SHANDONG CHENMING PAPER HOLDINGS LIMITED 2021 Interim Financial Report
SHANDONG CHENMING PAPER HOLDINGS LIMITED
Interim Financial Report 2021
August 2021
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
I. Auditors’ ReportIs the interim report audited Yes √ NoThe interim financial report is unaudited.
II. Financial StatementsThe unit in the notes to the financial statements is: RMB
1. Consolidated Balance Sheet
Prepared by: Shandong Chenming Paper Holdings Limited
Unit: RMBItem30 June 202131 December 2020CURRENT ASSETS:
Monetary funds16,393,514,831.4517,759,537,598.98 Financial assets held for trading101,188,881.03192,907,800.62 Accounts receivable1,814,158,093.601,984,931,665.82 Accounts receivable financing921,201,223.62488,385,666.76 Prepayments695,582,134.61964,290,512.36 Other receivables2,269,274,220.182,417,240,559.46 Including: Interest receivable
Dividend receivable Inventories6,901,922,518.265,135,293,347.82 Non-current assets due within one year3,637,802,641.724,222,744,207.34 Other current assets3,174,933,090.462,716,918,695.85Total current assets35,909,577,634.9335,882,250,055.01NON-CURRENT ASSETS:
Long-term receivables3,645,414,234.304,658,884,857.95 Long-term equity investments3,957,602,691.693,906,158,402.45 Other non-current financial assets1,221,910,000.00145,910,000.00 Investment property5,864,080,247.345,943,159,568.00 Fixed assets36,554,340,755.4437,651,706,658.97 Construction in progress220,315,554.79179,857,941.83 Right-of-use assets201,808,375.55205,876,719.75 Intangible assets1,630,226,450.231,774,624,509.33 Goodwill32,916,531.9532,916,531.95 Long-term prepaid expenses51,004,948.8251,061,485.49 Deferred income tax assets1,074,398,436.811,084,164,679.14 Other non-current assets237,433,282.5058,886,418.75Total non-current assets54,691,451,509.4255,693,207,773.61Total assets90,601,029,144.3591,575,457,828.62CURRENT LIABILITIES:
Short term borrowings33,167,277,711.3732,793,992,957.86
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
Item30 June 202131 December 2020 Bills payable3,632,929,014.892,998,936,736.34 Accounts payable3,540,439,024.954,042,430,732.31 Contract liabilities2,186,935,751.421,051,147,044.74 Employee benefits payable264,189,760.62232,376,585.31 Taxes payable297,515,949.58652,647,840.63 Other payables2,543,329,575.931,956,715,367.83 Including: Interest payable114,998,461.03178,992,959.85
Dividend payable661,044,485.66 Non-current liabilities due within one year5,252,532,028.567,160,949,615.93 Other current liabilities–157,037,833.35 Total current liabilities50,885,148,817.3251,046,234,714.30NON-CURRENT LIABILITIES:
Long-term borrowings6,973,604,410.208,077,150,979.15 Bonds payable1,536,877,351.46 Lease liabilities60,507,444.9060,271,769.90 Long-term payables2,294,420,531.462,295,309,357.74 Provisions325,259,082.28325,259,082.28 Deferred income1,625,472,296.551,637,996,636.51 Deferred income tax liabilities6,123,405.176,572,535.97 Other non-current liabilities1,197,016,666.67789,521,686.07 Total non-current liabilities12,482,403,837.2314,728,959,399.08 Total liabilities63,367,552,654.5565,775,194,113.38OWNERS’ EQUITY:
Share capital2,984,208,200.002,984,208,200.00 Other equity instruments3,234,750,000.005,473,500,000.00 Including: Preference Shares2,238,750,000.004,477,500,000.00
Perpetual Bonds996,000,000.00996,000,000.00 Capital reserves5,259,395,722.265,321,911,413.75 Less: Treasury shares226,860,000.00226,860,000.00 Other comprehensive income-503,780,907.79-561,686,607.66 Surplus reserves1,212,009,109.971,212,009,109.97 General risk provisions74,122,644.2074,122,644.20 Retained profit11,261,714,960.629,999,764,028.74Total equity attributable to owners of the Company23,295,559,729.2624,276,968,789.00 Minority interest3,937,916,760.541,523,294,926.24Total owners’ equity27,233,476,489.8025,800,263,715.24Total liabilities and owners’ equity90,601,029,144.3591,575,457,828.62Legal Representative:
Chen Hongguo
Financial controller:
Dong Lianming
Head of the financial department:
Zhang Bo
II. Financial Statements (Cont’d)
1. Consolidated Balance Sheet (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
II. Financial Statements (Cont’d)
2. Balance sheet of the Company
Unit: RMBItem30 June 202131 December 2020CURRENT ASSETS:
Monetary funds5,353,674,088.804,720,330,804.07 Bills receivable2,214,270,000.001,470,720,000.00 Accounts receivable888,035,432.20694,836,561.24 Accounts receivable financing32,503,281.7724,339,933.19 Prepayments649,108,811.531,697,770,445.12 Other receivables12,578,118,025.0810,637,425,503.02 Including: Dividend receivable600,000,000.00200,000,000.00 Inventories910,467,941.76637,293,495.29 Non-current assets due within one year25,000,000.00146,934,211.22 Other current assets40,621,651.8345,764,272.71Total current assets22,691,799,232.9720,075,415,225.86NON-CURRENT ASSETS:
Long-term receivables61,662,304.8564,762,373.99 Long-term equity investments23,098,730,054.7522,192,108,035.92 Other non-current financial assets121,910,000.00141,910,000.00 Fixed assets3,867,514,839.293,984,339,880.51 Construction in progress83,773,845.1780,192,749.46 Intangible assets527,484,352.71534,900,368.31 Deferred income tax assets344,372,815.11418,717,829.13 Other non-current assetsTotal non-current assets28,105,448,211.8827,416,931,237.32Total Assets50,797,247,444.8547,492,346,463.18CURRENT LIABILITIES:
Short-term borrowings13,549,861,184.5210,929,616,612.59 Bills payable9,329,871,983.837,603,416,890.27 Accounts payable3,434,010,104.64812,111,491.23 Contract liabilities2,206,531,454.37156,487,086.88 Staff remuneration payables102,061,005.7589,416,732.50 Tax payables99,800,601.54147,669,266.97 Other payables1,779,557,232.735,869,352,883.62 Including: Interest payable87,838,138.9297,497,305.56 Dividend payable661,044,485.66 Non-current liabilities due within one year1,896,218,473.692,374,029,490.27 Other current liabilities312,130,833.35Total current liabilities32,397,912,041.0728,294,231,287.68
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
Item30 June 202131 December 2020NON-CURRENT LIABILITIES:
Long-term borrowings828,500,000.001,295,000,000.00 Bonds payable439,957,250.00 Long-term payables479,023,939.84631,776,192.80 Provisions325,259,082.28325,259,082.28 Deferred income36,614,078.1938,017,165.55 Other non-current liabilities1,197,016,666.671,194,883,344.67Total non-current liabilities2,866,413,766.983,924,893,035.30Total liabilities35,264,325,808.0532,219,124,322.98OWNERS’ EQUITY:
Share capital2,984,208,200.002,984,208,200.00 Other equity instruments3,234,750,000.005,473,500,000.00 Including: Preference Shares2,238,750,000.004,477,500,000.00
Perpetual bonds996,000,000.00996,000,000.00 Capital reserves5,139,388,499.315,124,308,464.42 Less: Treasury shares226,860,000.00226,860,000.00 Surplus reserves1,199,819,528.061,199,819,528.06 Retained profit3,201,615,409.43718,245,947.72Total owners’ equity15,532,921,636.8015,273,222,140.20Total liabilities and owners’ equity50,797,247,444.8547,492,346,463.18
II. Financial Statements (Cont’d)
2. Balance sheet of the Company (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
II. Financial Statements (Cont’d)
3. Consolidated income statement
Unit: RMBItemFirst half of 2021First half of 2020I. Total revenue17,172,816,354.5313,599,805,765.86
Including: Revenue17,172,816,354.5313,599,805,765.86II. Total operating costs14,740,489,809.8213,331,852,506.55Including: Operating costs11,861,060,977.9210,679,861,701.47
Taxes and surcharges163,794,026.94107,048,098.21 Sales and distribution expenses147,622,738.74158,180,752.19 General and administrative expenses492,048,555.49491,987,245.33 Research and development expense757,021,354.57548,557,146.89 Finance expenses1,318,942,156.161,346,217,562.46
Including: Interest expenses1,399,107,777.111,439,500,160.77 Interest income221,507,514.16276,115,018.97
Plus: Other income123,098,748.58133,433,974.45 Investment income (“-” denotes loss)98,631,701.79136,893,482.97Including: Investment income from
associates and joint ventures82,955,115.52120,115,440.96 Gain on change in fair value (“-” denotes loss)-99,119,691.89-9,246,743.86 Credit impairment loss (“-” denotes loss)-279,757,983.46-257,855,903.60 Loss on impairment of assets (“-” denotes loss)–-163,717.76 Gain on disposal of assets (“-” denotes loss)48,920,358.12-4,705,886.89III. Operating profit (“-” denotes loss)2,324,099,677.85266,308,464.62
Plus: Non-operating income18,721,283.64642,400,117.78Less: Non-operating expenses2,332,530.969,007,544.18IV. Total profit (“-” denotes loss)2,340,488,430.53899,701,038.22Less: Income tax expenses274,057,779.20237,960,188.15V. Net profit (“-” denotes loss)2,066,430,651.33661,740,850.07(I) Classification according to the continuity of operation
1. Net profit from continuing operations
(“-” denotes loss)2,066,430,651.33661,740,850.07(II) Classification according to ownership
1. Net profit attributable to shareholders
of the Company2,021,095,417.54516,326,703.48
2. Profit or loss of minority interest45,335,233.79145,414,146.59VI. Net other comprehensive income after tax50,956,682.73-108,564,087.60
Net other comprehensive income after tax attributable to
shareholders of the Company50,956,682.73-108,564,087.60(I) Other comprehensive income that cannot be reclassified
to profit and loss in subsequent periods(II) Other comprehensive income that will be reclassified to
profit and loss in subsequent periods50,956,682.73-108,564,087.60
1. Translation differences of financial statements
denominated in foreign currency50,956,682.73-108,564,087.60
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
ItemFirst half of 2021First half of 2020VII. Total comprehensive income2,117,387,334.06553,176,762.47Total comprehensive income attributable to shareholders of the Company2,072,052,100.27407,762,615.88Total comprehensive income attributable to minority interest45,335,233.79145,414,146.59VIII. Earnings per share:
(I) Basic earnings per share0.6040.051(II) Diluted earnings per share0.6040.051For the business combination involving enterprises under common control during the reporting period, the net profitrealised by the parties being absorbed before the combination was nil (the same period last year: nil).
Legal Representative:
Chen Hongguo
Financial controller:
Dong Lianming
Head of the financial department:
Zhang Bo
II. Financial Statements (Cont’d)
3. Consolidated income statement (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
II. Financial Statements (Cont’d)
4. Income statement of the Company
Unit: RMBItemFirst half of 2021First half of 2020I. Revenue4,683,453,465.643,847,193,657.53
Less: Operating costs3,511,074,075.943,148,005,927.42 Taxes and surcharges42,172,707.7620,730,087.42 Sales and distribution expenses6,054,328.934,616,320.89 General and administrative expenses133,937,050.37159,106,436.16 Research and development expense183,256,544.45128,662,995.77 Finance expenses206,076,531.65380,567,325.04 Including: Interest expenses442,271,605.59803,815,024.42
Interest income304,371,806.49512,123,486.08Plus: Other income2,494,987.664,164,682.46Investment income (“-” denotes loss)2,679,672,292.80682,669,031.07Including: Investment income from associates and joint ventures-4,587,981.17-1,660,968.93Credit impairment loss (“-” denotes loss)29,056,014.1915,237,901.51Loss on impairment of assets (“-” denotes loss)–Gain on disposal of assets (“-” denotes loss)4,656,034.9616,102,859.30II. Operating profit (“-” denotes loss)3,316,761,556.15723,679,039.17Plus: Non-operating income486,916.5054,685,565.61Less: Non-operating expenses389,511.261,252,862.97III. Total profit (“-” denotes total loss)3,316,858,961.39777,111,741.81Less: Income tax expenses74,345,014.02-34,907.18IV. Net profit (“-” denotes net loss)3,242,513,947.37777,146,648.99(I) Net profit from continuing operations (“-”denotes netloss)3,242,513,947.37777,146,648.99V. Net other comprehensive income after tax
(I) Other comprehensive income that cannot be reclassified
to profit and loss(II) Other comprehensive income that will be reclassified toprofit and lossVI. Total comprehensive income3,242,513,947.37777,146,648.99VII. Earnings per share:
(I) Basic earnings per share(II) Diluted earnings per share
Legal Representative:
Chen Hongguo
Financial controller:
Dong Lianming
Head of the financial department:
Zhang Bo
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement
Unit: RMBItemFirst half of 2021First half of 2020I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services19,245,544,236.2514,322,440,708.60 Tax rebates received1,118,668.301,619,978.70 Cash received relating to other operating activities1,036,500,713.481,563,110,217.95Subtotal of cash inflows from operating activities20,283,163,618.0315,887,170,905.25 Cash paid for goods and services12,689,406,657.7911,303,287,012.69 Cash paid to and for employees639,736,604.16550,988,794.51 Payments of taxes and surcharges1,207,344,439.05622,011,647.05 Cash paid relating to other operating activities999,490,395.091,083,849,666.32Subtotal of cash outflows from operating activities15,535,978,096.0913,560,137,120.57Net cash flows from operating activities4,747,185,521.942,327,033,784.68II. Cash flows from investing activities:
Cash received from investments20,000,000.00– Cash received from investment income36,500,000.001,200,000.00Net cash received from disposal of fixed assets, intangible assets and other long-term assets104,108,628.7185,956,320.00Net cash received from disposal of subsidiaries and other business units4,503,417.80217,547,669.15 Cash received relating to other investing activities251,414,794.52129,197,968.06Subtotal of cash inflows from investing activities416,526,841.03433,901,957.21Cash paid for purchase of fixed assets, intangible assets and other long-term assets221,876,188.00143,811,622.89 Cash paid on investments1,100,000,000.0019,266,800.00 Cash paid relating to other investing activities–176,000,000.00Subtotal of cash outflows from investing activities1,321,876,188.00339,078,422.89Net cash flows from investing activities-905,349,346.9794,823,534.32
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
ItemFirst half of 2021First half of 2020III. Cash flows from financing activities:
Cash received from investments2,500,000,000.00294,820,000.00Including: Cash received from subsidiaries from minority
investment2,500,000,000.0067,960,000.00 Cash received from borrowings15,114,516,924.1315,228,878,371.99 Cash received relating to other financing activities2,734,332,351.511,356,957,000.00Subtotal of cash inflows from financing activities20,348,849,275.6416,880,655,371.99 Cash repayments of amounts borrowed16,987,908,936.8714,282,539,084.68Cash paid for dividend and profit distribution or interest
payment1,427,506,125.271,710,006,370.47Including: Dividend and profit paid by subsidiaries to minority
shareholders48,309,125.878,375,000.00 Cash paid relating to other financing activities5,519,292,287.813,982,494,113.94Subtotal of cash outflows from financing activities23,934,707,349.9519,975,039,569.09Net cash flows from financing activities-3,585,858,074.31-3,094,384,197.10IV. Effect of foreign exchange rate changes on cash and cash
equivalents-19,367,887.88-4,518,518.55V. Net increase in cash and cash equivalents236,610,212.78-677,045,396.65Plus: Balance of cash and cash equivalents as at the
beginning of the period4,389,169,963.792,890,328,027.41VI. Balance of cash and cash equivalents as at the end of the
period4,625,780,176.572,213,282,630.76Legal Representative:
Chen Hongguo
Financial controller:
Dong Lianming
Head of the financial department:
Zhang Bo
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company
Unit: RMBItemFirst half of 2021First half of 2020
1. Cash flows from operating activities:
Cash received from sales of goods and rendering of services5,570,459,385.984,646,172,812.15 Tax rebates received90,900.00– Cash received relating to other operating activities163,966,043.41155,230,403.66Subtotal of cash inflows from operating activities5,734,516,329.394,801,403,215.81 Cash paid for goods and services3,201,957,139.472,208,540,497.88 Cash paid to and for employees175,948,976.35174,694,134.98 Payments of taxes and surcharges176,576,815.1158,848,554.36 Cash paid relating to other operating activities301,406,268.10450,670,347.73Subtotal of cash outflows from operating activities3,855,889,199.032,892,753,534.95Net cash flows from operating activities1,878,627,130.361,908,649,680.86II. Cash flows from investing activities:
Cash received from investments20,000,000.00217,547,669.15 Cash received from investment income2,284,760,273.97682,430,000.00Net cash received from disposal of fixed assets, intangible assets and other long-term assets847,248.6885,956,320.00Net cash received from disposal of subsidiaries and other business units–– Cash received relating to other investing activities251,414,794.52129,197,968.06Subtotal of cash inflows from investing activities2,557,022,317.171,115,131,957.21Cash paid for purchase of fixed assets, intangible assets and other long-term assets–5,310,913.00 Cash paid on investments882,210,000.00–
Net cash paid for acquisition of subsidiaries and other business units–– Cash paid relating to other investing activities––Subtotal of cash outflows used in investing activities882,210,000.005,310,913.00Net cash flows from investing activities1,674,812,317.171,109,821,044.21
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
ItemFirst half of 2021First half of 2020III. Cash flows from financing activities:
Cash received from investments–226,860,000.00 Cash received from borrowings10,020,478,661.279,807,671,284.37 Cash received relating to other financing activities156,665,920.24794,457,000.00Subtotal of cash inflows from financing activities10,177,144,581.5110,828,988,284.37 Cash repayments of amounts borrowed8,736,105,095.529,591,880,585.58 Cash paid for dividend and profit distribution or interest payment219,435,214.79327,204,654.73 Cash paid relating to other financing activities4,871,112,670.182,963,023,405.21 Subtotal of cash outflows from financing activities13,826,652,980.4912,882,108,645.52Net cash flows from financing activities-3,649,508,398.98-2,053,120,361.15IV. Effect of foreign exchange rate changes on cash and cash
equivalents2,460,284.8286,290.34V. Net increase in cash and cash equivalents-93,608,666.63965,436,654.26Plus: Balance of cash and cash equivalents as at the beginning ofthe period301,284,723.52136,328,721.71VI. Balance of cash and cash equivalents as at the end of the period207,676,056.891,101,765,375.97
Legal Representative:
Chen Hongguo
Financial controller:
Dong Lianming
Head of the financial department:
Zhang Bo
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021II. Financial Statements (Cont
’d)
7. Consolidated statement of changes in owners
’ equity
Amount for the reporting period
Unit: RMB
ItemJanuary to June 2021
Equity attributable to owners of the Company
MinorityinterestTotalowners’ equityShare capital
Other equity instruments
CapitalreservesLess:
Treasury shares
OthercomprehensiveincomeSpecial
reservesSurplusreservesGeneral riskprovisionsRetained profitOthersSubtotal
Preference
sharesPerpetual
bondsOthers
I. Balance as at the end of the prior year2,984,208,200.004,477,500,000.00996,000,000.005,321,911,413.75226,860,000.00-561,686,607.661,212,009,109.9774,122,644.209,999,764,028.7424,276,968,789.001,523,294,926.2425,800,263,715.24II. Balance as at the beginning of the year2,984,208,200.004,477,500,000.00996,000,000.00–5,321,911,413.75226,860,000.00-561,686,607.661,212,009,109.9774,122,644.209,999,764,028.7424,276,968,789.001,523,294,926.2425,800,263,715.24III. Changes in the period (“-” denotes decrease)-2,238,750,000.00-62,515,691.4957,905,699.871,261,950,931.88-981,409,059.742,414,621,834.301,433,212,774.56
(I) Total comprehensive income57,905,699.872,021,095,417.542,079,001,117.4145,335,233.792,124,336,351.20(II) Capital paid in and reduced by owners-2,238,750,000.00-62,515,691.49-2,301,265,691.492,417,595,726.38116,330,034.89
1. Ordinary shares paid by shareholders2,417,595,726.382,417,595,726.382Capital paid by holders of
other equity instruments-2,238,750,000.00-11,250,000.00-2,250,000,000.00-2,250,000,000.00
3. Amount of share-based payments
recognised in owners’ equity26,330,034.8926,330,034.8926,330,034.89
4Others-77,595,726.38-77,595,726.38-77,595,726.38
(III) Profit distribution-759,144,485.66-759,144,485.66-48,309,125.87-807,453,611.53
1. Distribution to owners (or shareholders)-759,144,485.66-759,144,485.66-48,309,125.87-807,453,611.53
IV. Balance as at the end of the period2,984,208,200.002,238,750,000.00996,000,000.00–5,259,395,722.26226,860,000.00-503,780,907.79–1,212,009,109.9774,122,644.2011,261,714,960.62–23,295,559,729.263,937,916,760.5427,233,476,489.80
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
Amount for the prior period
Unit: RMB
ItemJanuary to June 2020
Equity attributable to owners of the Company
MinorityinterestTotalowners’ equityShare Capital
Other equity instruments
Capital
reservesLess:
treasury shares
Other
comprehensive
incomeSpecial
reservesSurplus
reservesGeneral risk
provisionsRetained profitOthersSubtotal
Preference
sharesPerpetual
BondsOthers
I. Balance as at the end of prior year2,904,608,200.004,477,500,000.002,988,000,000.005,086,686,427.30-879,452,135.101,212,009,109.9774,122,644.209,306,269,617.3825,169,743,863.751,170,029,016.8026,339,772,880.55II. Balance as at the beginning of the year2,904,608,200.004,477,500,000.002,988,000,000.00–5,086,686,427.30–-879,452,135.101,212,009,109.9774,122,644.209,306,269,617.3825,169,743,863.751,170,029,016.8026,339,772,880.55III. Changes in the period (“-” denotes decrease)79,600,000.00177,314,104.00226,860,000.00-100,282,332.31-191,882,963.68-262,111,191.99173,949,146.59-88,162,045.40(I) Total comprehensive income-100,282,332.31516,326,703.48416,044,371.17145,414,146.59561,458,517.76(II) Capital paid in and reduced by owners79,600,000.00177,314,104.00226,860,000.0030,054,104.0036,910,000.0066,964,104.00
1. Ordinary shares paid by owners79,600,000.00177,314,104.00256,914,104.0036,910,000.00293,824,104.002Amount of share-based payments
recognised in owners’ equity226,860,000.00-226,860,000.00-226,860,000.00
(III) Profit distribution-708,209,667.16-708,209,667.16-8,375,000.00-716,584,667.16
1. Distribution to owners (or shareholders)-708,209,667.16-708,209,667.16-8,375,000.00-716,584,667.16
IV. Balance as at the end of the period2,984,208,200.004,477,500,000.002,988,000,000.00–5,264,000,531.30226,860,000.00-979,734,467.41–1,212,009,109.9774,122,644.209,114,386,653.70–24,907,632,671.761,343,978,163.3926,251,610,835.15
Legal Representative:
Chen Hongguo
Financial controller:
Dong Lianming
Head of the financial department:
Zhang Bo
II. Financial Statements (Cont
’d)
7. Consolidated statement of changes in owners
’ equity (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
II. Financial Statements (Cont
’d)
8. Statement of changes in owners
’ equity of the Company
Amounts for the period
Unit: RMB
Item
January to June 2021
Share capital
Other equity instruments
SharecapitalLess:
Treasury shares
Othercomprehensive
incomeSpecial reservesSurplus reservesRetained profitOthers
Totalowners’ equity
PreferencesharesPerpetualbondsOthers
I. Balance as at the end of the
prior year2,984,208,200.004,477,500,000.00996,000,000.005,124,308,464.42226,860,000.001,199,819,528.06718,245,947.7215,273,222,140.20II. Balance as at the beginning of theyear2,984,208,200.004,477,500,000.00996,000,000.005,124,308,464.42226,860,000.001,199,819,528.06718,245,947.7215,273,222,140.20III. Changes in the period (
“-”denotes
decrease)-2,238,750,000.0015,080,034.892,483,369,461.71259,699,496.60(I) Total comprehensive income3,242,513,947.373,242,513,947.37(II) Capital paid in and reduced byowners-2,238,750,000.0015,080,034.89-2,223,669,965.11
1. Capital paid by holders of other
equity instruments-2,238,750,000.00-11,250,000.00-2,250,000,000.00
2. Amount of share-based payments
recognised in owners’ equity26,330,034.8926,330,034.89
(III) Profit distribution-759,144,485.66-759,144,485.66
1. Distribution to owners (or
shareholders)-759,144,485.66-759,144,485.66
IV. Balance as at the end of the period2,984,208,200.002,238,750,000.00996,000,000.00–5,139,388,499.31226,860,000.00––1,199,819,528.063,201,615,409.4315,532,921,636.80
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
Amount for the prior period
Unit: RMB
Item
January to June 2020
Share capital
Other equity instruments
Capitalreserves
Less:
treasury shares
OthercomprehensiveincomeSpecial reservesSurplus reservesRetained profitOther
Totalowners’ equity
Preference
sharesPerpetualbondsOthers
I. Balance as at the end of theprior year2,904,608,200.004,477,500,000.002,988,000,000.004,953,557,435.191,199,819,528.06812,690,534.9117,336,175,698.16II. Balance as at the beginning of the
year2,904,608,200.004,477,500,000.002,988,000,000.004,953,557,435.191,199,819,528.06812,690,534.9117,336,175,698.16
III. Changes in the period (
“-”denotes
decrease)79,600,000.00146,264,104.00226,860,000.0068,936,981.8367,941,085.83(I) Total comprehensive income777,146,648.99777,146,648.99(II) Capital paid in and reduced byowners79,600,000.00146,264,104.00226,860,000.00-995,896.00
1. Ordinary shares paid by
owners79,600,000.00146,264,104.00226,860,000.00-995,896.00(III) Profit distribution-708,209,667.16-708,209,667.16
1. Distribution to owners (or
shareholders)-708,209,667.16-708,209,667.16IV. Balance as at the end of the period2,984,208,200.004,477,500,000.002,988,000,000.00–5,099,821,539.19226,860,000.00––1,199,819,528.06881,627,516.74–17,404,116,783.99
Legal Representative:
Chen Hongguo
Financial controller:
Dong Lianming
Head of the financial department:
Zhang Bo
II. Financial Statements (Cont
’d)
8. Statement of changes in owners
’ equity of the Company (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
III. General Information of the Company
1. Company overview
The predecessor of Shandong Chenming Paper Holdings Limited (hereinafter referred to as the“Company”) wasShandong Shouguang Paper Mill Corporation, which was changed as a joint stock company with limited liability throughoffering to specific investors in May 1993. In December 1996, with approval by Lu Gai Zi [1996] No. 270 issued by thePeople’s Government of Shandong Province and Zheng Wei [1996] No. 59 of the Securities Committee of the StateCouncil, 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 115,000,000 domestic listed foreign shares (B shares) under public offering, which were listed andtraded 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 RegulatoryCommission, the Company issued an additional 70,000,000 RMB ordinary shares (A shares), which were listed andtraded on Shenzhen Stock Exchange from 20 November 2000.In June 2008, with approval by the Stock Exchange of Hong Kong Limited, the Company issued 355,700,000 H shares.At the same time, 35,570,000 H shares were allocated to the National Council for Social Security Fund by our relevantstate-owned shareholder and converted into overseas listed foreign shares (H shares) for the purpose of reducing thenumber of state-owned shares. The additionally issued H shares were listed and traded on Hong Kong Stock Exchangeon 18 June 2008.As at 30 June 2021, the total share capital of the Company was changed to 2,984,208,200 shares. For details, pleaserefer to Note VII. 38.The Company has established a corporate governance structure comprising the general meeting, the board of directorsand the supervisory committee, and has human resources department, information technology department, corporatemanagement department, legal department, financial management department, capital management department,securities investment department, procurement department, audit department and other departments.The Company and its subsidiaries (hereinafter referred to as the“Group”) are principally engaged in, among other things,processing and sale of paper products (including machine-made paper and paper board), paper making raw materialsand machinery; generation and sale of electric power and thermal power; forestry, saplings growing, processing andsale of timber; manufacturing, processing and sale of wood products; and manufacturing and sale of laminated boardsand fortified wooden floorboards, hotel service, and equipment financial and operating leasing, real estate and propertyservice.The financial statements and notes thereto were approved by the board of directors of the Group (the“Board”) on 26August 2021.
2. Scope of consolidation
Subsidiaries of the Group included in the scope of consolidation in 2021 totalled 76. For details, please refer to NoteIX“Equity in other entities”. The scope of consolidation of the Group during the year had one more company includedand one company less compared to the prior year. For details, please refer to Note VIII“Changes in the scope ofconsolidation”.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
IV. Basis of Preparation of the Financial Statements
1. Basis of preparation
These financial statements are prepared in accordance with the accounting standards for business enterprises, theapplication guidelines thereof, interpretations and other related rules (hereinafter referred to as“ASBEs”) promulgatedby the Ministry of Finance. In addition, the Group also discloses relevant financial information in accordance withthe“Preparation Rules for Information Disclosure by Companies Offering Securities to the Public No. 15 - GeneralProvisions on Financial Reports” (revised in 2014) of the CSRC.The financial statements are presented on a going concern.The Group’s financial statements have been prepared on an accrual basis. Except for certain financial instruments andinventories, the financial statements are prepared under the historical cost convention. In the event that depreciation ofassets occurs, a provision for impairment is made accordingly in accordance with the relevant regulations.
2. Going concern
No facts or circumstances comprise a material uncertainty about the Group’s going concern basis within 12 monthssince the end of the reporting period.V. Significant Accounting Policies and Accounting Estimates
Specific accounting policies and accounting estimates are indicated as follows:
The Company and its subsidiaries are principally engaged in machine-made paper, electricity and heat, construction materials,paper making chemical products, financial leasing, hotel management and other operations. The Company and its subsidiariesformulated certain specific accounting policies and accounting estimates for the transactions and matters such as revenuerecognition, determination of performance progress and R&D expenses based on their actual production and operationcharacteristics pursuant to the requirements under the relevant accounting standards for business enterprises. For details,please refer to this Note V. 35“Revenue”. For the critical accounting judgments and estimates made by the management,please refer to Note V. 39“Change of Significant accounting policies and accounting estimates”.
1. Statement of compliance with the Accounting Standards for Business Enterprises
These financial statements have been prepared in conformity with the ASBEs, which truly and fully reflect the financialposition of the consolidated entity and the Group as at 30 June 2021 and relevant information such as the operatingresults and cash flows of the consolidated entity and the Company for the first half of 2021.
2. Accounting period
The accounting period of the Group is from 1 January to 31 December of each calendar year.
3. Operating cycle
The operating cycle of the Group lasts for 12 months.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
4. Functional currency
The functional currency of the Company and its domestic subsidiaries is Renminbi (“RMB”). Overseas subsidiaries of theCompany recognise U.S. dollar (“USD”or“US$”), Japanese yen (“JPY”), Euro (“EUR”) and South Korean Won (“KRW”)as their respective functional currency according to the general economic environment in which these subsidiariesoperate. The Group prepares the financial statements in RMB.
5. Accounting treatment of business combinations under common control and not under common control
Business combinations refer to the transactions or events in which two or more separate enterprises merged as a singlereporting entity. Business combinations are divided into business combinations under common control and not undercommon control.
