is determid as follows:
The Group determis 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 busiss combinations intangible assets with an indefinite useful life and intangible assets not ready for use will be
tested for impairment annually regardless of whether there is any indication of impairment.The recoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of the
future cash flows expected to be derived from the asset. The Group estimates the recoverable amount of an individual
asset. If it is not possible to estimate the recoverable amount of the individual asset the Group shall determithe
recoverable amount of the asset group to which the asset belongs. The determination of an asset group is based on
whether major cash inflows gerated by the asset group are independent of the cash inflows from other assets or asset
groups.
44 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
25. Asset impairment (Cont’d)
When the recoverable amount of an asset or an asset group is less than its carrying amount the carrying amount is
reduced to its recoverable amount. The reduction amount is charged to profit or loss and an impairment provision is
made accordingly.
For the purpose of impairment test of goodwill the carrying amount of goodwill acquired in a busiss 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 befit from the syrgies of the busiss combination and are not
larger than the reportable segments identified by the Group.In the impairment test if there is any indication that an asset group or a combination of asset groups related to goodwill
may be impaired the Group first tests the asset group or set of asset groups excluding goodwill for impairment
calculates the recoverable amount and recognises the corresponding impairment loss. An impairment test is then carried
out on the asset group or combination of asset groups containing goodwill by comparing its carrying amount with its
recoverable amount. If the recoverable amount is lower than the carrying amount an impairment loss is recognised for
goodwill.
An impairment loss recognised shall not be reversed in a subsequent period.
26. Long-term prepaid expenses
The long-term prepaid expenses incurred by the Group shall be recognised based on the actual cost and evenly
amortised over the estimated befit period. For the long-term prepaid expense that cannot befit the subsequent
accounting periods its value after amortisation shall be entirely included in the profit or loss for the current period.
27. 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 obtaid 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 t basis and contract assets and contract liabilities under
different contracts are not offset.
28. Employee befits
(1) Scope of employee befits
Employee befits 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 befits include short-term staff
remuration post-employment befits termination befits and other long-term employee befits. Employee
befits include befits provided to employees’ spouses children other dependants survivors of the deceased
employees or to other beficiaries.
Employee befits are presented as “employee befits payable” and “long-term employee befits payable” in
the balance sheet respectively according to liquidity.
45SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
28. Employee befits (Cont’d)
(2) Short-term staff remuration
Employee wages or salaries actually incurred bonuses and social insurance contributions such as medical
insurance work injury insurance maternity insurance and housing fund contributed at the applicable benchmarks
and rates are recognised as a liability as the employees provide services with a corresponding charge to profit or
loss or included in the cost of assets where appropriate. Where the payment of liability is expected not to be fully
settled within 12 months after the end of the annual reporting period in which the employees render the related
services and the financial impact would be material these liabilities are measured at their discounted values.
(3) Post-employment befits
Post-employment befit plans include defid contribution plans and defid befit plans. A defid
contribution plan is a post-employment befit plan under which the Group pays fixed contributions into a
separate fund and the Group has no further obligations for payment. A defid befit plan is a post-employment
befit plan other than a defid contribution plan.
Defid contribution plans
Defid contribution plans include basic pension insurance and umployment insurance.
During the accounting period in which an employee provides service the amount payable calculated according to
the defid contribution plan is recognised as a liability and included in the profit or loss for the current period or
the cost of relevant assets.
(4) Termination befits
When the Group provides termination befits to employees employee befits liabilities arising from termination
befits are recognised in profit or loss for the current period at the earlier of the following dates: when the Group
cannot revoke unilaterally compensation for dismissal due to the cancellation of labour relationship plans and
employee redundant proposals; the Group recognises cost and expenses related to payment of compensation for
dismissal and restructuring.
For the early retirement plans economic compensations before the actual retirement date were classified as
termination befits. 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 o-off basis. Economic compensation after the official retirement date such as normal
pension is accounted for as post-employment befits.
(5) Other long-term befits
Other long-term employee befits provided by the Group to employees that meet the conditions for defid
contribution plans are accounted for in accordance with the relevant provisions relating to defid contribution
plans as stated above. If the conditions for defid befit plans are met the befits shall accounted for inaccordance with the relevant provisions relating to defid befit plans but the “changes arising from theremeasurement of the t liabilities or t assets of the defid befit plans” in the relevant employee befits
shall be included in the current profit or loss or the relevant asset cost.
46 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
29. Provisions
Obligations pertint to the contingencies which satisfy the following conditions are recognised as provisions:
(1) the obligation is a current obligation borby the Group;
(2) it is likely that an outflow of economic befits from the Group will be resulted from the performance of the
obligation; and
(3) the amount of the obligation can be reliably measured.
The provisions shall be initially measured based on the best estimate for the expenditure required for the performance
of the current obligation after taking into account relevant risks uncertainties time value of moy and other factors
pertint to the contingencies. If the time value of moy has significant influence the best estimates shall be
determid after discounting the relevant future cash outflow. The Group reviews the carrying amount of the provisions
on the balance sheet date and adjust the carrying amount to reflect the current best estimates.If all or some expenses incurred for settlement of recognised provisions are expected to be borby 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.
30. Share-based payments
(1) Category of share-based payment
The Group’s share-based payment is equity-based.
(2) Fair value of equity instrument
For the existence of an active market for options and other equity instruments granted by the Group the fair value
is determid at the active market quotations. 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 of the option
C. the current market price of the share D. the expected volatility of the share price E. predicted dividend of the
share and F. risk-free rate of the option within the validity period.
(3) Recognition of vesting of equity instrument based on the best estimate
During the waiting period at each balance sheet date the Group shall make the best available estimate of
the number of equity instruments expected to vest and shall revise that estimate if cessary if subsequent
information indicates that the number of equity instruments expected to vest differs from previous estimates.On the vesting date the entity shall revise the estimate to equal the number of equity instruments that ultimately
vested.
47SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
30. Share-based payments (Cont’d)
(4) Accounting treatment of implementation modification and termination of share-based payment
Equity-settled share-based payment is measured at the fair value of the equity instruments granted to employees.
For the shares exercise immediately after the grant the fair value of equity instrument at the grant date included
in the relevant costs or expenses and increase in capital reserve accordingly. Within the vesting period it will
recognise the received service-related costs or expense and capital reserves for each reporting date based on the
best estimate of the number of vested equity instruments on the grant date of the equity instruments value. After
the vesting period relevant costs or expenses and total shareholders’ equity has been confirmed and will not be
adjusted.When there is changes in Group’s share-based payment plans if the modification increases the fair value of the
equity instruments granted corresponding recognition of service increase in accordance with the increase in the
fair value of the equity instruments; if the modification increases the number of equity instruments granted the
increase in fair value of the equity instruments is recognised as a corresponding increase in service achieved.Increase in the fair value of equity instruments refer to the difference between the fair values of the modified date.If the modification reduces the total fair value of shares paid or not conductive to the use of other employees
share-based payment plans to modify the terms and conditions of service it will continue to be accounted for in
the accounting treatment as if the change had not occurred unless the Group cancelled some or all of the equity
instruments granted.
During the vesting period if the cancelled equity instruments (except for failure to meet the conditions of the
non-market vesting conditions such as length of service performance conditions or market conditions are
cancelled) granted by the Group to cancel the equity instruments granted amount treated as accelerated vesting
of the remaining period should be recognised immediately in profit or loss while recognizing the capital reserve. If
employees or other parties can choose to meet non-vesting conditions but they are not met in the vesting period
the Group will treat them as cancelled equity instruments granted.
31. Preference shares perpetual bonds and other financial instruments
(1) Classification of financial liabilities and equity instruments
Financial instruments issued by the Group are classified into financial assets financial liabilities or equity
instruments on the basis of the substance of the contractual arrangements and the economic nature not only
its legal form together with the definition of financial asset financial liability and equity instruments on initial
recognition.
(2) Accounting treatment of preference shares perpetual bonds and other financial instruments
Financial instruments issued by the Group are initially recognised and measured in accordance with the financial
instrument standards; thereafter interest or dividends are accrued on each balance sheet date and accounted for
in accordance with relevant specific ASBEs i.e. to determithe accounting treatment for interest expenditure
or dividend distribution of the instrument based on the classification of the financial instrument issued. For
financial instruments classified as equity instruments their interest expenses or dividend distributions are treated
as profit distribution of the Group and their repurchases and cancellations are treated as changes in equity;
for financial instruments classified as financial liabilities their interest expenses or dividend distribution are in
principle accounted for with reference to borrowing costs and the gains or losses arising from their repurchases
or redemption are included in the profit or loss for the current period.
For the transaction costs such as fees and commissions incurred by the Group for issuing financial instruments if
such financial instruments are classified as debt instruments and measured at amortised cost they are included
in the initial measured amount of the instruments issued; if such financial instruments are classified as equity
instruments they are deducted from equity.
48 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
32. Revenue
(1) Geral principles
The Group recognises revenue when it satisfies a performance obligation in the contract i.e. when the customer
obtains control of the relevant goods or services.Where a contract has two or more performance obligations the Group allocates the transaction price to each
performance obligation based on the percentage of respective unit price of goods or services guaranteed by
each performance obligation and recognises as revenue based on the transaction price that is allocated to each
performance obligation.If oof the following conditions is fulfilled the Group performs its performance obligation within a certain period;
otherwise it performs its performance obligation at a point of time:
① when the customer simultaously receives and consumes the befits provided by the Group when the
Group performs its obligations under the contract;
② when the customer is able to control the goods in progress in the course of performance by the Group
under the contract;
③ when the goods produced by the Group under the contract are irreplaceable and the Group has the right to
payment for performance completed to date during the whole contract term.
For performance obligations performed within a certain period the Group recognises revenue by measuring
the progress towards complete of that performance obligation within that certain period. When the progress
of performance cannot be reasonably determid if the costs incurred by the Group are expected to be
compensated the revenue shall be recognised at the amount of costs incurred until the progress of performance
can be reasonably determid.
For performance obligation performed at a point of time the Group recognises revenue at the point of time at
which the customer obtains control of relevant goods or services. To determiwhether a customer has obtaid
control of goods or services the Group considers the following indications:
① the Group has the current right to receive payment for the goods which is when the customers have the
current payment obligations for the goods;
② the Group has transferred the legal title of the goods to the customer which is when the client possesses
the legal title of the goods;
③ the Group has transferred the physical possession of goods to the customer which is when the customer
obtains physical possession of the goods;
④ the Group has transferred all of the substantial risks and rewards of owrship of the goods to the customer
which is when the customer obtain all of the substantial risks and rewards of owrship of the goods to the
customer;
⑤ the customer has accepted the goods;
⑥ other information indicates that the customer has obtaid control of the goods.
49SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
32. Revenue (Cont’d)
(1) Geral principles (Cont’d)
The Group’s right to consideration in exchange for goods or services that the Group has transferred to customers
(and such right depends on factors other than passage of time) is accounted for as contract assets and contract
assets are subject to impairment based on ECLs (see Note V. 25). The Group’s unconditional right to receive
consideration from customers (only depends on passage of time) is accounted for as accounts receivable. The
Group’s obligation to transfer goods or services to customers for which the Group has received or should receive
consideration from customers is accounted for as contract liabilities.
Contract assets and contract liabilities under the same contract are presented on a t basis. Where the t
amount has a debit balance it is presented in “contract assets” or “other non-current assets” according to its
liquidity. Where the t amount has a credit balance it is presented in “contract liabilities” or “other non-currentliabilities” according to its liquidity.
(2) Specific methods
Specific method for revenue recognition of machi-made paper busiss of the Group: in terms of domestic
sales of machi-made paper revenue is recognised when goods are delivered to the customers and such
deliveries are confirmed; while in terms of overseas sales of machi-made paper revenue is recognised on the
day when goods are loaded on board and declared.Specific method for recognition of finance lease income of the Group: according to the repayment schedule the
income is recognised by instalments according to the effective interest rate.Specific method for recognition of revenue from real estate of the Group: revenue is recognised by amortising the
rental income on a straight-libasis over the lease term.
33. Government grants
A government grant is recognised when there is reasonable assurance that the grant will be received and that the Group
will comply with the conditions attaching to the grant.If a government grant is in the form of a transfer of a motary asset it is measured at the amount received or
receivable. If a government grant is in the form of a transfer of non-motary asset it is measured at fair value; if the fair
value cannot be obtaid in a reliable way it is measured at the nominal amount of RMB1.Government grants obtaid 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 defid 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.
50 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
33. Government grants (Cont’d)
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 manr. For a government grant related to revenue if
the grant is a compensation for related costs expenses or losses incurred the grant shall be recognised in profit or loss
for the current period; if the grant is a compensation for related costs expenses or losses to be incurred in subsequent
periods the grant shall be recognised as deferred income and recognised in profit or loss over the periods in which the
related costs expenses or losses are recognised. A government grant measured at nominal amount is directly included
in profit or loss for the current period. The Group adopts a consistent approach to the same or similar government
grants.
A government grant related to daily activities is recognised in other gains relying on the essence of economic busiss;
otherwise recognised in non-operating income or non-operating expenses.
For the repayment of a government grant already recognised if there is any related deferred income the repayment
shall be off set against the carrying amount of the deferred income and any excess shall be recognised in profit or loss
for the current period; otherwise the repayment shall be recognised immediately in profit or loss for the current period.
For the policy preferential interest subsidy if it is provided by the financial authority through banks it is recognised
at the amount of borrowings actually received and the borrowings costs are calculated based on the principal of the
borrowings and the policy preferential interest rate; if it is provided by the financial authority directly the corresponding
interest will be used to offset the relevant borrowing expenses.
34. Deferred income tax assets and deferred income tax liabilities
Income tax comprises current income tax expense and deferred income tax expense which are included in profit or
loss for the current period as income tax expenses except for deferred tax related to transactions or events that are
directly recognised in owrs’ equity which are recognised in owrs’ equity and deferred tax arising from a busiss
combination which is adjusted against the carrying amount of goodwill.Temporary differences arising from the difference between the carrying amount of an asset or liability and its tax base
at the balance sheet date of the Group shall be recognised as deferred income tax using the balance sheet liability
method.
All the taxable temporary differences are recognised as deferred income tax liabilities except for those incurred in the
following transactions:
(1) The initial recognition of goodwill and the initial recognition of an asset or liability in a transaction which is ither
a busiss combination nor affects accounting profit or taxable profit (or deductible loss) when the transaction
occurs;
(2) The taxable temporary differences associated with investments in subsidiaries associates and joint ventures
and the Group is able to control the timing of the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
51SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
34. Deferred income tax assets and deferred income tax liabilities (Cont’d)
The Group recognises a deferred income tax asset for the carry forward of deductible temporary differences deductible
losses and tax credits to subsequent periods to the extent that it is probable that future taxable profits will be available
against which the deductible temporary differences deductible losses and tax credits can be utilised except for those
incurred in the following transactions:
(1) The transaction is ither a busiss combination nor affects accounting profit or taxable profit (or deductible loss)
when the transaction occurs;
(2) The deductible temporary differences associated with investments in subsidiaries associates and joint ventures
the corresponding deferred income tax asset is recognised when both of the following conditions are satisfied: it is
probable that the temporary difference will reverse in the foreseeable future and it is probable that taxable profits
will be available in the future against which the temporary difference can be utilised.
At the balance sheet date deferred income tax assets and deferred income tax liabilities are measured at the tax
rates that are expected to apply to the period when the asset is realised or the liability is settled and their tax effect is
reflected accordingly.
At the balance sheet date the Group reviews the carrying amount of a deferred income tax asset. If it is probable that
sufficient taxable profits will not be available in future periods to allow the befit 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.
35. Lease
(1) Identification of leases
On the beginning date of the contract the Group (as a lessee or lessor) assesses whether the customer in
the contract has the right to obtain substantially all of the economic befits from use of the identified asset
throughout the period of use and has the right to direct the use of the identified asset throughout the period of
use. If a contract conveys the right to control the use of an identified asset and multiple identified assets for a
period of time in exchange for consideration the Group identifies such contract is or contains a lease
(2) The Group as lessee
On the beginning date of the lease the 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. 23.The lease liability is initially measured at the present value of the lease payments that are not paid at the beginning
date of the lease using the interest rate implicit in the lease or the incremental borrowing rate. Lease payments
include fixed payments and in-substance fixed payments less any lease incentives receivable; variable lease
payments that are based on an index or a rate; the exercise price of a purchase option if the lessee is reasonably
certain to exercise that option; payments for terminating the lease if the lease term reflects the lessee exercising
that option of terminating; and amounts expected to be payable by the lessee under residual value guarantees.Subsequently the interest expense on the lease liability for each period during the lease term is calculated using a
constant periodic rate of interest and is recognised in profit or loss for the current period. Variable lease payments
not included in the measurement of lease liabilities are charged to profit or loss in the period in which they actually
arise. The Group calculates the interest expense of the lease liability for each period of the lease term based on
the fixed periodic interest rate and is included in the current profit and loss. The variable lease payments that are
not included in the measurement of the lease liability are recognised in profit or loss when incurred.
52 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
35. Lease (Cont’d)
(2) The Group as lessee (Cont’d)
Short-term lease
Short-term leases refer to leases with a lease term of less than 12 months from the commencement date except
for those with a purchase option.Lease payments on short-term leases are recognised in the cost of related assets or current profit or loss on a
straight-libasis over the lease term.
For short-term leases the Group chooses to adopt the above simplified approach for the following types of assets
that meet the conditions of short-term lease according to the classification of leased assets.Low-valve machiry and equipment
Transportation vehicles
Low-value asset lease
A low-value asset lease is a lease that the value of a single leased asset is below RMB2000000 when it is a w
asset.
For a low-value asset lease the Group chooses the above simplified approach based on the specific
circumstances of each lease.Lease payments on low-value asset leases are recognised on a straight-libasis over the lease term and either
included in the cost of the related asset or charged to profit or loss for the current period.
(3) The Group as lessor
When the Group is a lessor a lease is classified as a finance lease whever the terms of the lease transfer
substantially all the risks and rewards of asset owrship to the lessee. All leases other than financial leases are
classified as operating leases.Operating lease
Lease payments under operating leases are recognised in profit or loss on a straight-libasis 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
obtaid 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.
53SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
35. Lease (Cont’d)
(4) Sale and leaseback
The lessee and the lessor shall assess and determiwhether the transfer of assets in a sale and leaseback
transaction is a sale in accordance with the requirements of the Accounting Standard for Busiss 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 obtaid 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 Busiss 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 Busiss
Enterprises No. 22 – Recognition and Measurement of Financial Instruments.
36. Geral risk reserves
Geral risk reserve is a reserve provided from t profit for the partial offset unidentified possible losses
Adopting the principle of dynamic provisioning the Finance Company employs the standard method to quantitatively
analyse the risk situation faced by risk assets to determithe estimated potential risk value. After calculating the
potential risk value if the potential risk value is higher than the provision for impairment of assets the accrued provision
for impairment of assets will be deducted and provision for geral risk will be made. If the potential risk value is lower
than the provision for impairment of assets provision for geral risk will not be made.
Dynamic provisioning is a counter-cyclical provisioning method adopted by financial companies based on changes
in the macroeconomic situation as in in the upward cycle of macro economy and when the risk asset default rate
is relatively low more provisions are made to enhance financial buffer capacity; and in the downturn cycle of macro
economy and when the risk asset default rate is relatively high the accumulated provisions are used to absorb asset
losses.The Finance Company makes geral risk provisions for assets bearing risks and losses at the end of each year the
balance of which in principle shall not be lower than 1.5% of the closing balance of risk assets. The risk provision
made by factoring companies shall not be lower than 1% of the closing balance of the financial factoring busiss.
