2018 Interim Report Summary of Shandong Chenming Paper Holdings Limited Stockcode：000488, 200488 Stock abbreviation: Chenming Paper, Chenming B Announcement No.: 2018-120 2018 Interim Report Summary of
Shandong Chenming Paper Holdings Limited
I. IMPORTANT NOTICE
This interim report summary is extracted from the text of the interim report. For the full understanding of the operating results, financial position and plan for further development, investors should carefully read the text of the interim report published on the media as designated by the CSRC and the website of The Stock Exchange of Hong Kong Limited.
Non-standardauditor’s opinion
□ Applicable√ Not applicable
Plans for profit distribution on ordinary shares or conversion of capital reserves into share capital proposed to the Board during the reporting period
□ Applicable√ Not applicable
The Company does not propose distribution of cash dividends or bonus shares, and there will be no increase of share capital from reserves.
Plans for profit distribution on preference shares for the reporting period approved by the Board
√ Applicable□ Not applicable
||||||||
|-|-|-|-|-|-|-|
||||Whether it is in compliance|||Whether it|
|||Distributed||Way of|Whether it was an||
|Date of|Dividend||with the conditions and the|||participates in|
|||amount||dividend|accumulated||
|Distribution|Ratio||relevant procedures of|||distribution of|
|||(tax inclusive)||payment|dividend||
||||distribution|||remaining profit|
|19 March 2018|4.36%|98,100,000.00|Yes|Cash|No|Yes|

 II. BASIC INFORMATION ABOUT THE COMPANY
1. Company profile
|||||
|-|-|-|-|
|Stock abbreviation|晨鸣纸业, 晨鸣B|Stock code|000488, 200488|
|Stock abbreviation|晨鸣优01, 晨鸣优02 and 晨鸣优03|Stock code|140003, 140004, 140005|
|Stock exchanges on which|Shenzhen Stock Exchange|||
|the shares are listed||||
|Stock abbreviation|Chenming Paper|Stock code|01812|
|Stock exchanges on which|The Stock Exchange of Hong Kong Limited|||
|the shares are listed||||
|Legal name in Chinese of|山东晨鸣纸业集团股份有限公司|||
|the Company||||
|Legal short name in Chinese||||
||晨鸣纸业|||
|of the Company (if any)||||
|Legal name in English of||||
||SHANDONG CHENMING PAPER HOLDINGS LIMITED|||
|the Company (if any)||||
|Legal short name in English||||
||SCPH|||
|of the Company (if any)||||
|Legal representative of the|Chen Hongguo|||
|Company||||

2. Major financial data and financial indicators
Retrospective adjustment to or restatement of the accounting data for prior years by the Company
□ Yes√ No
|||||
|-|-|-|-|
||||Increase/decrease for the|
|||The corresponding||
||||reporting period as compared|
||The reporting period|period of the prior||
||||to the corresponding period of|
|||year||
||||the prior year|
|Revenue (RMB)|15,551,334,039.89|13,749,235,007.24|13.11%|
|Net profit attributable to shareholders of|1,784,631,025.31|1,745,514,838.23||
||||2.24%|
|the Company (RMB)||||
|Net profit after extraordinary gains or||||
||1,537,896,765.44|1,623,294,558.21|-5.26%|
|losses attributable to shareholders of the||||

2018 Interim Report Summary of Shandong Chenming Paper Holdings Limited
|||||
|-|-|-|-|
|Company (RMB)||||
|Net cash flows from operating activities|4,745,037,920.91|-4,112,941,768.39||
||||215.37%|
|(RMB)||||
|Basic earnings per share (RMB per share)|0.36|0.50|-28.00%|
|Diluted earnings per share (RMB per|0.36|0.50||
||||-28.00%|
|share)||||
|Rate of return on net assets on weighted||||
||5.77%|7.24%|-1.47%|
|average basis||||
||||Increase/decrease for the|
||As at the end of the reporting|As at the end of the|reporting period as compared|
||period|prior year|to the corresponding period of|
||||the prior year|
|Total assets (RMB)|107,076,479,252.92|105,625,096,076.92|1.37%|
|Net assets attributable to shareholders of|27,677,164,106.02|27,778,529,074.90||
||||-0.36%|
|the Company (RMB)||||

