SHANDONG CHENMING PAPER HOLDINGS
LIMITED
2014 First Quarter Report
April 2014
I Important Notice
The board of directors (the “Board”), the supervisory committee (the “Supervisory Committee”) and the directors (the “Directors”), supervisors (the “Supervisors”) and senior management (the “Senior Management”) of the Company hereby warrant that the contents of the quarter report (“Quarter Report”) are true, accurate and complete and there are no false representations, misleading statements or material omissions, and jointly and severally accept liability.
All Directors were present at the Board meeting to consider and approve this quarterly report.
Chen Hongguo, head of the Company, Li Dong, head in charge of accounting and Liu Jun, head of the accounting department (Accounting Officer), declare that they warrant the truthfulness, accuracy and completeness of the financial statements in the Quarter Report.
II Major financial data and change of shareholders
1. Major accounting data and financial indicators
Retrospective adjustment to or restatement of the accounting data for prior years by the Company due to change of accounting policies and correction of accounting errors
□ Yes √No
|||||
|-|-|-|-|
||This reportingperiod|Correspondingperiod of prior year|Increase/decreasecompared to thecorrespondingperiod of theprior year|
|Revenue (RMB)|4,078,069,314.47|4,923,810,623.61|-17.18%|
|Net profit attributableto shareholders of theCompany (RMB)|81,273,928.14|71,411,642.71|13.81%|
|Net profit afterextraordinary gains orlosses attributable toshareholders of theCompany (RMB)|-48,792,027.97|14,781,161.08|-430.10%|
|Net cash flows fromoperating activities(RMB)|631,844,125.85|280,787,686.38|125.03%|
|Basic earnings pershare (RMB pershare)|0.04|0.03|33.33%|
|Diluted earnings pershare (RMB pershare)|0.04|0.03|33.33%|
|Rate of return on netassets on weightedaverage basis (%)|0.58%|0.52%|0.06%|
||As at the end of thereporting period|As at the endof prior year|Increase/decreasecompared to thecorrespondingperiod of theprior year|
|Total assets (RMB)|48,284,558,080.95|47,521,883,569.18|1.60%|
|Net assets attributableto shareholders of theCompany (RMB)|14,067,211,811.15|14,039,888,226.11|0.19%|

Items and amounts of extraordinary gains or losses
√ Applicable □Not applicable
Unit: RMB
||||
|-|-|-|
|Item|Am ounts for theperiod from thebeginning of theyear to the end ofthe reportingperiod|Note|
|Gain or loss from disposal ofnon-current assets (includingwrite-off of provision for assetsimpairment)|63,617,955.54||
|Government grants (except for thegovernment grants closely related tothe normal operation of the companyand granted constantly at a fixedamount or quantity in accordancewith a certain standard based on statepolicies) accounted for in profit orloss for the current period|64,362,305.48||
|Non-operating gains and losses otherthan the above items|40,121,304.22||
|Less: Effect of income tax|31,426,178.16||
|Effect of minority interests (after tax)|6,609,430.97||
|Total|130,065,956.11|—|

 Notes for theCompany‘s extraordinary gain or loss items as defined in the Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the Public No.1 - Extraordinary Gains or Losses and the extraordinary gain or loss items as illustrated in the Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the Public No.1 - Extraordinary Gains or Losses defined as its recurring gain or loss items□ Applicable √Not applicable
2. Total number of shareholders and the shareholding of the top ten
shareholders as at the end of the reporting period
Unit: share
||||||||
|-|-|-|-|-|-|-|
|Total number of shareholders as at the end ofthe reporting period||134,276, of which 104,964 were holders of A shares,28,757 holders of B shares and 555 holders of H shares|||||
|Shareholding of the top ten shareholders|||||||
|Name of shareholders|Nature ofshareholders|Percentageofshareholding|Numberof sharesheld|Number ofrestrictedsharesheld|Share pledgedor locked-up||
||||||Statusofshares|Number|
|HKSCC NOMINEESLIMITED|Overseas legalperson|19.73%|389,814,500|0||0|
|SHOUGUANG CHENMINGHOLDINGS COMPANYLIMITED|State-ownedlegal person|14.83%|293,003,657|0||0|
|ZHONGRONGINTERNATIONAL TRUSTCO., LTD. —HAITONGUMBRELLA BAO NO. 1SECURITIESINVESTMENTASSEMBLED FUNDSTRUST|Others|1.85%|36,620,302|0||0|
|PLATINUM ASIA FUND|Overseas legalperson|1.64%|32,341,052|0||0|
|CAITONG FUND -EVERBRIGHT BANK —CAITONG FUND —YUANMEINO. 2 ASSETSMANAGEMENTPROGRAMME|Others|1.47%|29,056,556|0||0|
|CAITONG FUND—EVERBRIGHT BANK —YUAN MEI NO. 1ASSETS MANAGEMENTPROGRAMME|Others|1.47%|28,948,049|0||0|
|YUNNAN INTERNATIONALTRUST CO., LTD. —YUNNAN TRUSTGROWTH 2013 —NO. 2ASSEMBLED FUNDSTRUST PROGRAMME|Others|0.73%|14,377,397|0||0|
|BBH A/C VANGUARDEMERGING MARKETSSTOCK INDEX FUND|Overseas legalperson|0.61%|12,036,985|0||0|
|BILL & MELINDA GATESFOUNDATION TRUST|Overseas legalperson|0.51%|10,033,077|0||0|
|Jin Xing|Domestic naturalperson|0.41%|8,078,300|0||0|