(1) Business combination under common control
A business combination involving enterprises under common control is a business combination in which all of thecombining 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 enterpriseparticipating in the combination is the absorbing party, while that other enterprise participating in the combinationis a party being absorbed. The combination date is the date on which the absorbing party effectively obtainscontrol of the party being absorbed.Assets and liabilities obtained by the absorbing party are measured at their carrying amount at the combinationdate as recorded by the party being merged. The difference between the carrying amount of the net assetsobtained and the carrying amount of the consideration paid for the combination (or the aggregate nominal value ofshares issued as consideration) is charged to the capital reserve (share capital premium). If the capital reserve (sharecapital premium) is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.Cost incurred by the absorbing party that is directly attributable to the business combination shall be charged toprofit or loss in the period in which they are incurred.
(2) Business combination not under common control
A business combination not involving enterprises under common control is a business combination in whichall of the combining enterprises are not ultimately controlled by the same party or parties before and after thecombination. For a business combination not involving enterprises under common control, the party that, on theacquisition date, obtains control of another enterprise participating in the combination is the acquirer, while thatother enterprise participating in the combination is the acquiree. The acquisition date is the date on which theacquirer effectively obtains control of the acquiree.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
5. Accounting treatment of business combinations under common control and not under common control
(Cont’d)
(2) Business combination not under common control (Cont
’d)For business combination involving entities not under common control, the cost of a business combination is theaggregate of the fair values, on the date of acquisition, of assets given, liabilities incurred or assumed, and equityinstruments issued by the acquirer to be paid by the acquirer, in exchange for control of the acquire plus agencyfee such as audit, legal service and evaluation consultation and other management fees charged to the profit orloss for the period when incurred. Transaction cost attributable to equity or debt securities issued by the acquireras consideration is included in the initial costs. Contingent consideration involved is charged to the combinationcost at its fair value on the acquisition date, in the event that adjustment on the contingent consideration isrequired as a result of new or additional evidence in relation to circumstances existed on the acquisition dateemerges within 12 months from the acquisition date, the combination goodwill shall also be adjusted. Thecombination cost incurred by the acquirer and the identifiable net assets acquired from the combination aremeasured at their fair values on the acquisition date. Where the cost of a business combination exceeds theacquirer’s interest in the fair value of the acquiree’s identifiable net assets on the acquisition date, the differenceis recognised as goodwill. Where the cost of a business combination is less than the acquirer’s interest in thefair value of the acquiree’s identifiable net assets, the acquirer shall first reassess the measurement of the fairvalue of the acquiree’s identifiable assets, liabilities and contingent liabilities and the measurement of the cost ofcombination. If after such reassessment the cost of combination is still less than the acquirer’s interest in the fairvalue of the acquiree’s identifiable net assets, the difference is charged to profit or loss for the period.In relation to the deductible temporary difference acquired from the acquiree, which was not recognised asdeferred tax assets due to non-fulfilment of the recognition criteria at the date of the acquisition, if new orfurther information that is obtained within 12 months after the acquisition date indicates that related conditionsat the acquisition date already existed, and that the implementation of the economic benefits brought by thedeductible temporary difference of the acquiree can be expected, the relevant deferred tax assets shall berecognised and goodwill shall be deducted. When the amount of goodwill is less than the deferred tax assets thatshall be recognised, the difference shall be recognised in the profit or loss of the period. Except for the abovecircumstances, deferred tax assets in relation to business combination are recognised in the profit or loss of theperiod.For combination of business not under common control achieved by several transactions, these severaltransactions will be judged whether they belong to“transactions in a basket”in accordance with the judgementstandards on“transactions in a basket”as set out in the Notice of the Ministry of Finance on Issuing AccountingStandards for Business Enterprises Interpretation No. 5 (Cai Kuai [2012] No. 19) and Rule of 51 to“AccountingStandard for Business Enterprises No. 33 – Consolidated Financial Statements”. If they belong to“transactions ina basket”, they are accounted for with reference to the descriptions as set out in the previous paragraphs of thissection and Note V. 17“Long-term equity investments”, and if they do not belong to“transactions in a basket”,they are accounted for in separate financial statements and consolidated financial reports:
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
5. Accounting treatment of business combinations under common control and not under common control
(Cont’d)
(2) Business combination not under common control (Cont
’d)In separate financial statements, the initial equity investment cost is the aggregate of the carrying amount of theequity investment in the acquiree held prior to the acquisition date and the investment cost newly added as at theacquisition date. In respect of any other comprehensive income attributable to the equity interest in the acquireeprior to the acquisition date, other comprehensive income is accounted for on the same accounting treatmentas direct disposal of relevant asset or liability by the acquiree at the time of disposal (i.e. to be transferred toinvestment income for the period, except for the changes arising from remeasuring net assets or net liabilities ofdefined benefit plan using the equity method attributable to the acquiree).In consolidated financial statements, the equity interest in the acquiree held prior to the acquisition date isremeasured at fair value as at the acquisition date, and the difference between the fair value and the carryingamount is recognised as investment income for the current period. In respect of any other comprehensive incomeattributable to the equity interest in the acquiree held prior to the acquisition date, other comprehensive income isaccounted 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 remeasuringnet assets or net liabilities of defined benefit plan using the equity method attributable to the acquiree) istransferred to investment income in the period of the acquisition date.
6. Preparation of consolidated financial statements
(1) Scope of consolidation
The scope of consolidation of the consolidated financial statements is determined on the basis of control. Theterm“control”refers to the fact that the Company has power over the investee and is entitled to variable returnsfrom its involvement with the investee and the ability to use its power over the investee to affect the amount ofthose returns. A subsidiary is an entity controlled by the Company (including an enterprise, a separable part of aninvestee, 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 theCompany and its subsidiaries and other relevant information. In preparing the consolidated financial statements,the accounting policies and accounting periods of the Company and its subsidiaries shall be consistent, and intra-company significant transactions and balances are eliminated.A subsidiary and its business acquired through a business combination involving entities under common controlduring the reporting period shall be included in the scope of the consolidation of the Company from the dateof being controlled by the ultimate controlling party, and its operating results and cash flows from the date ofbeing controlled by the ultimate controlling party are included in the consolidated income statement and theconsolidated cash flow statement, respectively.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
6. Preparation of consolidated financial statements (Cont
’d)
(2) Basis for preparation of the consolidated financial statements (Cont
’d)For a subsidiary and its business acquired through a business combination involving entities not under commoncontrol during the reporting period, its income, expenses and profits are included in the consolidated incomestatement, and cash flows are included in the consolidated cash flow statement from the acquisition date to theend of the reporting period.The shareholders’equity of the subsidiaries that is not attributable to the Company is presented undershareholders’equity in the consolidated balance sheet as minority interest. The portion of net profit or loss ofsubsidiaries for the period attributable to minority interest is presented in the consolidated income statementunder the“profit or loss of minority interest”. When the amount of loss attributable to the minority shareholders ofa subsidiary exceeds the minority shareholders’ portion of the opening balance of owners’equity of the subsidiary,the excess amount shall be allocated against minority interest.
(3) Accounting treatment for loss of control over subsidiaries
For the loss of control over a subsidiary due to disposal of a portion of the equity investment or other reasons,the remaining equity is measured at fair value on the date when the control is lost. The difference arising fromthe sum of consideration received for disposal of equity interest and the fair value of remaining equity interestover the sun of the share of the carrying amount of net assets of the former subsidiary calculated continuouslyfrom the purchase date based on the shareholding percentage before disposal and the goodwill is recognised asinvestment income in the period when the control is lost.Other comprehensive income related to equity investment in the former subsidiary shall be transferred to currentprofit or loss at the time when the control is lost, except for other comprehensive income arising from changes innet assets or net liabilities due to remeasurement of defined benefit plan by the investee.
7. Classification of joint arrangements and accounting treatment for joint ventures
A joint arrangement refers to an arrangement of two or more parties have joint control. The joint arrangements of theGroup 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 obligationsof this arrangement.The Group recognises the following items in relation to its interest in a joint operation and accounts for them inaccordance with the relevant ASBEs:
A. the assets held solely by it and assets held jointly according to its share;B. the liabilities assumed solely by it and liabilities assumed jointly according to its share;C. the revenue from sale of output from joint operations;
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
7. Classification of joint arrangements and accounting treatment for joint ventures (Cont
’d)
(1) Joint operations (Cont
’d)D. the revenue from sale of output from joint operations according to its share;E. the fees solely incurred by it and fees incurred from joint operations according to its share.
(2) Joint ventures
Joint ventures refer to a joint arrangement during which the Group only is entitled to net assets of thisarrangement.The Group accounts for its investments in joint ventures in accordance with the requirements relating toaccounting 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-termand highly liquid investments held by the Group which are readily convertible into known amount of cash and which aresubject 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 spotexchange rate on the date of exchange, i.e. usually the middle price of RMB exchange rate published by thePeople’s Bank of China on that date in general and the same hereinafter.On the balance sheet date, foreign currency monetary items shall be translated at the spot exchange rate onthe balance sheet date. The exchange difference arising from the difference between the spot exchange rateon the balance sheet date and the spot exchange rate upon initial recognition or the last balance sheet date willbe recognised in profit or loss for the period. The foreign currency non-monetary items measured at historicalcost shall still be measured by the functional currency translated at the spot exchange rate on the date of thetransaction. Foreign currency non-monetary items measured at fair value are translated at the spot exchangerate on the date of determination of the fair value. The difference between the amounts of the functional currencybefore and after the translation will be recognised in profit or loss for the period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
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 andliabilities on the balance sheet are translated at the spot exchange rate prevailing at the balance sheet date;owner’s equity items except for“retained profit”are translated at the spot exchange rates at the dates on whichsuch items arose.Income and expenses items in the income statement are translated at the average exchange rate for the period inwhich the transaction occurred.All items in the cash flow statements shall be translated at the average exchange rate for the period in whichthe cash flow transaction occurred. Effects arising from changes of exchange rate on cash shall be presentedseparately as the“effect of foreign exchange rate changes on cash and cash equivalents”item in the cash flowstatements.The differences arising from translation of financial statements shall be included in the“other comprehensiveincome” item in owners’ equity in the balance sheet.On disposal of foreign operations and loss of control, exchange differences arising from the translation of financialstatements denominated in foreign currencies related to the disposed foreign operations which has been includedin owners’equity in the balance sheet, shall be transferred to profit or loss in whole or in proportionate share in theperiod in which the disposal took place.
10. Financial instruments
A financial instrument is a contract that gives rise to a financial asset of one party and a financial liability or equityinstrument of another party.
(1) Recognition and derecognition of financial instruments
Financial asset or financial liability will be recognised when the Group became one of the parties under a financialinstrument contract.Financial asset that satisfied any of the following criteria shall be derecognised:
the contract right to receive the cash flows of the financial asset has terminated;the financial asset has been transferred and meets the derecognition criteria for the transfer of financialasset as described below.A financial liability (or a part thereof) is derecognised only when the present obligation is discharged in full orin part. If an agreement is entered between the Group (debtor) and a creditor to replace the existing financialliabilities with new financial liabilities, and the contractual terms of the new financial liabilities are substantiallydifferent from those of the existing financial liabilities, the existing financial liabilities shall be derecognised and thenew financial liabilities shall be recognised.Conventionally traded financial assets shall be recognised and derecognised at the trading date.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(2) Classification and measurement of financial assets
The Group classifies the financial assets according to the business model for managing the financial assets andcharacteristics of the contractual cash flows as follows: financial assets measured at amortised cost, financialassets measured at fair value through other comprehensive income, and financial assets measured at fair valuethrough 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 designatedat fair value through other comprehensive income:
The Group’s business model for managing such financial assets is to collect contractual cash flows;The contractual terms of the financial asset stipulate that cash flows generated on specific dates are solelypayments of principal and interest on the principal amount outstanding.Subsequent to initial recognition, such financial assets are measured at amortised cost using the effective interestmethod. A gain or loss on a financial asset that is measured at amortised cost and is not part of a hedgingrelationship 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 incomeA financial asset is classified as measured at fair value through other comprehensive income if it meets both of thefollowing conditions and is not designated at fair value through profit or loss:
The Group’s business model for managing such financial assets is achieved both by collecting collect contractualcash flows and selling such financial assets;The contractual terms of the financial asset stipulate that cash flows generated on specific dates are solelypayments of principal and interest on the principal amount outstanding.Subsequent to initial recognition, such financial assets are subsequently measured at fair value. Interest calculatedusing the effective interest method, impairment losses or gains and foreign exchange gains and losses arerecognised in profit or loss for the current period, and other gains or losses are recognised in other comprehensiveincome. On derecognition, the cumulative gain or loss previously recognised in other comprehensive income isreclassified from other comprehensive income to profit or loss.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
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 lossThe Group classifies the financial assets other than those measured at amortised cost and measured at fair valuethrough other comprehensive income as financial assets measured at fair value through profit or loss. Uponinitial recognition, the Group irrevocably designates certain financial assets that are required to be measured atamortised cost or at fair value through other comprehensive income as financial assets measured at fair valuethrough 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 hedgingpurposes, gains or losses (including interests and dividend income) arising from such financial assets arerecognised in the profit or loss for the current period.The business model for managing financial assets refers to how the Group manages its financial assets in order togenerate cash flows. That is, the Group’s business model determines whether cash flows will result from collectingcontractual cash flows, selling financial assets or both. The Group determines the business model for managingfinancial assets on the basis of objective facts and specific business objectives for managing financial assetsdetermined by key management personnel.The Group assesses the characteristics of the contractual cash flows of financial assets to determine whetherthe contractual cash flows generated by the relevant financial assets on a specific date are solely payments ofprincipal and interest on the principal amount outstanding. The principal refers to the fair value of the financialassets at the initial recognition. Interest includes consideration for the time value of money, for the credit riskassociated with the principal amount outstanding during a particular period of time and for other basic lendingrisks, costs and profits. In addition, the Group evaluates the contractual terms that may result in a change in thetime distribution or amount of contractual cash flows from a financial asset to determine whether it meets therequirements 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 thebusiness model where the Group changes its business model for managing financial assets; otherwise, financialassets shall not be reclassified after initial recognition.Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair valuethrough profit or loss, relevant transaction costs are directly recognised in profit or loss for the current period.For other categories of financial assets, relevant transaction costs are included in the amount initially recognised.Accounts receivable or notes receivable arising from sales of goods or rendering services, without significantfinancing component are initially recognised based on the transaction price expected to be entitled by the Group.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
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 valuethrough profit or loss and financial liabilities measured at amortised cost. For financial liabilities not classifiedas measured at fair value through profit or loss, relevant transaction costs are included in the amount initiallyrecognised.
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 andfinancial liabilities designated at fair value through profit or loss upon initial recognition. Such financial liabilitiesare subsequently measured at fair value, and the gains or losses from the change in fair value and the dividend orinterest expenses related to the financial liabilities are included in the profit or loss of the current period.Financial liabilities measured at amortised costOther 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 currentperiod.Classification between financial liabilities and equity instrumentsA financial liability is a liability if:
it has a contractual obligation to pay in cash or other financial assets to other parties.it has a contractual obligation to exchange financial assets or financial liabilities under potential adversecondition with other parties. it is a non-derivative instrument contract which will or may be settled with the entity’s own equityinstruments, and the entity will deliver a variable number of its own equity instruments according to suchcontract. 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 assetwith a fixed number of its own equity instruments.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(3) Classification and measurement of financial liabilities (Cont
’d)Classification between financial liabilities and equity instruments(Cont’d)Equity instruments are any contract that evidences a residual interest in the assets of an entity after deducting allof its liabilities.If the Group cannot unconditionally avoid the performance of a contractual obligation by paying cash or deliveringother 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 ownequity instruments used to settle such instrument should be considered as to whether it is as a substitute for cashor other financial assets or for the purpose of enabling the holder of the instrument to be entitled to the remaininginterest in the assets of the issuer after deducting all of its liabilities. For the former, it is a financial liability of theGroup; for the latter, it is the Group’s own equity instruments.
(4) Derivative financial instruments
The Group’s derivative financial instruments are mainly forward foreign exchange contracts, which are initiallyrecognised at fair value on the date a derivative contract is entered into and are subsequently measured at theirfair value. A derivative financial instrument is recognised as an asset when the fair value is positive and as aliability when the fair value is negative. Any gain or loss arising from changes in fair value and not complying withthe accounting requirements on hedging shall be recognised in profit or loss for current period.
(5) Fair value of financial instruments
The methods for determining the fair value of the financial assets or financial liabilities are set out in Note V. 40.
(6) Impairment of financial assets
The Group makes provision for impairment based on expected credit losses (ECLs) on the following items:
Financial assets measured at amortised cost;Debt investments measured at fair value through other comprehensive income;
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(6) Impairment of financial assets (Cont
’d)Measurement of ECLsECLs are the weighted average of credit losses of financial instruments weighted by the risk of default. Creditlosses refer to the difference between all contractual cash flows receivable according to the contract anddiscounted according to the original effective interest rate and all cash flows expected to be received, i.e. thepresent value of all cash shortages.The Group takes into account reasonable and well-founded information such as past events, current conditionsand forecasts of future economic conditions, and calculates the probability-weighted amount of the present valueof the difference between the cash flows receivable from the contract and the cash flows expected to be receivedweighted by the risk of default.The Group measures ECLs of financial instruments at different stages. If the credit risk of the financial instrumentdid not increase significantly upon initial recognition, it is at the first stage, and the Group makes provision forimpairment based on the ECLs within the next 12 months; if the credit risk of a financial instrument increasedsignificantly upon initial recognition but has not yet incurred credit impairment, it is at the second stage, and theGroup makes provision for impairment based on the lifetime ECLs of the instrument; if the financial instrumentincurred credit impairment upon initial recognition, it is at the third stage, and the Group makes provision forimpairment 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 didnot increase significantly upon initial recognition, and makes provision for impairment based on the ECLs withinthe next 12 months.Lifetime ECLs represent the ECLs resulting from all possible default events over the expected life of a financialinstrument. The 12-month ECLs are the ECLs resulting from possible default events on a financial instrumentwithin 12 months (or a shorter period if the expected life of the financial instrument is less than 12 months) afterthe 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 theGroup is exposed to credit risk, including renewal options.For the financial instruments at the first and second stages and with low credit risks, the Group calculates theinterest income based on the book balance and the effective interest rate before deducting the impairmentprovisions. For financial instruments at the third stage, interest income is calculated based on the amortised costafter 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 financingcomponent, the Group always makes provision for impairment at an amount equal to lifetime ECLs.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(6) Impairment of financial assets (Cont
’d)Measurement of ECLs(Cont’d)When the Group is unable to assess the information of ECLs for an individual financial asset at a reasonable cost,it classifies bills receivable and accounts receivable into portfolios based on the credit risk characteristics, andcalculates the ECLs on a portfolio basis. The basis for determining the portfolios is as follows:
A. Bills receivableBills receivable portfolio 1: Bank acceptance billsBills receivable portfolio 2: Commercial acceptance billsB. Accounts receivable
Accounts receivable portfolio 1: Factoring receivablesAccounts receivable portfolio 2: Receivables from non-related party customersAccounts receivable portfolio 3: Due from related party customersFor bills receivable classified as a portfolio, the Group refers to the historical credit loss experience, combinedwith the current situation and the forecast of future economic conditions, to calculate the ECLs based on defaultrisk exposure and lifetime ECL rate.For accounts receivable classified as a portfolio, the Group refers to the historical credit loss experience,combined with the current situation and the forecast of future economic conditions, to prepare a comparison tableof the ageing/overdue days of accounts receivable and the lifetime ECL rate to calculate the ECLs.
Other receivables
The Group classifies other receivables into portfolios based on credit risk characteristics, and calculates the ECLson a portfolio basis. The basis for determining the portfolios is as follows:
Other receivables portfolio 1: Amount due from government authoritiesOther receivables portfolio 2: Amount due from related partiesOther receivables portfolio 3: Other receivablesFor other receivables classified as a portfolio, the Group calculates the ECLs based on default risk exposure andthe ECL rate over the next 12 months or the entire lifetime.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(6) Impairment of financial assets (Cont
’d)Long-term receivablesThe 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 basedon the credit risk characteristics, and calculates the ECLs on a portfolio basis. The basis for determining theportfolios is as follows:
A. Finance lease receivables
Finance lease receivables portfolio 1: Receivables not past dueFinance lease receivables portfolio 2: Overdue receivablesB. Other long-term receivablesOther long-term receivables portfolio 1: Deposits receivableOther long-term receivables portfolio 2: Other receivablesFor deposits receivable and other receivables, the Group refers to the historical credit loss experience, combinedwith the current situation and the forecast of future economic conditions, and calculates the ECLs based ondefault 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 next12 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 theinvestment, the types of counterparty and risk exposure, and default risk exposure and ECL rate within the next12 months or the entire lifetime.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
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 riskIn 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 dateof initial recognition to determine the relative change in risk of default within the expected lifetime of the financialinstrument.In determining whether the credit risk has increased significantly upon initial recognition, the Group considersreasonable and well-founded information, including forward-looking information, which can be obtained withoutunnecessary 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 significantadverse 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 significantincrease in credit risk on either an individual basis or a collective basis. When the assessment is performed on acollective basis, the financial instruments are grouped based on their common credit risk characteristics, such aspast due information and credit risk ratings.The Group determines that the credit risk on a financial asset has increased significantly if it is more than 30 dayspast due.Credit-impaired financial assets
At balance sheet date, the Group assesses whether financial assets measured at amortised cost and debtinvestments measured at fair value through other comprehensive income are credit-impaired. A financial asset iscredit-impaired when one or more events that have an adverse effect on the estimated future cash flows of thefinancial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observableevents:
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 thedebtor 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 ordebtor.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
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 ECLsECLs are remeasured at each balance sheet date to reflect changes in the financial instrument’s credit risk uponinitial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit or loss forthe current period. For financial assets measured at amortised cost, the provisions of impairment is deductedfrom the carrying amount of the financial assets presented in the balance sheet; for debt investments at fair valuethrough other comprehensive income, the Group makes provisions of impairment in other comprehensive incomewithout reducing the carrying amount of the financial asset.Write-offsThe book balance of a financial asset is directly written off to the extent that there is no realistic prospect ofrecovery of the contractual cash flows of the financial asset (either partially or in full). Such write-off constitutesderecognition of such financial asset. This is generally the case when the Group determines that the debtor doesnot have assets or sources of income that could generate sufficient cash flows to repay the amounts subject tothe write-off. However, financial assets that are written off could still be subject to enforcement activities in orderto comply with the Group’s procedures for recovery of amounts due.If a write-off of financial assets is subsequently recovered, the recovery is credited to profit or loss in the period inwhich 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 theissuer of such financial assets (the transferee).If the Group transfers substantially all the risks and rewards of ownership of the financial asset to the transferee,the financial asset shall be derecognised. If the Group retains substantially all the risks and rewards of ownershipof a financial asset, the financial asset shall not be derecognised.If the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset,it accounts for the transaction as follows: if the Group does not retain control, it derecognises the financial assetand recognises any resulting assets or liabilities; if the control over the financial asset is not waived, the relevantfinancial asset is recognised according to the extent of its continuing involvement in the transferred financial assetand 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, whichare enforceable currently, and the Group plans to realise the financial assets or to clear off the financial liabilitieson a net amount basis or simultaneously, the net amount of financial assets and financial liabilities shall bepresented in the balance sheet upon offsetting. Otherwise, financial assets and financial liabilities are presentedseparately in the balance sheet without offsetting.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. Bills receivable
Method for determining the ECLs of bills receivableThe Company measures the loss provisions for bills receivable in accordance with the ECLs amount for the entireperiod. Based on the credit risk characteristics of bills receivable, bills receivable are divided into different groups:
ItemBasis for determining the groupsBank acceptance billsThe acceptance party is a bank with less credit riskCommercial acceptance billsThe acceptance party is a company with higher credit risk
12. Accounts receivable
Method for determining the ECLs of accounts receivableFor receivables and contract assets that do not contain significant financing components, the Company measures lossprovisions based on the ECL amount for the entire period.For receivables, contract assets and lease receivables that contain significant financing components, the Companychooses 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 alsoclassified into different groups based on their credit risk characteristics:
ItemBasis for determining the groupsAmount due from related partiesThis group comprises amounts due from related parties with lower risks.Factoring receivablesThis group comprises factoring receivables with special risks.Amount due from distributor customersThis group comprises receivables with their ageing as credit risk characteristics.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
13. Accounts receivable financing
As for notes receivable and Accounts receivable that classified as measured at fair value through othercomprehensive income, the portion within one year (inclusive) from the date of acquisition is presentedas financing receivables. For relevant accounting policies, please refer to note V. 10. Financial instruments.
14. Other receivables
Determination and accounting treatment of ECLs of other receivablesThe Company measures impairment losses using the ECL amount in the next 12 months or the entire duration, basedon whether the credit risk of other receivables has increased significantly upon initial recognition. In addition to otherreceivables which are individually assessed for credit risk, they are also classified into different groups based on theircredit risk characteristics:
ItemBasis for determining the groupsDividends receivableThis group comprises dividends receivable.Interest receivableThis 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 partiesThis group comprises amount due from related parties with less risks.Other receivablesThis group comprises for all types of deposits, advances and premiums receivable
during daily and recurring activities.
15. Inventories
(1) Classification of inventories
Inventories of the Group mainly include raw materials, work in progress, goods in stock, development productsand consumable biological assets, etc.
(2) Pricing of inventories dispatched
Inventories of the Group are measured at their actual cost when obtained. Cost of raw materials, goods in stockand 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. Consumablebiological assets without a stock are stated at historical cost at initial recognition, and subsequently measuredat fair value when there is a stock. Changes in fair values shall be recognised as profit or loss in the currentperiod. The cost of self-planting, self-cultivating consumable biological assets is the necessary expensesdirectly 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 lossfor the current period.The cost of consumable biological assets shall, at the time of harvest or disposal, be carried forward at carryingamount using the stock volume proportion method.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
15. Inventories (Cont
’d)
(3) Recognition of net realisable value of inventories and provision for inventory impairment
Net realisable value of inventories refers to the amount of the estimated price of inventories less the estimatedcost incurred upon completion, estimated sales expenses and taxes and levies. The realisable value of inventoriesshall be determined on the basis of definite evidence, purpose of holding the inventories and effect of after-balance-sheet-date events.At the balance sheet date, provision for inventory impairment is made when the cost is higher than the netrealisable value. The Group usually make provision for inventory impairment based on categories of inventories. Atthe balance sheet date, in case the factors causing inventory impairment no longer exists, the original provision forinventory impairment shall be reversed.
(4) Inventory stock taking system
The Group implements permanent inventory system as its inventory stock taking system.
(5) Amortisation of low-value consumables and packaging materials
The low-value consumables of the Group are amortised when issued for use.Packaging materials for turnover are amortised when issued for use.
16. Contract assets
Contract assets are the Company’s right to consideration in exchange for goods that the Company has transferred tocustomers when that right is conditioned on something other than the passage of time. The Company’s unconditionalright to receive consideration from customers (only the passage of time is required) is accounted for as accountsreceivable.The methods for determination and accounting treatment of the ECLs on contract assets are detailed in Note V. 10Financial instruments.
17. Contract costs
Contract costs are either the incremental costs of obtaining a contract with a customer or the costs to fulfil a contractwith a customer.Incremental costs of obtaining a contract are those costs that the Company incurs to obtain a contract with a customerthat it would not have incurred if the contract had not been obtained e.g. an incremental sales commission. TheCompany recognises as an asset the incremental costs of obtaining a contract with a customer if it expects to recoverthose costs. Other costs of obtaining a contract are expensed when incurred.If the costs to fulfil a contract with a customer are not within the scope of inventories or other accounting standards,the Company recognises an asset from the costs incurred to fulfil a contract only if those costs meet all of the followingcriteria:
the costs relate directly to an existing contract or to a specifically identifiable anticipated contract, including direct
labour, direct materials, allocations of overheads (or similar costs), costs that are explicitly chargeable to thecustomer and other costs that are incurred only because the Group entered into the contract;the costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy)
performance obligations in the future; the costs are expected to be recovered.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Contract costs (Cont
’d)
Assets recognised for the incremental costs of obtaining a contract and assets recognised for the costs to fulfil acontract (the“assets related to contract costs”) are amortised on a systematic basis that is consistent with the transferto the customer of the goods or services to which the assets relate and recognised in profit or loss for the currentperiod. An expense is recognised when incurred if the amortisation period is less than one year.The Company recognises an impairment loss in profit or loss to the extent that the carrying amount of an asset relatedto contract costs exceeds:
remaining amount of consideration that the Company expects to receive in exchange for the goods or services towhich the asset relates; the cost estimated to be happened for the transfer of related goods or services.The costs of contract performance recognised as assets, if the amortisation period is less than one year or a normaloperating cycle upon the initial recognition, are presented as“Inventories”item, and if the amortisation period is morethan one year or a normal operating cycle upon the initial recognition, are presented as“Other non-current assets” item.The contract obtaining costs recognised as assets, if the amortisation period is less than one year or a normal operatingcycle upon the initial recognition, are presented as“Other current assets”item, and if the amortisation period is morethan one year or a normal operating cycle upon the initial recognition, are presented as“Other non-current assets” item.
18. Held for sale
A non-current asset or disposal group is classified as held for sale if its carrying amount will be recovered principallythrough a sale transaction (including a non-monetary asset exchange with commercial substance) rather than throughcontinuing use.The aforesaid non-current asset does not include the investment property subsequently measured at fair value, thebiological assets measured at the net amount of the fair value deducting the sales expense, the assets generated fromremuneration, 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, andliabilities directly associated with those assets that will be transferred in the transaction. In certain circumstances, thedisposal group includes the goodwill acquired in the business combination.A non-current asset or a disposal group is classified as held for sale if it meets all of the following conditions: the non-current asset or disposal group is available for immediate sale in its present condition subject only to terms that areusual and customary for sales of such asset or disposal group; the sale is highly probable, i.e. a sale plan has beenresolved and a firm purchase commitment has been obtained, and the sale is expected to be completed within one year.When the Group loses control of a subsidiary due to reasons such as disposal of investment in a subsidiary, regardlessof whether the Group retains part of the equity investment after the disposal, when the investment in a subsidiaryintended to be disposed of meets the conditions for classification as held for sale, the investment in a subsidiary isclassified as held for sale as a whole in the separate financial statements, and all assets and liabilities of the subsidiaryare classified as held for sale in the consolidated financial statements.When the non-current assets or disposal groups held for sale are initially measured or remeasured at the balance sheetdate, the excess of the carrying amount over the net amount of the fair value less selling expenses is recognised asasset impairment loss. For the amount of impairment loss recognised on disposal groups held for sale, the carryingamount of the goodwill of the disposal group shall be offset against first, and then be offset against the carrying amountof non-current assets according to the proportion of the carrying amount of non-current assets.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
18. Held for sale (Cont
’d)If the net amount of the fair value of the non-current assets or disposal groups held for sale less the selling expensesincreases on the subsequent balance sheet date, the amount previously written down shall be recovered and reversedin the amount of asset impairment loss recognised after be classified as held for sale, and the reversed amount shall beincluded 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. Interestand other expenses of a disposal group classified as held for sale continue to be recognised. For all or part of aninvestment in an associate or a joint venture that is classified as held for sale, the part of being classified as held for saleshall cease to be accounted for using the equity method, while any retained portion (not classified as held for sale) shallcontinue to be accounted for using the equity method; The Group ceases to use the equity method from the date whenthe 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 forbeing 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 notbeen classified as held for sale;
(2) recoverable amount.