Based on changes in the macroeconomic situation and with reference to non-performing corporate loans
non-performing loan ratio provision coverage ratio for non-performing loans loan provision ratio standard risk factor
and the requirement of geral risk provision as a percentage of risk assets the Ministry of Finance makes adjustments
to the scope of risk assets for geral risk provisions standard risk factor and the requirement of geral risk provision
as a percentage of risk assets as appropriate. The Finance Company shall make adjustments accordingly according to
the requirements of the Ministry of Finance.Provisions for geral risk are insufficient in principle the company shall not engage in after-tax profit distribution. As
considered and approved by the board of directors and geral meeting of the Finance Company such provisions may
be used to offset losses but not for dividends. For special reasons as approved by the Board and the geral meeting
geral risk reserves may be reclassified into undistributed profits.
54 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
37. Critical accounting judgments and estimates
The Group 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 xt financial year are listed as follows:
Classification of financial assets
Significant judgements involved in determining the classification of financial assets include the analysis of busiss
models and contractual cash flow characteristics.
Factors considered by the Group in determining the busiss model for a group of financial assets include how the
asset’s performance is evaluated and reported to key management personl how risks are assessed and managed
and how the relevant management personl are compensated.When the Group 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 moy 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 Group calculates the ECLs of accounts receivable using the exposure to default risk and ECL rate of accounts
receivable and determis the ECL rate based on default probability and default loss rate. When determining the ECL
rate the Group 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 Group 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 Group on a regularly
basis
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 determithe 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.
55SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VI. Taxation
1. Main tax types and tax rates
Tax type Tax base and rate
Value added tax (VAT) 13% for geral 9% for sales of water and gas and 6% for the service industry. VAT is
computed on the difference after deduction of input value-added tax.Urban maintenance and
construction tax
7% 3% 2% and 0.5% of actual payment of turnover tax.
Enterprise income tax (EIT) 25% of taxable income; for the companies which are subject to preferential policies
please refer to the table below; the overseas companies shall pay taxes at the tax rate
pursuant to the requirements of the countries or regions where the companies are
located.
Companies subject to different income tax rates are disclosed as follows
Name of taxpayer Income 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%
Shouguang Shun Da Customs Declaration Co Ltd. 10%
Qingdao Chenming Pulp & Paper Electronic Commodity Spot Trading Co. Ltd. 10%
Zhanjiang Chenming Arboriculture Development Co. Ltd. Exempt from EIT
Nanchang Chenming Arboriculture Development Co. Ltd. Exempt from EIT
Chenming Arboriculture Co. Ltd. Exempt from EIT
Yangjiang Chenming Arboriculture Development Co. Ltd. Exempt from EIT
56 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VI. Taxation (Cont’d)
2. Tax incentives
(1) Enterprise income tax
On 16 August 2018 the Company received a high and w technology enterprise certificate with a certification
number of GR201837000311. Pursuant to the requirements under the Law of the People’s Republic of China on
Enterprise Income Tax and the relevant policies the Company is subject to a corporate income tax rate of 15% of
taxable income and is entitled to the preferential treatment from 2018 to 2020.Shouguang Meilun Paper Co. Ltd. a subsidiary of the Company received a high and w technology enterprise
certificate with a certification number of GR201837000455 on 16 August 2018. Pursuant to the requirements
under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies Shouguang
Meilun is subject to an enterprise income tax rate of 15% of taxable income and is entitled to the preferential
treatment from 2018 to 2020.
For Jilin Chenming Paper Co. Ltd. a subsidiary of the Company received a high and w technology enterprise
certificate with a certification number of GR201922000658 on 2 September 2019. Pursuant to the requirements
under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies it is subject
to a corporate income tax rate of 15% of taxable income and is entitled to the preferential treatment from 2019 to
2021.
For Jiangxi Chenming Paper Co. Ltd. a subsidiary of the Company received a high and w technology
enterprise certificate with a certification number of GR201936002184 on 3 December 2019. Pursuant to the
requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies
it is subject to a corporate income tax rate of 15% of taxable income and is entitled to the preferential treatment
from 2019 to 2021.Zhanjiang Chenming Pulp & Paper Co. Ltd. a subsidiary of the Company received a high and w technology
enterprise certificate with a certification number of GR20184400547 on 28 November 2018. Pursuant to the
requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies
it is subject to a corporate income tax rate of 15% of taxable income and is entitled to the preferential treatment
from 2018 to 2020.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. and Yangjiang Chenming Arboriculture
Development Co. Ltd. which are the subsidiaries of the Company have completed the filings for EIT reduction
for exemption from EIT.
57SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VI. Taxation (Cont’d)
2. Tax incentives (Cont’d)
(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. and Yangjiang Chenming Arboriculture Development Co. Ltd.
which are the subsidiaries of the Company are exempt from VAT and have completed the filings for VAT
reduction for exemption from VAT.Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use of
Resources (Cai Shui [2015] No. 78) taxpayers who sell self-produced products and services applying integrated
use of resources may enjoy the immediate VAT refund policy. Zhanjiang Chenming New-style Wall Materials Co.Ltd. a subsidiary of the Company produced products applying raw materials containing more than 30% of fly
ash. It belongs to a company that uses pollutants for production and is therefore subject to the immediate VAT
refund policy in 2020.Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use of
Resources (Cai Shui [2015] No. 78) taxpayers who sell self-produced products and services applying integrated
use of resources may enjoy the immediate VAT refund policy. Shandong Chenming Pals Co. Ltd. a subsidiary
of the Company produced products applying integrated use of resources and is therefore subject to the
immediate VAT refund policy in 2020.Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use of
Resources (Cai Shui [2015] No. 78) taxpayers who sell self-produced products and services applying integrated
use of resources may enjoy the immediate VAT refund policy. Shouguang Chenming Cement Co. Limited a
subsidiary of the Company produced products applying integrated use of resources and is therefore subject to
the immediate VAT refund policy in 2020.
58 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements
1. Motary funds
Unit: RMB
Item Closing balance Opening balance
Treasury cash 3240007.66 2418131.86
Bank deposit 2210042623.10 2965127198.70
Other motary funds 17088478523.90 16338984142.77
Total 19301761154.66 19306529473.33
Of which: Total deposits in overseas banks 359705929.81 405881189.78
Notes: ① Other motary funds of RMB12368983244.21 (31 December 2019: RMB11796498642.44) were the guarantee deposit for the
application for bank acceptance with the banks by the Group.② Other motary funds of RMB2121287629.87 (31 December 2019: RMB2091467385.94) were the guarantee deposit for the
application for letter of credit with the banks by the Group.③ Other motary funds of RMB1921790589.38 (31 December 2019: RMB1846470647.92) were the guarantee deposit for the
application for guarantees with the banks by the Group.④ Other motary funds of RMB408693277.15 (31 December 2019: RMB440810000.00) were the Group’s statutory reserve deposit
at the banks.⑤ Other motary funds of RMB2125345.50 (31 December 2019: RMB995129.48) were locked-up due to litigations resulting in
restriction on the use of that account’s balance.⑥ The other motary funds include interest receivable of RMB265598437.79.
59SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
2. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMB
Closing balance Opening balance
Book balance Bad debts provision Book balance Bad debts provision
Category Amount Percentage Amount
Provision
percentage
Carrying
amount Amount Percentage Amount
Provision
percentage
Carrying
amount
Accounts receivable assessed
individually for impairment 124495140.17 4.30% 124495140.17 100.00% 0 117277135.48 3.81% 117277135.48 100.00% 0
Accounts receivable assessed
collectively for impairment 2773270689.28 95.70% 475575242.54 17.15% 2297695446.74 2960085058.36 96.19% 435001747.33 14.70% 2525083311.03
Of which:
Accounts receivable from
related parties 25652085.29 0.89% 2380460.92 9.28% 23271624.37 2008185.60 0.07% 61132.76 3.04% 1947052.84
Accounts receivable from
distributor clients 1969061227.30 67.95% 326725018.95 16.59% 1642336208.35 2202548603.03 71.57% 307333600.87 13.95% 1895215002.16
Factoring receivables 778557376.69 26.87% 146469762.67 18.81% 632087614.02 755528269.73 24.55% 127607013.70 16.89% 627921256.03
Total 2897765829.45 100.00% 600070382.71 20.71% 2297695446.74 3077362193.84 100.00% 552278882.81 17.95% 2525083311.03
60 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
2. Accounts receivable (Cont’d)
(1) Disclosure of accounts receivable by category (Cont’d)
Items assessed individually for impairment:
Unit: RMB
Closing balance
Name Book balance
Bad debts
provision
Provision
percentage Reasons for provision
Hengfeng Hongyuan Real Estate
Holdings Co. Ltd.
45500000.00 45500000.00 100.00% Due to poor management the financial
indicators of the company deteriorated and
its repayment ability substantially declid
Foshan Shunde Xingchen Paper
Co. Ltd.
26236528.70 26236528.70 100.00% Due to poor management the financial
indicators of the company deteriorated and
its repayment ability substantially declid
Ningxia Lingwu Baota Dagu Storage
and Transportation Co. Ltd.
32600000.00 32600000.00 100.00% Due to poor management the financial
indicators of the company deteriorated and
its repayment ability substantially declid
Beijing Huaxia Power Culture Media
Co. Ltd.
8207950.42 8207950.42 100.00% Due to poor management the financial
indicators of the company deteriorated and
its repayment ability substantially declid
47 companies including Jiangxi
Longming Enterprise Co. Ltd.
11950661.05 11950661.05 100.00% Due to poor management the financial
indicators of the company deteriorated and
its repayment ability substantially declid
Total 124495140.17 124495140.17 – –
Items assessed collectively for impairment:
Accounts receivable with collective provision for bad debts based on receivables from related parties
Unit: RMB
Closing balance
Name Book balance
Bad debts
provision
Provision
percentage
Within 1 year 13453177.37 814471.17 6.05%
1 to 2 years 11393260.18 1370890.31 12.03%
2 to 3 years 805647.74 195099.44 24.22%
Total 25652085.29 2380460.92 –
61SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
2. Accounts receivable (Cont’d)
(1) Disclosure of accounts receivable by category (Cont’d)
Accounts receivable with collective provision for bad debts based on receivables from distributor clients
Unit: RMB
Closing balance
Name Book balance
Bad debts
provision
Provision
percentage
Within 1 year 1356307954.92 21065204.22 1.55%
1 to 2 years 329934211.44 72588902.22 22.00%
2 to 3 years 55832347.15 17735625.89 31.77%
Over 3 years 226986713.79 215335286.62 94.87%
Total 1969061227.30 326725018.95 –
Accounts receivable with collective provision for bad debts based on factoring receivables
Unit: RMB
Closing balance
Name Book balance
Bad debts
provision
Provision
percentage
Within 1 year 620418416.69 128655866.67 20.74%
1 to 2 years 158138960.00 17813896.00 11.26%
Total 778557376.69 146469762.67 –
62 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
2. Accounts receivable (Cont’d)
(1) Disclosure of accounts receivable by category (Cont’d)
Disclosure by ageing
Unit: RMB
Ageing Closing balance
Within 1 year (including 1 year) 1975452308.32 2440760038.21
1 to 2 years 502455831.77 397312284.08
2 to 3 years 187335446.71 70484233.21
Over 3 years 232522242.65 168805638.34
Subtotal 2897765829.45 3077362193.84
Bad debts provision 600070382.71 552278882.81
Total 2297695446.74 2525083311.03
(2) 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 Write-off Others
Closing
balance
Accounts receivable with
provision for bad debt 552278882.81 50618019.25 2826519.34 600070382.71
Total 552278882.81 50618019.25 2826519.34 600070382.71
(3) Top five accounts receivable based on closing balance of debtors
The total amount of the Company’s top five accounts receivable based on closing balance of debtors for the
period was RMB961602717.39 which accounted for 33.18% of the closing balance of the total accounts
receivable. The closing balance of corresponding bad debt provision amounted to RMB153122029.71.
63SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
3. Accounts receivable financing
Unit: RMB
Item Closing balance Opening balance
Bills receivable 1418702732.26 442915861.70
Total 1418702732.26 442915861.70
Other explanation:
Bill receivable pledged by the Group at the end of the period:
Item Closing balance
Bank acceptance bill 366587869.44
Total 366587869.44
4. Prepayments
(1) Presentation of prepayments stated according to ageing analysis
Unit: RMB
Closing balance Opening balance
Ageing Amount Percentage Amount Percentage
Within 1 year 722311037.62 98.76% 528554005.66 87.57%
1-2 years 9092198.14 1.24% 75019543.42 12.43%
Total 731403235.76 – 603573549.08 –
(2) Top five prepayments according to closing balance of prepaid parties
Top five prepayments according to closing balance of prepaid parties was RMB401058608.97 which accounted
for 54.83% of the closing balance of the total accounts payable.
64 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
5. Other receivables
Unit: RMB
Item Closing balance Opening balance
Dividends receivable 13000000.00 13000000.00
Other receivables 3116061804.47 2203654598.66
Total 3129061804.47 2216654598.66
(1) Dividends receivable
1) Classification of dividends receivable
Unit: RMB
Item (or investee) Closing balance Opening balance
Weifang Xingxing United Chemical Co. Ltd 13000000.00 13000000.00
Total 13000000.00 13000000.00
(2) Other receivables
1) Other payables by nature
Unit: RMB
Nature
Closing
book balance
Opening
book balance
Open credit 2971708307.75 2043396146.61
Guarantee deposit 60901897.21 24109727.59
Advances 1868651.26 15799693.34
Insurance premium 3700154.18 17650.66
Reserve and borrowings 18148625.07 17045478.09
Others 59734169.00 103285902.37
Total 3116061804.47 2203654598.66
65SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
5. Other receivables (Cont’d)
(2) Other receivables (Cont’d)
2) Particulars of bad debt provision
Unit: RMB
Phase 1 Phase 2 Phase 3
Bad debt provision
ECLs for the
xt 12 months
ECLs over the
entire life (not
credit-impaired)
ECLs over the
entire life
(credit-impaired) Total
Balance as at 1 January 2020 169202744.32 326147132.58 495349876.90
Balance as at 1 January 2020 during the period – – – –
–Transferred into Phase 2
–Transferred into Phase 3 326147132.58 326147132.58
–Reversal to Phase 2
–Reversal to Phase 1 169202744.32 169202744.32
Provision for the period 7219809.98 7219809.98
Reversal for the period 18994740.83 75363658.86 94358399.69
Transfer for the period
Write-off for the period
Other changes
Balance as at 30 Ju2020 157427813.47 250783473.72 408211287.19
By ageing
Unit: RMB
Ageing Closing balance
Within 1 year (including 1 year) 2305069753.20 1601285972.69
1-2 years 1017960400.03 920980164.23
2-3 years 96790390.20 82752788.66
3-4 years 20226080.16 18199261.77
4-5 years 17164897.91 26242336.99
Over 5 years 67061570.16 49543951.22
Subtotal 3524273091.66 2699004475.56
Less: Bad debt provision 408211287.19 495349876.90
Total 3116061804.47 2203654598.66
66 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
5. Other receivables (Cont’d)
(2) Other receivables (Cont’d)
3) Provision recovery or reversal of bad debt provision for the period
Provision of bad debt provision for the period:
Unit: RMB
Changes in the period
Category
Opening
balance Provision
Recovery
or reversal Write-off Others
Closing
balance
Bad debt provision for
other receivables 495349876.90 7219809.98 94358399.69 408211287.19
Total 495349876.90 7219809.98 94358399.69 408211287.19
4) Top five other receivables according to closing balance of debtors
The top five other accounts receivable based on closing balance of debtors for the period amounted
to RMB2537485412.78 in total accounting for 72.00% of the total closing balance of other accounts
receivable. The closing balance of the corresponding bad debt provision amounted to RMB297887552.29
in total.
5) Receivables in respect of government grant
Unit: RMB
Name of entity Name of government grant Closing balance Closing age
Time of
reception
Wuhan Chenming Hanyang
Paper Holdings Co. Ltd.