Explanation:
① Net profit attributable to shareholders of the Company does not exclude the effect of interest of perpetual bonds and the dividends of preference shares paid and declared to be paid. When calculating financial indicators such as earnings per share and the rate of return on net assets on weighted average basis, the interest for perpetual bonds from 1 January 2018 to 30 June 2018 of RMB172,143,397.26 and the dividend on preference shares paid and declared to be paid in 2018 of RMB562,816,006.80 are deducted.
② Pursuant to the profit distribution plan of the Company for 2017 approved at the 2017 annual general meeting, based on the total ordinary share capital of 1,936,405,467 shares as at the end of 2017, a cash dividend of RMB6 (tax inclusive) per 10 shares was distributed to ordinary shareholders and a capitalisation issue to ordinary shareholders was made out of the capital reserves of 5 shares for every 10 shares held. The share capital of the Company increased by 968,202,733 shares. Corresponding adjustments were also made to the earnings per share for the same period last year.
3. Total number of shareholders and shareholdings
Unit: share
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||111,039, of which 91,323 were holders of A shares,||||Total number of shareholders of preference shares|||||
|Total number of shareholders of ordinary||||||||||
||19,346 were holders of B shares and 370 were holders||||with restored voting right as at the end of the|||0||
|shares as at the end of the reporting period||||||||||
||of H shares||||reporting period (if any)|||||
|Shareholdings of top ten shareholders||||||||||
||||Percentage of|Number of||Number of restricted|Share pledged or locked-up|||
|Name of shareholders||Nature of shareholders||||||||
||||shareholding|shares held||shares held|Status of shares||Number|
|CHENMING HOLDINGS COMPANY LIMITED||State-owned legalperson|15.13%|293,003,657||0||||
||||||||Pledged||225,717,161|
|HKSCC NOMINEES LIMITED||Overseas legal person|12.84%|248,678,750||0||||
|CHENMING HOLDINGS (HONG KONG) LIMITED||Overseas legal person|12.54%|242,754,375||0||||
|CENTRAL HUIJIN ASSET MANAGEMENT LTD.||State-owned legalperson|2.07%|40,137,900||0||||
|CHINA UNIVERSAL FUND - CHINACONSTRUCTION BANK - CHINA LIFE INSURANCE- CHINA LIFE INSURANCE’S EQUITY PORTFOLIOENTRUSTED TO CHINA UNIVERSAL FUND||Others|0.47%|9,134,240||0||||
|VANGUARD EMERGING MARKETS STOCK INDEXFUND||Overseas legal person|0.44%|8,608,238||0||||
|JIN Xing||Domestic natureperson|0.44%|8,510,117||0||||
|AGRICULTURAL BANK OF CHINA LIMITED –ESSENCE COMPARATIVE ADVANTAGE FLEXIBLEALLOCATION OF HYBRID SECURITIESINVESTMENT FUND||Others|0.39%|7,646,407||0||||
|INDUSTRIAL AND COMMERCIAL BANK OF CHINA- CHINA UNIVERSAL FOCUSED GROWTH FUND||Others|0.39%|7,500,009||0||||
|CHINA CONSTRUCTION BANK CORPORATION -CHINA UNIVERSAL ENVIRONMENT PROTECTIONINDUSTRY FUND||Others|0.36%|7,000,026||0||||
|||A shareholder, Chenming Holdings (Hong Kong) Limited, which is an overseas legal person, is a wholly-owned||||||||
|Connected relationship or connected party relationship||subsidiary of a shareholder, Chenming Holdings Company Limited, which is a state-owned legal person. Hence, they are||||||||
|||persons acting in concert under Administration of Disclosure of Information on the Change of Shareholdings in Listed||||||||
|among the above shareholders||||||||||
|||Companies Procedures. Save for the above, it is not aware that any other shareholders of tradable shares are persons acting||||||||
|||in concert and is also not aware that any other shareholders of tradable shares are connected with each other.||||||||