19. Long-term receivables
The Company measures the impairment loss of long-term receivables at an amount equal to the ECLs in the next 12months 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 intodifferent groups based on their credit risk characteristics:
ItemBasis for determining the groupsLong-term receivables not yet past due
The group is comprised of long-term receivables not yet past due with normalexposures.Long-term receivables overdueThis group is comprised of long-term receivables with higher past due exposures.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
20. Long-term equity investments
Long-term equity investments include the equity investments in subsidiaries, joint ventures and associates. Associatesof the Group are those investees that the Group imposes significant influence over.
(1) Determination of initial investment cost
Long-term equity investments acquired through business combinations: for a long-term equity investmentacquired through a business combination involving enterprises under common control, the investment cost shallbe the absorbing party’s share of the carrying amount of the owners’equity under the consolidated financialstatements of the ultimate controlling party on the date of combination. For a long-term equity investmentacquired through a business combination involving enterprises not under common control, the investment cost ofthe 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 cashpayment, the initial investment cost shall be the purchase cost actually paid; for a long-term equity investmentacquired 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 meetthe conditions of holding for sale, investments in associates and joint ventures shall be accounted for using theequity method.For a long-term equity investment accounted for using the cost method, the cash dividends or profits declared bythe investees for distribution shall be recognised as investment gains and included in profit or loss for the currentperiod, except the case of receiving the actual consideration paid for the investment or the declared but not yetdistributed 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 costexceeds the investor’s interest in the fair value of the investee’s identifiable net assets at the acquisition date, noadjustment shall be made to the investment cost of the long-term equity investment. Where the initial investmentcost is less than the investor’s interest in the fair value of the investee’s identifiable net assets at the acquisitiondate, adjustment shall be made to the carrying amount of the long-term equity investment, and the difference shallbe charged to profit or loss for the current period.Under the equity method, investment gain and other comprehensive income shall be recognised based on theCompany’s share of the net profits or losses and other comprehensive income made by the investee, respectively.Meanwhile, the carrying amount of long-term equity investment shall be adjusted. The carrying amount of long-term equity investment shall be reduced based on the Group’s share of profit or cash dividend distributed bythe investee. In respect of the other movement of net profit or loss, other comprehensive income and profitdistribution of investee, the carrying amount of long-term equity investment shall be adjusted and included inthe capital reserves (other capital reserves). The Group shall recognise its share of the investee’s net profits orlosses 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 theGroup.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
20. Long-term equity investments (Cont
’d)
(2) Subsequent measurement and method for profit or loss recognition (Cont
’d)
For additional equity investment made in order to obtain significant influence or common control over investeewithout resulted in control, the initial investment cost under the equity method shall be the aggregate of fairvalue of previously held equity investment and additional investment cost on the date of transfer. The differencebetween the fair value and carrying amount of previously held equity investment on the date of transfer and theaccumulated change in fair value originally included in other comprehensive income shall be recognised in theprofit 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 equityinvestment, the remaining equity interest after disposal shall be accounted for according to the AccountingStandard for Business Enterprises No. 22 – Recognition and measurement of Financial Instruments. The differencebetween its fair value and carrying amount shall be included in profit or loss for the current period. In respectof other comprehensive income recognised under previous equity investment using equity method, it shall beaccounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability byinvestee at the time when equity method was ceased to be used. Movement of other owners’equity related to theprevious 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 equityinterest which can apply common control or impose significant influence over the investee after disposal shall beaccounted for using equity method. Such remaining equity interest shall be treated as accounting for using equitymethod since it is obtained and adjustment was made accordingly. For the remaining equity interest which cannotapply common control or impose significant influence over the investee after disposal, it shall be accounted forusing the Accounting Standard for Business Enterprises No. 22 – Recognition and measurement of FinancialInstruments. The difference between its fair value and carrying amount as at the date of losing control shall beincluded in profit or loss for the current period.If the shareholding ratio of the Group is reduced due to the capital increase of other investors, and as a result,the Company loses the control of but still can apply common control or impose significant influence over theinvestee, the net asset increase due to the capital increase of the investee attributable to the Company shall berecognised according to the new shareholding ratio, and the difference with the original carrying amount of thelong-term equity investment corresponding to the shareholding ratio reduction part that should be carried forwardshall be recorded in the profit or loss for the current period; and then it shall be adjusted according to the newshareholding 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 unrealisedgain 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 transactionsbetween the Group and an investee is not eliminated to the extent that the loss is impairment loss of thetransferred assets.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
20. Long-term equity investments (Cont
’d)
(3) Basis for determining the common control and significant influence on the investee
Common control is the contractually agreed sharing of control over an arrangement, which relevant activities ofsuch arrangement must be decided by unanimously agreement from parties who share control. When determiningif there is any common control, it should first be identified if the arrangement is controlled by all the participantsor the group consisting of the participants, and then determined if the decision on the arranged activity can bemade only with the unanimous consent of the participants sharing the control. If all the participants or a groupof participants can only decide the relevant activities of certain arrangement through concerted action, it canbe considered that all the participants or a group of participants share common control on the arrangement. Ifthere are two or more participant groups that can collectively control certain arrangement, it does not constitutecommon control. When determining if there is any common control, the relevant protection rights will not be takeninto account.Significant influence is the power of the investor to participate in the financial and operating policy decisions ofan investee, but to fail to control or joint control the formulation of such policies together with other parties. Whendetermining if there is any significant influence on the investee, the influence of the voting shares of the investeeheld by the investor directly and indirectly and the potential voting rights held by the investor and other partieswhich are exercisable in the current period and converted to the equity of the investee, including the warrants,stock options and convertible bonds that are issued by the investee and can be converted in the current period,shall be taken into account.When the Group holds directly or indirectly through the subsidiary 20% (inclusive) to 50% of the voting sharesof the investee, it is generally considered to have significant influence on the investee, unless there is concreteevidence to prove that it cannot participate in the production and operation decision-making of the investee andcannot pose significant influence in this situation. When the Group owns less than 20% of the voting shares of theinvestee, it is generally considered that it has not significantly influenced on the investee, unless there is concreteevidence to prove that it can participate in the production and operation decision-making of the investee andcannot pose significant influence in this situation.
(4) Method for impairment test and measurement of impairment provision
For the method for making impairment provision for the investment in subsidiaries, associates and joint ventures,please refer to Note V. 27.
21. Investment property
Investment property refers to real estate held to earn rentals or for capital appreciation, or both. The investment propertyof 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 oramortisation 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 subsequentmeasurement, please refer to Note V. 27.When an investment property is sold, transferred, retired or damaged, the amount of proceeds on disposal of theproperty net of the carrying amount and related tax and surcharges is recognised in profit or loss for the current period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
22. Fixed assets
(1) Conditions for recognition
Fixed assets of the Group are tangible assets that are held for use in the production or supply of goods orservices, for rental to others, or for administrative purposes; and have a useful life of more than one accountingyear. Fixed assets are recognised only if the Company is very likely to receive economic benefits from the assetand its cost can be measured reliably. A fixed asset of the Group shall be initially measured at actual cost whenacquired.
(2) Depreciation method
CategoryDepreciation method
Useful lives of
depreciation
(Year)
Estimatedresidual value
(%)
Annualdepreciationrate (%)Housing and building structureStraight-line method20-405-102.25-4.75Machinery and equipmentStraight-line method8-205-104.50-11.88Transportation equipmentStraight-line method5-85-1011.25-19.00Electronic equipment and othersStraight-line method55-1018.00-19.00The Group adopts the straight-line method for depreciation. Provision for depreciation will be started when thefixed asset reaches its expected usable state, and stopped when the fixed asset is derecognised or classifiedas a non-current asset held for sale. Without regard to the depreciation provision, the Group determines thedepreciation rate by category, estimated useful lives and estimated residual value of the fixed assets. Where, forthe fixed assets for which depreciation provision is made, to determine the depreciation rate, the accumulatedamount of the fixed asset depreciation provision that has been made shall be deducted.The impairment test method and impairment provision method of the fixed assets are set out in Note V. 27.The Group will re-check the useful lives, estimated net residual value and depreciation method of the fixed assetsat the end of each year. When there is any difference between the useful lives estimate and the originally estimatedvalue, the useful lives of the fixed asset shall be adjusted. When there is any difference between the estimated netresidual value estimate and the originally estimated value, the estimated net residual value shall be adjusted.For the overhaul expense incurred by the Group during the regular inspection on the fixed assets, if there isconcrete evidence to prove that it meets the fixed asset recognition condition, it shall be included in the cost offixed asset; if it does not meet the fixed asset recognition condition, it shall be included in the profit or loss for thecurrent period. The depreciation of fixed assets shall be continued in the intervals of the regular overhaul of thefixed asset.
23. Construction in progress
Construction in progress of the Group is recognised based on the actual construction cost, including all necessaryexpenditures incurred for construction projects, capitalised borrowing costs for the construction in progress before ithas reached the working condition for its intended use, and other related expenses during the construction period.A construction in progress is reclassified to fixed assets when it has reached the working condition for its intended use.The method for impairment provision of construction in progress is set out in Note V. 27.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
24. Borrowing costs
(1) Recognition principle for the capitalisation of the borrowing costs
The borrowing costs incurred by the Group directly attributable to the acquisition, construction or productionof a qualifying asset will be capitalised and included in the cost of relevant asset. Other borrowing costs will berecognised as expenses when incurred according to the incurred amount, and included in the profit or loss for thecurrent period. When the borrowing costs meet all the following conditions, capitalisation shall be started:
The capital expenditure has been incurred, which includes the expenditure incurred by paying cash,transferring non-cash assets or undertaking interest-bearing liabilities for acquiring, constructing orproducing the qualifying assets; The borrowing costs have been incurred;The acquisition, construction or production activity necessary for the asset to be ready for its intended useor 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 assetis ready for its intended use or sale shall be recognised as expenses when incurred according to the incurredamount, 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 orproduction of a qualifying asset is interrupted abnormally, when the interruption is for a continuous period of morethan 3 months. The capitalisation of the borrowing costs shall be continued in the normal interruption period.
(3) Calculation methods for capitalisation rate and capitalised amount of the borrowing costs
Where funds are borrowed for a specific purpose, the amount of interest to be capitalised shall be the actualinterest expense incurred on that borrowing for the period less any bank interest earned from depositing theborrowed funds before being used into banks or any investment income on the temporary investment of thosefunds. Where funds are borrowed for general purpose, the Company shall determine the amount of interestto be capitalised on such borrowings by applying a capitalisation rate to the weighted average of the excessamounts of cumulative expenditures on the asset over and above the amounts of specific-purpose borrowings.The capitalisation rate shall be the weighted average of the interest rates applicable to the general-purposeborrowings.During the capitalisation period, exchange differences on a specific purpose borrowing denominated in foreigncurrency shall be capitalised. Exchange differences related to general-purpose borrowings denominated in foreigncurrency shall be included in profit or loss for the current period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
25. Right-of-use assets
(1) Conditions for recognition of right-of-use assets
Right-of-use assets of the Group are defined as the right of underlying assets in the lease term for the Group as alessee.Right-of-use assets are initially measured at cost at the commencement date of the lease. The cost includes theamount of the initial measurement of lease liability; lease payments made at or before the inception of the leaseless any lease incentives enjoyed; initial direct costs incurred by the Group as lessee; costs to be incurred indismantling and removing the underlying assets, restoring the site on which it is located or restoring the underlyingasset to the condition required by the terms and conditions of the lease incurred by the Group as lessee. Asa lessee, the Group recognises and measures the costs of dismantling and restoration in accordance with theAccounting Standard for Business Enterprises No. 13 – Contingencies. Subsequently, the lease liability is adjustedfor any remeasurement of the lease liability.
(2) Depreciation method of right-of-use assets
The Group uses the straight-line method for depreciation. Where the Group, as a lessee, is reasonably certain toobtain ownership of the leased asset at the end of the lease term, such asset is depreciated over the remaininguseful life of the leased asset. Where ownership of the lease assets during the lease term cannot be reasonablydetermined, right-of-use assets are depreciated over the lease term or the remainder of useful lives of the leaseassets, whichever is shorter.
(3) For the methods of impairment test and impairment provision of right-of-use assets, please refer to Note V. 27.
26. Intangible assets
(1) Measurement method, useful life and impairment testing
The intangible assets of the Group include land use rights, software and certificates of third party right.The intangible asset is initially measured at cost, and its useful life is determined upon acquisition. If the useful lifeis finite, the intangible asset will be amortised over the estimated useful life using the amortisation method thatcan reflect the estimated realisation of the economic benefits related to the asset, starting from the time whenit is available for use. If it is unable to reliably determine the estimated realisation, straight-line method shall beadopted 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:
TypeUseful life (year)Method of amortisationRemarkLand use rights50-70Straight-line methodSoftware5-10Straight-line methodCertificates of third party right3Straight-line methodThe Group reviews the useful life and amortisation method of the intangible assets with finite useful life at theend of each year. If it is different from the previous estimates, the original estimates will be adjusted, and will betreated as a change in accounting estimate.If it is estimated on the balance sheet date that certain intangible asset can no longer bring future economicbenefit to the company, the carrying amount of the intangible asset will be entirely transferred into the profit orloss for the current period.The impairment method for the intangible assets is set out in Note V. 27.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
26. Intangible assets (Cont
’d)
(2) Accounting policy for internal research and development expenditure
Research and development expenditure of the Group is divided into expenses incurred during the research phaseand expenses incurred during the development phase.Expenses incurred during the research phase and the development phase are recognised in profit or loss in thecurrent period.
27. Long-term asset impairment
Impairment of long-term equity investments in subsidiaries, associates and joint ventures, asset impairment oninvestment property, fixed assets, construction in progress, materials for project, right-of-use assets, intangible assets,goodwill and others (excluding inventories, deferred tax assets and financial assets) subsequently measured at cost isdetermined as follows:
The Group determines if there is any indication of asset impairment as at the balance sheet date. If there is any evidenceindicating that an asset may be impaired, recoverable amount shall be estimated for impairment test. Goodwill arisingfrom business combinations, intangible assets with an indefinite useful life and intangible assets not ready for use will betested 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 thefuture cash flows expected to be derived from the asset. The Group estimates the recoverable amount of an individualasset. If it is not possible to estimate the recoverable amount of the individual asset, the Group shall determine therecoverable amount of the asset group to which the asset belongs. The determination of an asset group is based onwhether major cash inflows generated by the asset group are independent of the cash inflows from other assets or assetgroups.When the recoverable amount of an asset or an asset group is less than its carrying amount, the carrying amount isreduced to its recoverable amount. The reduction amount is charged to profit or loss and an impairment provision ismade accordingly.For the purpose of impairment test of goodwill, the carrying amount of goodwill acquired in a business combination isallocated to the relevant asset groups on a reasonable basis from the acquisition date; where it is difficult to allocateto the related asset groups, it is allocated to the combination of related asset groups. The related asset groups orcombination of asset groups are those which can benefit from the synergies of the business combination and are notlarger 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 goodwillmay 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 carriedout on the asset group or combination of asset groups containing goodwill by comparing its carrying amount with itsrecoverable amount. If the recoverable amount is lower than the carrying amount, an impairment loss is recognised forgoodwill.An impairment loss recognised shall not be reversed in a subsequent period.
28. Long-term prepaid expenses
The long-term prepaid expenses incurred by the Group shall be recognised based on the actual cost, and evenlyamortised over the estimated benefit period. For the long-term prepaid expense that cannot benefit the subsequentaccounting periods, its value after amortisation shall be entirely included in the profit or loss for the current period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
29. Contract liabilities
A contract liability represents the Company’s obligation to transfer goods to a customer for which the Company hasreceived consideration (or an amount of consideration is due) from the customer. If the customer has already paidthe contract consideration before the Company transfers goods to the customer or the Company has obtained theunconditional collection right, the Company will recognise such amount received or receivable as contract liabilitiesat earlier of the actual payment by the customer or the amount payable becoming due. Contract assets and contractliabilities under the same contract are presented on a net basis, and contract assets and contract liabilities underdifferent contracts are not offset.
30. Employee benefits
(1) Scope of employee benefits
Employee benefits are all forms of considerations or compensation given by an entity in exchange for servicesrendered by employees or for the termination of employment. Employee benefits include short-term staffremuneration, post-employment benefits, termination benefits and other long-term employee benefits. Employeebenefits include benefits provided to employees’spouses, children, other dependants, survivors of the deceasedemployees or to other beneficiaries.Employee benefits are presented as“employee benefits payable”and“long-term employee benefits payable”inthe balance sheet, respectively, according to liquidity.
(2) Short-term staff remuneration
Employee wages or salaries actually incurred, bonuses, and social insurance contributions such as medicalinsurance, work injury insurance, maternity insurance, and housing fund, contributed at the applicable benchmarksand rates, are recognised as a liability as the employees provide services, with a corresponding charge to profit orloss or included in the cost of assets where appropriate. Where the payment of liability is expected not to be fullysettled within 12 months after the end of the annual reporting period in which the employees render the relatedservices, and the financial impact would be material, these liabilities are measured at their discounted values.
(3) Post-employment benefits
Post-employment benefit plans include defined contribution plans and defined benefit plans. A definedcontribution plan is a post-employment benefit plan under which the Group pays fixed contributions into aseparate fund and the Group has no further obligations for payment. A defined benefit plan is a post-employmentbenefit plan other than a defined contribution plan.Defined contribution plans
Defined contribution plans include basic pension insurance and unemployment insurance, both of which areoperated and managed by the government authorities and are non-refundable, whereas the Company has noaccess nor any discretion after making contributions, and hence there were not any forfeited contributions asunder paragraph 26(2) of appendix 16 of the Hong Kong Listing Rules for the financial year ended 31 December2020. In other words, the Group did not forfeit any contributions on behalf of its employees who leave the planprior to vesting fully in such contributions. Hence, there were no such an issue whether forfeited contributions maybe used by the Group under paragraph 26(2) of appendix 16 of the Hong Kong Listing Rules for the Group.During the accounting period in which an employee provides service, the amount payable calculated according tothe defined contribution plan is recognised as a liability and included in the profit or loss for the current period orthe cost of relevant assets.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
30. Employee benefits (Cont
’d)
(4) Termination benefits
When the Group provides termination benefits to employees, employee benefits liabilities arising from terminationbenefits are recognised in profit or loss for the current period at the earlier of the following dates: when the Groupcannot revoke unilaterally compensation for dismissal due to the cancellation of labour relationship plans andemployee redundant proposals; the Group recognises cost and expenses related to payment of compensation fordismissal and restructuring.For the early retirement plans, economic compensations before the actual retirement date were classified astermination benefits. During the period from the date of cease of render of services to the actual retirementdate, relevant wages and contribution to social insurance for the employees proposed to be paid are recognisedin profit or loss on a one-off basis. Economic compensation after the official retirement date, such as normalpension, is accounted for as post-employment benefits.
(5) Other long-term employee benefits
Other long-term employee benefits provided by the Group to employees that meet the conditions for definedcontribution plans are accounted for in accordance with the relevant provisions relating to defined contributionplans as stated above. If the conditions for defined benefit plans are met, the benefits shall accounted for inaccordance with the relevant provisions relating to defined benefit plans, but the“changes arising from theremeasurement of the net liabilities or net assets of the defined benefit plans”in the relevant employee benefitsshall be included in the current profit or loss or the relevant asset cost.
31. Lease liabilities
(1) Initial measurement
At the commencement date of a lease term, the Company shall initially measure the lease liabilities at the presentvalue of the lease payments that are not paid at that date.
1) Lease payments
The lease payments mean the payments made by the Company to a lessor for the right to use the leasedassets during the lease term, including: fixed payments and in-substance fixed payments, less any leaseincentives receivable; variable lease payments that depend on an index or a rate, initially measured usingthe index or rate as at the commencement date of the lease term; the exercise price of a purchase optionif the Company is reasonably certain to exercise that option; payments for terminating the lease, if thelease term reflects the Company exercising an option to terminate the lease; amounts expected to bepayable by the Company under residual value guarantees.
2) Discount rate
The present value of the lease payments shall be calculated using the Company’s incremental borrowingrate.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
31. Lease liabilities (Cont
’d)
(2) Subsequent measurement
After the commencement date of a lease term, the Company shall subsequently measure the lease liabilities by:
increasing the carrying amount to reflect interest on the lease liabilities; reducing the carrying amount to reflectthe lease payments made; remeasuring the carrying amount to reflect the change in the lease payments due toany reassessment or lease modificationsThe interest expense on the lease liabilities in each period during the lease term is calculated using a constantperiodic rate of interest and is recognised in profit or loss for the current period, except for the interest expense tobe capitalised. The periodic rate of interest is the discount rate used by the Company in the initial measurement oflease liabilities, or the revised discount rate used by the Company when the Company has to remeasure the leaseliabilities based on a revised discount rate due to a change in the lease payments or lease modifications.
(3) Remeasurement
After the commencement date of a lease term, the Company shall remeasure the lease liabilities using thechanges to the lease payments and the revised discount rate, and adjust the carrying amount of the right-of-useassets accordingly in the circumstances set out below. If the carrying amount of the right-of-use assets is reducedto zero and there is a further reduction in the measurement of the lease liabilities, the Company shall recogniseany remaining amount of the remeasurement in profit or loss: there is any change in the amount of in-substancefixed payments; there is any change in the amounts expected to be payable under a residual value guarantee;there is any change in the index or rate used to determine the lease payments; there is any change in theassessment results in the purchase option; and there is any change in the assessment results or the exercise ofthe extension option or termination option.
32. Provisions
Obligations pertinent to the contingencies which satisfy the following conditions are recognised as provisions:
(1) the obligation is a current obligation borne by the Group;
(2) it is likely that an outflow of economic benefits from the Group will be resulted from the performance of the
obligation; and
(3) the amount of the obligation can be reliably measured.
The provisions shall be initially measured based on the best estimate for the expenditure required for the performanceof the current obligation, after taking into account relevant risks, uncertainties, time value of money and other factorspertinent to the contingencies. If the time value of money has significant influence, the best estimates shall bedetermined after discounting the relevant future cash outflow. The Group reviews the carrying amount of the provisionson the balance sheet date and adjust the carrying amount to reflect the current best estimates.If all or some expenses incurred for settlement of recognised provisions are expected to be borne by the third party,the compensation amount shall, on a recoverable basis, be recognised as asset separately, and compensation amountrecognised shall not be more than the carrying amount of provisions.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
33. Share-based payments
(1) Category of share-based payment
The Group’s share-based payment is either equity-settled or cash-settled.
(2) Determination of fair value of equity instruments
For the existence of an active market for options and other equity instruments granted by the Group, the fair valueis determined at the quoted price in the active market. For options and other equity instruments with no activemarket, option pricing model shall be used to estimate the fair value of the equity instruments. The followingfactors shall be taken into account using option pricing models: A. the exercise price of the option; B. the validityperiod of the option; C. the current market price of the share; D. the expected volatility of the share price; E.predicted dividend of the share; and F. risk-free rate of the option within the validity period.
(3) Recognition of vesting of equity instruments based on the best estimate
On each balance sheet date within the vesting period, the estimated number of equity instruments expectedto vest is revised based on the best estimate made by the Group according to the latest available subsequentinformation as to changes in the number of employees with exercisable rights. On the vesting date, the finalestimated number of equity instruments expected to vest should equal the actual number of equity instrumentsexpected to vest.
(4) Accounting treatment of implementation, modification and termination of share-based payment
Equity-settled share-based payment shall be measured at the fair value of the equity instruments granted toemployees. For those may immediately vest after the grant, the fair value of equity instrument at the grant dateshall be included in the relevant costs or expenses, and the capital reserve shall be increased accordingly. If theright may not be exercised until the vesting period comes to an end or until the specified performance conditionsare met, within the vesting period, the services obtained in the current period shall, based on the best estimate ofthe number of vested equity instruments, be included in the relevant costs or expenses and the capital reserve atthe fair value of the equity instrument at the grant date. After the vesting period, relevant costs or expenses andtotal shareholders’ equity which have been recognised will not be adjusted.Cash-settled share-based payment shall be measured in accordance with the fair value of liability calculated andrecognised based on the shares or other equity instruments undertaken by the Group. For those may immediatelyvest after the grant, the fair value of the liability undertaken by the Group shall, on the date of the grant, beincluded in the relevant costs or expenses, and the liabilities shall be increased accordingly. If the right may not beexercised until the vesting period comes to an end or until the specified performance conditions are met, withinthe vesting period, the services obtained in the current period shall, based on the best estimate of the informationabout the exercisable right, be included in the relevant costs or expenses and the corresponding liabilities at thefair value of the liability undertaken by the Group. For each of the balance sheet date and settlement date beforethe settlement of the relevant liabilities, fair value of the liabilities shall be remeasured and the changes will beincluded in the profit or loss for the current period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
33. Share-based payments (Cont
’d)
(4) Accounting treatment of implementation, modification and termination of share-based payment (Cont
’d)
When there are changes in Group’s share-based payment plans, if the modification increases the fair value ofthe equity instruments granted, corresponding recognition of service increase in accordance with the increase inthe 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 employeesshare-based payment plans to modify the terms and conditions of service, it will continue to be accounted for inthe accounting treatment, as if the change had not occurred, unless the Group cancelled some or all of the equityinstruments granted.During the vesting period, if the cancelled equity instruments (except for failure to meet the conditions of the non-market vesting conditions) granted by the Group to cancel the equity instruments granted amount treated asaccelerated vesting of the remaining period should be recognised immediately in profit or loss, while recognisingcapital reserves. If employees or other parties can choose to meet non-vesting conditions but they are not met inthe vesting period, the Group will treat them as cancelled equity instruments granted.
34. Preference Shares, Perpetual Bonds and other financial instruments
(1) Classification of financial liabilities and equity instruments
Financial instruments issued by the Group are classified into financial assets, financial liabilities or equityinstruments on the basis of the substance of the contractual arrangements and the economic nature not onlyits legal form, together with the definition of financial asset, financial liability and equity instruments on initialrecognition.
(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 financialinstrument standards; thereafter, interest or dividends are accrued on each balance sheet date and accounted forin accordance with relevant specific ASBEs, i.e. to determine the accounting treatment for interest expenditureor dividend distribution of the instrument based on the classification of the financial instrument issued. Forfinancial instruments classified as equity instruments, their interest expenses or dividend distributions are treatedas 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 inprinciple accounted for with reference to borrowing costs, and the gains or losses arising from their repurchasesor 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, ifsuch financial instruments are classified as debt instruments and measured at amortised cost, they are includedin the initial measured amount of the instruments issued; if such financial instruments are classified as equityinstruments, they are deducted from equity.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
35. Revenue
(1) General principles
The Group recognises revenue when it satisfies a performance obligation in the contract, i.e. when the customerobtains control of the relevant goods or services.Where a contract has two or more performance obligations, the Group allocates the transaction price to eachperformance obligation based on the percentage of respective unit price of goods or services guaranteed byeach performance obligation, and recognises as revenue based on the transaction price that is allocated to eachperformance obligation.If one of the following conditions is fulfilled, the Group performs its performance obligation within a certain period;otherwise, it performs its performance obligation at a point of time:
when the customer simultaneously receives and consumes the benefits provided by the Group when the
Group performs its obligations under the contract;when the customer is able to control the goods in progress in the course of performance by the Group
under the contract;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 measuringthe progress towards complete of that performance obligation within that certain period. When the progressof performance cannot be reasonably determined, if the costs incurred by the Group are expected to becompensated, the revenue shall be recognised at the amount of costs incurred until the progress of performancecan be reasonably determined.For performance obligation performed at a point of time, the Group recognises revenue at the point of time atwhich the customer obtains control of relevant goods or services. To determine whether a customer has obtainedcontrol of goods or services, the Group considers the following indications:
The Group has the current right to receive payment for the goods, which is when the customer has the
current payment obligations for the goods.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.The Group has transferred the physical possession of goods to the customer, which is when the customer
obtains physical possession of the goods.The Group has transferred all of the substantial risks and rewards of ownership of the goods to the
customer, which is when the customer obtain all of the substantial risks and rewards of ownership of the
goods to the customer. The customer has accepted the goods. Other information indicates that the customer has obtained control of the goods.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
35. Revenue (Cont
’d)
(1) General principles (Cont
’d)The Group’s right to consideration in exchange for goods or services that the Group has transferred to customers(and such right depends on factors other than passage of time) is accounted for as contract assets, and contractassets are subject to impairment based on ECLs. The Group’s unconditional right to receive consideration fromcustomers (only depends on passage of time) is accounted for as accounts receivable. The Group’s obligation totransfer goods or services to customers for which the Group has received or should receive consideration fromcustomers is accounted for as contract liabilities.Contract assets and contract liabilities under the same contract are presented on a net basis. Where the netamount has a debit balance, it is presented in“contract assets”or“other non-current assets”according to itsliquidity. Where the net amount has a credit balance, it is presented in“contract liabilities”or“other non-currentliabilities” according to its liquidity.
(2) Specific methods
Specific method for revenue recognition of machine-made paper business of the Group: in terms of domesticsales of machine-made paper, revenue is recognised when goods are delivered to the customers and suchdeliveries are confirmed; while in terms of overseas sales of machine-made paper, revenue is recognised on theday when goods are loaded on board and declared.Specific method for recognition of finance lease income of the Group: according to the repayment schedule, theincome 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 therental income on a straight-line basis over the lease term.
36. Government grants
A government grant is recognised when there is reasonable assurance that the grant will be received and that the Groupwill comply with the conditions attaching to the grant.If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received orreceivable. If a government grant is in the form of a transfer of non-monetary asset, it is measured at fair value; if the fairvalue cannot be obtained in a reliable way, it is measured at the nominal amount of RMB1.Government grants obtained for acquisition or construction of long-term assets or other forms of long-term assetformation are classified as government grants related to assets, while the remaining government grants are classified asgovernment grants related to revenue.Regarding the government grant not clearly defined in the official documents and can form long-term assets, the partof government grant which can be referred to the value of the assets is classified as government grant related to assetsand the remaining part is government grant related to revenue. For the government grant that is difficult to distinguish,the entire government grant is classified as government grant related to revenue.A government grant related to an asset shall be recognised as deferred income, and evenly amortised to profit or lossover the useful life of the asset in a reasonable and systematic manner. For a government grant related to revenue, ifthe grant is a compensation for related costs, expenses or losses incurred, the grant shall be recognised in profit or lossfor the current period; if the grant is a compensation for related costs, expenses or losses to be incurred in subsequentperiods, the grant shall be recognised as deferred income, and recognised in profit or loss over the periods in which therelated costs, expenses or losses are recognised. A government grant measured at nominal amount is directly includedin profit or loss for the current period. The Group adopts a consistent approach to the same or similar governmentgrants.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
36. Government grants (Cont
’d)A government grant related to daily activities is recognised in other gains relying on the essence of economic business;otherwise, recognised in non-operating income or non-operating expenses.For the repayment of a government grant already recognised, if there is any related deferred income, the repaymentshall be off set against the carrying amount of the deferred income, and any excess shall be recognised in profit or lossfor 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 recognisedat the amount of borrowings actually received, and the borrowings costs are calculated based on the principal of theborrowings and the policy preferential interest rate; if it is provided by the financial authority directly, the correspondinginterest will be used to offset the relevant borrowing expenses.