Final payment of relocation
compensation
533390000.00 Within oyear 1 July 2020
67SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
6. Inventories
Whether the New Revenue Standard has been implemented
√ Yes □ No
(1) Categories of inventories
Unit: RMB
Closing balance Opening balance
Item Book balance
Impairment
provision for
inventories or
performance costs Carrying amount Book balance
Impairment
provision for
inventories or
performance costs Carrying amount
Raw materials 1902641983.51 18670304.78 1883971678.73 1972197240.93 21269429.01 1950927811.92
Work-in-process products 46382707.70 46382707.70 81382693.49 81382693.49
Goods in stock 1899848296.97 1899848296.97 886102819.24 886102819.24
Consumable biological assets 1556753786.65 1556753786.65 1541004633.42 1541004633.42
Developing products 314614378.34 314614378.34 315012152.74 315012152.74
Total 5720241153.17 18670304.78 5701570848.39 4795699539.82 21269429.01 4774430110.81
(2) Impairment provision for inventories or performance costs
Unit: RMB
Increase for the period Decrease for the period
Item Opening balance Provision Others Reversal or transfer Others Closing balance
Raw materials 21269429.01 2599124.23 18670304.78
Total 21269429.01 2599124.23 18670304.78
7. Non-current assets due within oyear
Unit: RMB
Item Closing balance Opening balance
Long-term receivables due within oyear 6010580174.26 6974539613.30
Total 6010580174.26 6974539613.30
68 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
8. Other current assets
Unit: RMB
Item Closing balance Opening balance
VAT recoverable 1157984356.26 1431298632.04
Prepaid tax 46114054.50 56778563.04
Receivables under financial lease due within oyear 5602015240.62 5229125471.51
Factoring receivables due within oyear 1043959033.92 1008707988.47
Prepaid expenses 685359071.56 366080343.71
Others 22975892.27 16716395.93
Total 8558407649.13 8108707394.70
9. Long-term receivables
(1) Particulars of long-term receivables
Unit: RMB
Closing balance Opening balance
Item Book balance
Bad debt
provision Carrying amount Book balance
Bad debt
provision Carrying amount
Discount
rate range
Finance lease payments 6908421427.84 583399494.29 6325021933.55 8144589680.91 182532601.30 7962057079.61 4%-20%
Less: Unrealised
financing income 142692516.64 – 142692516.64 462276887.85 462276887.85
Less: non-current assets
due within oyear 6551087262.04 580514958.75 5970572303.29 7004375494.85 159382707.55 6844992787.30
Subtotal 214641649.16 2884535.54 211757113.62 677937298.21 23149893.75 654787404.46
Deposit for finance lease 637879277.38 - 637879277.38 734530650.26 734530650.26
Less: Unrealised
financing income 46532961.75 - 46532961.75 59195417.77 59195417.77
Less: non-current assets
due within oyear 39557909.14 - 39557909.14 129546826.00 129546826.00
Subtotal 551788406.49 - 551788406.49 545788406.49 545788406.49
Total 766430055.65 2884535.54 763545520.11 1223725704.70 23149893.75 1200575810.95
69SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
9. Long-term receivables (Cont’d)
(1) Particulars of long-term receivables (Cont’d)
Particulars of bad debt impairment provision
Unit: RMB
Phase 1 Phase 2 Phase 3
Bad debt provision
ECLs for the
xt 12 months
ECLs over the
entire life (not
credit-impaired)
ECLs over the
entire life
(credit-impaired) Total
Balance as at 1 January 2020 3124322.44 20025571.31 23149893.75
Balance as at 1 January 2020 during the period
–Transferred into Phase 2
–Transferred into Phase 3 20025571.31 20025571.31
–Reversal to Phase 2
–Reversal to Phase 1 3124322.44 3124322.44
Provision for the year
Reversal for the year 2440892.95 17824465.26 20265358.21
Transfer for the year
Write-off for the year
Other changes
Balance as at 30 Ju2020 683429.49 2201106.05 2884535.54
70 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
10. Long-term equity investments
Unit: RMB
Change for the period
Investee Opening balance
Additional
contribution
Investment
gain or loss
recognised
under equity
method
Adjustment
of other
comprehensive
income
Other change
in equity
interest
Distribution
of cash
dividend or
profit declared
Impairment
provision Closing balance
Closing balance
of impairment
provision
I. Joint ventures
Shouguang Chenming Huisen New-style
Construction Materials Co. Ltd. 3789667.61 740169.16 1200000.00 3329836.77
Weifang Sime Darby West Port Co. Ltd 89726671.76 -2880211.17 86846460.59
Shouguang Meite Environmental
Technology Co. Ltd. 5880000.00 -257524.39 5622475.61
Weifang Chenrong New and Old Kitic
Ergy Conversion Equity Investment Fund
Partrship (Limited Partrship 158000000.00 42000000.00 -553476.37 199446523.63
Weifang Xingxing United Chemical Co. Ltd. 93816557.39 -1459789.79 92356767.60
Subtotal 351212896.76 42000000.00 -4410832.56 1200000.00 387602064.20
II. Associates
Jiangxi Jiangbao Media Colour Printing Co. Ltd. 0.00 0.00
Zhuhai Dechen New Third Board Equity
Investment Fund Company
(Limited Partrship) 52412989.91 -30470.86 52382519.05
Ningbo Kaichen Huamei Equity Investment
Fund Partrship (Limited Partrship) 199528847.52 516198.50 200045046.02
Xuchang Chenming Paper Co. Ltd. 5994545.96
Jiangxi Chenming Port Co. Ltd. 1690359.66 -521745.21 1168614.45
Chenming (Qingdao) Asset Management
Co. Ltd. 8669491.17 -6654.56 8662836.61
Goldtrust Futures Co. Ltd. 192732957.71 509191.24 193242148.95
Guangdong Nanyue Bank Co. Ltd 2800091481.01 124059754.41 2924151235.42
Subtotal 3255126126.98 124526273.52 3379652400.50 5994545.96
Total 3606339023.74 42000000.00 120115440.96 1200000.00 3767254464.70 5994545.96
71SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
11. Other non-current financial assets
Unit: RMB
Item Closing balance Opening balance
Equity instrument investments 147445653.55 147445653.55
Total 147445653.55 147445653.55
12. Investment properties
(1) Investment properties under the cost method
√ Applicable □ Not applicable
Unit: RMB
Item
Housing and
building structure Land use rights
Construction
in progress Total
I. Original carrying amount
1 Opening balance 5433710034.39 5433710034.39
2. Increase for the period 188223636.73 188223636.73
Transferred from fixed assets 188223636.73 188223636.73
3. Closing balance 5621933671.12 5621933671.12
II. Accumulated depreciation and
accumulated amortisation
1. Opening balance 351347741.28 351347741.28
2. Increase for the period 72208415.14 72208415.14
(1) Provision or amortisation 62862063.94 62862063.94
(2) Transferred from inventories/
fixed assets/construction in
progress 9346351.20 9346351.20
3. Closing balance 423556156.42 423556156.42
III. Carrying amount
1. Closing carrying amount 5198377514.70 5198377514.70
2. Opening carrying amount 5082362293.11 5082362293.11
13. Fixed assets
Unit: RMB
Item Closing balance Opening balance
Fixed assets 38215983514.51 34439935032.69
Total 38215983514.51 34439935032.69
72 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
13. Fixed assets (Cont’d)
(1) Particulars of fixed assets
Unit: RMB
Item
Housing and
building structure
Machiry and
equipment
Transportation
equipment
Electronic
equipment
and others Total
I. Original carrying amount:
1. Opening balance 9941580880.78 39482080460.52 351029607.21 398368057.18 50173059005.69
2. Increase for the period 1071404086.53 4039267399.98 703446.29 2283209.99 5113658142.79
(1) Acquisition 22691006.68 18937890.61 418490.17 1344019.11 43391406.57
(2) Transferred from construction in progress 1048713079.85 4020329509.37 284956.12 939190.88 5070266736.22
3. Decrease for the period 299507564.48 12375048.76 23948959.40 521394.19 336352966.83
(1) Disposal or retirement 111283927.75 12375048.76 23948959.40 521394.19 148129330.10
(2) Transferred into investment properties 188223636.73 188223636.73
4. Closing balance 10713477402.83 43508972811.74 327784094.10 400129872.98 54950364181.65
II. Accumulated depreciation
1. Opening balance 1796330000.77 13297091535.53 188896834.23 257770900.14 15540089270.67
2. Increase for the period 139085677.89 878544680.41 13206342.46 7587382.57 1038424083.33
(1) Provision 139085677.89 878544680.41 13206342.46 7587382.57 1038424083.33
3. Decrease for the period 15015295.16 5361980.49 16525427.54 264686.00 37167389.19
(1) Disposal or retirement 5668943.96 5361980.49 16525427.54 264686.00 27821037.99
(2) Depreciation for transfer into investment
properties 9346351.20 9346351.20
4. Closing balance 1920400383.50 14170274235.45 185577749.15 265093596.71 16541345964.81
III. Provision for impairment
1. Opening balance 27808852.79 157777407.54 13889.13 7434552.87 193034702.33
2. Closing balance 27808852.79 157777407.54 13889.13 7434552.87 193034702.33
IV. Carrying amount
1. Closing carrying amount 8765268166.54 29180921168.75 142192455.82 127601723.40 38215983514.51
2. Opening carrying amount 8117442027.22 26027211517.45 162118883.85 133162604.17 34439935032.69
73SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
13. Fixed assets (Cont’d)
(2) Particulars of temporarily idle fixed assets
Unit: RMB
Item
Original
carrying amount
Accumulated
depreciation
Provision for
impairment
Carrying
amount Remark
Housing and building structure 95571926.29 15334914.47 1420368.96 78816642.86
Machiry and equipment 1041587310.23 504133469.38 102416418.00 435037422.85
Transportation equipment 12200.00 10980.00 – 1220.00
Electronic equipment and others 781694.91 669098.40 2594.47 110002.04
Total 1137953131.43 520148462.25 103839381.43 513965287.75
(3) Particulars of fixed assets without obtaining property right certificates
Unit: RMB
Item Carrying amount
Reason for not yet
obtaining property
right certificates
Housing and building structure
(Zhanjiang Chenming Pulp & Paper Co. Ltd.) 1291450246.23 Handling
Housing and building structure
(Huanggang Chenming Pulp & Paper Co. Ltd.) 1274008741.37 Handling
Housing and building structure (Shouguang Meilun Paper Co. Ltd.) 412535443.46 Handling
Housing and building structure (Jilin Chenming Paper Co. Ltd.) 396097436.98 Handling
Housing and building structure (Jiangxi Chenming Paper Co. Ltd.) 213987044.09 Handling
Housing and building structure
(Shandong Chenming Paper Holdings Limited) 108006195.95 Handling
Housing and building structure
(Shandong Chenming Investment Limited) 86519304.60 Handling
Housing and building structure
(Wuhan Chenming Hanyang Paper Holdings Co. Ltd.) 80441254.26 Handling
Total 3863045666.94
74 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
14. Construction in progress
Unit: RMB
Item Closing balance Opening balance
Construction in progress 589320449.78 5467321406.80
Materials for project 8730717.09 8801522.15
Total 598051166.87 5476122928.95
(1) Particulars of construction in progress
Unit: RMB
Closing balance Opening balance
Item Book balance
Provision for
impairment Carrying amount Book balance
Provision for
impairment Carrying amount
Upgrading and renovation of back pressure
unit of captive power plant 249589135.27 249589135.27 263626439.57 263626439.57
New annual 200000 tonof fly ash cement
ceramsite production project 54186705.23 54186705.23 51767628.00 51767628.00
High-end cultural paper intelligent warehouse project 61116179.15 61116179.15 179056842.38 179056842.38
Meilun modification project 17026765.39 17026765.39 31858373.50 31858373.50
Huanggang pulp production project 93052147.95 93052147.95 4601844646.27 4601844646.27
Huanggang biomass power geration project 193548348.79 193548348.79
Technological modification project in the headquarter 32686178.75 32686178.75 35229753.85 35229753.85
Others 111351796.21 29688458.17 81663338.04 139914114.85 29524740.41 110389374.44
Total 619008907.95 29688458.17 589320449.78 5496846147.21 29524740.41 5467321406.80
75SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V
II.N
o
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s
to
it
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–
76 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
14. Construction in progress (Cont’d)
(3) Particulars of provision for construction in progress impairment
Unit: RMB
Item
Amount for the
period
Reason for the
provision
Other projects of Huanggang Chenming 163717.76 Project modification
Total 163717.76 –
Other explanation
(4) Materials for project
Unit: RMB
Closing balance Opening balance
Item Book balance
Impairment
provision Carrying amount Book balance
Impairment
provision Carrying amount
Special materials 8730717.09 8730717.09 8801522.15 8801522.15
Total 8730717.09 – 8730717.09 8801522.15 – 8801522.15
77SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
15. Right-of-use assets
Unit: RMB
Item Total
I. Original carrying amount:
1. Opening balance 163334964.90 163334964.90
2. Closing balance 163334964.90 163334964.90
II. Accumulated depreciation
1. Opening balance 11193082.85 11193082.85
2. Increase for the period 2691472.70 2691472.70
(1) Provision 2691472.70 2691472.70
3. Closing balance 13884555.55 13884555.55
III. Carrying amount
1. Closing carrying amount 149450409.35 149450409.35
2. Opening carrying amount 152141882.05 152141882.05
78 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
16. Intangible assets
(1) Particulars of intangible assets
Unit: RMB
Item Land use rights Software
Certificates of
third party right Total
I. Original carrying amount
1. Opening balance 2176207105.75 26352090.74 15895213.33 2218454409.82
2. Increase for the period 72000.00 72000.00
(1) Acquisition 72000.00 72000.00
3. Decrease for the period 107209008.00 107209008.00
(1) Disposal 107209008.00 107209008.00
4. Closing balance 2068998097.75 26424090.74 15895213.33 2111317401.82
II. Accumulated amortisation
1. Opening balance 407497707.25 22891289.24 7003508.82 437392505.31
2. Increase for the period 21157836.48 663165.08 2649202.26 24470203.82
(1) Provision 21157836.48 663165.08 2649202.26 24470203.82
3. Decrease for the period 9662821.09 9662821.09
(1) Disposal 9662821.09 9662821.09
4. Closing balance 418992722.64 23554454.32 9652711.08 452199888.04
III. Provision for impairment
IV. Carrying amount
1. Closing carrying amount 1650005375.11 2869636.42 6242502.25 1659117513.78
2. Opening carrying amount 1768709398.50 3460801.50 8891704.51 1781061904.51
17. Goodwill
(1) Original carrying amount of goodwill
Unit: RMB
Name of investee or item gerating goodwill
Opening
balance
Increase for
the period
Decrease for
the period
Closing
balance
Shandong Chenming Pals Co. Ltd. 5969626.57 5969626.57
Jilin Chenming Paper Co. Ltd. 14314160.60 14314160.60
Total 20283787.17 20283787.17
(2) Provision for impairment of goodwill
Unit: RMB
Name of investee or item gerating goodwill
Opening
balance
Increase for
the period
Decrease for
the period
Closing
balance
Jilin Chenming Paper Co. Ltd. 14314160.60 14314160.60
Total 14314160.60 14314160.60
79SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
18. Long-term prepaid expenses
Unit: RMB
Item
Opening
balance
Increase for
the period
Amortisation
for the period
Other
deductions
Closing
balance
Woodland expenses 9642224.60 302898.00 9339326.60
Railway expenses 16071459.93 599814.96 15471644.97
Other expenses 22489724.18 4176000.00 527201.82 26138522.36
Total 48203408.71 4176000.00 1429914.78 50949493.93
19. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before offsetting
Unit: RMB
Closing balance Opening balance
Item
Deductible
temporary
difference
Deferred
income tax
assets
Deductible/
taxable temporary
difference
Deferred income
tax assets/
liabilities
Deferred income tax assets:
Provision for impairment of assets 2041447469.67 482105135.45 1791356735.71 417688820.31
Unrealised profit arising from intra-group transactions 75054127.24 18763531.81 164089227.26 41022306.82
Deductible loss 2343752044.37 366327959.09 2243481924.83 344125106.67
Outstanding payables 470036072.19 72746587.79 446580396.87 68163018.91
Deferred income 111566555.62 20612480.91 116165951.14 21443378.33
Subtotal 5041856269.09 960555695.05 4761674235.81 892442631.04
Debt reconstructing 5644502.36 1411125.59
Subtotal 5644502.36 1411125.59
(2) The breakdown of unrecognised deferred income tax assets
Unit: RMB
Item Closing balance Opening balance
Deductible temporary difference 293607004.97 352057221.14
Deductible loss 661787456.93 521737724.53
Total 955394461.90 873794945.67
80 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
19. Deferred income tax assets/deferred income tax liabilities (Cont’d)
(3) Expiry of deductible loss of unrecognised deferred income tax assets falls in the periods as follows
Unit: RMB
Year Closing amount Opening amount Remark
2020 – 674989.71
2021 185647.61 185647.61
2022 11628813.14 11628813.14
2023 163280498.87 164859774.53
2024 338716266.07 344388499.54
2025 147976231.24 –
Total 661787456.93 521737724.53 –
20. Other non-current assets
Unit: RMB
Closing balance Opening balance
Item
Book
balance
Impairment
provision
Carrying
amount
Book
balance
Impairment
provision
Carrying
amount
Prepayments for land-transferring fee 101130000.00 101130000.00 101130000.00 101130000.00
Prepayments for engiering 61915754.57 61915754.57 47430952.09 47430952.09
Prepayments for properties 9800000.00 9800000.00 9800000.00 9800000.00
Prepayments for equipment 19350298.70 19350298.70 15514874.58 15514874.58
Prepayments for purchase of equity interest 176000000.00 176000000.00 –
Total 368196053.27 – 368196053.27 173875826.67 – 173875826.67
21. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMB
Item Closing balance Opening balance
Pledged borrowings 277536675.69 859312833.51
Mortgage borrowings 180000000.00 180000000.00
Guaranteed borrowings 8006661333.87 7082088423.98
Credit borrowings 8441863225.44 7174060275.17
Discounted borrowings 21648250000.00 21587694481.53
Total 38554311235.00 36883156014.19
81SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
22. Bills payable
Unit: RMB
Classification Closing balance Opening balance
Commercial acceptance bills 382897538.49 625325798.18
Bank acceptance bills 2364709222.68 889722407.82
Total 2747606761.17 1515048206.00
23. Accounts payable
(1) Particulars of accounts payable
Unit: RMB
Item Closing balance Opening balance
Loans 3501525952.77 3393786063.51
Payment for engiering 151196271.94 408694349.00
Payment for equipment 357086520.95 312292221.48
Service expense 165525980.81 199838288.95
Others 69571698.83 36476659.04
Total 4244906425.30 4351087581.98
(2) Significant advance receipts for over 1 year
Unit: RMB
Item Closing balance Reasons
Guangxi Construction Engiering Group No. 1 Installation
Co. Ltd. 31311231.15
Quality guarantee
deposit for engiering
Beijing Guodian Futong Science And Development Co. Ltd. 26630150.00
Quality guarantee
deposit for engiering
Omya Haiming (Nanchang) Chemical Co. Ltd. 16000000.00
Quality guarantee
deposit for engiering
China Ergy Engiering Group Guangzhou Electric Power
Design 14128415.00
Quality guarantee
deposit for engiering
Fujian Xinze Environmental Protection Equipment and
Engiering Co. Ltd. 13001120.40
Quality guarantee
deposit for engiering
Total 101070916.55 –
24. Contract liabilities
Unit: RMB
Item Closing balance Opening balance
Deposits received 1230606297.46 968082063.13
Total 1230606297.46 968082063.13
82 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
25. Staff remuration payables
(1) Particulars of staff remuration payables
Unit: RMB
Item
Opening
balance
Increase for
the period
Decrease for
the period
Closing
balance
I. Short-term remuration 189006380.72 632598237.29 597988645.16 223615972.85
II. Retirement befit plan – defid contribution scheme 1223502.80 64951329.89 58372687.09 7802145.60
Total 190229883.52 697549567.18 656361332.25 231418118.45
(2) Particulars of short-term remuration
Unit: RMB
Item
Opening
balance
Increase for
the period
Decrease for
the period
Closing
balance
1. Salaries bonuses allowance and subsidies 120634999.88 509315990.09 477709438.90 152241551.07
2. Staff welfare 14502279.87 14502279.87
3. Social insurance premium 1871932.30 33348186.94 33097202.50 2122916.74
Of which: Medical insurance premium 840248.82 30482685.63 31165115.14 157819.31
Work-related injury insurance premium 23069.88 1365767.12 963528.54 425308.46
Maternity insurance premium 1008613.60 1499734.19 968558.82 1539788.97
4. Housing provident funds 8856543.62 48333531.86 44866200.88 12323874.60
5. Union funds and workers’ education 35831023.93 16175524.42 14301359.06 37705189.29
6. Other short-term remuration 21811880.99 10922724.11 13512163.95 19222441.15
Total 189006380.72 632598237.29 597988645.16 223615972.85
(3) Defid contribution plan
Unit: RMB
Item
Opening
balance
Increase for
the period
Decrease for
the period
Closing
balance
1. Basic pension insurance 1033762.42 62119798.36 55961336.45 7192224.33
2. Umployment insurance 189740.38 2831531.53 2411350.64 609921.27
Total 1223502.80 64951329.89 58372687.09 7802145.60
83SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
26. Taxes payable
Unit: RMB
Item Closing balance Opening balance
Enterprise income tax 241770346.42 166389232.03
Value added tax 60572555.84 81745671.90
Land use tax 10658837.91 8206677.02
Property tax 24362303.63 8239300.78
Urban maintenance and construction tax 3421307.00 5844684.79
Educational surcharges and others 11151393.45 6850900.34
Individual income tax 28149300.07 29565363.87
Stamp duty 3191475.06 4712286.00
Total 383277519.38 311554116.73
27. Other payables
Unit: RMB
Item Closing balance Opening balance
Interest payable 149518233.84 208189699.15
Dividend payable 610109667.16