4. Change of controlling shareholders or beneficial controllers
The change of controlling shareholders during the reporting period
□ Applicable√ Not applicable
2018 Interim Report Summary of Shandong Chenming Paper Holdings Limited There was no change of controlling shareholders of the Company during the reporting period.
Change of beneficial owner during the reporting period
□ Applicable√ Not applicable
There was no change of beneficial owner of the Company during the reporting period.
5. Total number of shareholders of preference shares and the top ten holders of preference shares
√ Applicable□ Not applicable
Unit: share
||||||||
|-|-|-|-|-|-|-|
|Total number of shareholders of preference|7||||||
|shares as at the end of the reporting period|||||||
|Top ten holders of preference shares|||||||
||||Preference|Number of preference|Share pledged or locked-up||
|Name of shareholders||Nature of shareholders|||||
||||shareholding|shares held|Status of shares|Number|
|BEIJING YIBEN ZHONGXING INVESTMENTMANAGEMENT CO., LTD.||Domestic non-state-owned legal person|27.78%|12,500,000|||
||||||Pledged|12,500,000|
|BANK OF COMMUNICATIONS INTERNATIONALTRUST CO., LTD. - HUILI NO.167 SINGLE CAPITALTRUST||Others|22.44%|10,100,000|||
|BANK OF COMMUNICATIONS INTERNATIONALTRUST CO., LTD. - HUILI NO.136 SINGLE CAPITALTRUST||Others|14.22%|6,400,000|||
|QILU BANK CO., LTD. - QILU BANK QUANXINWEALTH MANAGEMENT PRODUCT SERIES||Others|13.33%|6,000,000|||
|HENGFENG BANK CO., LTD.||Domestic non-state-owned legal person|11.11%|5,000,000|||
|SHANGHAI STATE-OWNED ASSETS OPERATION CO.,LTD.||Domestic non-state-owned legal person|6.67%|3,000,000|||
|NCF - MINSHENG BANK - CHINA FORTUNEINTERNATIONAL TRUST – CHINA FORTUNETRUST(cid:31)MIN XIN NO. 11 SINGLE CAPITAL TRUST||Others|4.44%|2,000,000|||
|||The aforesaid holders of preference shares, “BANK OF COMMUNICATIONS INTERNATIONAL TRUST CO., LTD.|||||
|Connected relationship or connected party relationship||- HUILI NO.167 SINGLE CAPITAL TRUST” and “BANK OF COMMUNICATIONS INTERNATIONAL TRUST|||||
|||CO., LTD. - HUILI NO.136 SINGLE CAPITAL TRUST”, are persons acting in concert. Save for the above, it is not|||||
|among the above shareholders|||||||
|||aware that whether there is any connected relationship or connected party relationship among the remaining holders of|||||
|||preference shares, and between the top ten holders of preference shares and the top ten holders of ordinary shares.|||||

 6. Corporate Bonds
Are there any corporate bonds offered to the public and listed on stock exchanges which do not become due as at the date of approval of interim report or overdue but not fully settled?
Yes
(1) Basic information on corporate bonds
|||||||
|-|-|-|-|-|-|
|||||Outstanding||
||Bond||||Interest|
|Name of bond||Bond code|Maturity date|amount of the||
||abbreviation|||bonds|rate|
|||||(RMB’0,000)||
|The public issuance of the corporate bonds of||||||
||17 Chenming|||||
|Shandong Chenming Paper Holdings Limited||112570|21 August 2022|120,000|6.50%|
||Bond 01|||||
|to qualified investors in 2017 (tranche I)||||||
|The public issuance of the corporate bonds of||||||
||18 Chenming|||||
|Shandong Chenming Paper Holdings Limited||112641||90,000|7.28%|
||Bond 01||29 March 2023|||
|to qualified investors in 2018 (tranche I)||||||

(2) Major financial indicators of the Company as at the end of the reporting period
|||||
|-|-|-|-|
||||Increase/decrease as at the end|
||As at the end of the reporting||of the reporting period as|
|Item||As at the end of the prior year||
||period||compared to the end of the prior|
||||year|
|Current ratio|86.70%|86.32%|0.38%|
|Gearing ratio|72.95%|71.34%|1.61%|
|Quick ratio|75.88%|75.80%|0.08%|
||||Increase/decrease of the|
|||The corresponding period of the|reporting period as compared to|
||The reporting period|||
|||prior year|corresponding period of the|
||||prior year|