|||||
|-|-|-|-|
|Shareholding of the top ten shareholders of non-restricted shares||||
|Name of shareholders|Number ofnon-restrictedshares held|Class of shares||
|||Class of shares|Number|
|HKSCC NOMINEES LIMITED|389,814,500|Overseas listedforeign shares|389,814,500|
|SHOUGUANG CHENMINGHOLDINGS COMPANY LIMITED|293,003,657|RMB ordinaryshares|293,003,657|
|ZHONGRONG INTERNATIONALTRUST CO., LTD. —HAITONGUMBRELLA BAO NO. 1 SECURITIESINVESTMENT ASSEMBLED FUNDSTRUST|36,620,302|RMB ordinaryshares|36,620,302|
|PLATINUM ASIA FUND|32,341,052|Domestic listedforeign shares|32,341,052|
|CAITONG FUND - EVERBRIGHTBANK — CAITONG FUND —YUANMEINO. 2 ASSETS MANAGEMENTPROGRAMME|29,056,556|RMB ordinaryshares|29,056,556|
|CAITONG FUND —EVERBRIGHTBANK — YUAN MEI NO. 1 ASSETSMANAGEMENT PROGRAMME|28,948,049|RMB ordinaryshares|28,948,049|
|YUNNAN INTERNATIONAL TRUSTCO., LTD. — YUNNAN TRUSTGROWTH 2013 —NO. 2 ASSEMBLEDFUNDS TRUST PROGRAMME|14,377,397|RMB ordinaryshares|14,377,397|
|BBH A/C VANGUARD EMERGINGMARKETS STOCK INDEX FUND|12,036,985|Domestic listedforeign shares|12,036,985|
|BILL & MELINDA GATESFOUNDATION TRUST|10,033,077|RMB ordinaryshares|10,033,077|
|Jin Xing|8,078,300|RMB ordinaryshares|2,096,600|
|||Domestic listedforeign shares|5,981,700|
|Connected relationship or concert-partyrelationship among the aboveshareholders|Shouguang Chenming Holdings Company Limited, astate-owned legal person shareholder, is not connected with anyof the shareholders in the above. It is not a person acting inconcert under Administration of Disclosure of Information onthe Change of Shareholdings in Listed Companies Procedures.Both Caitong Fund - Everbright Bank - Caitong Fund - YuanMei No. 2 Assets Management Programme and Caitong Fund -Everbright Bank - Yuan Mei No. 1 Assets ManagementProgramme are funds managed by Caitong Fund ManagementCo., Ltd. Save for the above, it is not aware of any othershareholders of tradable shares are persons acting in concertand is also not aware of any other shareholders of tradableshares are connected with each others.|||

Whether an agreed repurchase transaction was entered during the reporting period by the shareholders of the Company
√ Yes □No
On 20 January 2014, Shouguang Chenming Holdings Limited, a shareholder holding more than5% interest of the Company, disposed of 86,600,000 shares through agreed repurchase type securities trading, the number of shares held by the Company before and after the transaction are set out below:
Unit: Share
||||||
|-|-|-|-|-|
||Before transaction||After transaction||
|Name ofshareholders|Number ofshares heldby theCompany|Percentage ofthe totalshare capitalof theCompany|Number ofshares heldby theCompany|Percentage ofthe totalshare capitalof theCompany|
|Shouguang ChenmingHoldings CompanyLimited|206,403,657|10.45%|293,003,657|14.83%|