Other payables 1694370129.51 2386059927.39
Total 2453998030.51 2594249626.54
(1) Interest payable
Unit: RMB
Item Closing balance Opening balance
Interest on borrowings 26109646.67 27960930.86
Interest on corporate bonds 7367916.67 103432934.98
Interest on medium-term notes 116040670.50 76795833.31
Total 149518233.84 208189699.15
84 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
27. Other payables (Cont’d)
(2) Dividend payable
Unit: RMB
Item Closing balance Opening balance
A shares 256449200.77
B shares 103543930.17
H shares 77440462.80
Preference shares 172676073.42
Total 610109667.16
(3) Other payables
1) Other payables by nature
Unit: RMB
Item Closing balance Opening balance
Open credit 507890103.31 1287822732.06
Deposit 417858566.67 451756402.26
Accrued expenses 427320371.12 506095837.14
Equity incentive 226860000.00
Others 114441088.41 140384955.93
Total 1694370129.51 2386059927.39
2) Significant other payables for over 1 year
Unit: RMB
Item Closing balance Reasons
NINE DRAGONS DAWEI HOLDINGS CO. LTD. 30000000.00 Deposit
SHOUGUANG LONGYUAN PAPER COATING CO. LTD. 9250000.00 Deposit
STATE-OWNED SHOUGUANG QINGSHUIPO FARM 8800000.00 Open credit
ZHEJIANG TSINGSHAN STEEL PIPE CO. LTD. 5860000.00 Deposit
WENZHOU DONGDA MINE CONSTRUCTION
ENGINEERING CO. LTD. 5450000.00 Deposit
Total 59360000.00 –
85SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
28. Non-current assets due within oyear
Unit: RMB
Item Closing balance Opening balance
Long-term receivables due within oyear 3963363135.83 2520582051.43
Long-term payables due within oyear 1968889601.58 2238647651.02
Lease liabilities due within oyear 4606717.58 4606717.58
Bonds payable due within oyear 899122500.00
Medium-term notes due within oyear 1000000000.00
Total 6936859454.99 5662958920.03
29. Other current liabilities
Unit: RMB
Item Closing balance Opening balance
Short-term bonds payable 150686164.01 222402500.00
Total 150686164.01 222402500.00
30. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMB
Item Closing balance Opening balance
Pledge borrowings 74823068.83
Secured borrowings 4789105773.48 5110291847.19
Guarantee borrowings 5232927028.33 5695114793.03
Credit borrowings 950692035.94 780692035.94
Less: Long-term borrowings due within 1 year 3963363135.83 2520582051.43
Total 7009361701.92 9140339693.56
86 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
31. Bonds payable
(1) Bonds payable
Unit: RMB
Item Closing balance Opening balance
17 Chenming bond 01- Chenming Paper 89943750.00 89070000.00
18 Chenming bond 01- Chenming Paper 350000000.00
Chenming USD Bonds 1188190442.59 1169200909.49
Total 1628134192.59 1258270909.49
(2) Increase/decrease in bonds payable (excluding other financial instruments such as preference shares and
perpetual bonds classified as financial liabilities)
Unit: RMB
Name of bond Par value Date of issue Term Amount Opening balance
17 Chenming bond 01 – Chenming Paper 1200000000.00 2017/8/22 5 years 1198200000.00 89070000.00
18 Chenming bond 01 – Chenming Paper 350000000.00 2020/6/1 5 years 350000000.00
Chenming USD Bonds 1137120600.00 2019/8/6 2.6 years 1125276863.46 1169200909.49
Total 2687120600.00 2673476863.46 1258270909.49
(Cont’d)
Name of bond
Issue during
the year
Interest at
par value
Amortisation
of premium/
discount
Redemption
during the year
Closing
balance
17 Chenming bond 01 – Chenming Paper 873750.00 89943750.00
18 Chenming bond 01- Chenming Paper 350000000.00 350000000.00
Chenming USD Bonds 16768832.50 2220700.60 1188190442.59
Total 350000000.00 16768832.50 3094450.60 1628134192.59
87SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
32. Lease liabilities
Unit: RMB
Item Closing balance Opening balance
Lease payments payable 90539867.03 90539867.03
Less: Unrecognised financing expenses 25661379.55 26236020.80
Subtotal 64878487.48 64303846.23
Less: Lease liabilities due within oyear 4606717.58 4606717.58
Total 60271769.90 59697128.65
33. Long-term payables
Unit: RMB
Item Closing balance Opening balance
Long-term payables 2748780858.47 3321535538.94
Total 2748780858.47 3321535538.94
(1) By nature
Unit: RMB
Item Closing balance Opening balance
Retention for the financial leasing operations 76000000.00 160190103.51
China Development Bank Special funds 517500000.00 595000000.00
Financial leasing 4124170460.05 4804993086.45
Subtotal 4717670460.05 5560183189.96
Less: Long-term payables due within 1 year 1968889601.58 2238647651.02
Total 2748780858.47 3321535538.94
88 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
34. Provision
Unit: RMB
Item
Closing
balance
Increase for
the period
Decrease for
the period
Opening
balance Reason
Provision 325259082.28 325259082.28
Losses from
Arjo’s lawsuit
Total 325259082.28 325259082.28 –
35. Deferred income
Unit: RMB
Item
Opening
balance
Increase for
the period
Decrease for
the period
Closing
balance Reason
Government grants 1771013335.11 28360000.00 106871499.81 1692501835.30 Financial provision
Total 1771013335.11 28360000.00 106871499.81 1692501835.30 –
Items in respect of government grants:
Unit: RMB
Liabilities item
Opening
balance
New grants
for the period
Include in
non-operating
income for
the period
Include in
other income
for the period
Amount
charged
against cost
expenses
Other
changes
Closing
balance
Asset-
related/
income-
related
Project fund for National
technological support
scheme 1452525.00 82350.00 1370175.00 Asset-related
Sewage treatment and water
conservation reconfiguration
project 63274136.71 1588476.44 61685660.27 Asset-related
Financial grants for
technological modification
project 168182448.80 28360000.00 6391903.86 190150544.94 Asset-related
Subsidy funds for
environmental protection 700228305.19 24595985.84 675632319.35 Asset-related
Logistics park project 51960000.00 51960000.00 Asset-related
Zhanjiang integrated forestry
pulp and paper project 67047201.50 10098654.93 56948546.57 Asset-related
Huanggang pulp-forestry-paper
project 681564072.66 11359401.20 670204671.46 Asset-related
Others 37304645.25 794727.54 36509917.71 Asset-related
Total 1771013335.11 28360000.00 54911499.81 51960000.00 1692501835.30
89SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
36. Other non-current liabilities
Unit: RMB
Item Closing balance Opening balance
Medium-term notes 3384489390.18 3042841328.86
Less: Other non-current liabilities due within oyear 1000000000.00
Total 2384489390.18 3042841328.86
37. Share capital
Unit: RMB
Increase/decrease during the year (+/-)
Opening
balance New issue Bonus issue
Shares
converted from
reserves Others Subtotal
Closing
balance
Total number of shares 2904608200.00 79600000.00 79600000.00 2984208200.00
38. Other equity instruments
(1) Preference shares perpetual bonds and other financial instruments outstanding at the end of the period
Item
Opening
balance
Increase for
the period
Decrease for
the period
Closing
balance
Perpetual bonds 2988000000.00 2988000000.00
Preference shares 4477500000.00 4477500000.00
Total 7465500000.00 7465500000.00
(2) Changes in perpetual bonds outstanding at the end of the period
Unit: RMB
Outstanding financial instruments
Opening
balance
Increase for
the period
Decrease for
the period
Closing
balance
17 Lu Chenming MTN001 996000000.00 996000000.00
17 Lu Chenming MTN002 1992000000.00 1992000000.00
Total 2988000000.00 2988000000.00
90 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
38. Other equity instruments (Cont’d)
(3) Changes in perpetual bonds outstanding at the end of the period
Outstanding financial instruments
Opening
balance
Increase for
the period
Decrease for
the period
Closing
balance
Chenming You 01 2238750000.00 2238750000.00
Chenming You 02 999000000.00 999000000.00
Chenming You 03 1239750000.00 1239750000.00
Total 4477500000.00 4477500000.00
39. Capital reserves
Unit: RMB
Item
Opening
balance
Increase for
the period
Decrease for
the period
Closing
balance
Capital premium (share premium) 4416363920.09 177314104.00 4593678024.09
Other capital reserves 670322507.21 670322507.21
Total 5086686427.30 177314104.00 5264000531.30
40. Treasury shares
Unit: RMB
Item
Opening
balance
Increase for
the period
Decrease for
the period
Closing
balance
Restricted treasury shares 226860000.00 226860000.00
Total 226860000.00 226860000.00
41. Other comprehensive income
Unit: RMB
During the period
Item
Opening
balance
Incurred before
income tax
for the period
Less:
Transferred
from other
comprehensive
income in prior
periods to profit
or loss during
the period
Less:
Transferred
from other
comprehensive
income in prior
periods to
retaid earnings
during the period
Less: Income
tax expenses
Attributable to
parent company
after tax
Attributable
to minority
shareholders
after tax
Closing
balance
Other comprehensive income to be
reclassified to profit or loss in
subsequent periods
Exchange differences on translation of
foreign operations -879452135.10 -100282332.31 -100282332.31 -979734467.41
Total other comprehensive income -879452135.10 -100282332.31 -100282332.31 -979734467.41
91SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
42. Geral risk reserves
Item
Opening
balance
Increase for
the period
Decrease for
the period
Closing
balance
Geral risk reserves 74122644.20 74122644.20
Total 74122644.20 74122644.20
43. Surplus reserves
Unit: RMB
Item
Opening
balance
Increase for
the period
Decrease for
the period
Closing
balance
Statutory surplus reserves 1212009109.97 1212009109.97
Total 1212009109.97 1212009109.97
44. Retaid profit
Unit: RMB
Item The period
The prior period
(the same period
last year)
Retaid profit as at the end of the prior year before adjustment 9306269617.38 9107422690.85
Accumulated adjustments to retaid profit as at the beginning
of the year (increase “+” decrease “-”)
Retaid profit as at the beginning of the year after adjustment 9306269617.38 9107422690.85
Plus: Net profit for year attributable to shareholders of
the parent company 516326703.48 509795572.29
Less: Transfer of statutory surplus reserves
Ordinary dividend payable 437433593.74 697105968.00
Preferred shares interest payable 270776073.42 377169767.52
Retaid profit as at the end of the year 9114386653.70 8542942527.62
92 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
45. Revenue and operating cost
Unit: RMB
Amount for the period Amount for the prior period
Item Revenue Costs Revenue Costs
Principal activities 12956373458.78 9705685293.06 13127389053.48 9644049075.24
Other activities 643432307.08 479614740.25 221259060.22 110048724.58
Total 13599805765.86 10185300033.31 13348648113.70 9754097799.82
Information related to revenue:
Unit: RMB
Category of contract
Machi-made
paper segment
Financial
segment
Other
segments Total
Type of goods
Machi-made paper 11558358972.70 11558358972.70
Financial leasing 523141507.84 523141507.84
Electricity and steam 76551167.17 1284686.67 77835853.84
Construction materials 178629808.17 178629808.17
Paper chemicals 65927709.45 65927709.45
Hotel services 7284272.63 7284272.63
Others 1080801337.95 43572514.54 64253788.74 1188627641.23
Total 12781639187.27 566714022.38 251452556.21 13599805765.86
93SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
46. Taxes and surcharges
Unit: RMB
Item
Amount for
the period
Amount for
the prior period
Urban maintenance and construction tax 16351064.21 33491970.50
Educational surcharges 11385806.59 30083061.41
Property tax 35765283.62 25991020.83
Land use tax 15431134.06 17485547.38
Vehicle and vessel tax 12010.68 53845.71
Stamp duty 13063555.43 10950170.18
Water engiering funds 849304.03 1634705.86
Environmental tax 7919659.65 4945936.66
Water resource tax 6270279.94 9852286.53
Total 107048098.21 134488545.06
47. Selling and distribution expenses
Unit: RMB
Item
Amount for
the period
Amount for
the prior period
Wages and surcharges 58686281.82 61585417.90
Depreciation expenses 6122536.00 6288587.94
Office expenses 1843778.51 1758975.11
Transportation expenses 486328202.98 425245830.59
Selling commissions 21030123.34 5725354.65
Cargo handling charges 8233465.18 7716321.23
Travel expenses 9122159.33 14946381.33
Busiss hospitality expenses 21137948.35 28199788.34
Warehouse expenses 1116656.86 1080149.47
Rental expenses 3513698.23 4019981.96
Others 35607569.75 34018168.95
Total 652742420.35 590584957.47
94 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
48. Geral and administrative expenses
Unit: RMB
Item
Amount for
the period
Amount for
the prior period
Wages and surcharges 158698083.16 118518202.91
Welfare expenses 29416491.43 27556239.75
Insurance premium 13706761.09 14052377.28
Depreciation expenses 58348214.94 114171603.76
Waste disposal expenses 6215674.32 5411881.45
Hospitality expenses 40625251.74 38283517.05
Amortisation of intangible assets 22805226.17 24242384.25
Production interruption loss 59359808.22 69899210.78
Repair fees 16847259.15 15566475.96
Others 85964475.11 134715506.06
Total 491987245.33 562417399.25
49. R&D expenses
Unit: RMB
Item
Amount for
the period
Amount for
the prior period
Installation expenses 609432.49 8229476.80
Depreciation expenses 27731869.06 18616150.51
Consumption of raw materials 198168322.21 181729065.27
Consumption of semi-finished products 87624595.31 61663204.78
Consumption of auxiliary materials 78527925.39 41870386.58
Travel expenses 1574.18
Wages and surcharges 69924624.21 52643872.99
Welfare expenses 3526275.77 3128695.00
Housing provident funds 3787143.40 3507430.88
Insurance premium 8279960.27 8344818.02
Union funds 391146.46 165815.82
Utilities 69857222.28 50274197.98
Other expenses 128630.04 1309027.25
Total 548557146.89 431483716.06
95SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
50. Finance expenses
Unit: RMB
Item
Amount for
the period
Amount for
the prior period
Finance expenses 1459184970.39 1650075404.49
Less: interest income 276115018.97 213994280.22
Less: capitalised interest amount 19684809.62 73319125.19
Foreign exchange gains and losses -1552952.90 -2644727.97
Bank charges 184385373.56 156731452.69
Total 1346217562.46 1516848723.80
51. Other income
Unit: RMB
Item
Amount for
the period
Amount for
the prior period
Government grants – amortised deferred income included in profit or loss 54911499.81 34507125.14
Government grants – directly included in profit or loss 78522474.64 4324165.50
Total 133433974.45 38831290.64
52. Investment income
Unit: RMB
Item
Amount for
the period
Amount for
the prior period
Income from long-term equity investments accounted for using
the equity method 120115440.96 -9467172.97
Investment gain on disposal of long-term equity investments 16778042.01
Total 136893482.97 -9467172.97
96 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
53. Gain on change in fair value
Unit: RMB
Source of gain on change in fair value
Amount for
the period
Amount for
the prior period
Consumable biological assets measured at fair value -9246743.86 -1883064.80
Total -9246743.86 -1883064.80
54. Credit impairment loss
Unit: RMB
Item
Amount for
the period
Amount for
the prior period
Bad debt loss of accounts receivable -257855903.60 -62440283.34
Total -257855903.60 -62440283.34
55. Loss on impairment of assets
Unit: RMB
Item
Amount for
the period
Amount for
the prior period
Loss on inventory impairment and impairment loss of performance
costs of contracts 83464107.59
Loss on construction in progress impairment -163717.76
Total -163717.76 83464107.59
56. Asset disposal income
Unit: RMB
Source of asset disposal income
Amount for
the period
Amount for
the prior period
Net income from disposal of non-current assets -4705886.89 22823551.43
Total -4705886.89 22823551.43
97SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
57. Non-operating income
Unit: RMB
Item
Amount for
the period
Amount for
the prior period
Amounts included
in extraordinary
gains and losses
for the period
Government grants 633778881.76 227700148.23 633778881.76
Others 8621236.02 9772444.74 8621236.02
Total 642400117.78 237472592.97 642400117.78
58. Non-operating expenses
Unit: RMB
Item
Amount for
the period
Amount for
the prior period
Amounts included
in extraordinary
gains and losses
for the period
Donation 5144077.88 3041000.00 5144077.88
Loss on destroyed and scrapped non-current assets 510335.35 1207252.11 510335.35
Others 3353130.95 801876.08 3353130.95
Total 9007544.18 5050128.19 9007544.18
59. Income tax expenses
(1) Particulars of income tax expenses
Unit: RMB
Item
Amount for
the period
Amount for
the prior period
Income tax expenses for the period 306073252.16 264288265.75
Deferred income tax expenses -68113064.01 -138410446.13
Total 237960188.15 125877819.62
98 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
60. Items on statements of cash flow
(1) Cash received relating to other operating activities
Unit: RMB
Item
Amount for
the period
Amount for
the prior period
Finance support fund 207271356.40 184083293.99
Interest income 202247580.26 213994280.22
Open credit and income from default penalty and fi97478845.77 199443495.78
Net return of principal receivables relating to finance lease busiss 1056112435.52 1700675170.98
Total 1563110217.95 2298196240.97
(2) Cash paid relating to other operating activities
Unit: RMB
Item
Amount for
the period
Amount for
the prior period
Expense and open credit 1083849666.32 1000088741.18
Total 1083849666.32 1000088741.18
(3) Cash received relating to other investing activities
Unit: RMB
Item
Amount for
the period
Amount for
the prior period
Sales of right in Haiming 60436164.38
Sales of right in Qingdao Logistics 37399937.28
Sales of right in Industrial Logistics 31361866.40
Total 129197968.06
(4) Cash paid relating to other investing activities
Unit: RMB
Item
Amount for
the period
Amount for
the prior period
Purchase of Goldtrust Futures equity interest 144248400.00
Investment in Growth Driver Replacement 39500000.00
Investment in Meite Environment 5880000.00
Acquisition of equity in Taan Plastic 176000000.00
Total 176000000.00 189628400.00
99SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
60. Items on statements of cash flow (Cont’d)
(5) Cash received relating to other financing activities
Unit: RMB
Item
Amount for
the period
Amount for
the prior period
Short-term commercial paper 144457000.00 1887185904.00
Equipment financing 542500000.00 831099242.78
Debt financing receivable 320000000.00 400071077.96
Loan from the Finance Company 200000000.00
Shandong Financial Assets Exchange borrowings 161337302.32
Issuance of corporate bonds 350000000.00
Total 1356957000.00 3479693527.06
(6) Cash paid relating to other financing activities
Unit: RMB
Item
Amount for
the period
Amount for
the prior period
Repayment of short-term commercial paper 190000000.00 2820000000.00
Repayment of matured bonds 900000000.00
Repayment of interest on preference shares 98100000.00 98100000.00
Repayment of equipment leaseback 1304243353.95 1400052857.83
Increase in restricted bank deposits for the period 704209894.72 1807611450.60
Repayment of borrowings from Chenming Holdings 708440865.27 330800000.00
Payment of equity in China Development Bank funds 77500000.00
Total 3982494113.94 6456564308.43
100 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
61. Supplementary information on cash flow statement
(1) Supplementary information on cash flow statement
Unit: RMB
Supplementary information
Amount for
the period
Amount for
the prior period
1. Reconciliation of t profit as cash flows from operating activities: – –
Net profit 661740850.07 536600045.95
Plus: Provision for impairment of assets 258019621.36 -83464107.59
Depreciation of fixed assets consumption of oil and gas assets
depreciation of bearer biological assets 1103977619.97 763316039.38
Amortisation of intangible assets 24470203.82 26402322.31
Amortisation of long-term prepaid expenses 1429914.78 5347583.69
Loss on disposal of fixed assets intangible assets and other long-
term assets (“-” denotes gain) 2171437.21 22823551.43
Loss on changes in fair value (“-” denotes gain) -9246743.86 -1883064.80
Finance expenses (“-” denotes gain) 1439500160.77 1516848723.80
Investment loss (“-” denotes gain) -136893482.97 -9467172.97
Decrease in deferred income tax assets (“-” denotes increase) -68113064.01 -155056230.40
Increase in deferred income tax liabilities (“-” denotes increase) -1411125.59
Decrease in inventories (“-” denotes increase) -927140737.58 -678542881.70
Decrease in operating receivables (“-” denotes increase) -1749063323.95 -282017217.78
Increase in operating payables (“-” denotes decrease) 1727592454.67 1038863300.37
Net cash flows from operating activities 2327033784.68 2699770891.69
2. Major investing and financing activities not involving cash
settlements: – –
3. Net change in cash and cash equivalents: – –
Closing balance of cash 2213282630.76 2009063231.38
Less: Opening balance of cash 2890328027.40 2381558242.53
Plus: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -677045396.64 -372495011.15
(2) Cash and cash equivalents composition
Unit: RMB
Item Closing balance Opening balance
I. Cash 2213282630.76 2890328027.40
Of which: Treasury cash 3240007.66 2418131.86
Bank deposit that can be used for payment at any time 2210042623.10 2887909895.54
III. Balance of cash and cash equivalent as at end of period 2213282630.76 2890328027.40
Other explanation:
Cash and cash equivalents did not include the restricted cash and cash equivalents used by the Company or
subsidiaries within the Group.
101SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
62. Assets with restricted owrships or right to use
Unit: RMB
Item
Closing
carrying amount Reason for such restrictions
Motary funds 18718827955.87 As guarantee deposits for bank acceptance bills letter of credit
and bank borrowings deposits and deposit reserves
Bills receivable 624106580.39 As collateral for short-term borrowings letters of guarantee and
letters of credit
Fixed assets 9433004439.14 As collateral for bank borrowings and long-term payables
Intangible assets 855039400.00 As collateral for bank borrowings and long-term payables
Investment properties 4581606847.89 As collateral for bank borrowings
Total 34212585223.29 –
63. Foreign currency items
(1) Foreign currency items
Unit: RMB
Item
Closing foreign
currency balance Exchange rate
Closing balance
in RMB
Motary funds – –
Of which: USD 63132986.23 7.0795 446949976.05
EUR 4399947.08 7.9610 35027978.69
HKD 36519300.65 0.9134 33358189.99
GBP 5709.69 9.1501 52244.22
Accounts receivables – –
Of which: USD 17402059.38 7.0795 123197879.41
EUR 3299963.79 7.9610 26271011.73
Accounts payable – –
Of which: USD 95108075.11 7.0795 673317617.77
EUR 11053728.26 7.9610 87998730.71
HKD 23572925.52 0.9134 21532453.09
Other payables – –
Of which: USD 1406229.34 7.0795 9955400.59
EUR 578759.35 7.9610 4607503.19
Short-term borrowings – –
Of which: USD 129772338.60 7.0795 918723271.12
Long-term borrowings – –
Of which: USD 223535000.00 7.0795 1582516032.50
Non-current liabilities due within oyear
Of which: USD 333362309.20 7.0795 2360038467.98
102 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
63. Foreign currency items (Cont’d)
(2) Explanation on overseas operating entities (including major overseas operating entities) which shall disclose
their overseas principal places of busiss functional currency and basis. Reasons shall be disclosed if there
is any change in the functional currency.
√ Applicable □ Not applicable
No. Name of subsidiary
Principal place
of busiss
Place of
incorporation
Functional
currency
1 Chenming GmbH Hamburg Germany Hamburg Germany EUR
2 Chenming Paper Korea Co. Ltd. Seoul Korea Seoul Korea KRW
3 Chenming (HK) Limited Hong Kong China Hong Kong China USD
4 Chenming International Co. Ltd. Los Angeles USA Los Angeles USA USD
5 Chenming Paper Japan Co. Ltd. Tokyo Japan Tokyo Japan JPY
6 Chenming Paper United States Co. Ltd. Los Angeles USA Los Angeles USA USD
7 Chenming (Overseas) Limited Hong Kong China Hong Kong China USD
8 Chenming (Singapore) Limited Singapore Singapore USD
64. Government grants
(1) Geral information of government grants
Unit: RMB
Type Amount Reporting item
Amount accounted
for in profit or loss
National Science and Technology Support
Program Project Funding
1452525.00 Deferred income 82350.00
Sewage treatment and water saving reconstruction 63274136.71 Deferred income 1588476.44
Financial subsidies for technical transformation
items
196542448.80 Deferred income 6391903.86
Funding for environmental protection 700228305.19 Deferred income 24595985.84
Industrial logistics park reconstruction
compensation
51960000.00 Deferred income
Zhanjiang Forest Pulp & Paper Integration Item 67047201.50 Deferred income 10098654.93
Huanggang Forest Pulp & Paper Integration Item 681564072.66 Deferred income 11359401.20
Others 37304645.25 Deferred income 794727.54
Interest subsidy 1087500.00 Finance expenses 1087500.00
Risk subsidy 19980000.00 Other income 19980000.00
Tax return 62377043.64 Non-operating income
and other income
62377043.64
Enterprise reform and development subsidies 80837506.25 Non-operating income
and other income
80837506.25
Government awards 5845000.00 Non-operating income 5845000.00
Afforestation subsidy 3252768.00 Other income 3252768.00
VAT return 1380000.00 Other income 1380000.00
Employment stabilization subsidy 3725651.13 Non-operating income
and other income
3725651.13
Relocation compensation balance 533390000.00 Non-operating income 533390000.00
Special subsidy funds for environmental protection 1000000.00 Non-operating income 1000000.00
Others 513387.38 Non-operating income
and other income
513387.38
Total 2512762191.51 768300356.21
103SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V
III.
C
ha
ng
e
in
s
co
p
e
o
f
co
ns
o
lid
at
io
n
1.
D
is
p
o
sa
l o
f
su
b
si
d
ia
ri
es
W
he
th
er
t
he
re
is
lo
ss
o
f c
on
tr
ol
o
ve
r
su
b
si
d
ia
rie
s
in
a
s
in
gl
e
d
is
p
os
al
√
Y
es
□
N
o
U
ni
t:
R
M
B
Na
me
of
su
bs
idi
ary
Co
ns
ide
rat
ion
of
dis
po
sa
l o
f
eq
uit
y i
nte
res
t
Sh
are
ho
ldi
ng
of
dis
po
sa
l o
f
eq
uit
y i
nte
res
t
Wa
y o
f
dis
po
sa
l o
f
eq
uit
y i
nte
res
t
Tim
e o
f
los
s o
f c
on
tro
l
Ba
sis
fo
r
de
ter
mi
nin
g t
he
tim
e o
f lo
ss
of
co
ntr
ol
Dif
fer
en
ce
be
tw
ee
n
co
ns
ide
rat
ion
an
d s
ha
re
of
t a
ss
ets
of
rel
ev
an
t
su
bs
idi
ary
as
pe
r
co
ns
oli
da
ted
fin
an
cia
l
sta
tem
en
ts
Re
ma
ini
ng
sh
are
ho
ldi
ng
as
of
th
e d
ate
of
los
s o
f c
on
tro
l
Ca
rry
ing
am
ou
nt
of
rem
ain
ing
sh
are
ho
ldi
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as
of
th
e d
ate
of
los
s o
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Fa
ir v
alu
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f
rem
ain
ing
sh
are
ho
ldi
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as
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th
e d
ate
of
los
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Ga
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r v
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De
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r v
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Re
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the
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mp
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en
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om
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for
me
r
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ary
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to
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or
los
s
Qi
ng
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o C
he
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ing
In
ter
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Lo
gis
tic
s C
o.Lt
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23
00
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.00
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0.0
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Tra
ns
fer
20
20
.2.
29
Wi
tho
ut
co
ntr
ol
11
36
48
11
.86
0.0
0%
0.0
0
0.0
0
0.0
0
Sh
ou
gu
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g C
he
nm
ing
In
du
str
ial
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tic
s C
o.Lt
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fer
20
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tho
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ntr
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54
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2.
C
ha
ng
e
in
c
o
ns
o
lid
at
io
n
sc
o
p
e
fo
r
o
th
er
r
ea
so
ns
Tw
o
w
s
ub
si
d
ia
rie
s
w
er
e
ad
d
ed
t
o
th
e
sc
op
e
of
c
on
so
lid
at
io
n
d
ur
in
g
th
e
re
p
or
tin
g
p
er
io
d
n
am
el
y
C
he
nm
in
g
(O
ve
rs
ea
s)
C
o.L
td. a
nd
C
he
nm
in
g
(S
in
ga
p
or
e)
C
o.Lt
d.
104 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
IX. Interest in other entities
1. Interest in subsidiaries
(1) Group composition
Shareholding (%)
Name of subsidiary
Principal place
of busiss
Place of
incorporation
Nature of
busiss Direct Indirect
Method of
acquisition
Zhanjiang Chenming Pulp & Paper Co. Ltd. Zhanjiang China Zhanjiang China Paper making 100 Establishment
Shouguang Meilun Paper Co. Ltd. Shouguang China Shouguang China Paper making 92 Establishment
Jilin Chenming Paper Co. Ltd. Jilin China Jilin China Paper making 100 Merger and
acquisition
Huanggang Chenming Pulp & Paper Co. Ltd. Huanggang China Huanggang China Pulp production 100 Establishment
Shandong Chenming Paper Sales Co. Ltd. Shouguang China Shouguang China Sales of paper 100 Establishment
Shouguang Chenming Import and Export Trade
Co. Ltd.
Shouguang China Shouguang China Import and export trade 100 Establishment
Jiangxi Chenming Supply Chain Management
Co. Ltd.
Jiangxi China Jiangxi China Trading 70 Establishment
Chenming GmbH Hamburg Germany Hamburg Germany Paper product trading 100 Establishment
Shouguang Chenming Papermaking MachiCo. Ltd.
Shouguang China Shouguang China Machiry
manufacturing
100 Establishment
Shouguang Hongxiang Printing and Packaging
Co. Ltd.
Shouguang China Shouguang China Printing and packaging 100 Merger and
acquisition
Shouguang Chenming Modern Logistic Co. Ltd. Shouguang China Shouguang China Transportation 100 Establishment
Jinan Chenming Investment Management Co. Ltd. Jinan China Jinan China Investment
management
100 Establishment
Huanggang Chenming Arboriculture Development
Co. Ltd.
Huanggang China Huanggang China Arboriculture 100 Establishment
Chenming Arboriculture Co. Ltd. Wuhan China Wuhan China Arboriculture 100 Establishment
Chenming Paper Korea Co. Ltd. Seoul Korea Seoul Korea Sales of paper 100 Establishment
Shandong Chenming Power Supply Holdings Co. Ltd. Shouguang China Shouguang China Power Supply 100 Establishment
Shouguang Shun Da Customs Declaration Co Ltd. Shouguang China Shouguang China Customs declaration 100 Establishment
Shanghai Chenming Industrial Co. Ltd. Shanghai China Shanghai China Property investment
and management
100 Establishment
Shandong Chenming Paper Group (Fuyu) Sales Co. Ltd. Fuyu China Fuyu China Sales of paper 100 Establishment
Shandong Chenming Group Finance Co. Ltd. Jinan China Jinan China Finance 80 20 Establishment
Jiangxi Chenming Paper Co. Ltd. Nanchang China Nanchang China Paper making 42.46 40.79 Establishment
Shouguang Chenming Art Paper Co. Ltd. Shouguang China Shouguang China Paper making 75 Establishment
Hailaer Chenming Paper Co. Ltd. Hailaer China Hailaer China Paper making 75 Establishment
Shandong Grand View Hotel Co. Ltd. Shouguang China Shouguang China Catering 70 Establishment
Wuhan Chenming Hanyang Paper Holdings Co. Ltd. Wuhan China Wuhan China Paper making 65.205 Establishment
Chengdu Chenming Culture Communication Co. Ltd. Chengdu China Chengdu China Marketing 100 Establishment
Shandong Chenming Financial Leasing Co. Ltd. Jinan China Jinan China Financial leasing 100 Establishment
Qingdao Chenming Nonghai Financial Leasing Co. Ltd. Qingdao China Qingdao China Financial leasing 100 Establishment
Chenming (HK) Limited Hong Kong China Hong Kong China Paper product trading 100 Establishment
Chenming (Overseas) Co. Ltd. Hong Kong China Hong Kong China Paper product trading 100 Establishment
Chenming (Singapore) Co. Ltd. Singapore Singapore Paper product trading 100 Establishment
Shouguang Hongyi Decorative Packaging Co. Ltd. Shouguang China Shouguang China Packaging 100 Merger and
acquisition
Shouguang Xinyuan Coal Co. Ltd. Shouguang China Shouguang China Coal 100 Merger and
acquisition
Shouguang City Run Sheng Wasted Paper Recycle
Co. Ltd.
Shouguang China Shouguang China Purchase and
sale of waste
100 Merger and
acquisition
105SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
Shareholding (%)
Name of subsidiary
Principal place
of busiss
Place of
incorporation
Nature of
busiss Direct Indirect
Method of
acquisition
Shouguang Wei Yuan Logistics Company Limited Shouguang China Shouguang China Logistics 100 Merger and
acquisition
Shandong Chenming Pals Co. Ltd. Shouguang China Shouguang China Pals 100 Merger and
acquisition
Shouguang Chenming Floor Board Co. Ltd. Shouguang China Shouguang China Floor board 100 Merger and
acquisition
Shouguang Chenming Cement Co. Limited Shouguang China Shouguang China Cement 100 Establishment
Wuhan Chenming Qianng Electric Power Co. Ltd. Wuhan China Wuhan China Electric power 51 Establishment
Shandong Chenming Investment Limited Jinan China Jinan China Investment 100 Establishment
Japan Chenming Paper Co. Ltd. Tokyo Japan Tokyo Japan Paper product trading 100 Establishment
Chenming International Co. Ltd. Los Angeles USA Los Angeles USA Paper product trading 100 Establishment
Zhanjiang Chenming Arboriculture Development Co. Ltd. Zhanjiang China Zhanjiang China Arboriculture 100 Establishment
Yangjiang Chenming Arboriculture Development Co. Ltd. Yangjiang China Yangjiang China Arboriculture 100 Establishment
Nanchang Chenming Arboriculture Development Co. Ltd. Nanchang China Nanchang China Arboriculture 100 Establishment
Guangdong Huirui Investment Co. Ltd. Zhanjiang China Zhanjiang China Investment 100 并購
Zhanjiang Chenming New-style Wall Materials Co. Ltd. Zhanjiang China Zhanjiang China Wall materials 100 Establishment
Jilin Chenming New-style Wall Materials Co. Ltd. Jilin China Jilin China Wall materials 100 Establishment
Jilin Chenming Logistics Co. Ltd. Jilin China Jilin China Logistics 100 Establishment
Jiangxi Chenming Logistics Co. Ltd. Nanchang China Nanchang China Logistics 100 Establishment
Fuyu Chenming Paper Co. Ltd. Fuyu China Fuyu China Paper making 100 Establishment
Zhanjiang Meilun Pulp & Paper Co. Ltd. Zhanjiang China Zhanjiang China Paper making 100 Establishment
Shanghai Chenming Group Financial Leasing Co. Ltd. Shanghai China Shanghai China Financial leasing 100 Establishment
Guangzhou Chenming Financial Leasing Co. Ltd. Guangzhou China Guangzhou China Financial leasing 100 Establishment
Shanghai Hongtai Real Estate Co. Ltd. Shanghai China Shanghai China Real estate 100 Merger and
acquisition
Shanghai Hongtai Property Management Co. Ltd. Shanghai China Shanghai China Property Management 100 Merger and
acquisition
Shandong Chenming Commercial Factoring Co. Ltd. Jinan China Jinan China Busiss factoring 100 Establishment
Guangzhou Chenming Commercial Factoring Co. Ltd. Guangzhou China Guangzhou China Busiss factoring 51 Establishment
Qingdao Chenming Pulp & Paper Electronic
Commodity Spot Trading Center Co. Ltd.
Qingdao China Qingdao China Trading 30 70 Establishment
Shandong Chenming Paper Coated Paper Sales
Co. Ltd.
Shouguang China Shouguang China Sales 100 Establishment
Zhanjiang Chenming Port Co. Ltd. Zhanjiang China Zhanjiang China Loading and unloading 100 Establishment
Beijing Chenming Financial Leasing Co. Ltd. Beijing China Beijing China Finance 100 Establishment
Chenming Paper United States Co. Ltd. USA 3200 EL CAMINO
REAL SUITE 130
IRVINE CA
Paper trading 100 Establishment
Guangdong Chenming Pals Co. Ltd. Guangdong Guangdong Pals 100 Establishment
Meilun (BVI) Limited Cayman Cayman 100 Establishment
Weifang Chenming Growth Driver Replacement Equity
Investment Fund Partrship (Limited Partrship)
Weifang Weifang Fund 79 Establishment
Nanjing Chenming Culture Communication Co. Ltd. Nanjing Nanjing Marketing 100 Establishment
Shanghai Chenming Pulp & Paper Sales Co. Ltd. Shanghai China Shanghai China Sales of pulp and paper 100 Establishment
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(1) Group composition (Cont’d)
106 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(2) Major non-wholly owd subsidiaries
Unit: RMB
Name of subsidiary
Minority
interest
Gain or loss
attributable to
minority interest
during the period
Dividend to
minority interest
declared during
the period
Closing
balance of
minority interest
Wuhan Chenming Hanyang Paper Holdings Co. Ltd. 34.80% 130961346.12 242658667.31
Shouguang Chenming Art Paper Co. Ltd. 25.00% 692249.39 99058489.45
Jiangxi Chenming Paper Co. Ltd. 16.75% 16377116.11 8375000.00 552551611.24
Shouguang Meilun Paper Co. Ltd. 8.00% 4398120.59 438545346.36
107SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
IX.In
te
re
st
in
o
th
er
e
nt
iti
es
(C
on
t’ d
)
1.
In
te
re
st
in
s
ub
si
d
ia
ri
es
(C
on
t’ d
)
(3
)
K
ey
f
in
an
ci
al
in
fo
rm
at
io
n
o
f
m
aj
o
r
no
n-
w
ho
lly
o
w
d
s
ub
si
d
ia
ri
es
U
ni
t:
R
M
B
Clo
sin
g b
ala
nc
e
Op
en
ing
ba
lan
ce
Na
me
of
su
bs
idi
ary
Cu
rre
nt
as
se
ts
No
n-c
urr
en
t a
ss
ets
To
tal
as
se
ts
Cu
rre
nt
lia
bil
itie
s
No
n-c
urr
en
t
lia
bil
itie
s
To
tal
lia
bil
itie
s
Cu
rre
nt
as
se
ts
No
n-c
urr
en
t a
ss
ets
To
tal
as
se
ts
Cu
rre
nt
lia
bil
itie
s
No
n-c
urr
en
t
lia
bil
itie
s
To
tal
lia
bil
itie
s
Wu
ha
n C
he
nm
ing
Ha
ny
an
g P
ap
er
Ho
ldi
ng
s C
o.Lt
d.
79
63
65
36
9.5
0
10
17
02
42
89
.91
18
13
38
96
59
.41
10
56
10
88
56
.15
38
77
49
75
.64
10
94
88
38
31
.79
24
23
00
84
3.2
8
10
42
53
05
49
.73
12
84
83
13
93
.01
85
46
28
91
8.2
2
84
52
10
86
.72
93
91
50
00
4.9
4
Sh
ou
gu
an
g C
he
nm
ing
Ar
t P
ap
er
Co. L
td.
53
87
20
02
1.4
2
55
20
91
92
1.5
1
10
90
81
19
42
.93
69
45
77
98
5.1
9
69
45
77
98
5.1
9
65
10
04
03
3.6
9
57
32
04
37
8.6
12
24
20
84
12
.36
83
07
43
45
2.1
6
83
07
43
45
2.1
6
Jia
ng
xi
Ch
en
mi
ng
Pa
pe
r C
o.Lt
d.