37. Deferred income tax assets/deferred income tax liabilities
Income tax comprises current income tax expense and deferred income tax expense, which are included in profit orloss for the current period as income tax expenses, except for deferred tax related to transactions or events that aredirectly recognised in owners’ equity which are recognised in owners’equity, and deferred tax arising from a businesscombination, 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 baseat the balance sheet date of the Group shall be recognised as deferred income tax using the balance sheet liabilitymethod.All the taxable temporary differences are recognised as deferred income tax liabilities except for those incurred in thefollowing transactions:
(1) The initial recognition of goodwill, and the initial recognition of an asset or liability in a transaction which is neither
a business combination nor affects accounting profit or taxable profit (or deductible loss) when the transactionoccurs;
(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 thetemporary difference will not reverse in the foreseeable future.The Group recognises a deferred income tax asset for the carry forward of deductible temporary differences, deductiblelosses and tax credits to subsequent periods, to the extent that it is probable that future taxable profits will be availableagainst which the deductible temporary differences, deductible losses and tax credits can be utilised, except for thoseincurred in the following transactions:
(1) The transaction is neither a business combination nor affects accounting profit or taxable profit (or deductible loss)
when the transaction occurs;
(2) The deductible temporary differences associated with investments in subsidiaries, associates and joint ventures,
the corresponding deferred income tax asset is recognised when both of the following conditions are satisfied: it isprobable that the temporary difference will reverse in the foreseeable future, and it is probable that taxable profitswill be available in the future, against which the temporary difference can be utilised.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
37. Deferred income tax assets/deferred income tax liabilities (Cont
’d)At the balance sheet date, deferred income tax assets and deferred income tax liabilities are measured at the taxrates that are expected to apply to the period when the asset is realised or the liability is settled, and their tax effect isreflected accordingly.At the balance sheet date, the Group reviews the carrying amount of a deferred income tax asset. If it is probable thatsufficient taxable profits will not be available in future periods to allow the benefit of the deferred tax asset to be utilised,the carrying amount of the deferred tax asset is reduced. Any such reduction in amount is reversed when it becomesprobable that sufficient taxable profits will be available.
38. Lease
(1) Identification of leases
On the beginning date of the contract, the Group (as a lessee or lessor) assesses whether the customer inthe contract has the right to obtain substantially all of the economic benefits from use of the identified assetthroughout the period of use and has the right to direct the use of the identified asset throughout the period ofuse. If a contract conveys the right to control the use of an identified asset and multiple identified assets for aperiod of time in exchange for consideration, the Group identifies such contract is, or contains, a lease.
(2) The Group as lessee
On the beginning date of the lease, the Group recognises right-of-use assets and lease liabilities for all leases,except for short-term lease and low-value asset lease with simplified approach.The accounting policy for right-of-use assets is set out in Note V. 25.The lease liability is initially measured at the present value of the lease payments that are not paid at the beginningdate of the lease using the interest rate implicit in the lease or the incremental borrowing rate. Lease paymentsinclude fixed payments and in-substance fixed payments, less any lease incentives receivable; variable leasepayments that are based on an index or a rate; the exercise price of a purchase option if the lessee is reasonablycertain to exercise that option; payments for terminating the lease, if the lease term reflects the lessee exercisingthat 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 aconstant periodic rate of interest and is recognised in profit or loss for the current period. Variable lease paymentsnot included in the measurement of lease liabilities are charged to profit or loss in the period in which they actuallyarise. The Group calculates the interest expense of the lease liability for each period of the lease term based onthe fixed periodic interest rate and is included in the current profit and loss. The variable lease payments that arenot included in the measurement of the lease liability are recognised in profit or loss when incurred.
Short-term lease
Short-term leases refer to leases with a lease term of less than 12 months from the commencement date, exceptfor 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 astraight-line basis over the lease term.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
38. Lease (Cont
’d)
(2) The Group as lessee (Cont
’d)Short-term lease(Cont’d)For short-term leases, the Group chooses to adopt the above simplified approach for the following types of assetsthat meet the conditions of short-term lease according to the classification of leased assets.? Low-value machinery and equipment? Transportation vehiclesLow-value asset lease
A low-value asset lease is a lease that the value of a single leased asset is below RMB2,000,000 when it is a newasset.For a low-value asset lease, the Group chooses the above simplified approach based on the specificcircumstances of each lease.Lease payments on low-value asset leases are recognised on a straight-line basis over the lease term, and eitherincluded in the cost of the related asset or charged to profit or loss for the current period.
(3) The Group as lessor
When the Group is a lessor, a lease is classified as a finance lease whenever the terms of the lease transfersubstantially all the risks and rewards of asset ownership to the lessee. All leases other than financial leases areclassified as operating leases.Operating lease
Lease payments under operating leases are recognised in profit or loss on a straight-line basis over the lease term.Initial direct costs incurred in relation to operating leases are capitalised and amortised over the lease term on thesame basis as rental income and recognised in profit or loss for the current period. The variable lease paymentsobtained in relation to operating leases that are not included in the lease payments are recognised in profit or lossin the period in which they actually incurred.
(4) Sublease
When the Group is an intermediate lessor, the sublease is classified with reference to the right-of-use assetsarising from the head lease. If the head lease is a short-term lease for which the Group adopts a simplifiedapproach, then the Group classifies the sublease as an operating lease.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
38. Lease (Cont
’d)
(5) Sale and leaseback
The lessee and the lessor shall assess and determine whether the transfer of assets in a sale and leasebacktransaction is a sale in accordance with the requirements of the Accounting Standard for Business Enterprises No.14 – Revenue.Where asset transfer under the sale and leaseback transactions is a sale, the lessee shall measure the right-of-use assets created by the sale and leaseback based on the portion of carrying amount of the original assetsrelated to right of use obtained upon leaseback, and only recognise relevant profit or loss for the right transferredto the lessor. The lessor shall account for the purchase of assets in accordance with other applicable ASBEs andaccount 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 torecognise the transferred assets while recognising a financial liability equal to the transfer income and accountfor such liability according to the Accounting Standard for Business Enterprises No. 22 – Recognition andMeasurement of Financial Instruments; or not to recognise the transferred assets but recognise a financial assetequal to the transfer income and account for such asset according to the Accounting Standard for BusinessEnterprises No. 22 – Recognition and Measurement of Financial Instruments.
39. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
Applicable √ Not Applicable
(2) Changes in significant accounting estimates
Applicable √ Not Applicable
(3) Adjustment to the relevant items in the financial statements at the beginning of the year due to the firs
adoption of the New Leases Standard in 2021Not applicable
(4) Reason for retrospective adjustment to the comparative data in the prior period due to the first adoption of the
New Leases Standard in 2021 Applicable √ Not Applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
40. Others
The fair value refers to the price that will be received when selling an asset or the price to be paid to transfer a liability inan orderly transaction between market participants on the date of measurement.The Group measures the relevant assets or liabilities at fair value, assuming that the orderly transaction of selling theassets or transferring the liabilities is conducted in the main market of the relevant assets or liabilities; in the absence ofthe main market, the Group assumes that the transaction is conducted in the most advantageous market for the relevantasset or liability. The main (or the most advantageous) market must be accessible to by the Group on the measurementdate. The Group uses assumptions that market participants would use when pricing the asset or liability, assuming thatmarket participants act in their economic best interest.For financial assets or financial liabilities exist in an active market, fair value is determined based on the quoted pricein such market. While financial instruments do not exist in an active market, the fair value is determined using valuationtechniques.Fair value measurement for a non-financial asset takes into account a market participant’s ability to generate economicbenefits by using the asset in its best use or by selling it to another market participant that would use the asset in itsbest use.The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data areavailable to measure fair value, and gives priority to relevant observable inputs. Unobservable inputs are used only whenrelevant observable inputs are not accessible or the access to which is impracticable.All assets and liabilities measured at fair value or disclosed in the financial statements are categorised within the fairvalue hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurementas a whole: Level 1 inputs are available quoted prices (unadjusted) in active markets for identical assets or liabilities atthe measurement date; Level 2 inputs are inputs, other than Level 1 inputs, that are observable for the asset or liability,either directly or indirectly; Level 3 inputs are unobservable inputs for the asset or liability.For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the Group re-assess them at each balance sheet date to determine whether transfers have occurred between levels in the hierarchy.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VI. Taxation
1. Main tax types and tax rates
Tax typeTax BaseTax rateValue added tax (VAT)Taxable income13/9/6Urban maintenance and construction taxTurnover tax payable7Enterprise income tax (EIT)Taxable income25Property taxRental income and property price1.2/12Disclosure of taxable entities subject to different EIT tax ratesName of taxable entityEIT tax rate (%)Shandong Chenming Paper Holdings Limited15Shouguang Meilun Paper Co., Ltd.15Jilin Chenming Paper Co., Ltd.15Jiangxi Chenming Paper Co., Ltd.15Zhanjiang Chenming Pulp & Paper Co., Ltd.15Wuhan Chenming Hanyang Paper Holdings Co., Ltd.15Huanggang Chenming Pulp & Paper Co., Ltd.15Kunshan Tuoan Plastic Products Co., Ltd.15Shouguang Shun Da Customs Declaration Co, Ltd.10Qingdao Chenming Pulp & Paper Electronic Commodity Spot Trading Co., Ltd.10Zhanjiang Chenming Arboriculture Development Co., Ltd.Exempt from EITNanchang Chenming Arboriculture Development Co., Ltd.Exempt from EITChenming Arboriculture Co., Ltd.Exempt from EITYangjiang Chenming Arboriculture Development Co., Ltd.Exempt from EIT
2. Tax incentives
(1) Enterprise income tax
On 16 August 2018, the Group received a high and new technology enterprise certificate with a certificationnumber of GR201837000311. Pursuant to the requirements under the Law of the People’s Republic of China onEnterprise Income Tax and the relevant policies, the Group is subject to a corporate income tax rate of 15% oftaxable income, and is entitled to the preferential treatment from 2018 to 2020.Shouguang Meilun Paper Co., Ltd., a subsidiary of the Group, received a high and new technology enterprisecertificate with a certification number of GR201837000455 on 16 August 2018. Pursuant to the requirementsunder the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies, ShouguangMeilun is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to the preferentialtreatment from 2018 to 2020.Jilin Chenming Paper Co., Ltd., a subsidiary of the Group, received a high and new technology enterprisecertificate with a certification number of GR201922000658 on 2 September 2019. Pursuant to the requirementsunder the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies, JilinChenming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to the preferentialtreatment from 2019 to 2021.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VI. Taxation (Cont’d)
2. Tax incentives (Cont
’d)
(1) Enterprise income tax (Cont
’d)Jiangxi Chenming Paper Co., Ltd., a subsidiary of the Group, received a high and new technology enterprisecertificate with a certification number of GR201936002184 on 3 December 2019. Pursuant to the requirementsunder the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies, JiangxiChenming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to the preferentialtreatment from 2019 to 2021.Zhanjiang Chenming Pulp & Paper Co., Ltd., a subsidiary of the Group, received a high and new technologyenterprise certificate with a certification number of GR20184400547 on 28 November 2018. Pursuant to therequirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies,Zhanjiang Chenming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to thepreferential treatment from 2018 to 2020.Wuhan Chenming Hanyang Paper Holdings Co., Ltd., a subsidiary of the Group, received a high and newtechnology enterprise certificate with a certification number of GR202042001502 on 1 December 2020. Pursuantto the requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevantpolicies, Wuhan Chenming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled tothe preferential treatment from 2020 to 2022.Huanggang Chenming Pulp & Paper Co., Ltd., a subsidiary of the Group, received a high and new technologyenterprise certificate with a certification number of GR202042001471 on 1 December 2020. Pursuant to therequirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies,Huanggang Chenming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to thepreferential treatment from 2020 to 2022.Kunshan Tuoan Plastic Products Co., Ltd., a subsidiary of the Group, received a high and new technologyenterprise certificate with a certification number of GR202032004526 on 2 December 2020. Pursuant to therequirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies,Kunshan Tuoan is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to thepreferential treatment from 2020 to 2022.Pursuant to the requirements of Rule 27(1) of Law of the People’s Republic of China on Enterprise Income Tax andRule 86(1) of regulations for the Implementation of Law of the People’s Republic of China on Enterprise IncomeTax, Zhanjiang Chenming Arboriculture Development Co., Ltd., Yangjiang Chenming Arboriculture DevelopmentCo., Ltd., Nanchang Chenming Arboriculture Development Co., Ltd. and Chenming Arboriculture Co., Ltd., whichare the subsidiaries of the Group, have completed the filings for EIT reduction for exemption from EIT.Shouguang Shun Da Customs Declaration Co, Ltd. and Qingdao Chenming Pulp & Paper Electronic CommoditySpot Trading Co., Ltd., which are subsidiaries of the Group, are small and micro enterprises. Pursuant to theNotice on Implementing the Inclusive Tax Deduction and Exemption Policies for Micro and Small Enterprises (CaiShui [2019] No. 13), the annual taxable income of a small low-profit enterprise that is more than RMB1 million butnot exceeding RMB3 million shall be included in its taxable income at a reduced rate of 50%, with the applicableenterprise income tax rate of 10%.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VI. Taxation (Cont’d)
2. Tax incentives (Cont
’d)
(1) Enterprise income tax (Cont
’d)Guangdong Chenming Panels Co., Ltd., a subsidiary of the Group, meets the requirements of Rule 99 of theRegulations for the Implementation of Law of the People’s Republic of China on Enterprise Income Tax (DecreeNo. 512 of the State Council of the People’s Republic of China) and the Notice of the Ministry of Finance andthe State Taxation Administration on Issues Concerning the Implementation of the Catalogue of Preferential TaxTreatments for Comprehensive Resource Utilisation Enterprises (Cai Shui [2008] No. 47): since 1 January 2008,for enterprises that derive income from the products listed in the Catalogue which are in line with related nationalor industry standards by making use of the resources listed in the Catalogue as the main raw materials, taxableincome will be calculated at a reduced rate of 90% of the total revenue for that year. To be entitled to the abovetax benefits, the ratio of the resources listed in the Catalogue and the raw materials used for the product shall beconsistent with the required technical standards stated in the Catalogue.
(2) Value-added Tax (
“VAT”)Pursuant to Rule 10 of the Interim Regulation of the People’s Republic of China on Value Added Tax, ZhanjiangChenming Arboriculture Development Co., Ltd., Yangjiang Chenming Arboriculture Development Co., Ltd.,Nanchang Chenming Arboriculture Development Co., Ltd. and Chenming Arboriculture Co., Ltd., which aresubsidiaries of the Group, are exempt from VAT, and have completed the filings for VAT reduction for exemptionfrom VAT.Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use ofResources (Cai Shui [2015] No. 78), taxpayers who sell self-produced products and services applying integrateduse of resources may enjoy the immediate VAT refund policy. Shandong Chenming Panels Co., Ltd., a subsidiaryof the Group, produces products applying integrated use of resources, and is therefore subject to the immediateVAT refund policy in 2021.Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use ofResources (Cai Shui [2015] No. 78), taxpayers who sell self-produced products and services applying integrateduse of resources may enjoy the immediate VAT refund policy. Shouguang Chenming Cement Co., Limited, asubsidiary of the Company, produces products applying integrated use of resources, and is therefore subject tothe immediate VAT refund policy in 2021.Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use ofResources (Cai Shui [2015] No. 78), taxpayers who sell self-produced products and services applying integrateduse of resources may enjoy the immediate VAT refund policy. Guangdong Chenming Panels Co., Ltd., a subsidiaryof the Company, produces products applying integrated use of resources, and is therefore subject to theimmediate VAT refund policy in 2021.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements
1. Monetary funds
Unit: RMBItemClosing balanceOpening balanceTreasury cash2,903,620.962,161,684.57Bank deposit4,622,876,555.614,387,725,487.05Other monetary funds11,767,734,654.8813,369,650,427.36Total16,393,514,831.4517,759,537,598.98 Of which: Total deposits in overseas banks561,226,417.07229,837,092.53Other explanationsOther monetary funds of RMB7,889,043,053.81 were the guarantee deposit for the application for bankacceptance with the banks by the Group;Other monetary funds of RMB1,871,619,947.75 were the guarantee deposit for the application for letter of creditwith the banks by the Group;Other monetary funds of RMB1,532,022,545.14 were the guarantee deposit for the application for guarantees with
the banks by the Group;Other monetary funds of RMB50,000,000.00 were the guarantee deposit for the application for loans with thebanks by the Group; Other monetary funds of RMB143,420,000.00 were the Group’s statutory reserve deposits at the People’s Bank ofChina;Other monetary funds of RMB9,670,354.00 were locked-up due to litigations, resulting in restriction on the use ofthat account’s balance; Bank deposit included interest receivable of RMB271,958,754.18.
2. Financial assets held for trading
Unit: RMBItemClosing balanceOpening balanceFinancial assets measured at fair value through profit or loss101,188,881.03192,907,800.62Of which:
Equity instrument investments101,188,881.03192,907,800.62Total101,188,881.03192,907,800.62Other explanation:
Financial assets held for trading were shares of China Bohai Bank subscribed by the Group.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
3. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMBClosing balanceOpening balanceBook balanceBad debt provision
Carryingamount
Book balanceBad debt provision
CarryingamountCategoryAmountPercentageAmountProvisionpercentageAmountPercentageAmount
ProvisionpercentageAccounts receivable assessed individually for impairment318,325,746.3213.62%318,325,746.32100.00%338,943,643.2613.7%338,943,643.26100.00%Accounts receivable assessed collectively for impairment2,018,546,104.4586.38%204,388,010.8510.13%1,814,158,093.602,135,216,813.3286.30%150,285,147.507.04%1,984,931,665.82Of which:
Accounts receivable from related parties1,199,064.720.05%59,811.284.99%1,139,253.442,000,017.960.08%87,306.274.37%1,912,711.69Accounts receivable from non-related parties1,701,489,663.0472.81%138,233,778.568.12%1,563,255,884.481,815,359,418.6773.37%97,096,893.565.35%1,718,262,525.11Factoring receivables315,857,376.6913.52%66,094,421.0120.93%249,762,955.68317,857,376.6912.85%53,100,947.6716.71%264,756,429.02Total2,336,871,850.77100.00%522,713,757.1722.37%1,814,158,093.602,474,160,456.58100.00%489,228,790.7619.77%1,984,931,665.82
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
3. Accounts receivable (Cont
’d)
(1) Disclosure of accounts receivable by category (Cont
’d)
Items assessed collectively for impairment:
Accounts receivable with collective provision for bad debts based on receivables from related parties
Unit: RMBClosing balanceNameBook balance
Provision for
bad debts
ProvisionpercentageWithin 1 year1,199,064.7259,811.284.99%Total1,199,064.7259,811.28–
Accounts receivable with collective provision for bad debts based on receivables from non-related partycustomers
Unit: RMBClosing balanceNameBook balance
Provision forbad debts
ProvisionpercentageWithin 1 year1,516,568,359.6475,895,519.815.00%1 to 2 years26,841,149.322,636,550.279.82%2 to 3 years100,179,071.2211,383,928.6511.36%Over 3 years57,901,082.8648,317,779.8383.45%Total1,701,489,663.04138,233,778.56–
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
3. Accounts receivable (Cont
’d)
(1) Disclosure of accounts receivable by category (Cont
’d)
Accounts receivable with collective provision for bad debts based on factoring receivables
Unit: RMBClosing balanceNameBook balance
Provision for
bad debts
ProvisionpercentageWithin 1 year0.000.000.00%1 to 2 years167,718,416.6928,512,130.8417.00%2 to 3 years148,138,960.0037,582,290.1725.37%Total315,857,376.6966,094,421.01–
Disclosure by ageing
Unit: RMBAgeingClosing balanceOpening balanceWithin 1 year (including 1 year)1,517,767,424.361,822,584,474.741 to 2 years194,559,566.01379,812,071.802 to 3 years248,318,031.2287,426,356.99Over 3 years376,226,829.18184,337,553.05Subtotal2,336,871,850.772,474,160,456.58Provision for bad debts522,713,757.17489,228,790.76Total1,814,158,093.601,984,931,665.82
(2) Provision, recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMBChanges in the period
ClosingbalanceCategoryOpeningbalanceProvision
Recovery or
reversalWrite-offOthersAccounts receivable with provision for bad debt489,228,790.7665,298,080.1324,375,703.851,299,472.956,137,936.92522,713,757.17Total489,228,790.7665,298,080.1324,375,703.851,299,472.956,137,936.92522,713,757.17
Note: Other changes are disposal of subsidiaries during the period.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
3. Accounts receivable (Cont
’d)
(3) Top five accounts receivable based on closing balance of debtors
The top five accounts receivable based on closing balance of debtors for the period amounted toRMB521,931,696.14 in total, accounting for 22.33% of the total closing balance of accounts receivable. Theclosing balance of the corresponding bad debt provision amounted to RMB26,096,584.81 in total.
4. Accounts receivable financing
Unit: RMBItemClosing balanceOpening balanceBills receivable921,201,223.62488,385,666.76Total921,201,223.62488,385,666.76Changes (increase or decrease) during the period and change in fair value of accounts receivable financing Applicable √Not applicableIf the provision for impairment of accounts receivable financing is made in accordance with the general model ofECLs, please disclose the information about provision for impairment with reference to the way of disclosure of otherreceivables:
Applicable √ Not applicable
5. Prepayments
(1) Disclosure of prepayments stated according to ageing analysis
Unit: RMBClosing balanceOpening balanceAgeingAmountPercentageAmountPercentageWithin 1 year607,221,765.5587.30%871,877,663.5590.42%1 to 2 years88,360,369.0612.70%92,412,848.819.58%Total695,582,134.61–964,290,512.36–
(2) Top five prepayments according to closing balance of prepaid unit
Top five prepayments according to closing balance of prepaid units for the period amounted toRMB273,416,339.52, which accounted for 39.31% of the closing balance of the total accounts payable.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
6. Other receivables
Unit: RMBItemClosing balanceOpening balanceOther receivables2,269,274,220.182,417,240,559.46Total2,269,274,220.182,417,240,559.46
(1) Other receivables
1) Other receivables by nature
Unit: RMBNature
Closingbook balance
Openingbook balanceOpen credit2,075,007,543.452,184,530,376.61Guarantee deposit33,031,885.359,579,812.57Insurance premium617,242.43519,803.12Reserve and borrowings25,467,008.5835,466,058.33Others135,150,540.37187,144,508.83Total2,269,274,220.182,417,240,559.46
2) Particulars of bad debt provision
Unit: RMB
Bad debt provision
Phase 1Phase 2Phase 3
TotalECLs for thenext 12 months
ECLs over theentire life (notcredit-impaired)
ECLs overthe entire life(credit-impaired)Balance as at 1 January 2021140,645,700.07402,660,101.59543,305,801.66Balance as at 1 January 2021 for the period––––Provision for the period68,684,323.172,099,829.3270,784,152.49Reversal for the period74,841,399.0117,917,679.6992,759,078.70Write-off for the period15,582.4015,582.40Other changes9,827.979,827.97Balance as at 30 June 2021134,463,213.86386,842,251.22521,305,465.08
Note: Other changes were caused by disposal of Zhanjiang Chenming Newstyle Wall Materials Co., Ltd. during the period.
Changes in carrying book balances with significant changes in loss provision for the period Applicable √ Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
6. Other receivables (Cont
’d)
(1) Other receivables (Cont
’d)
2) Particulars of bad debt provision
(Cont’d)Disclosed by ageing
Unit: RMBAgeingClosing balanceOpening balanceWithin 1 year (including 1 year)1,538,418,810.651,356,457,308.621 to 2 years949,091,474.36813,310,977.702 to 3 years119,206,732.50634,042,365.77Over 3 years183,862,667.75156,735,709.03Subtotal2,790,579,685.262,960,546,361.12Less: Bad debt provision521,305,465.08543,305,801.66Total2,269,274,220.182,417,240,559.46
3) Provision, recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMBChanges in the period
ClosingbalanceCategoryOpeningbalanceProvision
Recoveryor reversalWrite-offOthersBad debt provision for other receivables543,305,801.6670,784,152.4992,759,078.7015,582.409,827.97521,305,465.08Total543,305,801.6670,784,152.4992,759,078.7015,582.409,827.97521,305,465.08Note: Other deductions are the disposal of subsidiaries during the period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
6. Other receivables (Cont
’d)
(1) Other receivables (Cont
’d)
4) Top five other receivables according to closing balance of debtors
The top five other accounts receivable based on closing balance of debtors for the period amountedto RMB2,048,615,346.66 in total, accounting for 73.41% of the total closing balance of other accountsreceivable. The closing balance of the corresponding bad debt provision amounted to RMB198,653,622.35in total.
7. Inventories
(1) Categories of inventories
Unit: RMBClosing balanceOpening balanceItemBook balance
Impairment provisionfor inventories orperformance costsCarrying amountBook balance
Impairment provisionfor inventories orperformance costsCarrying amountRaw materials1,923,849,842.3020,535,018.691,903,314,823.611,712,610,505.6320,535,018.691,692,075,486.94Work-in-process products168,807,300.68168,807,300.68128,761,554.31128,761,554.31Goods in stock2,999,936,294.142,999,936,294.141,464,455,062.791,464,455,062.79Consumable biological assets1,515,249,721.491,515,249,721.491,535,386,865.441,535,386,865.44Developing products314,614,378.34314,614,378.34314,614,378.34314,614,378.34Total6,922,457,536.9520,535,018.696,901,922,518.265,155,828,366.5120,535,018.695,135,293,347.82
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
7. Inventories (Cont
’d)
(2) Impairment provision for inventories or performance costs
Unit: RMBOpening balance
Increase during the periodDecrease during the period
Closing balanceItemProvisionOthersReversal or transferOthersRaw materials20,535,018.6920,535,018.69
8. Non-current assets due within one year
Unit: RMBItemClosing balanceOpening balanceLong-term receivables due within one year3,637,802,641.724,222,744,207.34Total3,637,802,641.724,222,744,207.34
9. Other current assets
Unit: RMBItemClosing balanceOpening balanceVAT recoverable935,039,690.721,041,552,455.22Prepaid tax71,437,914.2553,146,519.47Receivables under financial lease due within one year1,082,406,809.15601,364,577.40Factoring receivables due within one year555,154,041.32596,856,928.35Prepaid expenses436,636,302.42329,739,882.81Other payments94,258,332.6094,258,332.60Total3,174,933,090.462,716,918,695.85
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
10. Long-term receivables
(1) Particulars of long-term receivables
Unit: RMBClosing balanceOpening balance
Discountrate rangeItemBook balanceBad debtprovision
CarryingamountBook balance
Bad debtprovision
CarryingamountFinancial leasing payments8,804,858,990.321,216,417,328.047,588,441,662.289,963,461,389.491,103,339,754.728,860,121,634.774%-20%Less: Unrealised financing income554,639,036.73554,639,036.73351,498,895.63351,498,895.63Less: Non-current assets due within one year4,565,549,280.03974,150,909.283,591,398,370.754,624,874,317.67585,446,099.514,039,428,218.16Subtotal3,684,670,673.56242,266,418.763,442,404,254.804,987,088,176.19517,893,655.214,469,194,520.98Deposit for financial leasing277,800,000.00277,800,000.00412,239,088.74412,239,088.74Less: Unrealised financing income28,385,749.5328,385,749.5339,232,762.5939,232,762.59Less: Non-current assets due within one year46,404,270.9746,404,270.97183,315,989.18183,315,989.18Subtotal203,009,979.50203,009,979.50189,690,336.97189,690,336.97Total3,887,680,653.06242,266,418.763,645,414,234.305,176,778,513.16517,893,655.214,658,884,857.95
Particulars of bad debt impairment provision
Unit: RMBPhase 1Phase 2Phase 3
TotalBad debt provisionECLs for thenext 12 months
ECLs over theentire life (notcredit-impaired)
ECLs over the
entire life(credit-impaired)Balance as at 1 January 20211,480,724.26516,412,930.95517,893,655.21Balance as at 1 January 2021 during the period––––Reversal for the period163,301.64275,463,934.81275,627,236.45Balance as at 30 June 20211,317,422.62240,948,996.14242,266,418.76
Changes in book balances with significant changes in loss provision for the period Applicable √ Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
11. Long-term equity investments
Unit: RMBChange for the period
Closingbalance(carryingamount)
Closingbalance ofimpairmentprovisionInvesteeOpeningbalance(carryingamount)Additionalcontribution
Withdrawncontribution
Investmentgain or lossrecognisedunder equity
method
Adjustmentof othercomprehensive
income
Otherchangein equityinterestDistribution ofcash dividendor profitdeclaredImpairment
provisionOthersI.Joint venture
Shouguang Chenming Huisen
New-style ConstructionMaterials Co., Ltd.4,945,742.031,242,575.51500,000.005,688,317.54Weifang Sime Darby West PortCo., Ltd.81,943,506.92-90,771.2281,852,735.70Shouguang Meite Environmental
Technology Co., Ltd.17,087,192.44-451,198.3516,635,994.09Weifang Chenrong New
and Old Kinetic Energy
Conversion Equity Investment
Fund Partnership (Limited
Partnership)199,705,636.2817,501,451.1616,959,843.42200,247,244.02Weifang Xingxing United
Chemical Co., Ltd.91,874,385.12-725,059.4191,149,325.71Subtotal395,556,462.7917,476,997.6917,459,843.42395,573,617.06II.Associates
Jiangxi Jiangbao Media Colour
Printing Co. Ltd.Zhuhai Dechen New Third
Board Equity Investment
Fund Company (Limited
Partnership)52,401,659.62-6,105,696.0846,295,963.54Ningbo Kaichen Huamei Equity
Investment Fund Partnership
(Limited Partnership)198,549,926.27343,561.57198,893,487.84Jiangxi Chenming Port Co., Ltd.1,310,585.65-246,185.911,064,399.74Goldtrust Futures Co., Ltd.189,366,931.59-6,055,220.25183,311,711.34Chenming (Qingdao) Asset
Management Co., Ltd.8,674,551.1822,349.058,696,900.23Guangdong Nanyue Bank Co.,
Ltd.3,060,298,285.3577,519,309.456,949,017.1421,000,000.003,123,766,611.94Subtotal3,510,601,939.6665,478,117.836,949,017.1421,000,000.003,562,029,074.63Total3,906,158,402.4582,955,115.526,949,017.1438,459,843.423,957,602,691.69
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
12. Other non-current financial assets
Unit: RMBItemClosing balanceOpening balanceInvestment in debt instruments1,100,000,000.004,000,000.00Investment in equity instruments121,910,000.00141,910,000.00Total1,221,910,000.00145,910,000.00
13. Investment property
(1) Investment property under the cost method
√ Applicable Not applicable
Unit: RMBItem
Housing andbuilding structureTotalI.Original carrying amount
1.Opening balance6,446,222,194.786,446,222,194.78
2.Increase during the period1,841,533.041,841,533.04
(1) Other1,841,533.041,841,533.04
3.Decrease during the period
4.Closing balance6,448,063,727.826,448,063,727.82II.Accumulated depreciation and accumulated amortisation
1.Opening balance503,062,626.78503,062,626.78
2.Increase during the period80,920,853.7080,920,853.70
(1) Provision or amortisation80,920,853.7080,920,853.70
3.Decrease during the period
4.Closing balance583,983,480.48583,983,480.48III.Provision for impairmentIV.Carrying amount
1.Closing carrying amount5,864,080,247.345,864,080,247.34
2.Opening carrying amount5,943,159,568.005,943,159,568.00
(2) Investment property under the fair value method
Applicable √ Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
14. Fixed assets
Unit: RMBItemClosing balanceOpening balanceFixed assets36,554,310,527.1837,651,706,658.97Disposal of fixed assets30,228.26Total36,554,340,755.4437,651,706,658.97
(1) Particulars of fixed assets
Unit: RMBItem
Housing andbuilding structure
Machinery andequipmentVehicles
Electronicequipmentand othersTotalI.Original carrying amount:
1.Opening balance10,640,660,046.6544,092,418,191.46308,616,664.66456,461,101.4155,498,156,004.18
2.Increase during the period76,884,998.1056,397,693.622,431,186.964,010,485.51139,724,364.19
(1)Acquisition5,070,546.7856,397,693.622,431,186.964,010,485.5167,909,912.87
(2)Other increases71,814,451.3271,814,451.32
3.Decrease during the period41,982,979.4756,454,482.429,832,690.3789,746,900.33198,017,052.59
(1)Disposal or retirement20,441,645.9626,851,014.389,391,079.6488,779,933.62145,463,673.60
(2)Other deductions21,541,333.5129,603,468.04441,610.73966,966.7152,553,378.99
4.Closing balance10,675,562,065.2844,092,361,402.66301,215,161.25370,724,686.5955,439,863,315.78II.Accumulated depreciation
1.Opening balance2,055,823,328.6415,125,890,831.31182,038,050.14276,762,643.9417,640,514,854.03
2.Increase during the period126,136,626.04923,630,492.5911,541,324.8422,344,615.201,083,653,058.67
(1)Provision126,136,626.04923,630,492.5911,541,324.8422,344,615.201,083,653,058.67
3.Decrease during the period9,196,494.9024,283,398.568,281,045.821,809,630.5643,570,569.84
(1)Disposal or retirement3,909,353.0710,132,145.438,041,881.781,516,369.0623,599,749.34
(2)Other deductions5,287,141.8314,151,253.13239,164.04293,261.5019,970,820.50
4.Closing balance2,172,763,459.7816,025,237,925.34185,298,329.16297,297,628.5818,680,597,342.86III.Provision for impairment
1.Opening balance27,808,852.79170,676,515.3413,889.137,435,233.92205,934,491.18
2.Increase during the period
(1)Provision
3.Decrease during the period979,045.44979,045.44
(1)Disposal or retirement979,045.44979,045.44
4.Closing balance27,808,852.79169,697,469.9013,889.137,435,233.92204,955,445.74IV.Carrying amount
1.Closing carrying amount8,474,989,752.7127,897,426,007.42115,902,942.9665,991,824.0936,554,310,527.18
2.Opening carrying amount8,557,027,865.2228,795,850,844.81126,564,725.39172,263,223.5537,651,706,658.97Other explanation: Other deductions in the original amount and accumulated depreciation are due to the selling ofthe subsidiary Zhanjiang Chenming Newstyle Wall Materials Co., Ltd. during the period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
14. Fixed assets (Cont
’d)
(2) Particulars of temporarily idle fixed assets
Unit: RMBItem
Originalcarrying amount
Accumulateddepreciation
Provision forimpairment
CarryingamountRemarkHousing and building structure76,252,901.8621,471,411.703,103,215.8251,678,274.34Machinery and equipment1,021,802,729.82536,559,530.93166,037,071.06319,206,127.83Transportation equipment25,020.5121,917.501,883.011,220.00Electronic equipment1,167,911.721,043,812.6434,063.6490,035.44Total1,099,248,563.91559,096,672.77169,176,233.53370,975,657.61
(3) Particulars of fixed assets without obtaining property right certificates
Unit: RMBItemCarrying amount
Reason for not yetobtaining propertyright certificatesHousing and building structure (Zhanjiang Chenming Pulp & Paper
Co., Ltd.)1,030,792,226.30Under applicationHousing and building structure (Huanggang Chenming Pulp & Paper
Co., Ltd.)512,518,573.49Under applicationHousing and building structure (Shouguang Meilun Paper Co., Ltd.)483,380,108.53Under applicationHousing and building structure (Jilin Chenming Paper Co., Ltd.)384,659,520.77Under applicationHousing and building structure (Jiangxi Chenming Paper Co., Ltd.)208,341,021.49Under applicationHousing and building structure (Shandong Chenming Paper Holdings
Limited)115,152,708.00Under applicationHousing and building structure (Wuhan Chenming Hanyang Paper
Holdings Co., Ltd.)78,337,160.26Under applicationHousing and building structure (Chengdu Chenming Culture
Communication Co., Ltd.)12,323,614.94Under application
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
15. Construction in progress
Unit: RMBItemClosing balanceOpening balanceConstruction in progress212,365,974.34171,178,595.73Materials for project7,949,580.458,679,346.10Total220,315,554.79179,857,941.83
Note: Construction in progress in the above table means constructions in progress less materials for project.