III Material matters
I. Details and reasons for significant changes of major accounting statement items and financial indicators during the reporting period
(I) Analysis of the assets and liabilities of the Company
Unit: RMB
||||||
|-|-|-|-|-|
|Item|31 March 2014|31 December 2013|Change|Reasonsfor change|
|Construction inprogress|2,962,938,369.71|5,266,031,817.60|-43.73%|(1)|
|Disposal of fixedassets|333,378,731.42|588,181,647.53|-43.32%|(2)|
|Bills payable|198,840,000.00|290,403,790.59|-31.53%|(3)|
|Advance receipts|218,750,535.23|442,432,261.58|-50.56%|(4)|
|Interest payable|268,757,445.94|153,189,860.42|75.44%|(5)|
|Long-term payables|128,000,000.00|60,000,000.00|113.33%|(6)|
|Treasury shares|92,333,379.10|30,954,891.40|198.28%|(7)|

 Explanation of the reasons leading to the major changes:
(1) Construction in progress decreased by43.73% mainly due to the reclassification of the construction in progress into fixed assets upon the completion of JilinChenming’s environment protection relocation project,Meilun’s paper additives project andWuhan’s household paper project.
(2) Disposal of fixed assets decreased by43.32% mainly due to the completion of JilinChenming’s environment protection relocation project and disposal of old plants.
(3) Bills payable decreased by31.53% mainly due to the decrease in acceptance bills issued by the Company for payment of goods.
(4) Advance receipts decreased by50.56% mainly due to the increase in letter of credit issued by the Company for payment of goods and a shorter time for goods delivery.
(5) Interest payable increased by75.44% mainly due to the interest payment on corporate bonds and medium-term notes by the Company.
(6) Long-term payables increased by113.33% mainly due to the increase in borrowings from the Management Committee of Nanchang Economic and Technological Development Zone to Jiangxi Chenming for promotion of the smooth commencement of its phase II project.
(7) Treasury shares increased by198.28% mainly due to the repurchase of H shares by the Company during the first quarter.
(II) Reasons for significant year on year changes of income statement items during the reporting period
Unit: RMB
||||||
|-|-|-|-|-|
|Item|January - March 2014|January - March 2013|Change|Reasonsfor change|
|Loss on impairment ofassets|-9,028,147.99|-5,070,294.78|-78.06%|(1)|
|Investment income|-3,377,138.33|-61,544.44|-5,387.32%|(2)|
|Operating profit|-73,970,004.17|9,797,160.75|-855.01%|(3)|
|Non-operating income|176,033,614.08|75,195,949.69|134.10%|(4)|
|Income tax expenses|21,288,605.27|12,445,693.81|71.05%|(5)|
|Other comprehensiveincome|-3,614,222.32|388,992.69|-1,029.12%|(6)|

 Explanation of the reasons leading to the major changes:
(1) Loss on impairment of assets by78.06% mainly due to fewer bad debts provisions as compared to the corresponding period of the prior year as a result of an increase in the accounts receivable managed by the Company. (2) Investment loss increased by5,387.32% mainly due to the increase in loss on disposal of subsidiaries and investment loss from associates.
(3) Operating profit decreased by855.01% mainly due to the decrease in sales of the Company during Chinese New Year and suspension of production of certain subsidiaries due to annual inspection.
(4) Non-operating income increased by134.10% mainly due to the increase in
net income from disposal of assets.
(5) Income tax expenses increased by71.05% mainly due to the increase in total profit of the Company for the current period.
(6) Other comprehensive income decreased by1,029.12% mainly due to the decrease in foreign currency translation differences arising from RMB depreciation.
(III) Analysis of cash flows during the reporting period
Unit: RMB
|||||
|-|-|-|-|
|Item|Am ounts for theperiod|Am ounts for thecorrespondingperiod ofthe prior year|Change|
|Net cash flows fromoperating activities|631,844,125.85|280,787,686.38|125.03%|
|Net cash flows frominvestment activities|-722,180,627.88|-235,926,556.72|-206.10%|
|Net cash flowsgenerated fromfinancial activities|225,246,123.67|-1,277,205,415.73|117.64%|