2018 Interim Report Summary of Shandong Chenming Paper Holdings Limited
|||||
|-|-|-|-|
|EBITDA interest coverage ratio|2.98|4.04|-26.24%|
|Loans payment ratio|100.00%|100.00%|0.00%|
|Interest payment ratio|100.00%|100.00%|0.00%|

 III. Discussion and Analysis of Operations
1. Operation during the reporting period
Whether the Company needs to comply with the disclosure requirements of specific industries
No
During the reporting period, the Company established and implemented new management concept by adhering to the main theme of “achieving growth amid stability” and committed itself to “team building, management enhancement, outstanding business performance and good results”. It has completed various works on maintaining stable operation, promoting growth, adjusting structure, preventing risk exposures and formulating favourable policies for employees. In the first half of 2018, the Company completed the production of machine-made paper of 2.4051 million tonnes with sales of 2.2738 million tonnes and achieved revenue of RMB15,551 million, a year-on-year increase of13.11%. The Company recorded operating costs of RMB10,260 million, a year-on-year increase of11.87%. Total profit and net profit attributable to equity holders of the Company were RMB2,217 million and RMB1,785 million respectively, up by6.65% and2.24% from the prior year. TheCompany’s total assets amounted to RMB107,076 million. The Company experienced stable development across businesses with ever improving management systems, which were shown in the following aspects:
(I) Sales management
Facing the complex and ever-changing market conditions, the sales system persistently executed the decision and planning made by the management of the Company, abided by the working theme of “solid foundation, new talents, guaranteed implementation and strict evaluation” and broke new grounds in terms of price elevation, market construction and new product development. Through increased business knowledge training and outward bound training, optimization and adjustment to the appraisal and incentive schemes and market-based personnel integration, the Company enhanced team building and elevated team cohesiveness and strength. By way of developing direct-sale customers, perfecting the channel building and holding annual customer signing conferences, the Company steadily enhanced market construction. The Company enhanced management over accounts receivable, heightened prepayment operations, standardised its customer credit management and improved its prevention against market risks.
(II) Product management
The Company plugged up management loopholes by improving the safety management system, enhancing safety education training, identifying potential hazards and elevating process safety control; and ensured up-to-standard emission by optimizing operation technique, enhancing the identification of potential environmental hazards, real-time supervision of pollutant emission and clarifying on the control targets and standards. The machines were under stable and efficient operation during the year through strengthened management, control and appraisal. The Company also conducted production capacity enhancement in its own pulp production, adjusted product structure, focused on the development of products with high efficiency, optimised techniques and promoted the application of new technologies and raw materials to improve efficiency.
(III) Finance and capital management
The Company constructed a financial business system with a more reasonable structure through active business expansion and strict risk control. The Company ensured efficient liquidity of theCompany’s capital through enhancing the planned management of revenue and expenditure as well as dispatching and compiled analysis on the capital; increased the application of new types of direct financing instruments, which boosted bank financing and lowered interest cost; maintained normal operation of the Company by way of, among others, offshore financing against domestic guarantee and bill of exchange to conduct foreign exchange financing under low interest rate; promoted the implementation of preferential policies; and stepped up efforts in cooperation with banks by entering into development financial cooperation agreement with the China Development Bank and a bank-enterprise strategic cooperation framework agreement with Guangdong Nanyue Bank, obtaining additional credit facilities of over RMB40.0 billion.
(IV) Project construction
The phase I of the magnesite mining project of Haiming Mining commenced operation in January 2018, principally engaged in the production of high-purity magnesia. Weifang Sime Darby West Port and the newly constructed port in Huanggang have officially commenced operation, which consistently lowers the logistics and transportation costs of raw materials and finished products. The 400,000-tonne chemical pulp project and 510,000 tonne high-end culture paper project of Shouguang Meilun and the 300,000 tonne wood pulp project of Huanggang Chenming progressed smoothly according to the schedule, which is scheduled to commence operation before the end of 2018. Viscose fibre and ancillary production facilities project of Huanggang Chenming and the cogeneration project are still in nascent stages. The commencement of operation and implementation of the above projects will play a very important role in the transformation and upgrading during the structural adjustment of the Company in elevating the vertical extension capacity of the Company, promoting sustainable development and achieving the strategic objectives of the Company.
(V) Corporate management
The Company actively carried out process and information construction, enhanced working efficiency and promoted management reform and system upgrade. The Company consistently strengthened its supervision and inspection as well as system improvement, enhanced the management system and hierarchical management and further standardized internal management. Multiple sessions of special training were organized to learn new concepts and new methods, elevating the management quality and business skills of the staff. The Company made active efforts to improve its performance appraisal, remuneration incentive and the promotion systems, introduced outstanding talents and inspired the enthusiasm and creativeness of the staff.
Year-on-year changes in major financial information
Unit: RMB
||||||
|-|-|-|-|-|
||During the reporting|During the corresponding|||
||||Increase/decrease|Reason for the change|
||period|period of the prior year|||
||15,551,334,039.89|13,749,235,007.24||Mainly due to the year-on-year increase in the prices|
|Revenue|||13.11%||
|||||of machine-made paper of the Company.|
|Operating costs|10,259,884,918.86|9,171,066,988.49|11.87%||
|Selling and distribution expenses|605,463,325.71|641,498,275.35|-5.62%||
|Administrative expenses|972,856,522.65|856,354,999.17|13.60%||
|Finance expenses|1,498,828,444.69|1,055,396,506.36|42.02%|Mainly due to the year-on-year increase in the|
|||||financing costs of the Company.|