44
31
05
03
27
.60
37
49
40
65
18
.06
81
80
45
68
45
.66
38
80
51
80
59
.33
10
68
75
83
91
.60
49
49
27
64
50
.93
51
76
44
62
85
.48
38
45
10
02
53
.80
90
21
54
65
39
.28
46
43
40
35
73
.27
11
94
73
63
98
.81
58
38
13
99
72
.08
Sh
ou
gu
an
g M
eil
un
Pa
pe
r C
o.Lt
d.
51
88
03
11
85
.59
11
19
99
41
76
3.8
3
16
38
79
72
94
9.4
2
10
03
92
37
02
4.7
4
87
17
04
60
4.7
9
10
91
09
41
62
9.5
3
50
71
13
71
94
.65
11
45
36
63
65
2.7
3
16
52
48
00
84
7.3
10
01
32
97
48
8.5
11
86
06
18
31
.08
11
19
93
59
31
9.6
7
108 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
IX. Interest in other entities (Cont’d)
2. Interest in joint arrangements or associates
(1) Major joint ventures and associates
Shareholding
Name of joint ventures and associates
Principle place
of busiss
Place of
incorporation
Nature of
busiss Direct Indirect
Accounting
method
Weifang Sime Darby West Port Co. Ltd. Weifang China Weifang China Port construction 50.00 Equity method
Ningbo Qichen Huamei Equity Investment
Fund Partrship (Limited Partrship)
Ningbo China Ningbo China Investment
management
40.00 Equity method
Weifang Xingxing United Chemical
Co. Ltd.
Weifang China Weifang China Chemical engiering 50.00 Equity method
Zhuhai Dechen New Third Board Equity
Investment Fund Company
(Limited Partrship)
Zhuhai China Zhuhai China Investment
management
50.00 Equity method
Goldtrust Futures Co. Ltd. Changsha Changsha Futures 35.43 Equity method
Weifang Chenming Growth Driver
Replacement Equity Investment Fund
Partrship (Limited Partrship)
Weifang Weifang Investment
management
44.44 Equity method
Guangdong Nanyue Bank Co. Ltd. Guangdong Guangdong Bank 16.62 Equity method
109SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
IX. Interest in other entities (Cont’d)
2. Interest in joint arrangements or associates (Cont’d)
(2) Key financial information of major joint ventures
Unit: RMB
Closing balance/
amount for the period
Opening balance/
amount for the prior period
Item
Weifang Sime
Darby West
Port Co. Ltd.Weifang Xingxing
United Chemical
Co. Ltd.
Weifang Sime
Darby West
Port Co. Ltd.Weifang Xingxing
United Chemical
Co. Ltd.
Current assets 21064715.93 128074700.60 26890506.23 94334994.14
Of which: Cash and cash equivalents 4931553.08 74028507.40 8299040.10 25959739.14
Non-current assets 534323243.57 33973666.50 543566206.60 32100379.42
Total assets 555387959.50 162048367.10 570456712.83 126435373.56
Current liabilities 14260458.22 27221822.09 16216196.08 27927549.31
Non-current liabilities 382165018.01 40000000.00 389517611.14
Total liabilities 396425476.23 67221822.09 405733807.22 27927549.31
Equity interest attributable to shareholders of the
parent company 158962483.27 94826545.01 164722905.61 98507824.25
Share of t assets based on shareholding 79481241.64 47413272.51 82361452.81 49253912.13
– Unrealised profit arising from intra-group transactions 7365218.95 44943495.09 7365218.95 44562645.26
Carrying amount of investment in joint ventures 86846460.59 92356767.60 89726671.76 93816557.39
Revenue 31672998.02 25838.06 7744022.16 78509386.24
Finance expenses 10889263.03 -289698.53 10159513.72 -261143.08
Income tax expenses 2733067.31
Net profit -5760422.34 -2919579.59 -15939693.96 8199201.95
Total comprehensive income -5760422.34 -2919579.59 -15939693.96 8199201.95
110 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
IX. Interest in other entities (Cont’d)
2. Interest in joint arrangements or associates (Cont’d)
(3) Key financial information of major associates
Unit: RMB
Closing balance/
amount for the reporting period
Opening balance/
amount for the prior period
Item
Ningbo Qichen
Huamei Equity
Investment Fund
Partrship
(Limited
Partrship)
Zhuhai Dechen
New Third Board
Equity Investment
Fund Company
(Limited
Partrship)
Ningbo Qichen
Huamei Equity
Investment Fund
Partrship
(Limited
Partrship)
Zhuhai Dechen
New Third Board
Equity Investment
Fund Company
(Limited
Partrship)
Current assets 27675379.91 5750038.07 43709912.78 5810979.79
Non-current assets 171877206.00 99020000.00 154450006.00 99020000.00
Total assets 199552585.91 104770038.07 198159918.78 104830979.79
Current liabilities 28721.17 5000.00 21826.94 5000.00
Total liabilities 28721.17 5000.00 21826.94 5000.00
Equity interest attributable to shareholders of the parent company 199523864.74 104765038.07 198138091.84 104825979.79
Share of t assets based on shareholding 79809545.90 52382519.04 79255236.74 52412989.90
Carrying amount of investment in associates 200045046.02 52382519.05 199528847.52 52412989.91
Net profit 1290560.77 -60941.72 1998750.11 217016.34
Total comprehensive income 1290560.77 -60941.72 1998750.11 217016.34
(4) Excess loss of joint ventures or associates
Unit: RMB
Name of joint ventures or associates
Accumulated
unrecognised
loss incurred
for prior periods
Unrecognised
loss (or share of
t profit) for
the period
Unrecognised
loss (or share of
t profit) for
the period
Arjo Wiggins Chenming Specialty Paper Co. Ltd. 7308869.16 7308869.16
Xuchang Chenming Paper Co. Ltd. 4091767.83 9967855.32 14059623.15
111SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
X. Risk relating to financial instruments
Main financial instruments of the Group include motary funds bills receivable accounts receivable other receivables
non-current assets due within oyear other current assets other non-current financial assets long-term receivables
short-term borrowings accounts payable other payables short-term borrowings non-current liabilities due within oyear
long-term borrowings bonds payable and Long-term payables. Details of financial instruments refer to related notes. The risks
associated with these financial instruments and the risk management policies adopted by the 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 Group aims to seek the appropriate balance between the risks and befits in order to mitigate the adverse effects
on the Group’s financial performance from financial risk. Based on such objectives the Group’s risk management
policies are established to identify and analyse the risks faced by the Group to set appropriate risk limits and devise
corresponding internal control procedures and to monitor risks faced by the Group. Such risk management policies and
internal control systems are reviewed regularly to adapt to changes in market conditions and the Group’s activities. The
internal audit department of the Group undertakes both regular and ad-hoc reviews of risk management controls and
procedures.Risks associated with the financial instrument of the Group mainly include credit risk liquidity risk market risk (including
exchange rate risk interest rate risk and commodity price risk).The board of directors is responsible to plan and establish the Group’s risk management structure make risk
management policies and related guidelis and supervise the implementation of risk management. The Group has
already made risk management risks to identify and analyse risks that the Group face. These policies mentiod specific
risks covering market credit risk and liquidity risk etc. The Group regularly assesses market environment and the
operation of the Group changes to determiif to make alteration to risk management policy and systems. The Group’s
risk management is implemented by Risk Management Committee according to the approval of the board of directors.The Risk Management Committee works closely with other busiss department of the Group to identify evaluating
and avoiding certain risks. The Group’s internal audit department will audit the risk management control and procedures
regularly and report the result to audit committee of the Group.The Group spreads risks through diverse investment and busiss lis and through making risk management policy to
reduce risks of single industry specific area and counterpart.
(1) Credit risks
Credit risk refers to risk associated with the default of contract obligation of a transaction counterparty.
The Group manages credit risk based category. Credit risks mainly arose from bank deposit bills receivable
accounts receivable other receivables and long-term receivables etc.The Group’s bank deposit mainly deposits in state-owd banks and other large and medium-sized listed banks.The Group anticipated that the bank deposit does not have significant credit risk.
For bill receivable accounts receivables other receivables and long-term receivables the Group set related
policies to control exposure of credit risks. The Group evaluate client’s credit quality and set related credit period
based on the client’s financial status credit records and other factors such as current market situation etc. The
Group keep monitor the client’s credit record and for client with deteriorate credit records the Group will ensure
the credit risk is under control in whole by means of written notice of payment collection shorten or cancel credit
period.The Group’s debtor spread over different industry and area. The Group continued to assess the credit evaluation
to receivables and purchase credit guarantee insurance if cessary.The biggest credit risk exposure of the Group is the carrying amount of each financial asset in the balance sheet.The Group did not provide financial guarantee which resulted in credit risks.The amount of top 5 accounts receivable of the Group accounted for 31.17% (2019: 29.05%) of the Group’s total
accounts receivables. The amount of top 5 other receivable of the Group accounted for 60.04% (2019: 87.09%) of
the Group’s total other receivables.
112 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont’d)
(2) Liquidity risk
Liquidity risk refers to the risks that the Group will not be able to meet its obligations associated with its financial
liabilities that are settled by delivering cash or other financial assets.To manage the liquidity risk the Group monitors and maintains a level of cash and cash equivalents to finance the
Group’s operations and mitigate the effects of fluctuations in cash flows. The management of the Group monitors
the usage of bank borrowings and ensures compliance with the borrowing agreements. In the meantime we
obtain commitments from major financial institutions to provide sufficient standby funds to meet short-term and
long-term funding eds.Operating cash was gerated from capital and bank and other borrowings. As of 30 Ju2020 the Group’s
unused bank loan credit is RMB35354.9489 million (31 December 2019: 34072.1416 million).
As at the end of the period the financial assets and financial liabilities of the Group are analysed by their maturity
date as below at their undiscounted contractual cash flows (in ten thousand RMB):
30 Ju2020
Item Within 1 year 1-2 years 2-3 years 3-4 years Over 4 years Total
Financial assets:
Motary funds 1930176.12 1930176.12
Accounts receivable 289776.58 289776.58
Accounts receivable financial 141870.27 141870.27
Other receivables 352427.31 352427.31
Long-term receivables 61373.61 6484.02 8785.38 76643.01
Other current assets 855840.76 855840.76
Non-current assets due within oyear 601058.02 601058.02
Total financial assets 4171149.06 61373.61 6484.02 8785.38 - 4247792.07
Financial liabilities:
Short-term borrowings 3855431.12 3855431.12
Bills payable 274760.68 274760.68
Accounts payable 424490.64 424490.64
Other payables 169437.01 169437.01
Non-current liabilities due within oyear 693685.95 693685.95
Other current liabilities 15068.62 15068.62
Long-term borrowings 273762.32 116584.06 32147.50 278442.29 700936.17
Bonds payable 127813.42 35000.00 162813.42
Lease liabilities 457.07 443.29 472.83 7277.58 8650.78
Long-term payables 117454.39 73980.58 26179.44 57263.68 274878.09
Total financial liabilities and contingent
liabilities 5432874.02 519487.20 226007.93 58799.77 342983.55 6580152.47
113SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont’d)
(2) Liquidity risk (Cont’d)
As at the beginning of the period the financial assets and financial liabilities of the Group at the reporting date are
analysed by their maturity date as below at their undiscounted contractual cash flows (in ten thousand RMB):
31 December 2019
Item Within 1 year 1-2 years 2-3 years 3-4 years Over 4 years Total
Financial assets:
Motary funds 1906656.98 1906656.98
Accounts receivable 307736.22 307736.22
Accounts receivable financial 44291.59 44291.59
Other receivables 270183.01 270183.01
Long-term receivables 17413.54 23488.20 81470.83 122372.57
Other current assets 808452.56 808452.56
Non-current assets due within oyear 697303.80 697303.80
Total financial assets 4034624.16 17413.54 23488.20 81470.83 4156996.73
Financial liabilities:
Short-term borrowings 3688315.60 3688315.60
Bills payable 151504.82 151504.82
Accounts payable 435108.76 435108.76
Other payables 238605.99 238605.99
Non-current liabilities due within oyear 566295.89 566295.89
Other current liabilities 22240.25 22240.25
Long-term borrowings 521440.85 117319.88 86672.98 188600.26 914033.97
Bonds payable 116920.09 8907.00 125827.09
Lease liabilities 457.07 443.29 472.83 7220.12 8593.31
Long-term payables 64272.98 96887.59 83321.65 87671.33 332153.55
Total financial liabilities and contingent
liabilities 5102071.31 703090.99 223557.76 170467.46 283491.71 6482679.23
The financial liabilities disclosed above are based on cash flows that are not discounted and may differ from the
carrying amount of the liitems of the balance sheet. Financial guarantees issued do not represent the amount
to be paid.
114 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont’d)
(3) Market risk
Market risk includes interest rate risk and currency risk refers to the risk that the fair value or future cash flow of a
financial instrument will be fluctuated due to the changes in market price.Interest 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 Group’s interest rate risk arises from long-term interest-bearing liabilities including long-term borrowing and
bonds payable. Financial liabilities issued at floating rate expose the Group to cash flow interest rate risk. Financial
liabilities issued at fixed rate expose the Group to fair value interest rate risk. The Group determis the relative
proportions of its fixed rate and floating rate contracts depending on the prevailing market conditions and to
maintain an appropriate combination of financial instruments at fixed rate and floating rate through regular reviews
and monitors.The Group’s finance department continuously monitors the interest rate position of the Group. The Group 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 cessary. Increase in interest rates will increase
the cost of w borrowing and the interest expenses with respect to the Group’s outstanding floating rate
interest-bearing borrowings and therefore could have a material adverse effect on the Group’s financial result.The management will make adjustments with reference to the latest market conditions. These adjustments may
include enter into interest swap agreement to mitigate its exposure to the interest rate risk.Interest bearing financial instrument held by the Group are as follows (in ten thousand RMB):
Item
Balance for
the period
Balance for
the prior year
Financial instrument with fixed interest rate
Financial liabilities
Of which: Short-term borrowings 3855431.12 3688315.60
Long-term borrowings 1163772.48 914033.97
Bonds payable 162813.42 125827.09
Total 5182017.03 4728176.66
Financial instrument with float interest rate
Financial assets
Of which: Motary funds 221115.73 288790.99
Total 221115.73 288790.99
The financial instruments held by the Group at the reporting date expose the Group to fair value interest rate risk.This sensitivity analysis as above has been determid 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 w interest rates.The non-derivative tools issued at floating interest rate held by the Group at the reporting date expose the Group
to cash flow interest rate risk. The effect to the t 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.
115SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont’d)
(3) Market risk (Cont’d)
Exchange rate risk
Exchange risk refers to the risk that the fair value or future cash flows of a financial instrument will be fluctuated
due to the changes in foreign currency rates. Foreign currency risk arises on financial instruments that are
denominated in a currency other than the functional currency in which they are measured.The principal busiss of the Group is situated within the PRC and is denominated in RMB. However foreign
exchange risks still exist for the assets and liabilities in foreign currencies and future foreign currency transactions
as recognised by the Group (assets and liabilities in foreign currencies and foreign currency transactions are
mainly denominated in US dollar Japase yen Euro and South Korean Won).The following table details the financial assets and liabilities held by the Group which denominated in foreign
currencies and amounted to RMB as at 30 Ju2020 are as follows (in RMB ten thousands):
Liabilities denominated
in foreign currency
Asset denominated
in foreign currency
Item
As at the end
of the period
As at the
beginning of
the period
As at the end
of the period
As at the
beginning of
the period
USD 569541.73 453753.14 95384.06 147730.57
EUR 9260.62 9890.43 7536.40 5131.53
HKD 2153.25 3150.80 3335.82 63.69
KRW
YEN 941.18
GBP 5.22 1.86
Total 580955.59 466794.37 106261.50 153868.82
The Company closely monitors the impact of exchange rate changes on the Company’s foreign exchange risk. The
Company has not taken any measures to avoid foreign exchange risks. However the management is responsible
for monitoring exchange rate risks and will consider hedging significant exchange rate risks when cessary.With other variables unchanged the after-tax effect of the possible reasonable changes in the exchange rate of
foreign currency to RMB on the current profit and loss of the Group is as follows (in RMB ten thousands):
Increase (decrease) in after-tax profits Balance for the period Balance for the prior year
Increase in exchange rate of USD 5% -17317.30 5% -15301.13
Decrease in exchange rate of USD -5% 17317.30 -5% 15301.13
Increase in exchange rate of Euro 5% -107.48 5% -237.95
Decrease in exchange rate of Euro -5% 107.48 -5% 237.95
116 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
X. Risk relating to financial instruments (Cont’d)
2. Capital management
The objective of the Group’s capital risk management is to safeguard the Group’s ability to continue as a going concern
in order to provide returns for shareholders and befits 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 Group may adjust the number of dividends paid to shareholders
return capital to shareholders issue w shares or disposes assets to reduce its liabilities.The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as t liabilities divided by total
capital. As at 30 Ju2020 the Group’s gearing ratio is 73.49% (31 December 2019: 73.11%).XI. Fair value
1. Fair value of assets and liabilities measured at fair value as at the end of the period
Unit: RMB
Fair value as at the end of the period
Item Level 1 Level 2 Level 3 Total
I. Continuous measurement of fair value – – – –
(I) Other non-current financial assets 147445653.55 147445653.55
(II) Biological assets
1. Consumable biological assets 1556753786.65 1556753786.65
2. Level 3 continuous measurement adjustment between opening and closing value and sensitivity of
unobservable inputs
The Company adopts sensitivity analysis techniques to analyse the possible effects of reasonable and probable changes
in risk variables to profit or loss for the period or to the shareholders’ equity. Since risk variables seldom change on a
stand-alobasis while the correlation between variables may have significant effect on the ultimate amount of change
effected by the change in a single risk variable the analysis below is based on the assumption that the changes in each
variable occurred separately.
For the year For the prior year
Item
Change in
investment yield
or discount rate
Impact
on profit
Impact on
shareholders’
equity
Impact
on profit
Impact on
shareholders’
equity
Consumable biological assets Increases by 1% -32178275.96 -32178275.96 -33202809.15 -33202809.15
Consumable biological assets Decreases by 1% 36713253.94 36713253.94 36397424.88 36397424.88
Note: In the prior period the income method was used to evaluate the impact of the change in the discount rate on the fair value. In the current
period the harvest present value method is used to assess the impact of the change in investment yield on fair value.
3. Fair value of financial assets and financial liabilities not measured at fair value
The Company’s financial assets and financial liabilities not measured at fair value mainly consist of: accounts receivable
short-term borrowings accounts payable long-term borrowings bonds payable and long-term payables. The carrying
amount of the above financial assets and financial liabilities deviates from the fair value by a small amount.
117SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XII. Related parties and related party transactions
1. Parent company of the Company
Name of parent company
Place of
incorporation Nature of busiss
Registered
capital
(RMB’ 0000)
Shareholding
of the parent
company in the
Company
Voting right
of the parent
company in
the Company
Chenming Holdings Company Limited Shouguang
Investment in manufacture
of paper electricity steam
arboriculture 123878.77 27.87% 27.87%
Note: The ultimate controller of the Company is State-owd Assets Supervision and Administration Bureau of Shouguang City.
2. Subsidiaries of the Company
Please refer to Note IX. 1. Interest in subsidiaries for details.
3. Joint ventures and associates of the Company
Please refer to Note IX. 2. Interest in joint ventures or associates for details.