(1) Particulars of construction in progress
Unit: RMBClosing balanceOpening balanceItemBook balance
Impairmentprovision
CarryingamountBook balance
Impairmentprovision
CarryingamountTechnological modification project97,153,954.1697,153,954.1659,209,256.2459,209,256.24Fly ash cement ceramsite production project54,246,139.1954,246,139.1954,246,139.1954,246,139.19Household paper project (Phase II) (Meilun)10,623,447.2010,623,447.2010,210,593.7510,210,593.75Light calcium carbonate project (Meilun)15,371,226.5515,371,226.5513,836,002.2713,836,002.27Others64,659,665.4129,688,458.1734,971,207.2463,365,062.4529,688,458.1733,676,604.28Total242,054,432.5129,688,458.17212,365,974.34200,867,053.9029,688,458.17171,178,595.73
(2) Materials for project
Unit: RMBClosing balanceOpening balanceItemBook balance
Impairment
provision
CarryingamountBook balance
Impairment
provision
CarryingamountSpecial materials7,949,580.457,949,580.458,679,346.108,679,346.10Total7,949,580.457,949,580.458,679,346.108,679,346.10
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
16. Right-of-use assets
Unit: RMBItem
Land userights
Housing andbuilding structureTotalI.Original carrying amount
1.Opening balance219,101,390.275,571,378.54224,672,768.81
2.Decrease during the period441,950.75441,950.75
(1) Sublease441,950.75441,950.75
3.Closing balance218,659,439.525,571,378.54224,230,818.06II.Accumulated depreciation
1.Opening balance18,548,990.80247,058.2618,796,049.06
2.Increase during the period3,820,811.57138,727.873,959,539.44
(1) Provision3,820,811.57138,727.873,959,539.44
3.Decrease during the period333,145.99333,145.99
(1) Sublease333,145.99333,145.99
4.Closing balance22,036,656.38385,786.1322,422,442.51III.Provision for impairmentIV.Carrying amount
1.Closing carrying amount196,622,783.145,185,592.41201,808,375.55
2.Opening carrying amount200,552,399.475,324,320.28205,876,719.75
17. Intangible assets
(1) Particulars of intangible assets
Unit: RMB
Item
Landuse rightsSoftwarePatents
Certificatesof thirdparty rightTotalI.Original carrying amount
1.Opening balance2,191,720,025.2321,573,963.2527,358,613.0515,908,674.872,256,561,276.40
2.Increase during the period430,015.51430,015.51
(1) Acquisition430,015.51430,015.51
3.Decrease during the period128,966,741.0657,153.12129,023,894.18
(1) Disposal128,966,741.0657,153.12129,023,894.18
4.Closing balance2,062,753,284.1721,946,825.6427,358,613.0515,908,674.872,127,967,397.73II.Accumulated amortisation
1.Opening balance448,158,030.3820,561,952.90911,953.7712,304,830.02481,936,767.07
2.Increase during the period22,634,438.90994,100.431,367,930.652,649,202.1227,645,672.10
(1) Provision22,634,438.90994,100.431,367,930.652,649,202.1227,645,672.10
3.Decrease during the period11,841,491.6711,841,491.67
(1) Disposal11,841,491.6711,841,491.67
4.Closing balance458,950,977.6121,556,053.332,279,884.4214,954,032.14497,740,947.50III.Impairment provisionIV.Carrying amount
1.Closing carrying amount1,603,802,306.56390,772.3125,078,728.63954,642.731,630,226,450.23
2.Opening carrying amount1,743,561,994.851,012,010.3526,446,659.283,603,844.851,774,624,509.33
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
18. Goodwill
(1) Original carrying amount of goodwill
Unit: RMBIncrease duringthe period
Decrease duringthe period
DisposalName of investee or event generating goodwillOpening balanceArising frombusinesscombinationsClosing balanceShandong Chenming Panels Co., Ltd.5,969,626.575,969,626.57Jilin Chenming Paper Co., Ltd.14,314,160.6014,314,160.60Kunshan Tuoan Plastic Products Co., Ltd.26,946,905.3826,946,905.38Total47,230,692.5547,230,692.55
(2) Provision for impairment of goodwill
Unit: RMBIncrease during
the period
Decrease during
the periodName of investee or event generating goodwillOpening balanceProvisionDisposalClosing balanceJilin Chenming Paper Co., Ltd.14,314,160.6014,314,160.60Total14,314,160.6014,314,160.60Note: The Group assessed the recoverable amount of goodwill and determined that the goodwill related to the Group’s panel and plasticbusiness was not impaired. With the category of the principal activities as the basis for determining the reporting segments, theGroup regards Shandong Chenming Panels Co., Ltd. and Kunshan Tuoan Plastic Products Co., Ltd. as two separate asset groups.Their recoverable amount is determined based on the present value of the estimated future cash flows. Future cash flows aredetermined based on the financial budget for 2021 to 2025 as approved by the management, and adopt 7.28% as the discount ratewhich is the interest rate of the 5-year bonds issued by the Company in 2018. The cash flows for more than 5 years are calculatedbased on the growth rate of 5%. Other key assumptions used in estimating future cash flows include the estimated sales and grossprofit based on the performance of such asset group in the past and the expectation to market development by the management.The management believes that any reasonable change in the above assumptions will not result in the total book value of theasset group Shandong Chenming Panels Co., Ltd. and the asset group Kunshan Tuoan Plastic Products Co., Ltd. exceeding itsrecoverable amount.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
19. Long-term prepaid expenses
Unit: RMBItemOpening balance
Increase duringthe period
Amortisationduring the periodOther deductionsClosing balanceWoodland expenses9,036,428.60302,898.008,733,530.60Others42,025,056.891,737,095.391,490,734.0642,271,418.22Total51,061,485.491,737,095.391,793,632.0651,004,948.82
20. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before offsetting
Unit: RMBClosing balanceOpening balanceItem
Deductibletemporarydifference
Deferredincome taxassets
Deductibletemporarydifference
Deferredincome tax
assetsProvision for impairment of assets2,581,199,406.29607,142,610.542,210,402,262.82509,732,949.61Unrealised profit arising from intra-group transactions223,445,636.8055,861,409.20205,628,008.4051,407,002.10Outstanding payables491,129,734.5874,450,015.62538,679,932.1788,774,034.53Deferred income138,559,855.8220,783,978.37127,445,713.4621,358,762.71Deductible loss1,959,592,584.00316,160,423.082,445,427,000.05400,915,339.22Debt reconstructing47,906,363.9411,976,590.97Total5,393,927,217.491,074,398,436.815,575,489,280.841,084,164,679.14
(2) Deferred income tax liabilities before offsetting
Unit: RMBClosing balanceOpening balanceItem
Taxabletemporarydifferences
Deferredincome tax
liabilities
Taxabletemporarydifferences
Deferredincome tax
liabilitiesAsset valuation increment from business combinations involving entities not under common control40,822,701.136,123,405.1743,816,906.476,572,535.97Total40,822,701.136,123,405.1743,816,906.476,572,535.97
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
20. Deferred income tax assets/deferred income tax liabilities (Cont
’d)
(3) The breakdown of unrecognised deferred income tax assets
Unit: RMBItemClosing balanceOpening balanceDeductible temporary difference141,286,586.6559,564,220.72Deductible loss668,089,327.64776,900,858.71Total809,375,914.29836,465,079.43
(4) Expiry of deductible loss of unrecognised deferred income tax assets falls in the periods as follows
Unit: RMBYearClosing amountOpening amountRemark202166,234,527.652022156,438,853.14187,801,057.212023128,426,672.96138,151,854.932024156,201,868.17108,619,258.722025200,865,382.78276,094,160.20202626,156,550.59Total668,089,327.64776,900,858.71–
21. Other non-current assets
Unit: RMBClosing balanceOpening balanceItemBook balance
Impairment
provision
CarryingamountBook balance
Impairment
provisionCarrying amountPrepayments for land transfer fees211,072,250.68211,072,250.68Prepayments for engineering and equipment26,361,031.8226,361,031.8258,886,418.7558,886,418.75Total237,433,282.50237,433,282.5058,886,418.7558,886,418.75
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
22. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMBItemClosing balanceOpening balanceMortgage borrowings275,331,174.98279,524,407.05Pledged borrowings60,000,000.0035,075,833.33Guaranteed borrowings7,005,407,751.877,536,960,272.39Credit borrowings9,528,352,184.528,189,875,845.09Discounted borrowings16,298,186,600.0016,752,556,600.00Total33,167,277,711.3732,793,992,957.86Explanation of the classification of short-term borrowings:
For classification and amount of mortgage borrowing and mortgage borrowing, please see 1. Monetary fundsand 63. Assets with restricted ownerships or right to use in Note VII; For classification and amount of pledgedborrowing and mortgage borrowing, please see notes in relation, please see 1. Monetary funds and 63. Assetswith restricted ownerships or right to use in Note VII; Overdue short-term borrowings: total outstandingaccounts payable as at the end of the year amounted to RMB0.00.
23. Bills payable
Unit: RMBItemClosing balanceOpening balanceCommercial acceptance bills1,816,089,052.29984,661,462.19Bank acceptance bills1,816,839,962.602,014,275,274.15Total3,632,929,014.892,998,936,736.34Total outstanding bills payable as at the end of the period amounted to RMB0.00.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
24. Accounts payable
(1) Particulars of accounts payable
Unit: RMBItemClosing balanceOpening balancePayment for goods2,846,452,304.683,416,069,031.99Payment for equipment171,284,544.60260,995,383.02Payment for engineering141,094,426.64139,679,646.76Others381,607,749.03225,686,670.54Total3,540,439,024.954,042,430,732.31
(2) Significant advance receipts for over 1 year
Unit: RMBItemClosing balanceReasonsBEIJING GUODIAN FUTONG SCIENCE AND DEVELOPMENT CO., LTD.
46,122,225.40Quality guarantee depositOMYA HAIMING (NANCHANG) CHEMICAL CO. LTD.16,000,000.00Quality guarantee depositCHINA ENERGY ENGINEERING GROUP GUANGZHOU ELECTRIC POWER DESIGN INSTITUTE CO., LTD.
14,128,415.00Quality guarantee depositZHEJIANG JNDIA PIPELINE INDUSTRY CO., LTD.10,556,896.91Quality guarantee depositCSSC 704TH RESEARCH INSTITUTE7,263,929.00Quality guarantee depositTotal94,071,466.31–
25. Contract liabilities
Unit: RMBItemClosing balanceOpening balanceAdvance loans2,186,935,751.421,051,147,044.74Total2,186,935,751.421,051,147,044.74
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
26. Staff remuneration payables
(1) Particulars of staff remuneration payables
Unit: RMBItem
Openingbalance
Increase duringthe period
Decrease duringthe period
ClosingbalanceI.Short-term remuneration231,749,583.09665,596,739.51633,424,471.85263,921,850.75II.Retirement benefit plan-defined contribution scheme627,002.22103,997,435.53104,356,527.88267,909.87III.Termination benefits219,835.00219,835.00Total232,376,585.31769,814,010.04738,000,834.73264,189,760.62
(2) Particulars of short-term remuneration
Unit: RMBItem
Openingbalance
Increase duringthe period
Decrease duringthe period
Closingbalance
1.Salaries, bonuses, allowance and subsidies170,642,761.74539,324,293.60513,512,375.29196,454,680.05
2.Staff welfare26,232,148.7026,232,148.70
3.Social insurance premium585,607.7347,823,645.2548,275,268.91133,984.07Of which: Medical insurance premium575,413.7143,096,714.6743,667,538.944,589.44
Work-related injury insurance premium3,538.603,040,833.943,006,158.5238,214.02Maternity insurance premium6,655.421,686,096.641,601,571.4591,180.61
4.Housing provident funds7,998,911.3836,494,364.1336,363,639.788,129,635.73
5.Union funds and workers
’ education30,774,839.4813,472,605.484,569,443.8039,678,001.16
6.Other short-term remuneration21,747,462.762,249,682.354,471,595.3719,525,549.74Total231,749,583.09665,596,739.51633,424,471.85263,921,850.75
(3) Defined contribution plan
Unit: RMBItem
Openingbalance
Increase during
the period
Decrease during
the period
Closingbalance
1.Basic pension insurance premiums559,683.6099,998,398.95100,490,658.8467,423.71
2.Unemployment insurance premiums67,318.623,999,036.583,865,869.04200,486.16Total627,002.22103,997,435.53104,356,527.88267,909.87
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
27. Taxes payable
Unit: RMBItemClosing balanceOpening balanceEnterprise income tax146,270,920.28274,637,537.42Value added tax54,512,695.27294,438,467.26Land use tax13,381,808.867,522,959.20Property tax22,028,641.929,232,558.17Urban maintenance and construction tax1,488,643.1710,137,043.67Educational surcharges1,509,812.728,112,168.27Individual income tax41,736,958.8641,648,852.90Stamp duty3,170,695.432,630,037.02Land appreciation tax4,153,352.862,024,028.20Environmental Protection Tax4,762,420.212,263,933.52Resource tax4,500,000.00255.00Total297,515,949.58652,647,840.63
28. Other payables
Unit: RMBItemClosing balanceOpening balanceInterest payable114,998,461.03178,992,959.85Dividend payable661,044,485.66Other payables1,767,286,629.241,777,722,407.98Total2,543,329,575.931,956,715,367.83
(1) Interest payable
Unit: RMBItemClosing balanceOpening balanceInterest on borrowings27,160,322.1181,495,654.29Interest on corporate bonds7,116,611.1617,401,472.25Interest on medium-term notes80,721,527.7680,095,833.31Total114,998,461.03178,992,959.85
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
28. Other payables (Cont
’d)
(2) Dividend payable
Unit: RMBItemClosing balanceOpening balanceOrdinary shares dividends552,078,517.00Dividends of preferred stocks/perpetual bonds classified as equity instruments108,965,968.66Total661,044,485.66
(3) Other payables
1) Other payables by nature
Unit: RMBItemClosing balanceOpening balanceOpen credit607,351,554.68625,546,672.65Deposit262,051,453.61259,341,777.01Accrued expenses469,043,342.97525,268,287.87The obligation to repurchase shares under the share incentive scheme226,860,000.00226,860,000.00Others201,980,277.98140,705,670.45Total1,767,286,629.241,777,722,407.98
2) Significant other payables for over 1 year
Unit: RMBItemClosing balanceReasonsNINE DRAGONS DAWEI HOLDINGS CO., LTD.30,000,000.00DepositSHOUGUANG LONGYUAN PAPER COATING CO., LTD.13,350,000.00DepositSHANGHAI YINHU INDUSTRY CO., LTD.13,000,000.00Open creditSTATE-OWNED SHOUGUANG QINGSHUIPO FARM8,800,000.00Open creditWUHAN TIANRUI PAPER CO., LTD.7,341,708.00DepositTotal72,491,708.00
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
29. Non-current liabilities due within one year
Unit: RMBItemClosing balanceOpening balanceLong-term receivables due within one year1,630,025,500.002,935,835,697.30Bonds payable due within one year1,527,790,296.70Long-term payables due within one year1,490,109,514.281,621,095,530.96Lease liabilities due within one year4,606,717.584,606,717.58Other non-current liabilities due within one year600,000,000.002,599,411,670.09Total5,252,532,028.567,160,949,615.93
30. Other current liabilities
Unit: RMBItemClosing balanceOpening balanceShort-term bonds payable–157,037,833.35Total–157,037,833.35Increase/decrease in short-term bonds payable:
Unit: RMBName ofcommercial paperPar value
Date of
issueTermAmount
Openingbalance
Issue duringthe period
Interest atpar value
Amortisationof premium/discount
Redemptionduringthe period
Closingbalance2020 first tranche of super& short-term commercial paper300,000,000.002020-04-22270 days299,550,000.00157,037,833.356,065,416.68163,103,250.030.00Total–––299,550,000.00157,037,833.356,065,416.68163,103,250.030.00
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
31. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMBItemClosing balanceOpening balanceSecured borrowings4,319,788,510.204,618,249,057.65Guarantee borrowings2,325,101,400.004,319,737,618.80Credit borrowings1,958,740,000.002,075,000,000.00Less: Long-term borrowings due within ones year1,630,025,500.002,935,835,697.30Total6,973,604,410.208,077,150,979.15
32. Bonds payable
(1) Bonds payable
Unit: RMBItemClosing balanceOpening balance17 Chenming Bond 01- Chenming Group89,957,250.0089,957,250.0018 Chenming Bond 01- Chenming Group350,013,500.00350,000,000.00Chenming USD Bonds1,087,819,546.701,096,920,101.46Subtotal1,527,790,296.701,536,877,351.46Less: Bonds payable due within one year1,527,790,296.70Total–1,536,877,351.46
(2) Increase/decrease in bonds payable (excluding other financial instruments such as Preference Shares and
Perpetual Bonds classified as financial liabilities)
Unit: RMBBond namePar valueDate of issueTermAmount17 Chenming Bond 01- Chenming Group1,200,000,000.002017/8/225 years1,198,200,000.0018 Chenming Bond 01- Chenming Group350,000,000.002018/4/25 years350,000,000.00Chenming USD Bonds1,137,120,600.002019/8/62.6 years1,125,276,863.46Subtotal2,687,120,600.002,673,476,863.46
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
32. Bonds payable (Cont
’d)
(2) Increase/decrease in bonds payable (excluding other financial instruments such as Preference Shares and
Perpetual Bonds classified as financial liabilities)(Cont’d)
Bond name
Openingbalance
Issueduringthe period
Interest atpar value
Amortisationof premium/discount
Redemptionduringthe period
Changes inforeignexchangegains andlosses
Closingbalance
Of which theamount duewithin one year17 Chenming Bond 01- Chenming Group89,957,250.0089,957,250.0089,957,250.0018 Chenming Bond 01- Chenming Group350,000,000.0013,500.00350,013,500.00350,013,500.00Chenming USD Bonds1,096,920,101.469,100,554.761,087,819,546.701,087,819,546.70Subtotal1,536,877,351.4613,500.00–9,100,554.761,527,790,296.701,527,790,296.70
33. Lease liabilities
Unit: RMBItemClosing balanceOpening balanceLease payments payable81,362,458.4585,933,149.45Less: Unrecognised financing expenses16,248,295.9721,054,661.97Subtotal65,114,162.4864,878,487.48Less: Lease liabilities due within one year4,606,717.584,606,717.58Total60,507,444.9060,271,769.90
34. Long-term payables
Unit: RMBItemClosing balanceOpening balanceLong-term payables2,294,420,531.462,295,309,357.74Total2,294,420,531.462,295,309,357.74
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
34. Long-term payables (Cont
’d)
(1) Long-term payables by nature
Unit: RMBItemClosing balanceOpening balanceRetention for the financial leasing operations1,000,000.0064,196,192.92China Development Bank Special Funds488,000,000.00517,500,000.00Contributions by other partners267,000,000.0034,210,000.00Financial leasing3,028,530,045.743,300,498,695.78Subtotal3,784,530,045.743,916,404,888.70Less: Long-term payables due within one year1,490,109,514.281,621,095,530.96Total2,294,420,531.462,295,309,357.74
35. Provisions
Unit: RMBItemClosing balanceOpening balanceReasonPending litigation325,259,082.28325,259,082.28Losses from Arjo’s lawsuitTotal325,259,082.28325,259,082.28–Other explanations, including the explanations on significant assumptions and estimation related to significant provision:
In February 2017, Arjowiggins HKK2 Limited (“HKK2 Company”) submitted a H share winding-up petition to Hong KongHigh Court due to a joint venture dispute, which required a compensation for economic loss of RMB167 million andinterest thereon, and legal costs of USD3.54 million and arbitration fee of HK$3.3 million and interest thereon to HKK2.The Company made provision of RMB320 million for such pending litigation in 2017. On 5 August 2020, Hong KongHigh Court rejected the Group’s appeal. The Group is seeking ways of appeal again to safeguard the lawful rights andinterests of the Company and the investor community.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
36. Deferred income
Unit: RMBItem
Openingbalance
Increase duringthe period
Decrease during
the period
ClosingbalanceReasonGovernment grants1,637,996,636.5153,605,132.8066,129,472.761,625,472,296.55Financial provisionTotal1,637,996,636.5153,605,132.8066,129,472.761,625,472,296.55–Items in respect of government grants:
Unit: RMBLiabilities item
Openingbalance
New grantsfor the period
Include inother incomefor the period
Otherchanges
Closingbalance
Asset-related/income-relatedProject fund for National technological support scheme1,287,825.00–82,350.00–1,205,475.00Asset-relatedSewage treatment and water conservation reconfiguration project59,601,116.336,555,470.0653,045,646.27Asset-relatedHuanggang forestry-pulp-paper project653,165,566.26–12,513,108.9013,216,025.00627,436,432.36Asset-relatedZhanjiang forestry-pulp-paper project54,901,230.11–2,047,316.46–52,853,913.65Asset-relatedFinancial subsidies for technical transformation project155,686,141.08–5,767,903.86–149,918,237.22Asset-relatedFunding for environmental protection677,639,567.56–25,296,070.94–652,343,496.62Asset-relatedHuanggang Pulp and Paper Project Phase II53,605,132.8053,605,132.80Asset-relatedOthers35,715,190.17–651,227.54–35,063,962.63Asset-relatedTotal1,637,996,636.5153,605,132.8052,913,447.7613,216,025.001,625,472,296.55Asset-related
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
II. Notes to items of the consolidated financial statements (Cont’d)
37. Other non-current liabilities
Unit: RMBItemClosing balanceOpening balanceMedium-term notes1,797,016,666.673,388,933,356.16Subtotal1,797,016,666.673,388,933,356.16Less: Other non-current liabilities due within one year600,000,000.002,599,411,670.09Total1,197,016,666.67789,521,686.07Other explanation:
38. Share capital
Unit: RMBIncrease/decrease during the year (+/-)OpeningbalanceNew issueBonus issue
Sharesconvertedfrom reservesOthersSubtotalClosing balanceTotal number of shares2,984,208,200.002,984,208,200.00
39. Other equity instruments
(1) Preference Shares, Perpetual Bonds and other financial instruments outstanding at the end of the period
Outstanding financialinstruments
Year ofissuance
Accountingclassification
Dividend orinterest rate
IssuepriceIssue size
Amount (RMB)Maturity date orrenewal status
Condition forconversionConversion17 Lu Chenming MTN0012017Equity instrument8.97%100.0010,000,000.001,000,000,000.00No defined
maturity date
NoneNon-convertibleChenming You 022016Equity instrument5.17%100.0010,000,000.001,000,000,000.00No defined
maturity date
NoneNon-convertibleChenming You 032016Equity instrument5.17%100.0012,500,000.001,250,000,000.00No defined
maturity date
NoneNon-convertibleTotal3,250,000,000.00
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
39. Other equity instruments (Cont
’d)
(2) Changes in Preference Shares, Perpetual Bonds and other financial instruments outstanding at the end of the
period
Unit: RMBBeginning of the periodIncrease during the periodDecrease during the periodEnd of the periodOutstanding financialinstrumentsNumberCarrying amountNumber
CarryingamountNumber
CarryingamountNumberCarrying amount17 Lu Chenming MTN00110,000,000.00996,000,000.0010,000,000.00996,000,000.00Chenming You 0122,500,000.002,238,750,000.0022,500,000.002,238,750,000.00Chenming You 0210,000,000.00999,000,000.0010,000,000.00999,000,000.00Chenming You 0312,500,000.001,239,750,000.0012,500,000.001,239,750,000.00Total55,000,000.005,473,500,000.0022,500,000.002,238,750,000.0032,500,000.003,234,750,000.00Changes (increase or decrease) in other equity instruments during the period, the reasons for such changes, andthe basis for relevant accounting treatment:
The Company non-publicly issued Preference Shares amounting to RMB4,500 million on 17 March, 17 Augustand 22 September 2016 respectively. The proceeds net of issue costs amounted to RMB4,477.50 million. On 17March 2021, the Company exercised the option to redeem preference shares amounting to RMB2,250 million.