2018 Interim Report Summary of Shandong Chenming Paper Holdings Limited
||||||
|-|-|-|-|-|
||434,202,112.50|331,253,327.08||Mainly due to the year-on-year increase in the|
|Income tax expenses|||31.08%|provision for income tax expenses as some|
|||||companies turned around from losses to profits.|
|Investments in research and development|478,014,854.10|446,835,957.44|6.98%||
|Net cash flows from operating activities|4,745,037,920.91|-4,112,941,768.39|215.37%|Mainly due to the net returns of the financial leasing|
|||||business of the Company.|
|Net cash flows from investing activities|-470,806,697.24|-363,428,930.29|-29.55%|Mainly due to the year-on-year increase in|
|||||investment in construction in progress.|
|Net cash flows from financing activities|-3,577,622,905.43|5,025,392,453.07|-171.19%|Mainly due to the increase in restricted bank|
|||||deposits.|
|Net increase in cash and cash equivalents|726,576,915.27|441,630,376.91|64.52%||

2. Events relating to the financial report
(1) Reason for changes in accounting policies, accounting estimates and accounting methods as compared to the financial report for the prior accounting period
□ Applicable√ Not applicable
During the reporting period, no changes were made to accounting policies, accounting estimates and accounting methods.
(2) Reason for retrospective restatement to correct major accounting errors during the reporting period□ Applicable√ Not applicable
During the reporting period, no major accounting errors needed to be corrected through retrospective restatement.
(3) Reason for changes in scope of the consolidated financial statements as compared to the financial report for the prior accounting period
√ Applicable□ Not applicable
① Newly established subsidiary
Unit:RMB’0,000
||||||
|-|-|-|-|-|
||Date of|Operating scope|Registered|Percentage of|
|Name of companies|||||
||establishment||capital|shareholding|
|Beijing ChenmingFinancial LeasingCo., Ltd.|17 May 2018|Financial leasing business; operating leasing business;purchase of leased property in domestic and foreign market;disposal of and maintenance of residual value of leasedproperty; leasing transaction consultation; engagement incommercial factoring business related to its principaloperations. (For projects subject to approval as required by thelaw, their operating activities can only commence uponapproval by the relevant authorities)|100,000.00|100%|

② Disposal of subsidiary
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||||||Basis for|Difference between disposal|
|||Shareholding|Method||||
|Name of|Consideration of|||Time of loss|determination|consideration and share of net assets of|
|||of equity|of equity||||
|subsidiary|equity disposal|||of control|of time of|the relevant subsidiary as per the|
|||disposal|disposal||||
||||||loss of control|consolidated financial statements|
|Xuchang|||||Equity||
|Chenming Paper|30,000,000.00|30%|Transfer|January 2018|Transfer|13,717,571.88|
|Co. Ltd.|||||Agreement||

The Board of Directors of Shandong Chenming Paper Holdings Limited 27 August 2018