 Explanation of the reasons leading to the major changes:
(1) Net cash flows from operating activities increased by125.03% mainly due the increase in proportion of payment for goods by bills and letter of credit and the decrease in cash payment through fully utilize the overseas market to expand financing channels.
(2) Net cash flows from investment activities decreased by206.10% mainly due the increase in external entrusted loans during the year.
(3) Net cash flows from financial activities increased by117.64% mainly due to the settlement of medium-term notes due for repayment during the corresponding period of the prior year.
II. Progress in respect to material matters and analysis of the related effects and solutions
1. Repurchase of H shares
On 27 June 2013, the First Extraordinary Meeting of the Seventh Session of the Board approved the proposal concerning the granting of a general mandate to the Board for repurchase of part of H shares of the Company.
On 21 August 2013, the Company convened the 2013 First extraordinary general meeting, Class Meeting for Holders of Domestic Listed Shares (A shares and B shares) and Class Meeting for Holders of Overseas Listed Shares (H shares), at which proposals concerning the repurchase of H shares of the Company were approved. On the next day, the Company disclosed an announcement in respect of H shares repurchase and capital reduction.
On 10 October 2013, Shandong Province Commerce Department issued a Preliminary Reply to Capital Reduction by Shandong Chenming Paper Holdings Limited (Lu Shang Wu Wai Zi Zi[2013] No. 705), which intended to agree that the Company repurchased not more than 39.127 million issued overseas listed foreign shares (H shares). The number of repurchased shares will be determined by the actual amount of shares repurchased and the registered capital should be reduced accordingly.
The Company commenced the repurchase of H shares since 11 December 2013. As at 31 March 2014, the accumulated number of H shares repurchased by the Company in Hong Kong Stock Exchange was 34,097,500 shares, representing1.7260% of the total share capital of the Company. The highest and lowest repurchase prices wereHK$3.53 per share andHK$3.17 per share, respectively. The total amount paid wasHK$116,044,580. The repurchased shares have not been cancelled yet.
2. Disposal of51% equity interest in Xinli Power by our controlling subsidiary, Chenming Power
On 15 November 2013, the Company convened the third extraordinary meeting of the seventh session of the Board and approved “the resolution on disposal of equity interest in Xinli Power”, which agreed to dispose of51% equity interest in Shandong Chenming Xinli Power Co., Ltd by Shandong Chenming Power Supply Holdings Co., Ltd .On 4 March 2014, Chenming Power Supply entered into an equity transfer contract with Guangdong Dejun Investment Co., Ltd., at a consideration of RMB76.1940 million, to transfer its51% equity interest in Xinli Power to Guangdong Dejun Investment Co., Ltd.. Upon the completion of the above equity transfer, the Company will no longer hold any equity interest in Xinli Power.
Due to the prolonged use of Xinli Power equipment as well as higher operational costs arising from greater investments in environmental protection equipment relating to desulfurisation and denitration, the Company disposed of its equity interest in Xinli Power to increase its cash flow, which allowed the Company to centralise its resources for developing high-end niche products to further improve its results.
For more details, please refer to the related announcements disclosed by the Company on http://www.cninfo.com.cn/ on 16 November 2013 and 5 March 2014, respectively.
III. Undertakings made by the Company and shareholders interested in5% or m ore of the shares of the Company made in the reporting period or subsisting to the reporting period
|||||||
|-|-|-|-|-|-|
|Undertaking|Partyinvolved inundertaking|Details of undertaking|Undertakingdate|Term|Particulars ontheperformance|
|Undertaking onshareholding structurereformation||||||
|Undertaking made inoffering documents orshareholdingalternation documents||||||
|Undertaking made duringasset reconstruction||||||

|||||||
|-|-|-|-|-|-|
|Undertaking|Partyinvolved inundertaking|Details of undertaking|Undertakingdate|Term|Particulars ontheperformance|
|Undertaking made oninitial public offeringor refinancing|ShouguangChenmingHoldingsCompanyLimited, thecontrollingshareholderof theCompany|(1) According to the plan ondefective properties of theCompany, ShouguangChenming HoldingsCompany Limited hasguaranteed and undertakenthat: according to theapplication of the Company,for defective property(ies)owned by the Company andits holding company whichsituated in the administrativearea of Shouguang city,Shouguang ChenmingHoldings will purchase it(them) and have it (them)being transferred to itselfpursuant to the law inaccordance with the result ofthe related asset valuation ifthe Company decides totransfer and dispose of it(them) and there is no othertransferee; (2) before theCompany transfers anddisposes of the defectiveproperties pursuant to thelaw, if the defects cause theCompany to incur anyeconomic losses (includingbut not limited to damages,penalties and relocationcosts), Shouguang ChenmingHoldings will bear sucheconomic losses; (3) duringthe corrective activities takento the defective properties ofbuildings and land ofsubsidiaries of the Companysituated outside the localareas (including theadministrative area ofShouguang city), theeconomic losses such aspenalties or relocation costsimplemented by competentadministrative authoritiesand borne by the subsidiariesarising from defects ofinsufficient title documentsshall be paid pursuant to thelaw by Shouguang ChenmingHoldings after verification.|16 January 2008|During theperiod whenChenmingHoldings wasthe substantialshareholder ofthe Company|Strictlyimplemented|