40. Capital reserves
Unit: RMBItem
Openingbalance
Increase during
the period
Decrease during
the period
ClosingbalanceCapital premium (share premium)4,619,101,981.3182,404,273.62171,250,000.004,530,256,254.93Other capital reserves702,809,432.4426,330,034.89729,139,467.33Total5,321,911,413.75108,734,308.51171,250,000.005,259,395,722.26Other explanations, including changes (increase or decrease) during the period and reasons for such changes: Duringthe period,the Group recognised the capital reserve during the vesting period for the share-based payments of
RMB26,330,034.89;the Group repaid other equity instruments – Perpetual Bonds with a decrease of capital reserves of
RMB11,250,000.00;the Group acquired non-controlling interest in Wuhan Chenming Hanyang Paper Holdings Co., Ltd. with a
decrease of capital reserves of RMB160,000,000.00;other investors made unilateral investments in Shouguang Meilun Paper Co., Ltd., a subsidiary of the Group,
which caused a decrease in the shareholding of the Group without loss of control, and an increase of capital
reserves of RMB82,404,273.62.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
41. Treasury shares
Unit: RMBItemOpening balance
Increase duringthe period
Decrease duringthe periodClosing balanceShare incentive226,860,000.00226,860,000.00Total226,860,000.00226,860,000.00
42. Other comprehensive income
Unit: RMBDuring the period
Item
Openingbalance
Incurredbefore incometax forthe period
Less:
Transferredfrom othercomprehensiveincome in prior
periods toprofit or lossduringthe period
Less:
Transferredfrom othercomprehensiveincome in prior
periods to
retainedearnings during
the period
Less: Incometax expenses
Attributable to
parentcompanyafter tax
Attributableto minorityshareholders
after tax
ClosingbalanceI.Other comprehensive income that cannot be
reclassified to profit or loss in subsequent periodsII.Other comprehensive income that will be reclassified to profit and loss in subsequent periods-561,686,607.6657,905,699.8757,905,699.87-503,780,907.79Including: Other comprehensive income that may be
reclassified to profit and loss under the equitymethod-12,359,143.506,949,017.146,949,017.14-5,410,126.36Translation differences of financial statements denominated in foreign currency-549,327,464.1650,956,682.7350,956,682.73-498,370,781.43Total other comprehensive income-561,686,607.6657,905,699.8757,905,699.87-503,780,907.79
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
43. General risk reserves
Unit: RMBItem
Openingbalance
Increase duringthe period
Decrease duringthe period
ClosingbalanceGeneral risk reserves74,122,644.2074,122,644.20Total74,122,644.2074,122,644.20
44. Surplus reserves
Unit: RMBItem
Openingbalance
Increase duringthe period
Decrease duringthe period
ClosingbalanceStatutory surplus reserves1,212,009,109.971,212,009,109.97Total1,212,009,109.971,212,009,109.97
45. Retained profit
Unit: RMBItemThe periodThe prior periodRetained profit as at the end of the prior period before adjustment9,999,764,028.749,306,269,617.38Retained profit as at the beginning of the year after adjustment9,999,764,028.749,306,269,617.38Plus: Net profit for period attributable to shareholders of the parentcompany2,021,095,417.54516,326,703.48Less: Transfer of statutory surplus reserves Ordinary dividend payable552,078,517.00437,433,593.74 Preference shares dividend payable207,065,968.66270,776,073.42Retained profit as at the end of the period11,261,714,960.629,114,386,653.70
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
46. Revenue and operating costs
Unit: RMBAmount for the periodAmount for the prior periodItemRevenueCostsRevenueCostsPrincipal activities16,368,937,751.5911,107,531,244.5712,956,373,458.7810,200,246,961.22Other activities803,878,602.94753,529,733.35643,432,307.08479,614,740.25Total17,172,816,354.5311,861,060,977.9213,599,805,765.8610,679,861,701.47Information related to revenue:
Unit: RMBCategory of contract
Machine-madepaper segmentFinancial segmentPropertiesOthersTotalType of goodsIncluding: Machine-made paper14,898,851,438.2514,898,851,438.25 Financial leasing206,068,787.05206,068,787.05 Electricity and steam119,023,236.5714,136,584.02133,159,820.59 Construction materials174,782,023.02174,782,023.02 Paper chemicals71,994,410.8771,994,410.87 Hotel services11,556,339.9511,556,339.95 Others1,339,213,809.0658,732,734.96278,456,990.781,676,403,534.80Total16,429,082,894.75206,068,787.0558,732,734.96478,931,937.7717,172,816,354.53
47. Taxes and surcharges
Unit: RMBItem
Amount for
the period
Amount forthe prior periodUrban maintenance and construction tax27,858,367.3316,351,064.21Educational surcharges19,989,461.9411,385,806.59Property tax37,450,589.3535,765,283.62Land use tax24,349,448.9315,431,134.06Vehicle and vessel tax85,669.2912,010.68Stamp duty18,130,742.6613,063,555.43Water engineering funds516,687.03849,304.03Environmental tax10,751,303.037,919,659.65Water resource tax15,486,250.506,270,279.94Land appreciation tax9,175,506.88Total163,794,026.94107,048,098.21
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
48. Selling and distribution expenses
Unit: RMBItem
Amount forthe period
Amount forthe prior periodWages and surcharges70,949,714.1458,686,281.82Depreciation expenses5,712,298.996,122,536.00Office expenses1,299,490.731,843,778.51Selling commissions7,029,390.0021,030,123.34Travel expenses9,694,437.719,122,159.33Business hospitality expenses25,673,227.6321,137,948.35Warehouse expenses252,549.571,116,656.86Rental expenses5,295,433.813,513,698.23Others21,716,196.1635,607,569.75Total147,622,738.74158,180,752.19
49. General and administrative expenses
Unit: RMBItem
Amount for
the period
Amount forthe prior periodWages and surcharges169,081,336.44158,698,083.16Welfare expenses34,628,571.8629,416,491.43Insurance premium14,955,132.4213,706,761.09Depreciation expenses51,326,963.1158,348,214.94Waste disposal expenses1,035,662.976,215,674.32Hospitality expenses27,155,232.9740,625,251.74Amortisation of intangible assets25,323,097.5622,805,226.17Production interruption loss48,338,437.2759,359,808.22Repair fees13,610,506.5416,847,259.15Share-based payments26,330,034.89Others80,263,579.4685,964,475.11Total492,048,555.49491,987,245.33
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
50. R&D expenses
Unit: RMBItem
Amount for
the period
Amount forthe prior periodInstallation expenses372,517.00609,432.49Depreciation expenses27,969,754.4527,731,869.06Consumption of raw materials366,439,019.85198,168,322.21Consumption of semi-finished products66,656,701.3787,624,595.31Consumption of auxiliary materials100,156,151.9378,527,925.39Wages and surcharges83,767,837.0169,924,624.21Welfare expenses5,060,144.673,526,275.77Housing provident funds2,786,507.563,787,143.40Insurance premium15,104,675.768,279,960.27Union funds815,212.59391,146.46Utilities86,755,891.9769,857,222.28Other expenses1,136,940.41128,630.04Total757,021,354.57548,557,146.89
51. Finance expenses
Unit: RMBItem
Amount for
the period
Amount forthe prior periodInterest expenses1,399,107,777.111,459,184,970.39Less: capitalised interest amount–19,684,809.62Interest income221,507,514.16276,115,018.97Foreign exchange gains and losses-35,419,357.17-1,552,952.90Bank charges and others176,761,250.38184,385,373.56Total1,318,942,156.161,346,217,562.46
52. Other income
Unit: RMBSource of other income
Amount for
the period
Amount forthe prior periodGovernment grants – amortised deferred income included in profit or loss52,913,447.7654,911,499.81Government grants – directly included in profit or loss70,185,300.8278,522,474.64Total123,098,748.58133,433,974.45
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
53. Investment income
Unit: RMBItem
Amount forthe period
Amount forthe prior periodIncome from long-term equity investments accounted for using the equity method82,955,115.52120,115,440.96Investment gain on disposal of subsidiaries676,586.2716,778,042.01Investment gain from holding other non-current financial assets15,000,000.00Total98,631,701.79136,893,482.97
54. Gain on change in fair value
Unit: RMBSource of gain on change in fair value
Amount forthe period
Amount forthe prior periodFinancial assets held for trading-89,980,570.69Of which: Gain on change in fair value from derivative financial instrumentsConsumable biological assets measured at fair value-9,139,121.20-9,246,743.86Total-99,119,691.89-9,246,743.86
55. Credit impairment loss
Unit: RMBItem
Amount for
the period
Amount forthe prior periodBad debt loss of accounts receivable-279,757,983.46-257,855,903.60Total-279,757,983.46-257,855,903.60
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
56. Loss on impairment of assets
Unit: RMBItem
Amount for
the period
Amount forthe prior period
1. Loss on construction in progress impairment-163,717.76Total-163,717.76
57. Asset disposal income
Unit: RMBSource of asset disposal income
Amount for
the period
Amount forthe prior periodNet income from disposal of non-current assets6,731,452.88-4,705,886.89Gain on disposal of intangible assets42,188,905.24Total48,920,358.12-4,705,886.89
58. Non-operating income
Unit: RMB
Item
Amount forthe period
Amount forthe prior period
Amount included inextraordinary gains
or losses forthe periodGovernment subsidy2,045,973.21633,778,881.762,045,973.21Unpaid debt4,275,104.924,275,104.92Net income from disposal of fixed assets1,255,005.761,255,005.76Others11,145,199.758,621,236.0211,145,199.75Total 18,721,283.64642,400,117.7818,721,283.64
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
59. Non-operating expenses
Unit: RMB
Item
Amount forthe period
Amount forthe prior period
Amountsincluded inextraordinarygains or lossesfor the periodDonation80,000.005,144,077.8880,000.00Loss on destroyed and scrapped non-current assets2,177,197.00510,335.352,177,197.00Others75,333.963,353,130.9575,333.96Total2,332,530.969,007,544.182,332,530.96
60. Income tax expenses
(1) Particulars of income tax expenses
Unit: RMBItem
Amount forthe period
Amount forthe prior periodIncome tax expenses for the period283,824,021.53306,073,252.16Deferred income tax expenses-9,766,242.33-68,113,064.01Total274,057,779.20237,960,188.15
(2) The reconciliation between accounting profit and income tax expenses
Unit: RMBItem
Amount for
the periodTotal profit2,340,488,430.53Income tax expenses calculated at statutory/applicable tax rates351,073,264.58Effect of different tax rates applicable to subsidiaries13,690,303.26Effect of adjustments for income tax for prior periods-6,115,069.85Profit and loss of joint ventures and associates accounted for using the equity method-16,822,224.16Effect of income not subject to tax-416,521,913.64Non-deductible costs, expenses and losses17,573,270.97Effect of utilisation of previously unrecognised deductible loss on deferred income tax assets-62,909,783.28Effect of current unrecognised deductible temporary difference or deductible loss arising from deferred tax income assets461,901,237.75Tax effect of R & D fee deduction-67,811,306.43Income tax expense274,057,779.20
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
61. Other comprehensive income
Please refer to note 42 for the details.
62. Items on statements of cash flow
(1) Cash received relating to other operating activities
Unit: RMBItem
Amount forthe period
Amount forthe prior periodNet proceedings from the financial leasing business616,398,096.591,056,112,435.52Government support fund111,501,713.53207,271,356.40Interest income208,877,644.50202,247,580.26Open credit and other income99,723,258.8697,478,845.77Total1,036,500,713.481,563,110,217.95
(2) Cash paid relating to other operating activities
Unit: RMBItem
Amount forthe period
Amount forthe prior periodExpenses and open credit999,490,395.091,083,849,666.32Total999,490,395.091,083,849,666.32
(3) Cash received relating to other investing activities
Unit: RMBItem
Amount for
the period
Amount forthe prior periodRecovery of consideration for equity transfer251,414,794.52129,197,968.06Total251,414,794.52129,197,968.06
(4) Cash paid relating to other investing activities
Unit: RMBItem
Amount for
the period
Amount forthe prior periodAcquisition of Tuoan Plastic176,000,000.00Total176,000,000.00
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
62. Items on statements of cash flow (Cont
’d)
(5) Cash received relating to other financing activities
Unit: RMBItem
Amount forthe period
Amount forthe prior periodShort-term commercial paper144,457,000.00Issuance of corporate bonds350,000,000.00Equipment financing574,665,920.24542,500,000.00Decrease in restricted bank deposits during the period1,526,876,431.27Debt financing receivable320,000,000.00Resale of medium-term notes400,000,000.00Contribution from government platforms to GDR Fund and Chendu Fund232,790,000.00Total2,734,332,351.511,356,957,000.00
(6) Paid relating to other financing activities
Unit: RMBItem
Amount for
the period
Amount forthe prior periodRepayment of short-term commercial paper and MTNs2,145,000,000.00190,000,000.00Repayment of equipment sale and leaseback996,692,287.811,304,243,353.95Repayment of preference shares2,250,000,000.00Payment of interest on preference shares98,100,000.0098,100,000.00Payment of equity in China Development Bank funds29,500,000.0077,500,000.00Repayment of bonds900,000,000.00Repayment of financial support from shareholders708,440,865.27Restricted bank deposits704,209,894.72Total5,519,292,287.813,982,494,113.94
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
63. Supplementary information on cash flow statement
(1) Supplementary information on cash flow statement
Unit: RMBSupplementary information
Amount forthe period
Amount forthe prior period
1.Reconciliation of net profit as cash flows from operating activities:––
Net profit2,066,430,651.33661,740,850.07Plus: Provision for impairment of assets163,717.76Credit impairment loss279,757,983.46257,855,903.60Depreciation of fixed assets, depreciation of investment property,depreciation of right-of-use assets1,168,533,451.811,103,977,619.973Amortisation of intangible assets27,645,672.1024,470,203.82Amortisation of long-term prepaid expenses1,793,632.061,429,914.78Loss on disposal of fixed assets, intangible assets and otherlong-term assets (“-” denotes gain)-47,998,166.882,171,437.21Loss on changes in fair value (“-” denotes gain)99,119,691.89-9,246,743.86Finance expenses (“-” denotes gain)1,399,107,777.111,439,500,160.77Investment loss (“-” denotes gain)-98,631,701.79-136,893,482.97Decrease in deferred income tax assets (“-” denotes increase)9,766,242.33-68,113,064.01Increase in deferred income tax liabilities (“-” denotes decrease)-449,130.80-1,411,125.59Decrease in inventories (“-” denotes increase)-1,766,629,170.47-927,140,737.58Decrease in operating receivables (“-” denotes increase)1,272,002,689.91-1,749,063,323.95Increase in operating payables (“-” denotes decrease)336,735,899.881,727,592,454.67Net cash flows from operating activities4,747,185,521.942,327,033,784.68
2. Major investing and financing activities not involving cash
settlements:––
3. Net change in cash and cash equivalents:––
Closing balance of cash4,625,780,176.572,213,282,630.76Less: Opening balance of cash equivalents4,389,169,963.792,890,328,027.40Plus: Closing balance of cash equivalentsLess: Opening balance of cash equivalentsNet increase in cash and cash equivalents236,610,212.78-677,045,396.64
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
63. Supplementary information on cash flow statement (Cont
’d)
(2) Cash and cash equivalents composition
Unit: RMBItemClosing balanceOpening balanceI.Cash4,625,780,176.574,389,169,963.79
Of which: Treasury cash2,903,620.962,161,684.57
Bank deposit that can be used for payment at any time4,622,876,555.614,387,008,279.22Other monetary funds that can be used for payment at any timeDeposit at central bank deposit that can be used for paymentAmount due from banksAmount due to banksII.Cash equivalentsOf which: Bond investment with maturity within 3 monthsIII.Balance of cash and cash equivalent at end of period4,625,780,176.574,389,169,963.79
Of which: Restricted cash and cash equivalents used by theCompany or subsidiaries within the Group
64. Assets with restricted ownerships or right to use
Unit: RMBItem
Closingcarrying amountReason for such restrictionMonetary funds11,767,734,654.88As deposits for bank acceptance bills and letters of
credit, deposit reserves, etc.Assets held for trading50,594,440.51As collateral for margin financingAccounts receivable financing28,550,798.44As collateral for letters of guarantee and letters of
creditFixed assets10,957,342,646.52As collateral for bank borrowings and long-term
payablesIntangible assets1,226,330,911.70As collateral for bank borrowings and long-term
payablesInvestment property4,865,390,729.36As collateral for bank borrowingsTotal28,895,944,181.41
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
65. Foreign currency items
(1) Foreign currency items
Unit: RMBItem
Closing foreigncurrency balanceExchange rate
Closing balance
in RMBMonetary funds––558,658,365.42Of which: USD86,135,319.976.4601556,442,780.52
EUR170,396.007.68621,309,697.73HKD1,000,678.630.8320832,564.62GBP8,197.908.941073,297.45JPY429.790.058425.10Accounts receivables––114,157,874.90Of which: USD16,307,661.426.4601105,349,123.52
JPY150,834,783.900.05848,808,751.38Accounts payable––243,629,557.02Of which: USD36,093,052.126.4601233,164,725.98
EUR1,351,899.317.686210,390,968.45
HKD88,777.150.832073,862.59Other receivables––1,238,689.06Of which: USD112,116.486.4601724,283.67
EUR66,925.847.6862514,405.39Other payables160,000,505.89Of which: USD24,767,418.466.4601160,000,000.00
JPY8,662.500.0584505.89Short-term borrowings––1,653,255,791.89Of which: USD242,677,142.276.46011,567,718,606.78
HKD102,809,116.720.83285,537,185.11Long-term borrowings––1,069,783,410.20Of which: USD165,598,583.646.46011,069,783,410.20Non-current liabilities due within one year––1,507,726,046.70Of which: USD233,390,512.026.46011,507,726,046.70
(2) Explanation on overseas operating entities (including major overseas operating entities), which shall disclose
their overseas principal places of business, functional currency and basis. Reasons shall be disclosed if thereis any change in the functional currency.
√ Applicable Not applicable
No.Name of subsidiary
Principal place ofbusinessPlace of incorporation
Functionalcurrency1Chenming GmbHHamburg, GermanyHamburg, GermanyEUR2Chenming Paper Korea Co., Ltd.Seoul, KoreaSeoul, KoreaKRW3Chenming (HK) LimitedHong Kong, ChinaHong Kong, ChinaUSD4Chenming International Co., Ltd.Los Angeles, USALos Angeles, USAUSD5Chenming Paper Japan Co., Ltd.Tokyo, JapanTokyo, JapanJPY6Chenming Paper United States Co., Ltd.Los Angeles, USALos Angeles, USAUSD7Chenming (Overseas) LimitedHong Kong, ChinaHong Kong, ChinaUSD8Chenming (Singapore) LimitedSingaporeSingaporeUSD
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
VII. Notes to items of the consolidated financial statements (Cont’d)
66. Government grants
(1) General information of government grants
Unit: RMBTypeAmountReporting item
Amount included
in the currentprofit and lossProject Funding for National Key TechnologyResearch and Development Program
1,205,475.00Deferred income82,350.00Sewage treatment and water conservationtransformation project
52,056,966.55Deferred income6,555,470.06Huanggang Forest Pulp & Paper Integration Item640,652,457.36Deferred income12,513,108.90Zhanjiang Forest Pulp & Paper Integration Item52,853,913.65Deferred income2,047,316.46Financial subsidies for technical transformationitems
149,918,237.22Deferred income5,767,903.86Funding for environmental protection652,343,496.62Deferred income25,296,070.94Other76,441,750.15Deferred income651,227.54Working subsidies28,000.00Non-operating income28,000.00Subsidies for the pandemic1,537,288.56Other income and non-
operating income
1,537,288.56Industrial Development fund22,359,939.85Other income22,359,939.85Rewards for new high-tech enterprise1,407,800.00Other income1,407,800.00Refund of individual tax handling fee210,242.13Other income and non-
operating income
210,242.13Financial subsidies for technical transformationproject
8,679,800.00Other income8,679,800.00Subsidies for cultivation200,000.00Other income200,000.00Enterprise reform and development subsidies400,000.00Other income400,000.00Subsidies for talents1,642,000.00Other income and non-
operating income
1,642,000.00Subsidies for financing340,000.00Other income340,000.00Refund of tax9,100,794.92Other income9,100,794.92Employment stabilisation subsidies532,808.62Other income532,808.62Subsidies for forestation2,430,191.20Other income2,430,191.20Refund of VAT upon assessment504,258.75Other income504,258.75Government rewards22,577,150.00Other income and non-
operating income
22,577,150.00Others281,000.00Other income281,000.00Total1,697,703,570.58–125,144,721.79
(2) The condition of the refund of government grants
√ Applicable Not applicable
Unit: RMBItemAmountReasonInfrastructure and environmental projects13,216,025.00Land return of Huanggang idle land
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021VIII. Change in scope of consolidation
1. Disposal of subsidiaries
Whether there is loss of control over subsidiaries on a single disposal
√ Yes No
Unit: RMB
Name of subsidiary
Considerationof disposal ofequity interestShareholding of
disposal ofequity interest
Way ofdisposal ofequity interest
Time of
loss of control
Basis for
determining the
time of lossof controlDifferencebetweenconsiderationand share ofnet assetsof relevantsubsidiaryas perconsolidatedfinancialstatementsRemaining
shareholdingas of the date ofloss of controlCarrying amount
of remainingshareholding
has of the date of
loss of controlFair value of
remaining
shareholding
as of the date of
loss of control
Gain or loss
in fair value of
remaining
shareholdingDetermination
and key
assumption of
fair value of
remaining
shareholding
as of the date of
loss of controlRelevant othercomprehensive
income of
former
subsidiary
transferred to
profit or loss
Zhanjiang Chenming New-style Wall Materials Co., Ltd.12,580,000.00100.00%Transfer2021-1-1Without control676,586.27Other explanation:
Whether there was disposal of the investment in a subsidiary in stages through multiple transactions and loss of control during the period Yes √ No
2. Other reasons for change in scope of consolidation
During the year, the scope of consolidation had 1 newly established subsidiary, namely Weifang Chendu Equity Investment Partnership (Limited Partnership).
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
IX. Interest in other entities
1. Interest in subsidiaries
(1) Constitution of the Group
ShareholdingName of subsidiary
Principle place ofbusiness
Place ofincorporation
Nature ofbusinessDirectIndirectAcquisitionZhanjiang Chenming Pulp & Paper Co., Ltd.ZhanjiangZhanjiangPaper making100.00%EstablishmentShouguang Meilun Paper Co., Ltd.ShouguangShouguangPaper making62.4864%EstablishmentJilin Chenming Paper Co., Ltd.JilinJilinPaper making100.00%AcquisitionHuanggang Chenming Pulp & Paper Co., Ltd.HuanggangHuanggangPulp production70.1493%29.8507%EstablishmentShandong Chenming Paper Sales Co., Ltd.ShouguangShouguangSales of paper product100.00%EstablishmentShouguang Chenming Import and Export Trade Co.,Ltd.
ShouguangShouguangTrading100.00%EstablishmentJiangxi Chenming Supply Chain Management Co.,Ltd.
JiangxiJiangxiTrading70.00%EstablishmentChenming GmbHGermanyGermanyPaper product trading100.00%EstablishmentShouguang Chenming Papermaking Machine Co.,Ltd.
ShouguangShouguangMachinery
manufacturing
100.00%Establishment
Shouguang Hongxiang Printing and Packaging Co.,
Ltd.
ShouguangShouguangPrinting and packaging100.00%AcquisitionShouguang Chenming Modern Logistic Co., Ltd.ShouguangShouguangTransportation100.00%EstablishmentJinan Chenming Paper Sales Co., Ltd.JinanJinanInvestment
Management/Paperproduct Trading
100.00%Establishment
Huanggang Chenming Arboriculture Development
Co., Ltd.
HuanggangHuanggangArboriculture100.00%EstablishmentChenming Arboriculture Co., Ltd.WuhanWuhanArboriculture100.00%EstablishmentChenming Paper Korea Co., Ltd.KoreaKoreaPaper product Trading100.00%EstablishmentShandong Chenming Power Supply Holdings Co.,
Ltd.
ShouguangShouguangPower100.00%EstablishmentShouguang Shun Da Customs Declaration Co, Ltd.ShouguangShouguangCustoms declaration100.00%EstablishmentShanghai Chenming Industry Co., Ltd.ShanghaiShanghaiProperty investment
and management
100.00%Establishment
Shandong Chenming Group Finance Co., Ltd.JinanJinanFinance80.00%20.00%EstablishmentJiangxi Chenming Paper Co., Ltd.NanchangNanchangPaper making42.46%47.49%EstablishmentShouguang Chenming Art Paper Co., Ltd.ShouguangShouguangPaper making75.00%EstablishmentHailaer Chenming Paper Co., Ltd.HailaerHailaerPaper making75.00%EstablishmentShandong Grand View Hotel Co., Ltd.ShouguangShouguangCatering70.00%EstablishmentWuhan Chenming Hanyang Paper Holdings Co., LtdWuhanWuhanPaper making65.205%34.645%EstablishmentChengdu Chenming Culture Communication Co.,
Ltd
ChengduChengduMarketing100.00%EstablishmentShandong Chenming Financial Leasing Co., Ltd.JinanJinanFinancial leasing100.00%EstablishmentQingdao Chenming Nonghai Financial Leasing Co.,
Ltd
QingdaoQingdaoFinancial leasing100.00%EstablishmentChenming (HK) LimitedHong KongHong KongPaper product Trading100.00%EstablishmentShouguang Hongyi Decorative Packaging Co., Ltd.ShouguangShouguangPackaging100.00%Merger and
acquisitionShouguang Xinyuan Coal Co., Ltd.ShouguangShouguangCoal100.00%Merger and
acquisitionShouguang City Run Sheng Wasted Paper Recycle
Co., Ltd.
ShouguangShouguangPurchase and sale of
waste
100.00%Merger and
acquisition
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
ShareholdingName of subsidiary
Principle place ofbusiness
Place ofincorporation
Nature ofbusinessDirectIndirectAcquisitionShouguang Wei Yuan Logistics Company LimitedShouguangShouguangLogistics100.00%Merger and
acquisitionShandong Chenming Panels Co., Ltd. SShouguangShouguangPanels100.00%Merger and
acquisitionShouguang Chenming Floor Board Co., Ltd.ShouguangShouguangFloor Board100.00%Merger and
acquisitionShouguang Chenming Cement Co., LimitedShouguangShouguangCement100.00%EstablishmentWuhan Chenming Qianneng Electric Power Co., Ltd.WuhanWuhanThermal power51.00%EstablishmentShandong Chenming Investment LimitedJinanJinanInvestment100.00%EstablishmentJapan Chenming Paper Co., Ltd.JapanJapanPaper product Trading100.00%EstablishmentChenming International Co., Ltd.the United Statesthe United StatesPaper product Trading100.00%EstablishmentZhanjiang Chenming Arboriculture Development Co.,Ltd.
ZhanjiangZhanjiangArboriculture100.00%EstablishmentYangjiang Chenming Arboriculture Development Co.,Ltd.
YangjiangYangjiangArboriculture100.00%EstablishmentNanchang Chenming Arboriculture DevelopmentCo., Ltd.
NanchangNanchangArboriculture100.00%EstablishmentGuangdong Huirui Investment Co., Ltd.ZhanjiangZhanjiangInvestment100.00%EstablishmentWeifang Chendu Equity Investment Partnership(Limited Partnership)
WeifangWeifangInvestment79.75%EstablishmentJilin Chenming New-style Wall Materials Co., LtdJilinJilinWall materials100.00%EstablishmentJilin Chenming Logistics Co., Ltd.JilinJilinLogistics100.00%EstablishmentJiangxi Chenming Logistics Co., Ltd.NanchangNanchangLogistics100.00%EstablishmentFuyu Chenming Paper Co., Ltd.FuyuFuyuPaper making100.00%EstablishmentZhanjiang Meilun Pulp & Paper Co., Ltd.ZhanjiangZhanjiangPaper making100.00%EstablishmentShanghai Chenming Financial Leasing Co., Ltd.ShanghaiShanghaiFinancial leasing100.00%EstablishmentGuangzhou Chenming Financial Leasing Co., Ltd.GuangzhouGuangzhouFinancial leasing100.00%EstablishmentShanghai Hongtai Real Estate Co., Ltd.ShanghaiShanghaiReal estate100.00%Merger and
acquisitionShanghai Hongtai Property Management Co., Ltd.ShanghaiShanghaiProperty100.00%Merger and
acquisitionShandong Chenming Commercial Factoring Co., LtdJinanJinanBusiness factoring100.00%EstablishmentGuangzhou Chenming Commercial Factoring Co.,
Ltd.
GuangzhouGuangzhouBusiness factoring51.00%EstablishmentQingdao Chenming Pulp & Paper Electronic
Commodity Spot Trading Co., Ltd.
QingdaoQingdaoTrading30.00%70.00%EstablishmentShandong Chenming Coated Paper Sales Co. LtdShouguangShouguangPaper product Trading100.00%EstablishmentZhanjiang Chenming Port Co., Ltd.ZhanjiangZhanjiangPort100.00%EstablishmentBeijing Chenming Financial Leasing Co., Ltd.BeijingBeijingFinancial leasing100.00%EstablishmentChenming Paper United States Co., Ltd.the United Statesthe United StatesPaper product Trading100.00%EstablishmentGuangdong Chenming Panels Co., Ltd.GuangdongGuangdongPanels100.00%EstablishmentShanghai Chenming Pulp & Paper Sales Co., Ltd.ShanghaiShanghaiPaper product Trading100.00%EstablishmentMeilun (BVI) LimitedCaymanCaymanCommerce100.00%EstablishmentWeifang Chenming Growth Driver Replacement
Equity Investment Fund Partnership (LimitedPartnership)
WeifangWeifangFund79.00%Establishment
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont
’d)
(1) Constitution of the Group (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
ShareholdingName of subsidiary
Principle place ofbusiness
Place ofincorporation
Nature ofbusinessDirectIndirectAcquisitionNanjing Chenming Culture Communication Co., Ltd.NanjingNanjingMarketing100.00%EstablishmentChenming (Overseas) Co., Ltd.Hong KongHong KongPaper product Trading100.00%EstablishmentChenming (Singapore) Co., Ltd.SingaporeSingaporePaper product Trading100.00%EstablishmentKunshan Tuoan Plastic Products Co., Ltd.KunshanKunshanRubber and plastic100.00%Merger and
acquisitionHubei Changjiang Chenming Huanggang Equity
Investment Fund Partnership (Limited Partnership)
HuanggangHuanggangFund59.97%EstablishmentHainan Chenming Technology Co., Ltd.HaikouHaikouWholesale and retail100.00%EstablishmentQingdao Chenming Import and Export Trade Co.,Ltd.
QingdaoQingdaoTrading100.00%EstablishmentShanghai Herui Investment Co., Ltd.ShanghaiShanghaiBusiness services100.00%Merger and
acquisitionHubei Huanggang Chenming Equity Investment
Fund Management Co., Ltd.
HuanggangHuanggangCapital market services60.00%EstablishmentShandong Dingkun Asset Management Partnership
(Limited Partnership)
ShouguangShouguangBusiness services99.9001%EstablishmentHuanggang Chenming Paper Technology Co., Ltd.HuanggangHuanggangPaper making100.00%EstablishmentHuanggang Chenming Port Co., Ltd.HuanggangHuanggangPort services51.00%Establishment
(2) Major non-wholly owned subsidiaries
Unit: RMB
Name of subsidiary
Minorityinterest
Gain or lossattributable tominority interestduring the period
Dividend tominority interestdeclared during
the period
Closingbalance ofminority interestWuhan Chenming Hanyang Paper Holdings Co., Ltd.0.15%-50,546.401,045,973.30Shouguang Chenming Art Paper Co., Ltd.25.00%3,051,292.80101,801,479.58Shouguang Meilun Paper Co., Ltd.37.5136%26,857,174.063,142,626,187.55Jiangxi Chenming Paper Co., Ltd.10.05%19,612,578.62367,067,860.45
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont
’d)
(1) Constitution of the Group (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
IX. Interest in other entities (Cont
’d)
1. Interest in subsidiaries (Cont
’d)
(3) Key financial information of major non-wholly owned subsidiaries
Unit: RMB
Closing balanceOpening balance
Name of subsidiaryCurrent assets
Non-currentassetsTotal assetsCurrent liabilities
Non-currentliabilitiesTotal liabilitiesCurrent assets
Non-currentassetsTotal assetsCurrent liabilities
Non-currentliabilitiesTotal liabilities
Wuhan ChenmingHanyang Paper Holdings Co., Ltd.317,761,628.041,326,690,900.871,644,452,528.91910,834,069.1641,955,213.72952,789,282.88734,208,419.791,351,736,457.462,085,944,877.251,314,519,046.2943,365,094.681,357,884,140.97Shouguang Chenming Art Paper Co., Ltd.321,762,933.01511,398,748.40833,161,681.41425,955,763.13425,955,763.13210,008,389.30531,396,869.27741,405,258.57346,404,511.49346,404,511.49Shouguang Meilun Paper Co., Ltd.6,062,424,932.0510,689,940,221.2416,752,365,153.297,222,587,601.901,234,676,452.058,457,264,053.953,954,358,701.8210,971,104,092.0314,925,462,793.857,816,696,759.191,228,430,785.129,045,127,544.31Jiangxi Chenming Paper Co., Ltd.2,744,681,275.795,333,029,928.198,077,711,203.983,217,985,657.781,320,107,639.574,538,093,297.352,898,786,538.594,742,116,901.137,640,903,439.722,918,424,625.581,377,979,879.824,296,404,505.40
Unit: RMB
Amount for the periodAmount for the prior period
Name of subsidiaryRevenueNet profit
Total
comprehensive
incomeCash flows
from operating
activitiesRevenueNet profit
Total
comprehensive
incomeCash flows
from operating
activities
Wuhan Chenming Hanyang Paper Holdings Co., Ltd.475,535,684.94-32,610,581.77-32,610,581.7758,992,793.36314,596,358.81376,379,784.80376,379,784.80135,298,517.97Shouguang Chenming Art Paper Co., Ltd.344,898,772.3412,205,171.2012,205,171.203,726,791.43266,150,140.992,768,997.542,768,997.54-189,493,760.12Shouguang Meilun Paper Co., Ltd.4,447,905,629.92232,335,249.64232,335,249.64542,602,634.964,080,372,638.2552,895,635.6852,895,635.68-1,346,914,591.72Jiangxi Chenming Paper Co., Ltd.1,845,943,724.17195,118,972.31195,118,972.311,469,444,173.381,417,546,892.8597,773,827.5397,773,827.532,193,376,169.72
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
IX. Interest in other entities (Cont’d)
2. Transaction changing shareholding in but not causing to loss of control over subsidiaries
(1) Changing in shareholding in subsidiaries
In March 2021, Weifang Chenchuang Equity Investment Partnership (Limited Partnership) made a unilateral capitalinjection into Shouguang Meilun Paper Co., Ltd. Upon completion of the capital increase, 13.04% equity interestin Shouguang Meilun Paper Co., Ltd. was acquired by Weifang Chenchuang Equity Investment Partnership(Limited Partnership), and the transaction did not result in the loss of our control of Shouguang Meilun Paper Co.,Ltd. As of 30 June 2021, the transaction resulted in an increase in minority interest of RMB914.08 million; In June2021, a capital increase of Shouguang Meilun Paper Co., Ltd. was contributed on the part of CCB Investment –Shandong Development Debt-to-Equity Swap Investment Scheme and SWSC Innovation Investment Co., Ltd.Upon completion of the capital increase, the companies respectively acquired 15.56% and 2.22% equity interestin Shouguang Meilun Paper Co., Ltd., and the transaction did not result in the loss of the Group’s control overShouguang Meilun Paper Co., Ltd. As of 30 June 2021, the transaction resulted in an increase in minority interestof RMB1,475.38 million.