Balance of related party transaction between the Company and its joint ventures or associates during the period or prior
periods are as follows:
Name of joint ventures or associates Relation
Shouguang Chenming Huisen New-style Construction
Materials Co. Ltd. A joint venture of the Company
Xuchang Chenming Paper Co. Ltd. An associate of the Company
Weifang Sime Darby West Port Co. Ltd. A joint venture of the Company
Jiangxi Jiangbao Media Colour Printing Co. Ltd. An associate of the Company
Chenming (Qingdao) Asset Management Co. Ltd. An associate of the Company
Jiangxi Chenming Port Co. Ltd. An associate of the Company
Weifang Xingxing United Chemical Co. Ltd. A joint venture of the Company
Guangdong Nanyue Bank Co. Ltd. An associate of the Company
118 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XII. Related parties and related party transactions (Cont’d)
4. Other related parties
Name of other related parties Relation
Shandong Shouguang Jinxin Investment Development
Holdings Group Co. Ltd.Shareholder of the Company’s largest shareholder
Shouguang Henglian Enterprise Investment Limited Shareholder of the Company’s largest shareholder
Shouguang Ruifeng Enterprise Investment Limited Shareholder of the Company’s largest shareholder
Chenming Holdings (Hong Kong) Limited Subsidiary of the Company’s largest shareholder
Zhanjiang Chenming Real Estate Co. Ltd. Subsidiary of the Company’s largest shareholder
Qingdao Hongji Weiye Investment Co. Ltd. Subsidiary of the Company’s largest shareholder
Shouguang Hengying Real Estate Co. Ltd. Subsidiary of the Company’s largest shareholder
Shouguang Hengtai Enterprise Investment Co. Ltd. A company invested by the Directors and senior
management of the Company
Shouguang Huixin Construction Materials Co. Ltd. A company invested by the Directors and senior
management of the Company
Shouguang Chenming Guangyuan Real Property Co. Ltd.and its subsidiaries
A company invested by the Directors and senior
management of the Company
Qingdao Chenming Nonghai Investment Co. Ltd. and
its subsidiaries
A company invested by the Directors and senior
management of the Company
Nanchang Chenjian New-style Wall Materials Co. Ltd. A company invested by the Directors and senior
management of the Company
Shouguang Hengde Enterprises Investment Co. Ltd. A company invested by the Directors and senior
management of the Company
Zhejiang Huaming Investment Management Co. Ltd. and
its subsidiaries
Directors and senior management served by the
Company’s Directors
Hebei Chenming Zhongjin Real Estate Development Co. Ltd.and its subsidiaries
Directors and senior management served by the
Company’s Supervisors
Wuhan Chenming Zhongjin Real Estate Co. Ltd. and
its subsidiaries
Directors and senior management served by the
Company’s Supervisors
Wuhan Rongsheng Zhongjin Development and Investment
Co. Ltd. and its subsidiaries
Directors and senior management served by the
Company’s Supervisors
Shouguang Hengyuan Ergy Co. Ltd. Directors and senior management served by the
Company’s Supervisors
Qingzhou Chenming Denaturation Amylum Co. Ltd. Investee of the Company
Anhui Time Source Corporation Investee of the Company
Shandong Hongqiao Venture Capital Co. Ltd. Investee of the Company
Shanghai Hengzheng Venture Investment Center
(Limited Partrship)
Investee of the Company
Lide Technology Co. Ltd. Investee of the Company
Jiangxi Jiuyu Ergy Co. Ltd. and its subsidiaries Directors and senior management served by the
Company’s Directors in the past twelve month
Chen Hongguo Hu Changqing Li Xingchun Geng Guanglin
Li Feng Chen Gang Dong Lianming and Yuan Xikun
Key management personl
119SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XII. Related parties and related party transactions (Cont’d)
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
Related party
Details of related party
transaction
Amount for
the period
Transaction
facility
approved
Whether the
transaction
facility is
exceeded
Amount
for the prior
period
Jiangxi Jiuyu Ergy Co. Ltd. Procurement of natural
gas and heavy oil etc.
68606145.25 600000000.00 No 112367700.00
Weifang Xingxing United
Chemical Co. Ltd.
Procurement of hydrogen
peroxide etc.
0 45877683.03
Table on sales of goods/providing of services
Unit: RMB
Related party
Details of related
party transaction
Amount for
the period
Amount for
the prior period
Shouguang Chenming Huisen New-style
Construction Materials Co. Ltd. Sales of electricity and gas 3186741.72 3980581.15
Shouguang Huixin Construction Materials
Co. Ltd. Machiry materials 2422678.94 34785.90
120 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Guarantee
The Company as guarantor
Unit: RMB
Guarantor Party being guaranteed
Amount
under
guarantee
Starting date
of guarantee
Expiry date
of guarantee
Whether
performance
of guarantee
is completed
Shandong Chenming Paper Holdings Limited Weifang Sime Darby West Port Co. Ltd. 135000000.00 2017/12/20 2027/12/20 No
Shandong Chenming Paper Holdings Limited Shouguang Meilun Paper Co. Ltd. 125705687.82 2019/8/6 2020/8/6 No
Shandong Chenming Paper Holdings Limited Shouguang Meilun Paper Co. Ltd. 100000000.00 2019/9/30 2020/9/30 No
Shandong Chenming Paper Holdings Limited Shouguang Meilun Paper Co. Ltd. 168622526.92 2019/12/9 2020/12/3 No
Shandong Chenming Paper Holdings Limited Shouguang Meilun Paper Co. Ltd. 24851540.87 2020/3/25 2020/9/25 No
Shandong Chenming Paper Holdings Limited Shouguang Meilun Paper Co. Ltd. 99476860.75 2020/4/8 2020/10/8 No
Shandong Chenming Paper Holdings Limited Shouguang Meilun Paper Co. Ltd. 132570677.48 2020/6/8 2020/12/8 No
Shandong Chenming Paper Holdings Limited Shandong Chenming Paper Sales Co. Ltd. 280000000.00 2019/7/30 2020/7/29 No
Shandong Chenming Paper Holdings Limited Shandong Chenming Paper Sales Co. Ltd. 253272043.36 2020/3/9 2021/3/4 No
Shandong Chenming Paper Holdings Limited Shandong Chenming Paper Sales Co. Ltd. 60000000.00 2020/3/31 2021/1/22 No
Shandong Chenming Paper Holdings Limited Shandong Chenming Paper Sales Co. Ltd. 240000000.00 2020/3/31 2020/9/7 No
Shandong Chenming Paper Holdings Limited Shandong Chenming Paper Sales Co. Ltd. 420456575.63 2020/5/6 2021/5/2 No
Shandong Chenming Paper Holdings Limited Shandong Chenming Paper Sales Co. Ltd. 100000000.00 2020/6/10 2021/6/7 No
Shandong Chenming Paper Holdings Limited Shandong Chenming Paper Sales Co. Ltd. 270000000.00 2020/6/16 2021/1/22 No
Shandong Chenming Paper Holdings Limited Shanghai Chenming Pulp & Paper Sales
Co. Ltd
20000000.00 2019/8/30 2020/8/7 No
Shandong Chenming Paper Holdings Limited Shanghai Chenming Pulp & Paper Sales
Co. Ltd
10000000.00 2019/12/27 2020/12/24 No
Shandong Chenming Paper Holdings Limited Shanghai Chenming Pulp & Paper Sales
Co. Ltd
5000000.00 2020/5/11 2021/5/10 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2019/8/16 2020/8/14 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 86000000.00 2019/8/21 2020/8/20 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 50108549.49 2019/9/6 2020/9/6 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 200000000.00 2019/10/9 2020/10/8 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 80000000.00 2019/10/14 2020/10/13 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 110000000.00 2019/10/16 2020/10/15 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 115000000.00 2019/11/5 2020/11/4 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 90000000.00 2019/11/8 2020/11/7 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 166668000.00 2019/11/13 2020/11/13 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 90000000.00 2019/11/5 2020/11/14 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2019/12/9 2020/12/8 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2019/12/17 2020/12/16 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 49556500.00 2019/11/13 2020/11/5 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 89000000.00 2020/3/18 2020/9/14 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 99600000.00 2020/3/26 2020/9/22 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2020/1/14 2021/1/13 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 125000000.00 2020/1/21 2021/1/21 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2020/2/11 2021/2/10 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2020/2/19 2021/2/18 No
121SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
Guarantor Party being guaranteed
Amount
under
guarantee
Starting date
of guarantee
Expiry date
of guarantee
Whether
performance
of guarantee
is completed
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2020/2/27 2021/2/25 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2020/2/18 2021/2/12 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 300000000.00 2020/2/29 2021/2/28 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 30000000.00 2020/3/13 2021/3/10 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 70000000.00 2020/3/13 2021/3/12 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2020/3/25 2021/3/25 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 50000000.00 2020/3/27 2021/3/22 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 38229300.00 2020/3/25 2021/3/24 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 53096250.00 2020/1/13 2020/7/10 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 353975000.00 2020/2/26 2021/2/25 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 30071580.00 2020/4/29 2020/10/26 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 90000000.00 2020/5/18 2020/11/17 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 31857750.00 2020/5/21 2021/5/18 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 33981600.00 2020/5/27 2020/11/26 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 51500000.00 2020/6/1 2020/11/24 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 90000000.00 2020/6/3 2020/12/1 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 90000000.00 2020/6/8 2020/12/5 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2020/5/19 2020/8/19 No
Shandong Chenming Paper Holdings Limited Jilin Chenming Paper Co. Ltd. 20000000.00 2020/3/16 2021/2/26 No
Shandong Chenming Paper Holdings Limited Jilin Chenming Paper Co. Ltd. 20053500.00 2020/3/6 2020/9/2 No
Shandong Chenming Paper Holdings Limited Jilin Chenming Paper Co. Ltd. 78000000.00 2020/5/18 2020/11/16 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 150000000.00 2019/12/4 2020/12/4 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 46800000.00 2020/2/14 2021/2/13 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 25000000.00 2020/2/25 2020/8/21 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 60000000.00 2020/2/24 2021/2/23 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 99000000.00 2020/3/3 2021/3/2 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 150000000.00 2020/3/20 2021/3/19 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 90000000.00 2020/3/27 2021/3/26 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 49500000.00 2020/3/19 2021/3/19 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 100000000.00 2020/4/10 2021/4/9 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 70000000.00 2020/4/15 2021/4/14 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 73000000.00 2020/5/27 2021/5/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 200000000.00 2019/9/29 2020/9/28 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 100000000.00 2019/12/23 2020/12/22 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 20000000.00 2020/3/30 2021/3/29 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 70000000.00 2020/4/27 2021/3/29 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 90000000.00 2020/6/24 2021/3/29 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 100000000.00 2020/5/18 2020/12/22 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 20000000.00 2020/3/23 2021/3/22 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 96942436.11 2020/4/14 2021/4/13 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 30000000.00 2020/6/9 2021/6/8 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 38057563.89 2020/6/19 2021/6/18 No
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Guarantee (Cont’d)
122 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
Guarantor Party being guaranteed
Amount
under
guarantee
Starting date
of guarantee
Expiry date
of guarantee
Whether
performance
of guarantee
is completed
Jiangxi Chenming Paper Co. Ltd. Chenming (HK) Limited 154687075.00 2019/1/12 2020/1/10 No
Jiangxi Chenming Paper Co. Ltd. Chenming (HK) Limited 94538935.05 2020/3/19 2021/3/9 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 70795000.00 2019/8/5 2021/5/30 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 200000000.00 2019/6/28 2022/6/27 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 300000000.00 2019/7/1 2020/6/27 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 85000000.00 2019/10/23 2022/6/27 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co. Ltd. 114750000.00 2019/11/22 2022/6/27 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. Chenming (HK) Limited 106192500.00 2019/3/28 2022/1/7 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. Chenming (HK) Limited 208385082.50 2019/4/2 2022/1/6 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 142297950.00 2019/4/30 2022/4/22 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 138191840.00 2018/4/23 2021/4/7 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 79290400.00 2018/5/4 2021/4/6 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 49839680.00 2018/5/17 2021/5/5 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. Chenming (HK) Limited 262533732.74 2018/8/8 2021/5/25 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. Chenming (HK) Limited 262533732.74 2018/8/8 2021/5/25 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. Chenming (HK) Limited 267782087.50 2018/9/4 2021/6/21 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. Chenming (HK) Limited 267782087.50 2018/9/6 2021/6/21 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. Chenming (HK) Limited 168138125.00 2019/1/25 2021/5/21 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. Chenming (HK) Limited 106192500.00 2019/3/28 2021/6/16 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. Chenming (HK) Limited 208385082.50 2019/4/2 2021/6/10 No
Zhanjiang Chenming Pulp & Paper Co. Ltd. Chenming (HK) Limited 138050250.00 2019/7/19 2021/6/19 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 198933950.00 2018/11/30 2020/10/30 No
Shandong Chenming Paper Holdings Limited Shandong Chenming Financial Leasing
Co. Ltd.
25000000.00 2017/9/21 2020/9/21 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 330000000.00 2018/10/31 2020/10/30 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 70000000.00 2018/10/31 2020/10/30 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 100000000.00 2018/12/18 2020/10/31 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 200000000.00 2019/7/12 2021/7/12 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 140000000.00 2019/12/4 2021/12/3 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co. Ltd. 700870500.00 2019/12/27 2022/12/27 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 38240000.00 2017/1/5 2020/9/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 38240000.00 2017/1/5 2020/12/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 43690000.00 2017/1/5 2021/3/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 43690000.00 2017/1/5 2021/6/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 3900000.00 2017/1/5 2021/9/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 36260000.00 2017/2/3 2021/9/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 40160000.00 2017/2/3 2021/12/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 40160000.00 2017/2/3 2022/3/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 33420000.00 2017/2/3 2022/6/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co. Ltd. 45017527.85 2018/11/14 2020/9/26 No
Total 13357901980.70
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Guarantee (Cont’d)
123SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(3) Related party lending and borrowing
Unit: RMB
Related party
Borrowing
amount
Starting
date Expiry date Description
Lending
Weifang Sime Darby West Port Co. Ltd. 59500000.00 2018/07/09 2022/07/08
(4) Interest on related party lending and borrowing
Unit: RMB
Related party
Related party
transaction
Amount for
the period
Amount for
the prior period
Weifang Sime Darby West Port Co. Ltd. Interest income 1980057.34 1794916.65
124 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XII. Related parties and related party transactions (Cont’d)
6. Related party accounts receivable and accounts payable
(1) Accounts receivables
Unit: RMB
Closing balance Opening balance
Item Book balance Bad debt Book balance Bad debt
Accounts receivable:
Shouguang Chenming Huisen New-style Construction
Materials Co. Ltd. 1548830.12 82185.06 2008185.60 61132.76
Shouguang Huixin Construction Materials Co. Ltd. 24103255.17 2298275.87
Total 25652085.29 2380460.92 2008185.60 61132.76
Prepayments:
Jiangxi Jiuyu Ergy Co. Ltd. 12089761.12 15358225.83
Shouguang Hengyuan Ergy Co. Ltd. 8838324.17 20179937.87
Total 20928085.29 – 35538163.70 –
Other receivables:
Shouguang Hengyuan Ergy Co. Ltd. 10000000.00 757910.97
Weifang Sime Darby West Port Co. Ltd. 66436602.10 5151661.58 64889583.26 5151661.58
Total 66436602.10 5151661.58 74889583.26 5909572.55
125SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XII. Related parties and related party transactions (Cont’d)
6. Related party accounts receivable and accounts payable (Cont’d)
(2) Accounts payable
Unit: RMB
Item Related party
Closing book
balance
Opening book
balance
Accounts payable: Weifang Xingxing Joint Chemical Co. Ltd. 26905494.34 26905494.34
Accounts payable: Jiangxi Jiuyu Ergy Co. Ltd. 4067576.01 3054956.65
Accounts payable: Jiangxi Chenming Port Co. Ltd. 910329.34
Total 31883399.69 29960450.99
Other current liabilities Guangdong Nanyue Bank Co. Ltd. 400000000.00 400000000.00
Total 400000000.00 400000000.00
(3) Deposits with related parties
Unit: RMB
Related party Related party transaction
Closing book
balance
Opening book
balance
Bank deposit Guangdong Nanyue Bank Co. Ltd. 83915.75 85668.46
Other motary funds Guangdong Nanyue Bank Co. Ltd. 1964668000.00 2414668000.00
(4) Loans from related parties
Unit: RMB
Item name Related party
Closing book
balance
Opening book
balance
Short-term borrowings Guangdong Nanyue Bank Co. Ltd. 2598668000.00 2948970000.00
126 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XIII. Share-based payment
1. Geral information of share-based payment
√ Applicable □ Not applicable
Unit: RMB
Total equity instruments of the Company granted during the period 226860000
On 29 May 2020 the Company disclosed the Announcement on Grant of Restricted Shares to Participants and
determid to grant 79600000 restricted shares to 111 participants at the grant price of RMB2.85 per share. On 9 July
2020 the Company disclosed the announcement on Completion of Registration of the Grant of the 2020 Restricted A
Shares. The restricted shares will be unlocked respectively after 24 months 36 months and 48 months from the date of
completion of the registration of the restricted shares under the grant.
2. Equity-settled share-based payment
√ Applicable □ Not applicable
Unit: RMB
The method of determining the fair value of equity instrument
on the grant date
The Company chooses to calculate the
fair value based on the closing price of
the Company’s shares on the grant
date deducting the grant price
Basis for determining the quantity of exercisable equity instruments Based on subsequent information such
as the latest changes in the number of
participants who are entitled to exercise
and the completion status of
performance targets
Reasons for significant difference between the current estimate and
previous estimate
NoAccumulated amount of equity-settled share-based payment included
in the capital reserve
146264104
Total amount of equity-settled share-based payment recognised
in the current period
34443000
127SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XIV. Undertaking and contingency
1. Significant commitments
(1) Capital commitment
Item Closing balance Opening balance
Commitments in relation to acquisition and construction of
long-term assets 360655698.54 260421348.84
Total 360655698.54 260421348.84
2. Contingency
Contingent liabilities arising from pending litigation and its financial impacts
In October 2005 the Company and Hong Kong ArjowigginsHKK2Limited (“HKK2”) jointly established Arjo Wiggins
Chenming Specialty Paper Co. Ltd. in Shouguang Shandong Province which is engaged in the production of special
paper decoration paper and draft paper. However such company experienced poor management due to financial
crisis. Hence such company was forced to dissolve in October 2008.In October 2012 HKK2 submitted for arbitration application to Hong Kong International Arbitration Centre Hong Kong
Special Administration of PRC on the ground of default of the joint venture agreement by the Company. In November
2015 Hong Kong International Arbitration Centre announced arbitration result stating that the Company should
compensate HKK2 with economic loss of RMB167 million arbitration fee of HK$3.30 million and legal fee of USD3.54
million together with interest thereon calculated at 8% per annum. In October 2016 the Company received a statutory
demand stating that if the Company fails to perform the arbitration results within 21 days the liquidation application
on H shares of the Company will be submitted. Subsequently HKK2 submitted H shares liquidation application to the
arbitration centre.In November 2016 the Company submitted application to the Court of First Instance of the High Court of the HKSAR
and received an injunction stating that “the applicant is prohibited from applying for liquidation on the Company”.
In February 2017 HKK2 submitted an appeal to the court. In Ju2017 the court dismissed the injunction received by
the Company. In the same month the Company received the liquidation application submitted by the defendant to the
High Court of Hong Kong which alleged that the Company should compensate the defendant with economic loss of
RMB167 million legal fee of USD3.54 million and arbitration fee of HK$3.30 million together with interest thereon due to
failure in compliance of the arbitration results.In September 2017 the Company procured a deposit of HK$389 million to the High Court of Hong Kong and appealed
against the injunction to the court. In May 2018 the court session of the case commenced. At present the injunction
case is still in progress.
In 2017 the Company made provision of RMB325259082.28 for the expected liability arising from this litigation.