|||||||
|-|-|-|-|-|-|
|Undertaking|Partyinvolved inundertaking|Details of undertaking|Undertakingdate|Term|Particulars ontheperformance|
||ShouguangChenmingHoldingsCompanyLimited, thecontrollingshareholderof theCompany|(1) Shouguang ChenmingHoldings shall not engage,whether solely, jointly, or byrepresenting itself or anyother persons or companies,and shall not procure itsassociates (as defined in TheListing Rules of Hong KongStock Exchange) to engage,in any business whichcompetes with the businessof the Company and itssubsidiaries (“ChenmingGroup” or “we”) directly orindirectly, in any countryand region which ourbusiness exists (or any partof the world if in any formof electronics business), orin any business that directlyor indirectly competes withChenming Group’s businesswhich we operate from timeto time (including but notlimited to any business inthe form of soleproprietorship, joint venturesor acquisitions, or holdinginterests directly orindirectly in suchenterprises, or by any othermeans); (2) in the event thatShouguang ChenmingHoldings is required by itsbusiness to, whether solely,jointly, or by representingitself or any other persons orcompanies, engage inbusiness which directly orindirectly competes against|22 May 2008|During theperiod whenChenmingHoldings wasthe substantialshareholder ofthe Company|Strictlyimplemented|

|||||||
|-|-|-|-|-|-|
|Undertaking|Partyinvolved inundertaking|Details of undertaking|Undertakingdate|Term|Particulars ontheperformance|
|||Chenming Group’s business,or obtain any businessopportunity which directly orindirectly competes againstChenming Group’s business,it shall endeavour to procurethat Chenming Group shallhave priority to obtain theright to operate suchbusiness or to obtain suchbusiness opportunity; (3) ifShouguang ChenmingHoldings is in breach of theabovementionedundertakings, it shallindemnify us for any losscaused by such breach andthe Company shall have theright to acquire allbusinesses of ShouguangChenming Holdings, whichdirectly or indirectlycompete with the businessesof our Group, at marketprice or cost price(whichever price is lower);(4) Shouguang ChenmingHoldings shall not make useof its position as thecontrolling shareholder (asdefined in The Listing Rulesof Hong Kong StockExchange) of our Group (orjointly or representing otherpersons or companies)jeopardise the legal interestsof Chenming Group and itsshareholders.||||
|Other undertakings madeto minorityshareholders of theCompany||||||
|Does the undertakingperformed timely?|Yes|||||

IV. Estimate of the operating results for January - June 2014
Warning of cumulative net profit for the period from the beginning of the year to the end of the next reporting period being projected to be at a loss or expected to have material changes as compared year on year and its explanation
□ Applicable √Not applicable
V. Registration report on reception of research investigations,
communications and interviews during the reporting period
|||||||
|-|-|-|-|-|-|
|Date ofreception|Place ofreception|Manner ofreception|Class ofPartiesaccommodated|Partiesaccommodated|Main topics ofdiscussion andinformationprovided|
|11 February2014|The Company’sconferenceroom|On-siteresearchinvestigation|Institution|E FundManagementCo., Ltd.|Recentproduction andoperation ofthe Companyanddevelopment ofthe industry|
|27 March 2014|The Company’sconferenceroom|Conference call|Institution|First BeijingInvestmentLimited|Recentproduction andoperation ofthe Companyanddevelopment ofthe industry|
|28 March 2014|The Company’sconferenceroom|On-siteresearchinvestigation|Institution|Taikang AssetManagementCompanyLimited|Recentproduction andoperation ofthe Companyanddevelopment ofthe industry|