(2) Effect of transactions on minority interest and equity attributable to the owners of the parent company
Unit: RMB
Capital injection
from WeifangChenchuangEquity InvestmentPartnership (Limited
Partnership) toShouguang Meilun
Paper Co., Ltd.
Capital injection
from CCBInvestment– ShandongDevelopmentDebt-to-EquitySwap Investment
Scheme andSWSC Innovation
Investment Co.,Ltd. to Shouguang
Meilun Paper
Co., Ltd.Amount of capital increase900,000,000.001,600,000,000.00Share of net assets of the Group after the capital increase5,325,833,586.125,185,746,328.76Share of net assets of the Group before the capital increase5,338,136,620.065,091,039,021.20Difference-12,303,033.9494,707,307.56Of which: capital reserve adjustment-12,303,033.9494,707,307.56
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates
(1) Major joint ventures and associates
ShareholdingName of joint venture and associate
Principle placeof business
Place ofincorporation
Nature ofbusinessDirectIndirect
AccountingmethodWeifang Senda Meixi Port Co., Ltd.WeifangWeifangPort construction50.00%Equity methodNingbo Kaichen Huamei Equity Investment FundPartnership (Limited Partnership)
NingboNingboInvestment
management
40.00%Equity methodWeifang Xingxing United Chemical Co., Ltd.WeifangWeifangChemical50.00%Equity methodZhuhai Dechen New Third Board EquityInvestment Fund Company (Limited Partnership)
ZhuhaiZhuhaiInvestment
management
50.00%Equity methodGoldtrust Futures Co., Ltd.ChangshaChangshaFutures35.43%Equity methodWeifang Chenrong Growth Driver ReplacementEquity Investment Fund Partnership (LimitedPartnership)
WeifangWeifangInvestment
management
44.44%Equity methodGuangdong Nanyue Bank Co., Ltd.GuangdongGuangdongBank16.62%Equity method
(2) Key financial information of major joint ventures
Unit: RMBWeifang Senda Meixi Port Co., Ltd.
Closing balance/
Amount for
the period
Opening balance/
Amount forthe prior periodCurrent assets21,067,416.9211,717,494.06Of which: Cash and cash equivalents6,320,558.735,739,139.97Non-current assets517,498,148.33526,006,172.67Total assets538,565,565.25537,723,666.73Current liabilities23,673,313.6417,876,446.30Non-current liabilities365,662,252.47370,515,018.03Total liabilities389,335,566.11388,391,464.33Equity interest attributable to shareholders of the parent company149,229,999.14149,332,202.40Share of net assets based on shareholding74,614,999.5774,666,101.20Adjusting events– Unrealised profit arising from intra-group transactions7,237,736.137,277,405.72Carrying amount of investment in joint ventures81,852,735.7081,943,506.92Revenue37,344,708.2531,672,998.02Finance expenses10,648,523.2310,889,263.03Net profit-181,542.45-5,760,422.34Total comprehensive income-181,542.45-5,760,422.34
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont
’d)
(2) Key financial information of major joint ventures (Cont
’d)Weifang Xingxing United Chemical Co., Ltd.
Closing balance/Amount forthe period
Opening balance/Amount forthe prior periodCurrent assets114,252,508.29118,868,385.80Of which: Cash and cash equivalents31,215,037.2037,588,664.71Non-current assets22,351,329.7024,644,081.09Total assets136,603,837.99143,512,466.89Current liabilities26,444,484.1226,318,294.93Non-current liabilities17,085,537.6522,662,556.59Total liabilities43,530,021.7748,980,851.52Equity interest attributable to shareholders of the parent company93,073,816.2294,531,615.37Share of net assets based on shareholding46,536,908.1147,265,807.69Adjusting events– Unrealised profit arising from intra-group transactions44,612,417.6044,608,577.43Carrying amount of investment in joint ventures91,149,325.7191,874,385.12Revenue404,300.8825,838.06Finance expenses-121,109.94-289,698.53Net profit-1,450,118.81-2,919,579.59Total comprehensive income-1,450,118.81-2,919,579.59
(3) Key financial information of major associates
Unit: RMBNingbo Kaichen Huamei Equity Investment Fund Partnership(Limited Partnership)
Closing balance/
Amount for
the period
Opening balance/
Amount forthe prior periodCurrent assets5,384,295.1024,928,544.79Non-current assets192,276,706.00171,877,206.00Total assets197,661,001.10196,805,750.79Current liabilities15,225.4219,749.95Total liabilities15,225.4219,749.95Equity interest attributable to shareholders of the parent company197,645,775.68196,786,000.84Share of net assets based on shareholding79,058,310.2778,714,400.34Adjusting events– Others119,835,177.57119,835,525.93Carrying amount of investment in associate198,893,487.84198,549,926.27Net profit858,903.931,290,560.77Total comprehensive income858,903.931,290,560.77
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont
’d)
(3) Key financial information of major associates (Cont
’d)
Zhuhai Dechen New Third Board Equity Investment FundCompany (Limited Partnership)
Closing balance/Amount forthe period
Opening balance/Amount forthe prior periodCurrent assets30,336,819.045,788,211.20Non-current assets62,260,108.0099,020,108.00Total assets92,596,927.04104,808,319.20Current liabilities5,000.005,000.00Total liabilities5,000.005,000.00Equity interest attributable to shareholders of the parent company92,591,927.04104,803,319.20Share of net assets based on shareholding46,295,963.5252,401,659.62Carrying amount of investment in associate46,295,963.5452,401,659.62Net profit-12,211,392.16-60,941.72Total comprehensive income-12,211,392.16-60,941.72
Goldtrust Futures Co., Ltd.
Closing balance/
Amount for
the period
Opening balance/
Amount forthe prior periodCurrent assets529,485,420.97764,236,547.83Non-current assets23,842,620.2018,545,737.98Total assets553,328,041.17782,782,285.81Current liabilities332,962,582.62544,534,428.24Non-current liabilities33,221,917.8132,169,041.10Total liabilities366,184,500.43576,703,469.34Equity interest attributable to shareholders of the parent company187,143,540.74206,078,816.47Share of net assets based on shareholding66,311,319.3673,013,724.68Adjusting events– Goodwill104,073,292.25104,073,292.25– Others12,927,099.7312,279,914.66Carrying amount of investment in associate183,311,711.34189,366,931.59Revenue9,407,419.4928,397,850.32Net profit-17,089,018.401,437,175.40Total comprehensive income-17,089,018.401,437,175.40
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont
’d)
(3) Key financial information of major associates (Cont
’d)Weifang Chenrong Growth Driver Replacement EquityInvestment Fund Partnership (Limited Partnership)
Closing balance/Amount forthe period
Opening balance/
Amount forthe prior periodCurrent assets1,307,636.81281.95Non-current assets450,000,000.00450,000,000.00Total assets451,307,636.81450,000,281.95Current liabilities15,000.0015,000.00Total liabilities15,000.0015,000.00Equity interest attributable to shareholders of the parent company451,292,636.81449,985,281.95Share of net assets based on shareholding200,554,447.80199,973,459.30Adjusting events– Others-307,203.78-267,823.02Carrying amount of investment in associate200,247,244.02199,705,636.28Net profit39,382,203.34-1,245,446.38Total comprehensive income39,382,203.34-1,245,446.38
Guangdong Nanyue Bank Co., Ltd.
Closing balance/Amount forthe period
Opening balance/
Amount forthe prior periodCurrent assets44,183,321,267.5370,627,194,227.70Non-current assets174,380,381,424.19169,970,138,147.42Total assets218,563,702,691.72240,597,332,375.12Current liabilities179,422,366,670.13197,253,124,440.72Non-current liabilities22,193,008,432.1424,930,860,850.46Total liabilities201,615,375,102.27222,183,985,291.18Equity interest attributable to shareholders of the parent company16,948,327,589.4518,413,347,083.94Share of net assets based on shareholding2,816,812,045.373,060,298,285.35Carrying amount of investment in associate3,123,766,611.943,060,298,285.35Revenue2,009,057,538.562,372,383,445.87Net profit734,646,824.76746,448,582.48Total comprehensive income21,000,000.00
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont
’d)
(4) Summary financial information of non-major joint ventures and associates
Unit: RMBClosing balance/Amount forthe period
Opening balance/Amount forthe prior periodJoint ventures:––Total carrying amount of investment22,324,311.6322,032,934.47Total amount of the following items based on shareholding––– Net profit791,377.16482,644.77Associates:––Total carrying amount of investment9,761,299.979,985,136.83Total amount of the following items based on shareholding––– Net profit-223,836.86-528,399.77
(5) Excess loss of joint ventures or associates
Unit: RMB
Name of joint ventures or associates
Accumulatedunrecognisedloss incurredfor prior periods
Unrecognisedloss (or share of
net profit) for
the period
Unaccumulated
andunrecognised
loss forthe periodArjo Wiggins Chenming Specialty Paper Co., Ltd.7,308,869.167,308,869.16Xuchang Chenming Paper Co., Ltd.35,911,505.0011,152,964.0047,064,469.00X. Risk relating to financial instruments
Main financial instruments of the Group include monetary funds, bills receivable, accounts receivable, other receivables, non-current assets due within one year, other current assets, other non-current financial assets, long-term receivables, short-term borrowings, accounts payable, other payables, short-term borrowings, non-current liabilities due within one year, long-term borrowings, bonds payable and long-term payables. Details of financial instruments refer to related notes. The risksassociated with these financial instruments and the risk management policies adopted by the Group to mitigate these risksare described below. The management of the Group manages and monitors these exposures to ensure that the above risksare controlled in a limited extent.
1. Risk management goals and policies
The Group aims to seek the appropriate balance between the risks and benefits in order to mitigate the adverse effectson the Group’s financial performance from financial risk. Based on such objectives, the Group’s risk managementpolicies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and devisecorresponding internal control procedures, and to monitor risks faced by the Group. Such risk management policies andinternal control systems are reviewed regularly to adapt to changes in market conditions and the Group’s activities. Theinternal audit department of the Group undertakes both regular and ad-hoc reviews of risk management controls andprocedures.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont
’d)Risks associated with the financial instrument of the Group mainly include credit risk, liquidity risk, market risk (includingexchange 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 riskmanagement policies and related guidelines, and supervise the implementation of risk management. The Group hasalready made risk management risks to identify and analyse risks exposed to the Group. These policies mentionedspecific risks, covering market, credit risk and liquidity risk etc. The Group regularly assesses market environment andthe operation of the Group changes to determine if to make alteration to risk management policy and systems. TheGroup’s operation of the Group changes to determine if to make alteration to risk management policy and systems.The Group’s risk management is implemented by Risk Management Committee according to the approval of the boardof directors. The Risk Management Committee works closely with other business department of the Group to identify,evaluating and avoiding certain risks. The Group’s internal audit department will audit the risk management control andprocedures regularly and report the result to audit committee of the Group.The Group spreads risks through diverse investment and business lines, and through making risk management policy toreduce risks of single industry, specific area and counterpart.
(1) Credit risks
Credit risk refers to risk associated with the default of contract obligation of a transaction counterparty.The Group manages credit risk based category. Credit risks mainly arose from bank deposit, bills receivable,accounts receivable, other receivables and long-term receivables etc.The Group’s bank deposit mainly deposits in state-owned banks and other large and medium-sized listed banks.The Group anticipated that the bank deposit does not have significant credit risk.For bill receivable, accounts receivables, other receivables and long-term receivables, the Group set relatedpolicies to control exposure of credit risks. The Group evaluates client’s credit quality and set related credit periodbased on the client’s financial status, credit records and other factors such as current market situation etc. TheGroup keeps monitor the client’s credit record and for client with deteriorate credit records, the Group will ensurethe credit risk is under control in whole by means of written notice of payment collection, shorten or cancel creditperiod.The Group’s debtor spread over different industry and area. The Group continued to assess the credit evaluationto receivables and purchase credit guarantee insurance if necessary.The biggest credit risk exposure of the Group is the carrying amount of each financial asset in the balance sheet.The Group did not provide financial guarantee which resulted in credit risks.The amount of top 5 accounts receivable of the Group accounted for 22.33% (2020: 21.47%) of the Group’s totalaccounts receivables. The amount of top 5 other receivable of the Group accounted for 73.41% (2020: 81.22%) ofthe Group’s total other receivables.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont
’d)
(2) Liquidity risks
Liquidity risk refers to the risks that the Group will not be able to meet its obligations associated with its financialliabilities 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 theGroup’s operations and mitigate the effects of fluctuations in cash flows. The management of the Group monitorsthe usage of bank borrowings and ensures compliance with the borrowing agreements. In the meantime, weobtain commitments from major financial institutions to provide sufficient standby funds to meet short-term andlong-term funding needs.Operating cash was generated from capital and bank and other borrowings. As of 30 June 2021, the Group’sunused bank loan credit is RMB41,077.6910 million (31 December 2020: 38,894.7823 million).As at the end of the period, the financial assets and financial liabilities of the Group are analysed by their maturitydate as below at their undiscounted contractual cash flows (unit: in ten thousand RMB):
30 June 2021ItemWithin 1 year1-2 years2-3 years3-4 yearsOver 4 yearsTotalFinancial assets:
Monetary funds1,639,351.481,639,351.48Accounts receivable151,776.7419,539.0724,831.8137,539.57233,687.19Accounts receivable financing92,120.1292,120.12Other receivables153,841.8894,909.1511,920.678,937.359,448.92279,057.97Long-term receivables47,113.76403,793.603,420.00454,327.36Non-current assets due within one year426,158.54426,158.54Other current assets317,493.31317,493.31Total financial assets2,780,742.07161,561.98440,546.0849,896.929,448.923,442,195.97Financial liabilities:
Short-term borrowings3,316,727.773,316,727.77Bills payable363,292.90363,292.90Accounts payable354,043.90354,043.90Other payables176,728.66176,728.66Non-current liabilities due within one year525,253.20525,253.20Long-term borrowings227,191.29220,623.70172,918.7076,626.75697,360.44Lease liabilities455.461,312.995,907.127,675.57Long-term payables112,863.4652,477.661,043.4572,750.00239,134.57Total financial liabilities and contingent liabilities4,736,046.43340,510.21274,414.35179,869.27149,376.755,680,217.01
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont
’d)
(2) Liquidity risks (Cont
’d)As at the beginning of the period, the financial assets and financial liabilities of the Group at the reporting date areanalysed by their maturity date as below at their undiscounted contractual cash flows (in ten thousand RMB):
31 December 2020ItemWithin 1 year1-2 years2-3 years3-4 yearsOver 4 yearsTotalFinancial assets:
Monetary funds1,775,953.761,775,953.76Accounts receivable182,258.4537,981.218,742.6418,433.76247,416.06Accounts receivable financing48,838.5748,838.57Other receivables135,645.7381,331.1063,404.2415,673.57296,054.64Long-term receivables452,285.9361,971.923,420.00517,677.85Other current assets271,691.87271,691.87Non-current assets due within one year422,274.42422,274.42Total financial assets2,836,662.80571,598.24134,118.8037,527.333,579,907.17Financial liabilities:
Short-term borrowings3,279,399.303,279,399.30Bills payable299,893.67299,893.67Accounts payable404,243.07404,243.07Other payables177,772.24177,772.24Non-current liabilities due within one year716,094.96716,094.96Other current liabilities15,703.7815,703.78Long-term borrowings258,446.95203,956.6910,909.00334,402.46807,715.10Bonds payable122,712.0635,000.00157,712.06Lease liabilities439.69472.831,312.995,907.128,132.63Long-term payables151,420.0966,617.1016,778.59234,815.78Total financial liabilities and contingent liabilities4,893,107.02533,018.79271,046.6229,000.58375,309.586,101,482.59The financial liabilities disclosed above are based on cash flows that are not discounted and may differ from thecarrying amount of the line items of the balance sheet. Financial guarantees issued do not represent the amountto be paid.
(3) Market risk
Market risk refers to the risk that the fair value or future cash flow of a financial instrument will be fluctuated due tothe changes in market price, including interest rate risk, exchange rate risk and other price risk.Interest rate risk
Interest rate risk refers to the risk that the fair value or future cash flow of a financial instrument will be fluctuateddue to the floating rate. Interest rate risk arises from recognised interest-bearing financial instrument andunrecognised financial instrument (e.g. loan commitments).
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont
’d)
(3) Market risk (Cont
’d)
Interest rate risk(Cont’d)The Group’s interest rate risk arises from long-term interest-bearing liabilities including long-term borrowing andbonds payable. Financial liabilities issued at floating rate expose the Group to cash flow interest rate risk. Financialliabilities issued at fixed rate expose the Group to fair value interest rate risk. The Group determines the relativeproportions of its fixed rate and floating rate contracts depending on the prevailing market conditions and tomaintain an appropriate combination of financial instruments at fixed rate and floating rate through regular reviewsand monitors.The Group’s finance department continuously monitors the interest rate position of the Group. At present, theGroup did not enter into any interest rate hedging arrangements. However, the management is responsible tomonitor the risks of interest rate and consider to hedge significant interest risk if necessary. Increase in interestrates will increase the cost of new borrowing and the interest expenses with respect to the Group’s outstandingfloating rate interest-bearing borrowings, and therefore could have a material adverse effect on the Group’sfinancial result. The management will make adjustments with reference to the latest market conditions. Theseadjustments 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 forthe prior yearFinancial instrument with fixed interest rateFinancial liabilitiesOf which: Short-term borrowings3,316,727.773,279,399.30Long-term borrowings697,360.44807,715.10Bonds payable153,687.74Total4,014,088.214,240,802.14Financial instrument with float interest rateFinancial assetsOf which: Monetary funds549,061.69438,772.55Total549,061.69438,772.55The financial instruments held by the Group at the reporting date expose the Group to fair value interest rate risk.This sensitivity analysis as above has been determined assuming that the change in interest rates had occurred atthe reporting date and arisen from the recalculation of the above financial instrument issued at new interest rates.The non-derivative tools issued at floating interest rate held by the Group at the reporting date expose the Groupto cash flow interest rate risk. The effect to the net profit and shareholder’s equity illustrated in the sensitivityanalysis as above is arisen from the effect to the annual estimate amount of interest expenses or revenue at thefloating interest rate. The analysis is performed on the same basis for prior year.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont
’d)
(3) Market risk (Cont
’d)Exchange rate riskExchange risk refers to the risk that the fair value or future cash flows of a financial instrument will be fluctuateddue to the changes in foreign currency rates. Foreign currency risk arises on financial instruments that aredenominated in a currency other than the functional currency in which they are measured.The principal business of the Group is situated within the PRC and is denominated in RMB. However, foreignexchange risks still exist for the assets and liabilities in foreign currencies and future foreign currency transactionsas recognised by the Group (assets and liabilities in foreign currencies and foreign currency transactions aremainly denominated in US dollar, Japanese yen, South Korean Won and Euro).The following table details the financial assets and liabilities held by the Group which denominated in foreigncurrencies and amounted to RMB as at 30 June 2021 are as follows (in RMB ten thousands):
Liabilities denominated in foreign
currency
Asset denominated in foreign
currencyItem
As atthe end ofthe period
As at thebeginning ofthe period
As atthe end ofthe period
As at thebeginning ofthe periodUSD453,839.28589,167.1166,251.6236,393.34EUR1,039.102,692.09182.414,547.15HKD8,561.109,131.7383.26294.97KRWJPY0.050.05880.88880.88GBP7.334.64Total463,439.53600,990.9867,405.5042,120.98The Group closely monitors the impact of exchange rate changes on the Group’s foreign exchange risk. Atpresent, the Group has not taken any measures to avoid foreign exchange risks. However, the management isresponsible for monitoring exchange rate risks and will consider hedging significant exchange rate risks whennecessary.With other variables unchanged, the after-tax effect of the possible reasonable changes in the exchange rate offoreign currency to RMB on the current profit and loss of the Group is as follows (in RMB ten thousands):
Increase (decrease) in after-tax profitsBalance for the periodBalance for the periodIncrease in exchange rate of USD5%-19,379.385%-27,638.69Decrease in exchange rate of USD-5%19,379.38-5%27,638.69Increase in exchange rate of Euro5%-42.835%92.75Decrease in exchange rate of Euro-5%42.83-5%-92.75
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
XI. Fair value
1. Fair value of assets and liabilities measured at fair value as at the end of the period
Unit: RMBFair value as at the end of the periodItemLevel 1Level 2Level 3TotalI.Continuous measurement of fair value––––(I) Financial liabilities held for trading101,188,881.03101,188,881.03
(1) Equity instrument investments101,188,881.03101,188,881.03(II) Other non-current financial assets1,221,910,000.001,221,910,000.00(III) Biological assets1,515,249,721.491,515,249,721.49
1. Consumable biological assets1,515,249,721.491,515,249,721.49Total assets continuously measured at fair value101,188,881.032,737,159,721.492,838,348,602.52
2. Valuation techniques and qualitative and quantitative information for level 3 items measured on and not
on a recurring basis
Unit: RMBItem
Fair value as atthe end ofthe period
ValuationtechniquesUnobservable inputsRangeConsumable biological assets:
Forestry1,515,249,721.49Replacement cost
method
Cost per mu for the first
year of Eucalyptus
806 (ton/RMB)Cost per mu for the first
year of Pines
592 (ton/RMB)Roll back method of
market price
Unit price per ton of
Eucalyptus wood
595 (ton/RMB)Unit price per ton of wet
pine
435 (ton/RMB)Unit price per ton of
Chinese fir
800 (ton/RMB)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
XI. Fair value (Cont’d)
3. Level 3 continuous measurement, adjustment between opening and closing value and sensitivity of
unobservable inputsThe Company adopts sensitivity analysis techniques to analyse the possible effects of reasonable and probable changesin risk variables to profit or loss for the period or to the shareholders’equity. Since risk variables seldom change on astand-alone basis, while the correlation between variables may have significant effect on the ultimate amount of changeeffected by the change in a single risk variable, the analysis below is based on the assumption that the changes in eachvariable occurred separately.
For the yearFor the prior yearItem
Change in investmentyield or discount rate
Impact onprofit
Impact onshareholders’
equity.
Impact on
profit
Impact onshareholders’
equityConsumable biological assetsIncreases by 1%-37,734,399.41-37,734,399.41-32,178,275.96-32,178,275.96Consumable biological assetsDecreases by 1%42,800,784.6142,800,784.6136,713,253.9436,713,253.94
XII. Related parties and related party transactions
1. Parent company of the Company
Name of parent company
Place ofincorporationBusiness nature
Registered
capital
Shareholdingof the parentcompany in the
Company
Voting rightof the parent
company inthe CompanyChenming Holdings Co., Ltd.Shouguang
Investment in manufacture ofpaper, electricity steam, andarboriculture1,238,787,70027.53%27.53%The ultimate controller of the Company is Shouguang State-owned Assets Supervision and Administration Office.
2. Subsidiaries of the Company
Please refer to Note IX. 1. Interest in subsidiaries for details.
3. Joint ventures and associates of the Company
Please refer to Note IX. 2. Interest in joint ventures or associates for details.Balance of related party transaction between the Company and its joint ventures or associates during the period or priorperiods are as follows:
Name of joint ventures or associatesRelationShouguang Meite Environmental Technology Co., Ltd.A joint venture of the GroupWeifang Xingxing United Chemical Co., Ltd.A joint venture of the GroupShouguang Chenming Huisen New-style Construction Materials
Co., Ltd.A joint venture of the GroupJiangxi Jiangbao Media Colour Printing Co., Ltd.An associate of the GroupChenming (Qingdao) Asset Management Co., Ltd.An associate of the GroupJiangxi Chenming Port Co., Ltd.An associate of the GroupWeifang Sime Darby West Port Co., Ltd.A joint venture of the GroupGuangdong Nanyue Bank Co., Ltd.An associate of the Group
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
XII. Related parties and related party transactions (Cont’d)
4. Other related parties
Name of other related partiesRelationShandong Shouguang Jinxin Investment DevelopmentHoldings Group Co., Ltd.
Shareholder of the Company’s largest shareholderShouguang Henglian Enterprise Investment LimitedShareholder of the Company’s largest shareholderShouguang Ruifeng Enterprise Investment LimitedShareholder of the Company’s largest shareholderChenming Holdings (Hong Kong) LimitedSubsidiary of the Company’s largest shareholderZhanjiang Chenming Real Estate Co., Ltd.Subsidiary of the Company’s largest shareholderQingdao Hongji Weiye Investment Co., Ltd.Subsidiary of the Company’s largest shareholderShouguang Hengying Real Estate Co., Ltd.Subsidiary of the Company’s largest shareholderShouguang Hengtai Enterprise Investment Co., Ltd.A company invested by the Directors and senior
management of the CompanyShouguang Huixin Construction Materials Co., Ltd.A company invested by the Directors and senior
management of the CompanyShouguang Chenming Guangyuan Real Property Co., Ltd.
and its subsidiaries
A company invested by the Directors and senior
management of the CompanyQingdao Chenming Nonghai Investment Co., Ltd. and its
subsidiaries
A company invested by the Directors and senior
management of the CompanyNanchang Chenjian New-style Wall Materials Co., Ltd.A company invested by the Directors and senior
management of the CompanyShouguang Hengde Real Estate Co., Ltd.A company invested by the Directors and senior
management of the CompanyZhejiang Huaming Investment Management Co., Ltd. and its
subsidiaries
Directors served by the Company’s DirectorsHebei Chenming Zhongjin Real Estate Development Co., Ltd.
and its subsidiaries
Directors served by the Company’s senior
managementWuhan Chenming Zhongjin Real Estate Co., Ltd.