However as at 30 Ju2020 judgment of the court of Hong Kong is yet to be made and the expected loss is uncertain.Hence such expected liability is still stated under the balance sheet.
128 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XV. Post-balance sheet events
As of 10 August 2020 (the date of approval of the report by the Board of Directors) the Group has no events that should be
disclosed after the balance sheet date.XVI. Other material matters
1. Segment information
(1) Basis for determination and accounting policies
According to the Group’s internal organizational structure management requirements and internal reporting
system the Group’s operating busiss is divided into 5 reporting segments. These report segments are
determid 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 determithe
allocation of resources to them and evaluate their performance.The Group’s reporting segments include:
(1) Machipaper segment which is responsible for production and sales of machipaper;
(2) Financial services segment which provides financial services;
(3) Investment real estate segment which is responsible for real estate rental;
(4) Other segments which is responsible for the above segments otherwise.
Segment report information is disclosed in accordance with the accounting policies and measurement standards
adopted by each segment when reporting to management. These accounting policies and measurement basis are
consistent with the accounting policies and measurement basis used in preparing the financial statements.
(2) Financial Information of Reporting Segment
Unit: RMB’ 0000
Item
Machipaper
Financial
Services
Investment
real estate Others
Inter-segment
offset Total
Revenue from principal activities 1219124.98 80275.71 3567.20 45013.05 52343.59 1295637.35
Costs of principal activities 935107.60 47183.26 6399.64 39695.04 57817.01 970568.53
Total assets 9494702.87 2674717.40 565998.03 509033.89 3341044.22 9903407.97
Total liabilities 6753299.01 1306696.34 314968.25 286852.27 1383568.99 7278246.88
129SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XVI. Other material matters (Cont’d)
2. Government Subsidies
(1) Government subsidies included in deferred income will be subsequently measured using the gross method
Unit: RMB
Liability item
Opening
balance
New grants
for the period
Include in
other income
for the period
Other
changes
Closing
balance
Asset-related/
income-
related
National Science and Technology Support
Program Project Funding 1452525.00 82350.00 1370175.00 Asset-related
Sewage treatment and water saving
reconstruction 63274136.71 1588476.44 61685660.27 Asset-related
Financial subsidies for technical transformation
project 168182448.80 28360000.00 6391903.86 190150544.94 Asset-related
Funding for environmental protection 700228305.19 24595985.84 675632319.35 Asset-related
Industrial logistics park reconstruction
compensation 51960000.00 51960000.00 Asset-related
Zhanjiang integrated forestry pulp and
paper project 67047201.50 10098654.93 56948546.57 Asset-related
Huanggang pulp-forestry-paper project 681564072.66 11359401.20 670204671.46 Asset-related
Others 37304645.25 794727.54 36509917.71 Asset-related
Total 1771013335.11 28360000.00 54911499.81 51960000.00 1692501835.30
(2) Government subsidies calculated into the current profit and loss using the total method
Unit: RMB
Subsidy Item Type
Amount
credited to
profit or loss for
the prior period
Amount
credited to
profit or loss
for the period
Presentable
items included
in profit or loss
Asset-related/
revenue-related
Interest subsidy Financial appropriation 1087500.00 Finance expenses Asset-related
Risk subsidy Financial appropriation 19980000.00 Other income Income-related
Tax rebate Tax rebate 33984039.89 62377043.64 Non-operating income
and other income
Income-related
Enterprise reform and development
subsidies
Financial appropriation 160161518.76 80837506.25 Non-operating income
and other income
Income-related
Government awards Financial appropriation 10000.00 5845000.00 Non-operating income Income-related
Afforestation subsidy Financial appropriation 588512.58 3252768.00 Other income Income-related
Value-added tax rebate Tax rebate 275104.76 1380000.00 Other income Income-related
Employment subsidy Financial appropriation 135853.85 3725651.13 Non-operating income
and other income
Income-related
Final payment of relocation compensation Financial appropriation 533390000.00 Non-operating income Income-related
Funding for environmental protection Financial appropriation 36428597.00 1000000.00 Non-operating income Income-related
Research and development grants Financial appropriation 392300.00 Non-operating income Income-related
Others Financial appropriation 46886.89 513387.38 Non-operating income
and other income
Income-related
Total 232022813.73 713388856.40
130 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XVI. Other material matters (Cont’d)
3. Net Current Assets and Total Assets less Current Liabilities
(1) Net current assets
Unit: RMB’0000
2020.06.30 2019.12.31
Current assets 4714918.30 4495243.39
Less: Current liabilities 5693367.00 5269876.89
Net current assets -978448.70 -774633.50
(2) Total assets less current liabilities
Unit: RMB’0000
2020.06.30 2019.12.31
Total assets 9903407.97 9795890.99
Less: Current liabilities 5693367.00 5269876.89
Total assets less current liabilities 4210040.97 4526014.10
131SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XVII. Notes to major financial statement items of the parent company
1. Accounts receivable
(1) Accounts receivable by category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Category Amount Percentage Amount Percentage
Carrying
amount Amount Percentage Amount Percentage
Carrying
amount
Accounts receivable assessed
individually for impairment 5000000.00 0.52% 5000000.00 100.00% 778063.57 1.73% 778063.57 100.00%
Accounts receivable assessed
collectively for impairment 957744376.63 99.48% 4723988.82 0.92% 953020387.81 44083258.79 98.27% 4878588.79 11.07% 39204670.00
Of which:
Receivables from related
parties 446319284.22 46.36% 276.00 0.00% 446319008.22 31427654.36 70.06% 157138.27 0.50% 31270516.09
Receivables from dealer
customers 511425092.41 53.12% 4723712.82 0.92% 506701379.59 12655604.43 28.21% 4721450.52 37.31% 7934153.91
Total 962744376.63 100.00% 9723988.82 1.88% 953020387.81 44861322.36 100.00% 5656652.36 12.61% 39204670.00
Items assessed individually for impairment:
Unit: RMB
Closing balance
Name
Book
balance
Bad debt
provision
Provision
percentage
Reasons for
provision
Ningxia Lingwu Baota Dagu
Storage and Transportation
Co. Ltd.
5000000.00 5000000.00 100.00% Due to poor
management the
financial indicators
of the company
deteriorated and its
repayment ability
substantially declid
Total 5000000.00 5000000.00 – –
132 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XVII. Notes to major financial statement items of the parent company (Cont’d)
1. Accounts receivable (Cont’d)
(1) Accounts receivable by category (Cont’d)
Items assessed collectively for impairment:
Accounts receivable with collective provision for bad debts based on receivables from related parties:
Unit: RMB
Closing balance
Name Book balance
Bad debt
provision
Provision
percentage
Within 1 year 446319284.22 276.00 0.00%
Total 446319284.22 276.00 –
Accounts receivable with collective provision for bad debts based on receivables from dealer customers:
Unit: RMB
Closing balance
Name Book balance
Bad debt
provision
Provision
percentage
Within 1 year 511425092.41 4723712.82 0.92%
Total 511425092.41 4723712.82 –
By ageing
Unit: RMB
Ageing Closing balance
Within 1 year (including 1 year) 953020387.81
Total 953020387.81
133SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XVII. Notes to major financial statement items of the parent company (Cont’d)
1. Accounts receivable (Cont’d)
(2) Provision recovery or reversal of bad debt provision for the period
Unit: RMB
Changes in the period
Category
Opening
balance Provision
Recovery
or reversal Write-off Others
Closing
balance
bad debt provision for accounts
receivable 5656652.36 4067336.46 9723988.82
合計 5656652.36 4067336.46 9723988.82
(3) Top five accounts receivable based on closing balance of debtors
The top five accounts receivable based on closing balance of debtors for the period amounted to
RMB509639869.96 in total accounting for 98.69% of the total closing balance of accounts receivable. The
closing balance of the corresponding bad debt provision amounted to RMB9422600.00 in total.
2. Other receivables
Unit: RMB
Item Closing balance Opening balance
Other receivables 13615203417.43 13975590537.58
Total 13615203417.43 13975590537.58
(1) Other receivables
1) Other receivables by nature
Unit: RMB
Nature
Closing book
balance
Opening book
balance
Open credit 13530563966.51 13888363610.88
Guarantee deposit 52295446.66 5379025.93
Advances 519489.32
Insurance premium 1692817.38 13786.37
Reserve and borrowings 9505097.32 7978371.88
Others 21146089.56 73336253.20
Total 13615203417.43 13975590537.58
134 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XVII. Notes to major financial statement items of the parent company (Cont’d)
2. Other receivables (Cont’d)
(1) Other receivables (Cont’d)
2) Particulars of bad debt provision
Unit: RMB
Phase 1 Phase 2 Phase 3
Bad debt provision
ECLs for the
xt 12 months
ECLs over the
entire life (not
credit-impaired)
ECLs over the
entire life (credit-
impaired) Total
Balance as at 1 January 2020 192610311.65 2790901.12 195401212.77
Balance as at 1 January 2020 during the period – – – –
– Transferred into Phase 2
– Transferred into Phase 3 2790901.12 2790901.12
– Reversal to Phase 2
– Reversal to Phase 1 192610311.65 192610311.65
Provision for the period
Reversal for the period 14305237.97 14305237.97
Transfer for the period
Write-off for the period
Other changes
Balance as at 30 Ju2020 178305073.68 2790901.12 181095974.80
Changes in book balances with significant changes in loss provision for the period
□ Applicable √ Not applicable
By ageing
Unit: RMB
Ageing Book balance
Within 1 year (including 1 year) 13543034435.30
1 – 2 years 47804128.41
2 – 3 years 24364853.72
Total 13615203417.43
135SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XVII. Notes to major financial statement items of the parent company (Cont’d)
2. Other receivables (Cont’d)
(1) Other receivables (Cont’d)
3) Provision recovery or reversal of bad debt provision for the period
Provision of bad debt provision for the period:
Unit: RMB
Changes in the period
Category
Opening
balance Provision
Recovery
or reversal Write-off Others
Closing
balance
Bad debt provision for other
receivables 195401212.77 14305237.97 181095974.80
Total 195401212.77 14305237.97 181095974.80
4) Top five other receivables according to closing balance of debtors
Unit: RMB
Name of entity Nature Closing balance Maturity
Percentage to
closing balance
of other
receivables
Closing balance
of bad debt
provision
Shanghai Chenming Financial Leasing
Co. Ltd. Open credit 3559000000.00 Within 1 year 24.99% 17795000.00
Shandong Chenming Financial Leasing
Co. Ltd. Open credit 1974869546.02 Within 1 year 13.87% 9874347.73
Shanghai Chenming Industrial Co. Ltd. Open credit 1634234658.73 Within 1 year 11.47% 8171173.29
Zhanjiang Chenming Pulp & Paper
Co. Ltd. Open credit 1397791325.58 Within 1 year 9.81% 6988956.63
Shouguang Chenming Import and
Export Trade Co. Ltd Open credit 1154508529.76 Within 1 year 8.11% 5772542.65
Total – 9720404060.09 – 68.25% 48602020.30
3. Long-term equity investments
Unit: RMB
Closing balance Opening balance
Item
Book
balance
Impairment
provision
Carrying
amount
Book
balance
Impairment
provision
Carrying
amount
Investment in subsidiaries 23343942649.90 23343942649.90 23275652649.90 23275652649.90
Investment in associates and joint ventures 357261245.00 5994545.96 351266699.04 360122213.93 5994545.96 354127667.97
Total 23701203894.90 5994545.96 23695209348.94 23635774863.83 5994545.96 23629780317.87
136 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XVII. Notes to major financial statement items of the parent company (Cont’d)
3. Long-term equity investments (Cont’d)
(1) Investment in subsidiaries
Unit: RMB
Investee Opening balance
Increase for
the year
Decrease for
the year
Closing
balance
Impairment
provision for
the year
Closing balance
provision of
impairment
Chenming Paper Korea Co. Ltd. 6143400.00 6143400.00
Chenming GmbH 4083235.00 4083235.00
Shandong Chenming Paper Group (Fuyu) Sales
Co. Ltd. 1000000.00 1000000.00
Hailaer Chenming Paper Co. Ltd. 12000000.00 12000000.00
Huanggang Chenming Pulp & Paper Co. Ltd. 2250000000.00 50000000.00 2300000000
Huanggang Chenming Arboriculture Development
Co. Ltd. 70000000.00 70000000.00
Jilin Chenming Paper Co. Ltd. 1501350000.00 1501350000.00
Jinan Chenming Investment Management Co. Ltd. 100000000.00 100000000.00
Jiangxi Chenming Paper Co. Ltd. 822867646.40 822867646.40
Shandong Chenming Power Supply Holdings
Co. Ltd. 157810117.43 157810117.43
Wuhan Chenming Hanyang Paper Holdings Co. Ltd. 264493210.21 264493210.21
Shandong Grand View Hotel Co. Ltd. 80500000.00 80500000.00
Zhanjiang Chenming Pulp & Paper Co. Ltd. 5055000000.00 27500000.00 5082500000.00
Shouguang Chenming Modern Logistic Co. Ltd. 10000000.00 10000000.00
Shouguang Chenming Art Paper Co. Ltd. 113616063.80 113616063.80
Shouguang Meilun Paper Co. Ltd. 4449441979.31 4449441979.31
Shouguang Shun Da Customs Declaration Co Ltd. 1500000.00 1500000.00
Shandong Chenming Paper Sales Co. Ltd. 762641208.20 762641208.20
Shouguang Chenming Import and Export Trade
Co. Ltd. 250000000.00 250000000.00
Shouguang Chenming Papermaking MachiCo. Ltd. 2000000.00 2000000.00
Shouguang Chenming Industrial Logistics Co. Ltd. 10000000.00 10000000.00
Shouguang Chenming Hongxin Packaging Co. Ltd. 3730000.00 3730000.00
Shandong Chenming Group Finance Co. Ltd. 4000000000.00 4000000000.00
Chenming Arboriculture Co. Ltd. 45000000.00 45000000.00
Shanghai Chenming Industrial Co. Ltd. 3000000000.00 3000000000.00
Chenming (HK) Limited 118067989.55 118067989.55
Chenming Paper USA Co. Ltd. 6407800.00 6407800.00
Shandong Chenming Coated Paper Sales Co. Ltd. 20000000.00 20000000.00
Weifang Chenming Growth Driver Replacement
Equity Investment Fund Partrship
(Limited Partrship) 158000000.00 790000.00 158790000.00
Total 23275652649.90 78290000.00 10000000.00 23343942649.90
137SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XVII. Notes to major financial statement items of the parent company (Cont’d)
3. Long-term equity investments (Cont’d)
(2) Investment in associates and joint ventures
Unit: RMB
Change for the period
Investee
Opening
balance
Additional
contribution
Withdrawn
contribution
Investment
gain or loss
recognised
under equity
method
Adjustment
of other
comprehensive
income
Other
change
in equity
interest
Distribution
of cash
dividend
or profit
declared
Impairment
provision Others
Closing
balance
Closing
balance of
impairment
provision
I. Joint ventures
Shouguang Chenming Huisen
New-style Construction
Materials Co. Ltd. 3789667.61 740169.16 1200000.00 3329836.77
Weifang Sime Darby West
Port Co. Ltd. 89726671.76 -2880211.17 86846460.59
Subtotal 93516339.37 -2140042.01 1200000.00 90176297.36
II. Associates
Jiangxi Jiangbao Media
Colour Printing Co. Ltd. 0 0
Zhuhai Dechen New Third
Board Equity Investment
Fund Company (Limited
Partrship) 52412989.91 -30470.86 52382519.05
Ningbo Kaichen Huamei
Equity Investment Fund
Partrship (Limited
Partrship) 199528847.52 516198.50 200045046.02
Xuchang Chenming Paper
Co. Ltd. 5994545.96
Chenming (Qingdao) Asset
Management Co. Ltd. 8669491.17 -6654.56 8662836.61
Subtotal 260611328.60 0.00 0.00 479073.08 0.00 0.00 0.00 0.00 0.00 261090401.68 5994545.96
Total 354127667.97 0.00 0.00 -1660968.93 0.00 0.00 1200000.00 0.00 0.00 351266699.04 5994545.96
138 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XVII. Notes to major financial statement items of the parent company (Cont’d)
4. Other payables
Unit: RMB
Item Closing balance Opening balance
Interest payable 109263749.98 127278083.35
Dividend payable 610109667.16
Other payables 3672958735.20 6299370764.60
Total 4392332152.34 6426648847.95
Other payables of the top five closing balances collected by the payee
Unit: RMB
Name of company Closing balance
Jiangxi Chenming Paper Co. Ltd. 1655496622.33
Shouguang Meilun Paper Co. Ltd. 950951379.11
Jilin Chenming Paper Co. Ltd. 233624654.50
Shandong Chenming Power Supply Holdings Co. Ltd. 146387007.68
Sutai (Hangzhou) Investment Management Co. Ltd. 100000000.00
Total 3086459663.62
5. Revenue and operating costs
Unit: RMB
Amount for the period Amount for the prior period
Item Revenue Costs Revenue Costs
Principal activities 3138096400.01 2435165869.61 2237163494.68 1674925035.20
Other activities 709097257.52 593307602.81 458848921.42 428362116.44
Total 3847193657.53 3028473472.42 2696012416.10 2103287151.64
6. Investment income
Item
Amount for
the period
Amount for
the prior period
Income from long-term equity investments accounted for using
the cost method 681230000.00 1023353000.00
Income from long-term equity investments accounted for using
the equity method -1660968.93 -12799856.43
Investment gain on disposal of long-term equity investments 3100000.00
Total 682669031.07 1010553143.57
139SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XVIII. Supplementary information
1. Breakdown of extraordinary gains and losses for the current period
√ Applicable □ Not applicable
Unit: RMB
Item Amount
Profit or loss from disposal of non-current assets 13758306.22
Government grants (except for the government grants closely related to the normal operation
of the Company and granted constantly at a fixed amount or quantity in accordance with a
certain standard based on state policies) accounted for in profit or loss for the current period 767184012.96
Gain or loss from change in fair value of consumable biological assets and other non-current
financial assets by adopting fair value method for subsequent measurements -9246743.86
Other gain or loss items within the definition of extraordinary gain or loss -2416979.09
Less: Effect of income tax 179535882.21
Effect of minority interest 141298126.77
Total 448444587.25
Notes for the Company’s extraordinary gain or loss items as defid in the Explanatory Announcement on Information
Disclosure for Companies Offering Their Securities to the Public No. 1 – Extraordinary Gains or Losses and 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 defid as its recurring gain or loss items.
□ Applicable √ Not applicable
2. Return on t assets and earnings per share
Earnings per share
Profit for the reporting period
Rate of return
on t assets
on weighted
average basis
Basic
(RMB per share)
Diluted
(RMB per share)
Net profit attributable to ordinary shareholders of the
Company 0.84% 0.051 0.051
Net profit after extraordinary gains and losses attributable to
ordinary shareholders of the Company -1.69% -0.103 -0.103
Note: The t profit attributable to shareholders of the listed company has not deducted perpetual debt incurred interest and impact of dividends
issued and declared by preference shares. When calculating the financial indicators of earnings per share and weighted average return on
equity the interest on perpetual bonds of RMB96734246.58 from 1 January 2020 to 30 Ju2020 and the dividends issued and declared
by preference shares of RMB270776073.42 in 2020 are deducted.
3. Differences in accounting data under domestic and overseas accounting standards
(1) Differences between the t profit and t assets disclosed in accordance with international accounting
standards and China accounting standards in the financial report
□ Applicable √ Not applicable
(2) Differences between the t profit and t assets disclosed in accordance with overseas accounting
standards and China accounting standards in the financial report
□ Applicable √ Not applicable
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