IV Financial statements
I. Financial statements
1. Consolidated balance sheet
Prepared by: Shandong Chenming Paper Holdings Limited
Unit: RMB
||||
|-|-|-|
|Item|Closing|Opening|
|CURRENT ASSETS:|||
|Monetary funds|2,664,566,533.78|2,547,729,794.24|
|Balances with clearing companies|||
|Loans to banks and other financialinstitutions|||
|Held-for-trading financial assets|||
|Bills receivable|2,453,509,542.54|2,870,443,681.49|
|Accounts receivable|2,741,686,700.08|3,102,643,083.54|
|Prepayments|1,292,315,291.18|1,589,021,331.24|
|Insurance premium receivable|||
|Receivables from reinsurers|||
|Reinsurance contract reserves|||
|Interest receivable|||
|Dividend receivable|||
|Other receivables|1,444,876,991.18|1,331,900,749.84|
|Financial assets purchased underagreements to resell|||
|Inventories|4,241,449,446.65|3,725,809,877.25|
|Non-current assets due within one|||
|Other current assets|1,811,848,085.50|1,740,520,586.37|
|Total current assets|16,650,252,590.91|16,908,069,103.97|
|NON-CURRENT ASSETS:|||
|Entrusted loans and advancesto customers|||
|Available-for-sale financial assets|||
|Held-to-maturity investments|500,000,000.00||
|Long-term receivables|||
|Long-term equity investments|114,603,949.53|115,477,214.86|
|Investment properties|19,038,879.94|19,473,443.95|
|Fixed assets|24,264,099,675.82|21,181,647,488.39|
|Construction in progress|2,962,938,369.71|5,266,031,817.60|
|Construction materials|46,782,525.87|63,968,067.62|

||||
|-|-|-|
|Item|Closing|Opening|
|Disposal of fixed assets|333,378,731.42|588,181,647.53|
|Consumable biological assets|1,327,911,384.93|1,317,141,123.77|
|Oil and gas assets|||
|Intangible assets|1,331,285,676.62|1,365,418,002.26|
|Development expenditure|||
|Goodwill|20,283,787.17|20,283,787.17|
|Long-term prepaid expenses|167,470,543.11|168,538,483.68|
|Deferred income tax assets|546,511,965.92|507,653,388.38|
|Other non-current assets|||
|Total non-current assets|31,634,305,490.04|30,613,814,465.21|
|Total assets|48,284,558,080.95|47,521,883,569.18|
|CURRENT LIABILITIES:|||
|Short-term borrowings|10,881,009,086.26|9,818,885,237.85|
|Borrowings from the central bank|||
|Customer bank deposits and due to banksand other financial institutions|||
|Placements from banks and otherfinancial institutions|||
|Held-for-trading financial liabilities|||
|Bills payable|198,840,000.00|290,403,790.59|
|Accounts payable|2,776,093,583.82|2,695,169,927.14|
|Advance receipts|218,750,535.23|442,432,261.58|
|Assets sold under agreementsto repurchase|||
|Handling charges andcommission payable|||
|Staff remuneration payables|119,068,383.07|130,271,812.18|
|Taxes payable|114,349,006.61|130,192,936.87|
|Interest payable|268,757,445.94|153,189,860.42|
|Dividend payable|||
|Other payables|562,418,152.44|486,836,595.89|
|Due to reinsurers|||
|Insurance contract reserves|||
|Customer brokerage deposits|||
|Securities underwritingbrokerage deposits|||
|Non-current liabilities due withinone year|1,153,813,900.00|1,287,804,452.66|
|Other current liabilities|3,928,065,388.95|3,878,735,536.52|
|Total current liabilities|20,221,165,482.32|19,313,922,411.70|