and its subsidiaries
Directors served by the Company’s Supervisors in
the past 12 monthsWuhan Rongsheng Zhongjin Development and Investment Co., Ltd. and its subsidiaries
Directors served by the Company’s Supervisors
in the past 12 monthsQingzhou Chenming Denaturation Amylum Co., Ltd.Investee of the CompanyLide Technology Co., Ltd.Investee of the CompanyChen Hongguo, Hu Changqing, Li Xingchun, Li Feng, Li Xueqin, Li
Weixian, Li Zhenzhong, Dong Lianming and Yuan Xikun
Key management personnel
5. Related party transactions
(1) Purchase and sales of goods and rendering and receiving services
Table on purchase of goods/receiving of services
Unit: RMBRelated party
Details of relatedparty transaction
Amount forthe reporting
period
Amount forthe prior periodShouguang Chenming Huisen Newstyle Construction Materials Co., Ltd.Sales of electricity and steam4,489,589.983,186,741.72Shouguang Huixin Construction Materials Co., Ltd.Sales of cement, coal, oil, etc.1,183,941.172,422,678.94
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont
’d)
(2) Guarantee
The Company as guarantor
Unit: RMB
GuarantorParty being guaranteed
Amount underguarantee
Starting dateof guarantee
Expiry dateof Guarantee
Whetherperformanceof guaranteeis completedShandong Chenming Paper Holdings LimitedWeifang Sime Darby West Port Co., Ltd.122,400,000.002017/12/202027/12/20NoShandong Chenming Paper Holdings LimitedChenming (HK) Limited190,572,950.002021/3/112022/2/25NoShandong Chenming Paper Holdings Limited Chenming (HK) Limited 14,231,811.67 2021/2/4 2021/8/3 NoShandong Chenming Paper Holdings Limited Chenming (HK) Limited 13,549,195.13 2021/3/5 2021/9/1 NoShandong Chenming Paper Holdings Limited Chenming (HK) Limited 32,269,672.02 2021/3/24 2021/9/20 NoShandong Chenming Paper Holdings Limited Chenming (HK) Limited 17,962,430.15 2021/3/26 2021/9/23 NoShandong Chenming Paper Holdings Limited Chenming (HK) Limited 7,439,011.36 2021/3/8 2021/10/12 NoShandong Chenming Paper Holdings Limited Chenming (HK) Limited 2,552,918.34 2021/3/8 2021/8/2 NoShandong Chenming Paper Holdings Limited Chenming (HK) Limited 2,428,173.42 2021/3/15 2021/8/2 NoShandong Chenming Paper Holdings Limited Chenming (HK) Limited 16,724,117.35 2021/3/17 2021/9/13 NoShandong Chenming Paper Holdings Limited Chenming (HK) Limited 9,774,374.72 2021/3/19 2021/8/2 NoShandong Chenming Paper Holdings Limited Chenming (HK) Limited 18,839,200.41 2021/4/15 2021/10/12 NoShandong Chenming Paper Holdings Limited Chenming (HK) Limited 2,231,576.94 2021/4/21 2021/10/18 NoShandong Chenming Paper Holdings Limited Chenming (HK) Limited 2,231,576.94 2021/4/21 2021/10/18 NoShandong Chenming Paper Holdings Limited Chenming (HK) Limited 2,231,576.94 2021/4/21 2021/10/18 NoShandong Chenming Paper Holdings Limited Chenming (HK) Limited 1,115,788.47 2021/4/21 2021/10/18 NoShandong Chenming Paper Holdings LimitedChenming (HK) Limited 1,673,682.71 2021/4/28 2021/10/25 NoShandong Chenming Paper Holdings Limited Chenming (HK) Limited 1,952,629.83 2021/4/29 2021/10/26 NoShandong Chenming Paper Holdings Limited Chenming (HK) Limited 56,023,886.34 2021/5/4 2021/9/27 NoShandong Chenming Paper Holdings Limited Chenming (HK) Limited 8,341,264.65 2021/5/12 2021/9/27 NoShandong Chenming Paper Holdings Limited Chenming (HK) Limited 1,673,682.71 2021/6/15 2021/12/13 NoShandong Chenming Paper Holdings Limited Chenming (HK) Limited 50,085,736.71 2021/6/16 2021/12/13 NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.3,900,000.002017/1/52021/9/26NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.36,260,000.002017/2/32021/9/26NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.40,160,000.002017/2/32021/12/26NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.40,160,000.002017/2/32022/3/26NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.33,420,000.002017/2/32022/6/26NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.200,000,000.002020/10/222021/10/21NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.300,000,000.002020/12/232021/12/23NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.20,000,000.002021/4/202022/4/19NoShandong Chenming Paper Holdings LimitedHuanggang Chenming Pulp & Paper Co., Ltd.90,000,000.002021/5/122021/5/11NoShandong Chenming Paper Holdings LimitedJilin Chenming Paper Co., Ltd.98,580,000.002021/1/202021/7/19NoShandong Chenming Paper Holdings LimitedJilin Chenming Paper Co., Ltd.18,000,000.002021/3/312022/3/8NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.200,000,000.002019/6/282022/6/27NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.300,000,000.002019/7/12022/6/27NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.85,000,000.002019/10/232022/6/27NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.114,750,000.002019/11/222022/6/27NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.150,000,000.002021/2/252022/2/24NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.99,000,000.002021/3/312022/3/30No
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont
’d)
(2) Guarantee (Cont
’d)
GuarantorParty being guaranteed
Amount under
guarantee
Starting dateof guarantee
Expiry dateof Guarantee
Whetherperformanceof guaranteeis completedShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.73,000,000.002021/5/282022/5/27NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.150,000,000.002020/12/182021/12/17NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.12,920,200.002021/6/162021/12/10NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.90,000,000.002021/3/192022/3/18NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.100,000,000.002021/5/272022/5/23NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.16,473,255.002021/3/172021/9/13NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.30,140,898.262021/3/32021/8/30NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.70,000,000.002021/6/102022/5/23NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.10,000,000.002021/6/152022/6/13NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.10,000,000.002021/6/232022/6/17NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.10,000,000.002021/6/242022/6/17NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.80,000,000.002021/6/182022/6/17NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.25,000,000.002021/6/212021/12/21NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.70,000,000.002021/4/162022/4/15NoShandong Chenming Paper Holdings LimitedJiangxi Chenming Paper Co., Ltd.49,500,000.002021/3/312022/3/30NoShandong Chenming Paper Holdings LimitedShandong Chenming Paper Sales Co., Ltd.253,301,644.842021/2/232021/8/23NoShandong Chenming Paper Holdings LimitedShandong Chenming Paper Sales Co., Ltd.420,452,396.282021/5/72022/4/29NoShandong Chenming Paper Holdings LimitedShandong Chenming Paper Sales Co., Ltd.100,000,000.002020/7/152021/7/12NoShandong Chenming Paper Holdings LimitedShanghai Chenming Pulp & Paper Sales Co., Ltd.10,000,000.002020/12/232021/12/23NoShandong Chenming Paper Holdings LimitedShanghai Chenming Pulp & Paper Sales Co., Ltd.10,000,000.002021/6/212022/6/21NoShandong Chenming Paper Holdings LimitedShanghai Chenming Pulp & Paper Sales Co., Ltd.10,000,000.002021/6/222022/5/30NoShandong Chenming Paper Holdings LimitedShanghai Chenming Pulp & Paper Sales Co., Ltd.80,000,000.002021/6/232022/5/30NoShandong Chenming Paper Holdings LimitedShouguang Meilun Paper Co., Ltd.124,976,460.752020/7/92021/7/9NoShandong Chenming Paper Holdings LimitedShouguang Meilun Paper Co., Ltd.112,481,429.122021/1/262021/7/26NoShandong Chenming Paper Holdings LimitedShouguang Meilun Paper Co., Ltd.100,000,000.002020/9/292021/9/29NoShandong Chenming Paper Holdings LimitedShouguang Meilun Paper Co., Ltd.132,532,591.402021/6/72021/12/4NoShandong Chenming Paper Holdings LimitedShouguang Meilun Paper Co., Ltd.163,597,622.702021/6/162021/12/14NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.200,000,000.002019/7/122021/7/12NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.140,000,000.002019/12/42021/12/3NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.639,549,900.002019/12/272022/12/27NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002021/1/152022/1/14NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.125,000,000.002021/1/202022/1/19NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.49,096,760.002021/2/52021/11/24NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.49,096,760.002021/2/52022/1/24NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002021/1/52024/1/4NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.40,000,000.002021/2/92021/8/8NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002021/2/22022/2/1NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.70,000,000.002021/2/192022/2/18NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.25,840,400.002021/3/262022/2/25NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.99,600,000.002021/3/12021/8/28NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002021/3/22022/2/28NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.99,000,000.002021/2/52021/8/4NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.90,000,000.002021/2/52021/8/4No
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
GuarantorParty being guaranteed
Amount underguarantee
Starting dateof guarantee
Expiry dateof Guarantee
Whetherperformanceof guaranteeis completedShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.200,000,000.002021/2/202022/2/19NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002020/8/182021/8/12NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.67,000,000.002020/9/152021/9/14NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.99,600,000.002021/3/162021/9/12NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.110,000,000.002020/10/162021/10/15NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.80,000,000.002020/10/162023/10/15NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.30,000,000.002020/11/42021/11/3NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.45,220,700.002020/11/52021/10/13NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.115,000,000.002020/11/112023/11/10NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.90,000,000.002020/11/122021/11/11NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.90,000,000.002020/11/162021/11/15NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.166,668,000.002020/11/182021/11/17NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.30,000,000.002020/12/12021/11/30NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.200,000,000.002020/12/42021/12/3NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002020/12/102023/12/9NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002020/12/182021/12/17NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002020/12/182021/12/17NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.32,300,500.002020/12/242021/12/17NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.30,000,000.002021/3/102022/3/9NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002021/4/82022/3/29NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002021/4/192022/4/18NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.29,070,450.002021/4/302022/4/26NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.43,000,000.002021/5/12022/4/26NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.85,000,000.002021/5/82022/5/8NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.80,000,000.002021/5/122021/11/8NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002021/5/282022/5/27NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.30,362,470.002021/6/162022/5/27NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.186,372,496.722021/6/202021/9/30NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.26,000,000.002021/6/182022/5/27NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.70,000,000.002021/6/182022/6/17NoShandong Chenming Paper Holdings LimitedZhanjiang Chenming Pulp & Paper Co., Ltd.9,000,000.002021/6/232021/12/20NoZhanjiang Chenming Pulp & Paper Co., Ltd.Chenming (HK) Limited96,901,500.002019/3/282022/1/7NoJiangxi Chenming Paper Co., Ltd.Chenming (HK) Limited94,317,460.002021/3/172022/3/17NoShandong Chenming Financial Leasing Co., Ltd.Zhanjiang Chenming Pulp & Paper Co., Ltd.120,000,000.002020/8/52021/8/5NoShanghai Herui Investment Co., Ltd.Shouguang Meilun Paper Co., Ltd.200,000,000.002020/12/42022/6/27NoShanghai Herui Investment Co., Ltd.Shouguang Meilun Paper Co., Ltd.410,000,000.002020/12/42023/10/30NoShanghai Herui Investment Co., Ltd.Wuhan Chenming Hanyang Paper Holdings
Co., Ltd.
25,000,000.002020/12/42023/10/30NoShanghai Herui Investment Co., Ltd.Huanggang Chenming Pulp & Paper Co., Ltd.195,000,000.002020/12/42023/10/30NoShandong Chenming Group Finance Co., Ltd. Shandong Chenming Paper Holdings Limited 150,000,000.00 2021/6/23 2022/6/22 No
Total10,432,909,151.88
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont
’d)
(2) Guarantee (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont
’d)
(3) Related party lending and borrowing
Unit: RMBRelated party
Borrowing
amount
StartingdateExpiry dateDescriptionBorrowing Chenming Holdings Co., Ltd.210,000,000.001 January 202131 December 2021 Guangdong Nanyue Bank Co., Ltd.700,000,000.001 January 202131 December 2021
6. Related party accounts receivable and accounts payable
(1) Accounts receivables
Unit: RMBClosing balanceOpening balanceItemRelated partyBook balanceBad debtBoot balanceBad debtAccounts receivableShouguang Chenming Huisen
New-style Construction Materials Co., Ltd.1,199,064.7259,811.282,000,017.9687,306.27Other receivablesWeifang Sime Darby West Port
Co., Ltd.70,271,044.6528,373,570.1568,476,127.9819,038,071.06Other receivablesShouguang Meite Environmental
Technology Co., Ltd.18,860,394.09943,019.7016,307,200.0070,132.59
(2) Accounts payable
Unit: RMBItemRelated partyClosing partyOpening balanceAccounts payableWeifang Xingxing United Chemical Co., Ltd.26,905,494.3426,905,494.34Other payablesWeifang Xingxing United Chemical Co., Ltd.16,860,000.0016,860,000.00Other payablesChenming Holdings Co., Ltd.7,000,000.00–Accounts payableWeifang Sime Darby West Port Co., Ltd.11,276,253.67–Accounts payableShouguang Meite Environmental Technology
Co., Ltd.6,948,106.71–Other non-current liabilitiesGuangdong Nanyue Bank Co., Ltd.400,000,000.00
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
XIII. Share-based payment
1. General information of share-based payment
√ Applicable Not applicable
Unit: RMBTotal equity instruments of the Company granted during the periodNoneTotal exercised equity instruments of the Company during the periodNoneTotal invalid equity instruments of the Company during the periodNoneRange of strike price and remaining periods of contracts of stock options excluding of which theCompany issues at the end of the period
See explanationfor detailsRange of strike price and remaining periods of contracts of other equity instruments excluding ofwhich the Company issues at the end of the period
NoneOther explanation: the strike price of restricted shares is RMB2.85 per share. The shares shall be unlocked in separatebatches, 40% of the shares shall unlock at 2022, 30% of the shares shall unlock at 2023 and 30% of the shares shallunlock at 2024.
2. Equity-settled share-based payment
√ Applicable Not applicable
Unit: RMBThe method of determining the fair value of equity instrument on the grant dateEx-right price of
grant of shareBasis for determining the quantity of exercisable equity instrumentsSee explanation
for detailsReasons for significant difference between the current estimate and previous estimateNoneAccumulated amount of equity-settled share-based payment included in the capital reserve58,816,960.12Total amount of equity-settled share-based payment recognised in the current period26,330,034.89Other explanation: On 29 May 2020, the Resolution on the Matters Relating to Adjustments to the 2020 RestrictedA Share Incentive Scheme of the Group and the Resolution in Relation to the Grant of Restricted Shares to theParticipants were considered and approved at the tenth extraordinary meeting of ninth session of the Board and the fifthextraordinary meeting of the ninth session of the Supervisory Committee of the Company. It is determined that the grantdate would be 29 May 2020, and the fair value of the restricted shares was the ex-rights price of the shares on the grantdate. The Restricted Shares to be granted under the Incentive Scheme were“granted once and unlocked in batches”.For the period commencing from the first trading day after expiry of the 24-month period from the date on which theregistration of the grant of the Restricted Shares is completed and ending on the last trading day of the 36-month periodfrom the date on which the registration of the grant of the Restricted Shares is completed, 40% of the Restricted Shareswill be unlocked; for the period commencing from the first trading day after expiry of the 36-month period from the dateon which the registration of the grant of the Restricted Shares is completed and ending on the last trading day of the48-month period from the date on which the registration of the grant of the Restricted Shares is completed, 30% of theRestricted Shares will be unlocked; for the period commencing from the first trading day after expiry of the 48-monthperiod from the date on which the registration of the grant of the Restricted Shares is completed and ending on thelast trading day of the 60-month period from the date on which the registration of the grant of the Restricted Shares iscompleted, 30% of the Restricted Shares will be unlocked. Meanwhile, during the three accounting years from 2021 to2023, the Restricted Shares granted under the Incentive Scheme shall be subject to annual performance appraisal forunlocking. (for details of specific performance evaluation conditions, please refer to the announcement of the Company).At each balance sheet date during the vesting period, the Group, based on the latest information such as the latestupdate on the change in the number of entitled employees, will make best estimates to adjust the expected numberof equity instruments that can be vested. As at the exercise date, the final estimated number of exercisable equityinstruments should equal the actual number of exercisable equity instruments.
3. Cash-settled share-based payment
Applicable √ Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
XIV. Undertaking and contingency
1. Significant commitments
Unit: RMBCapital commitments contracted for but not yetnecessary to be recognised on the balance sheetClosing balanceOpening balanceCommitments in relation to acquisition and construction of long-term assets269,719,611.42236,106,766.83
2. Contingency
(1) Significant contingency as at the balance sheet date
In October 2005, the Company and Hong Kong Arjowiggins HKK2 Limited (“HKK2”) jointly established ArjoWigginsChenming Specialty Paper Co., Ltd. in Shouguang, Shandong Province, which is engaged in the production ofspecial paper, decoration paper and draft paper. However, such company experienced poor management due tofinancial 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, HongKong 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 theCompany should compensate HKK2 with economic loss of RMB167 million, arbitration fee of HK$3.30 millionand legal fee of USD3.54 million, together with interest thereon calculated at 8% per annum. In October 2016, theCompany received a statutory demand, stating that if the Company fails to perform the arbitration results within 21days, the liquidation application on H shares of the Company will be submitted. Subsequently, HKK2 submitted Hshares liquidation application to the arbitration centre.In November 2016, the Company submitted application to the Court of First Instance of the High Court of theHKSAR and received an injunction, stating that“the applicant is prohibited from applying for liquidation on theCompany”.In February 2017, HKK2 submitted an appeal to the court. In June 2017, the court dismissed the injunctionreceived by the Group. In the same month, the Group received the liquidation application submitted by thedefendant to the High Court of Hong Kong, which alleged that the Group should compensate the defendant witheconomic loss of RMB167 million, legal fee of USD3.54 million and arbitration fee of HK$3.30 million, togetherwith interest thereon due to failure in compliance of the arbitration results.In 2017, the Group made provision of RMB325,259,082.28 for the pending litigation.Relevant appeal hearing of the Group on 15 July 2017 was completed in the Hong Kong High Court Appeal Courton the morning of 11 May 2018. At the end of the hearing, the court had instructed that another sentence beadjudicated.On 5 August 2020, the Court of Appeal of the High Court of Hong Kong made a judgment and rejected ourCompany’s appeal request. The Company is seeking ways to re-appeal to protect the legal rights and interests ofthe Company and investors. However, as of 30 June 2021, the estimated loss was still uncertain. Therefore, theestimated liability must still be listed in the balance sheet.
(2) To state that the company has no material contingency that needs to be disclosed
The Company had no material contingency that needs to be disclosed.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
XV. Post-balance sheet eventAt 15 July 2021, the Company convened the twentieth extraordinary meeting of ninth session of the Board, and consideredand approved the Resolution on the Matters Relating to redeeming the second and third tranches of the Preference shares,and agrees to redeem in full, Chenming You 02 and Chenming You 03, the redeeming price being the par value of the priorityshares (RMB100 per share) plus current resolved payment of but unpaid fixed dividends (RMB5.17 per share), the redemptiondates being the respective fixed dividend distribution dates of Chenming You 02 and Chenming You 03, namely 16 August2021 and 22 September 2021. As of the reporting date of this report, the Company has completed the redemption anddelisting process of Chenming You 02.XVI. Other material matters
1. Segment information
(1) Basis for determination and accounting policies
According to the Group’s internal organisational structure, management requirements and internal reportingsystem, the Group’s operating business is divided into 5 reporting segments. These report segments aredetermined based on the financial information required by the company’s daily internal management. Themanagement of the Group regularly evaluates the operating results of these reporting segments to determine theallocation of resources to them and evaluate their performance.The Group’s reporting segments include:
(1) Machine paper segment, which is responsible for production and sales of machine paper;
(2) Financial services segment, which provides financial services;
(3) Investment real estate segment, which is responsible for real estate rental;
(4) Other segments, which is responsible for the above segments otherwise.
Segment report information is disclosed in accordance with the accounting policies and measurement standardsadopted by each segment when reporting to management. These accounting policies and measurement basis areconsistent with the accounting policies and measurement basis used in preparing the financial statements.
(2) Financial Information of Reporting Segment
Unit: RMBItemMachine-made paperFinancial ServicesInvestment real estateOthersInter-segment offsetTotalRevenue15,647,880,095.72307,483,904.89204,218,912.262,050,474,074.051,841,119,235.3316,368,937,751.59Operating costs12,381,044,826.4045,872,270.8389,108,456.751,566,334,523.182,974,828,832.5911,107,531,244.57Total assets105,777,817,055.3419,551,306,927.346,340,554,629.6110,124,440,524.8251,193,089,992.7690,601,029,144.35Total liabilities56,890,777,038.776,565,044,164.943,347,151,455.625,355,320,541.348,790,740,546.1263,367,552,654.55
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
XVII. Major Item Notes of the Parent Company’s Financial Statements
1. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMBClosing balanceOpening balanceBook balanceBad debt provisionBook balanceBad debt provisionTypeAmountPercentageAmountECL rateCarrying valueAmountPercentageAmountECL rateCarrying valueAccounts receivable assessed collectively for impairment892,582,074.57100.00%4,546,642.370.51%888,035,432.20698,032,192.53100.00%3,195,631.290.46%694,836,561.24Of which:
Accounts receivable from related party customers887,202,829.4099.40%887,202,829.40692,218,139.2699.17%692,218,139.26Accounts receivable from non-related party customers5,379,245.170.60%4,546,642.3784.52%832,602.805,814,053.270.83%3,195,631.2954.96%2,618,421.98Total892,582,074.57100.00%4,546,642.370.51%888,035,432.20698,032,192.53100.003,195,631.290.46%694,836,561.24Items assessed individually for impairment:
Accounts receivable with collective provision for bad debts based on receivables from related parties
Unit: RMBClosing balanceAgeingBook balance
Bad debtprovisionECL rateWithin 1 year887,202,829.400.00%Total887,202,829.40–
Accounts receivable with collective provision for bad debts based on receivables from non-related parties
Unit: RMBClosing balanceAgeingBook balance
Bad debtprovisionECL rateWithin 1 year2,376,424.001,543,821.2064.96%1-2 years0.000.002-3 years0.000.00Over 3 years3,002,821.173,002,821.17100.00%Total5,379,245.174,546,642.37–
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
1. Accounts receivable (Cont
’d)
(1) Disclosure of accounts receivable by category (Cont
’d)Accounts receivable with collective provision for bad debts based on receivables from non-related parties
(Cont’d)If the bad debt provision of accounts receivable is made in accordance with the general model of ECLs, pleasedisclose the information about bad debt provision with reference to the way of disclosure of other receivables:
Applicable √ Not applicableBy ageing
Closing balanceAgeingBook balance
Bad debtprovisionECL rateWithin 1 year889,579,253.401,543,821.200.17%1-2 years0.000.000.00%2-3 years0.000.000.00%Over 3 years3,002,821.173,002,821.17100.00%Total892,582,074.574,546,642.37–
(2) Provision, recovery or reversal of bad debt provision for the period
Unit: RMBChanges in the periodCategory
OpeningbalanceProvision
Recoveryor reversalWrite-offOthers
ClosingbalanceBad debt provision of accounts receivables3,195,631.291,434,777.9383,766.854,546,642.37Total3,195,631.291,434,777.9383,766.854,546,642.37
(3) Top five other receivables according to closing balance of debtors
The total amount of the Company’s top five accounts receivable based on closing balance of debtors for theperiod was RMB892,002,690.31, which accounted for 99.79% of the closing balance of the total accountsreceivable. The closing balance of corresponding bad debt provision amounted to RMB4,422,600.00.
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
2. Other receivables
Unit: RMBItemClosing balanceOpening balanceDividend receivables600,000,000.00200,000,000.00Other receivables11,978,118,025.0810,437,425,503.02Total12,578,118,025.0810,637,425,503.02
(1) Dividends receivable
1) Classification of dividends receivable
Unit: RMBItem (or investee)Closing balanceOpening balanceShandong Chenming Group Finance Co., Ltd.200,000,000.00Zhanjiang Chenming Pulp & Paper Co., Ltd.600,000,000.00Total600,000,000.00200,000,000.00
(2) Other receivables
1) Other payables by nature
Unit: RMBNature
Closing bookbalance
Open book
balanceOpen credit11,932,731,117.5210,328,819,312.56Guarantee deposit7,312,361.03Insurance premium116,093.50287,426.35Reserve and borrowings7,077,935.616,869,635.57Others38,192,878.4594,136,767.51Total11,978,118,025.0810,437,425,503.02
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
2. Other receivables (Cont
’d)
(2) Other receivables (Cont
’d)
2) Particulars of bad debt provision
Unit: RMBPhase 1Phase 2Phase 3Bad debt provision
ECLs for thenext 12 months
ECLs over theentire life (notcredit-impaired)
ECLs over theentire life (credit-
impaired)TotalBalance as at 1 January 202190,410,049.5965,082,456.61155,492,506.20Balance as at 1 January 2021 during the period––––Provision for the period11,024,963.20786,420.8211,811,384.02Reversal for the period25,120,610.6117,097,798.6842,218,409.29Balance as at 30 June 202176,314,402.1848,771,078.75125,085,480.93Changes in carrying book balances with significant changes in loss provision for the period Applicable √ Not applicableDisclosed by ageing
Unit: RMBAgeingClosing balanceWithin 1 year (including 1 year)11,701,151,788.881-2 years253,336,897.722-3 years62,380,662.41Over 3 years86,334,157.00Total12,103,203,506.01Less: Bad debt provision125,085,480.93Total11,978,118,025.08
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
2. Other receivables (Cont
’d)
(2) Other receivables (Cont
’d)
3) Provision, recovery or reversal of bad debt provision for the period
Provision of bad debt provision for the period:
Unit: RMBChanges in the periodCategory
OpeningbalanceProvision
Recoveryor reversalWrite-offOthers
ClosingbalanceBad debt provision for otherreceivables155,492,506.2011,811,384.0242,218,409.29125,085,480.93Total155,492,506.2011,811,384.0242,218,409.29125,085,480.93
4) Top five other receivables according to closing balance of debtors
Unit: RMB
Name of entityNatureClosing balanceMaturity
Percentage toclosing balanceof otherreceivables
Closing balanceof bad debtprovisionShanghai Chenming Financial Leasing Co., Ltd.Open credit2,608,700,000.00Within 1 year21.55%0.00Zhanjiang Chenming Pulp & Paper Co., Ltd.Open credit1,903,166,425.75Within 1 year15.72%0.00Shandong Chenming Financial Leasing Co., Ltd.Open credit1,327,343,000.00Within 1 year10.97%0.00Shouguang Meilun Paper Co., Ltd.Open credit1,326,759,208.16Within 1 year10.96%0.00Shanghai Hongtai Real Estate Co., Ltd.Open credit1,097,071,450.89Within 1 year9.06%0.00Total–8,263,040,084.80–68.27%0.00
3. Long-term equity investments
Unit: RMBClosing balanceOpening balanceItemBook balance
Impairment
provisionCarrying amountBook balance
Impairment
provisionCarrying amountInvestment in subsidiaries22,757,302,649.9022,757,302,649.9021,845,592,649.9021,845,592,649.90Investment in associates and joint ventures347,421,950.815,994,545.96341,427,404.85352,509,931.985,994,545.96346,515,386.02Total23,104,724,600.715,994,545.9623,098,730,054.7522,198,102,581.885,994,545.9622,192,108,035.92
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
3. Long-term equity investments (Cont
’d)
(1) Investment in subsidiaries
Unit: RMBChange for the periodInvestee
Opening balance(Carrying amount)
Additionalcontribution
Withdrawncontribution
Impairment
provisionOthers
Closing balance(Carrying amount)
Closing balanceof impairmentprovisionChenming Paper Korea Co., Ltd.6,143,400.006,143,400.00Chenming GmbH4,083,235.004,083,235.00Hailaer Chenming Paper Co., Ltd.12,000,000.0012,000,000.00Huanggang Chenming Pulp & Paper Co., Ltd.2,300,000,000.002,000,000.002,302,000,000.00Huanggang Chenming Arboriculture Development Co., Ltd.70,000,000.0070,000,000.00Jinan Chenming Investment Management Co., Ltd.100,000,000.00100,000,000.00Jiangxi Chenming Paper Co., Ltd.822,867,646.40822,867,646.40Shandong Chenming Power Supply Holdings Co., Ltd.157,810,117.43157,810,117.43Wuhan Chenming Hanyang Paper Holdings Co., Ltd.264,493,210.21264,493,210.21Shandong Grand View Hotel Co., Ltd.80,500,000.0080,500,000.00Zhanjiang Chenming Pulp & Paper Co., Ltd.5,082,500,000.0027,500,000.005,110,000,000.00Shouguang Chenming Modern Logistic Co., Ltd.10,000,000.0010,000,000.00Shouguang Chenming Art Paper Co., Ltd.113,616,063.80113,616,063.80Shouguang Meilun Paper Co., Ltd.4,449,441,979.314,449,441,979.31Shouguang Shun Da Customs Declaration Co, Ltd.1,500,000.001,500,000.00Shandong Chenming Paper Sales Co., Ltd.762,641,208.20762,641,208.20Shouguang Chenming Import and Export Trade Co., Ltd.250,000,000.00250,000,000.00Shouguang Chenming Papermaking Machine Co., Ltd.2,000,000.002,000,000.00Shouguang Chenming Hongxin Packaging Co., Ltd.3,730,000.003,730,000.00Shandong Chenming Group Finance Co., Ltd.4,000,000,000.004,000,000,000.00Chenming Arboriculture Co., Ltd.45,000,000.0045,000,000.00Shanghai Chenming Industrial Co., Ltd.3,000,000,000.003,000,000,000.00Chenming (HK) Limited118,067,989.55118,067,989.55Chenming Paper USA Co., Ltd.6,407,800.006,407,800.00Shandong Chenming Coated Paper Sales Co. Ltd.20,000,000.0020,000,000.00Weifang Chenming Growth Driver Replacement Equity Investment Fund Partnership (Limited Partnership)162,790,000.00627,210,000.00790,000,000.00Weifang Chendu Equity Investment Partnership (Limited Partnership)255,000,000.00255,000,000.00Total21,845,592,649.90911,710,000.0022,757,302,649.90
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
3. Long-term equity investments (Cont
’d)
(2) Investment in associates and joint ventures
Unit: RMBChange for the period
Investee
Openingbalance(Carryingamount)Additionalcontribution
Withdrawncontribution
Investmentgain or lossrecognisedunder equitymethod
Adjustment
of othercomprehensive
income
Otherchangein equityinterest
Distribution
of cashdividendor profitdeclared
Impairment
provisionOthers
Closingbalance(Carryingamount)
Closingbalance ofimpairment
provisionI. AssociatesJiangxi Jiangbao Media Colour Printing Co., Ltd.Zhuhai Dechen New ThirdBoard Equity InvestmentFund Company (Limited Partnership)52,401,659.62-6,105,696.0846,295,963.54Ningbo Kaichen HuameiEquity InvestmentFund Partnership (Limited Partnership)198,549,926.27343,561.57198,893,487.84Chenming (Qingdao) Asset Management Co., Ltd.8,674,551.1822,349.058,696,900.23Subtotal259,626,137.07-5,739,785.46253,886,351.61II. Joint venturesShouguang Chenming HuisenNew-style Construction Materials Co., Ltd.4,945,742.031,242,575.51500,000.005,688,317.54Weifang Sime Darby West Port Co., Ltd.81,943,506.92-90,771.2281,852,735.70Subtotal86,889,248.951,151,804.29500,000.0087,541,053.24Total346,515,386.02-4,587,981.17500,000.00341,427,404.85
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
4. Revenue and operating costs
Unit: RMBAmount for the periodAmount for the prior periodItemRevenueCostsRevenueCostsPrincipal activities4,032,722,509.282,973,878,062.693,138,096,400.012,554,698,324.61Other activities650,730,956.36537,196,013.25709,097,257.52593,307,602.81Total4,683,453,465.643,511,074,075.943,847,193,657.533,148,005,927.42Information related to revenue:
Unit: RMBCategory of contract
Machine-madepaper segmentOthersTotalType of goodsIncluding: Machine made paper3,894,032,851.163,894,032,851.16Material sales409,810,971.82409,810,971.82Leasing18,846,037.3218,846,037.32Others138,689,658.12222,073,947.22360,763,605.34Total4,032,722,509.28650,730,956.364,683,453,465.64
5. Investment gains
Unit: RMBItem
Amounts during
the period
Amounts duringthe prior periodIncome from long-term equity investments accounted for using the cost method2,669,260,273.97681,230,000.00Income from long-term equity investments accounted for using the equity method-4,587,981.17-1,660,968.93Investment gain on disposal of long-term equity investments3,100,000.00Investment gain from other non-current financial assets during the holding period15,000,000.00Total2,679,672,292.80682,669,031.07
SHANDONG CHENMING PAPER HOLDINGS LIMITED
FINANCIAL REPORT 2021
XIIX. Supplementary information
1. Breakdown of extraordinary gains or losses for the current period
√ Applicable Not applicable
Unit: RMBItemAmountRemarkProfit or loss from disposal of non-current assets (including write-off of
asset impairment provision)48,674,753.15Government grants (except for the government grants closely related tothe normal operation of the Company and granted constantly at a fixedamount or quantity in accordance with a certain standard based on statepolicies) accounted for in profit or loss for the current period125,144,721.79Except for effective hedging business conducted in the ordinary courseof business of the Company, gain or loss arising from the change infair value of financial assets held for trading, derivative financial assets,financial liabilities held for trading and derivative financial liabilities,as well as investment gains from disposal of financial assets held fortrading, derivative financial assets, financial liabilities held for trading,derivative financial liabilities and other debt investments-89,980,570.69Consumable biological assets subsequently measured at fair value-9,139,121.20Other gain or loss items within the definition of extraordinary gain or loss15,264,970.71Less: Effect of income tax30,517,886.75Effect of minority interest (after tax)3,069,630.17Total56,377,236.84–The Company defines non-recurring profit and loss according to the definition in Explanatory Announcement No.1 on Information Disclosure of Companies Offering Their Securities to the Public – Non-recurring Profit and Lossand classifies non-recurring profit and loss listed in Explanatory Announcement No. 1 on Information Disclosure ofCompanies Offering Their Securities to the Public – Non-recurring Profit and Loss as nonrecurring profit and loss, pleaseexplain the reason. Applicable √ Not applicable
2. Return on net assets and earnings per share
Earnings per shareProfit for the reporting period
Rate of returnon net assetson weightedaverage basis
Basic
(RMB per share)
Diluted(RMB per share)Net profit attributable to ordinary shareholders of the Company8.94%0.6040.604Net profit after extraordinary gains or losses attributable toordinary shareholders of the Company8.65%0.5850.585When calculating financial indicators such as earnings per share and rate of return on weighted average net assets, theinterest on perpetual bonds of RMB44,481,369.86 from 1 January 2021 to 30 June 2021 and the dividends issued anddeclared by preference shares of RMB207,065,968.66 in 2021 are deducted.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDFINANCIAL REPORT 2021
XIIX. Supplementary information (Cont’d)
3. Differences in accounting data under domestic and overseas accounting standards
(1) Differences between the net profit and net assets disclosed in accordance with international accounting
standards and China accounting standards in the financial report Applicable √ Not applicable
(2) Differences between the net profit and net assets disclosed in accordance with overseas accounting
standards and China accounting standards in the financial report Applicable √ Not applicable