||||
|-|-|-|
|Item|Closing|Opening|
|NON-CURRENT LIABILITIES:|||
|Long-term borrowings|3,708,919,007.90|3,723,865,807.90|
|Bonds payable|5,770,596,786.55|5,768,418,612.73|
|Long-term payable|128,000,000.00|60,000,000.00|
|Special payable|866,694,854.09|971,805,561.39|
|Estimated liabilities|||
|Deferred income tax liabilities|||
|Other non-current liabilities|3,051,344,371.93|3,045,517,642.57|
|Total non-current liabilities|13,525,555,020.47|13,569,607,624.59|
|TOTAL LIABILITIES|33,746,720,502.79|32,883,530,036.29|
|OWNERS’ EQUITY (ORSHAREHOLDERS’ EQUITY):|||
|Paid-up capital (or share capital)|1,975,471,967.00|1,975,471,967.00|
|Capital reserves|6,215,724,395.86|6,204,682,028.94|
|Less: treasury shares|92,333,379.10|30,954,891.40|
|Special reserves|||
|Surplus reserves|1,132,116,106.40|1,132,116,106.40|
|General risk provisions|||
|Retained profit|4,822,912,869.72|4,741,638,941.58|
|Differences in foreigncurrency conversion|13,319,851.27|16,934,073.59|
|Total equity attributable to equityholders of the Company|14,067,211,811.15|14,039,888,226.11|
|Minority interests|470,625,767.01|598,465,306.78|
|Total owners’ equity (orshareholders’ equity)|14,537,837,578.16|14,638,353,532.89|
|TOTAL LIABILITIES ANDOWNERS’ EQUITY (ORSHAREHOLDERS’|48,284,558,080.95|47,521,883,569.18|

 Legal Representative: Head in charge of Head of the financial Chen Hongguo accounting: department:
Li Dong Liu Jun
2. Balance sheet of the parent company
Prepared by: Shandong Chenming Paper Holdings Limited
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|CURRENT ASSETS:|||
|Monetary funds|1,547,286,909.62|1,454,242,620.40|
|Held-for-trading financial assets|||
|Bills receivable|634,479,863.22|945,832,396.01|
|Accounts receivable|3,947,352,842.30|3,814,654,532.05|
|Prepayments|633,384,208.30|762,470,888.60|
|Interest receivable|||
|Dividend receivable|191,300,102.21|191,300,102.21|
|Other receivables|11,614,007,456.76|11,051,622,177.96|
|Inventories|982,271,737.09|857,030,449.25|
|Non-current assets due within one year|20,000,000.00|200,000,000.00|
|Other current assets|102,803,089.97|103,214,843.26|
|Total current assets|19,672,886,209.47|19,380,368,009.74|
|NON-CURRENT ASSETS:|||
|Available-for-sale financial assets|||
|Held-to-maturity investments|500,000,000.00||
|Long-term receivable|||
|Long-term equity investments|8,984,627,938.68|8,863,738,003.45|
|Investment property|19,038,879.94|19,473,443.95|
|Fixed assets|5,064,568,277.02|5,170,770,619.87|
|Construction in progress|333,679,281.78|127,095,105.63|
|Construction materials|1,725,793.23|1,813,442.43|
|Disposal of fixed assets|||
|Productive biological assets|||
|Oil and gas assets|||
|Intangible assets|305,525,599.88|308,163,298.83|
|Development expenses|||
|Goodwill|||
|Long-term prepaid expenses|||
|Deferred income tax assets|17,159,739.53|17,082,162.53|
|Other non-current assets|||
|Total non-current assets|15,226,325,510.06|14,508,136,076.69|
|TOTAL ASSETS|34,899,211,719.53|33,888,504,086.43|

||||
|-|-|-|
|Item|Closing balance|Opening balance|
|CURRENT LIABILITIES:|||
|Short-term borrowings|5,278,652,653.51|5,119,632,573.69|
|Held-for-trading financial liabilities|||
|Bills payable|500,000.00|500,000.00|
|Accounts payable|803,959,310.42|891,996,724.44|
|Advance receipts|105,140,465.43|185,524,508.71|
|Staff remuneration payables|64,021,625.87|62,091,273.25|
|Taxes payable|13,077,255.66|8,949,746.01|
|Interest payable|268,724,805.54|150,047,305.56|
|Dividend payable|||
|Other payables|1,099,032,162.52|431,217,791.18|
|Non-current liabilities due within oneyear|346,084,000.00|343,876,000.00|
|Other current liabilities|3,911,939,467.95|3,856,239,467.95|
|Total current liabilities|11,891,131,746.90|11,050,075,390.79|
|NON-CURRENT LIABILITIES:|||
|Long-term borrowings|796,776,035.94|594,568,035.94|
|Bonds payable|5,770,596,786.55|5,768,418,612.73|
|Long-term payables|||
|Special payables|||
|Estimated liabilities|||
|Deferred income tax liabilities|||
|Other non-current liabilities|2,607,744,061.93|2,607,180,511.28|
|Total non-current liabilities|9,175,116,884.42|8,970,167,159.95|
|Total liabilities|21,066,248,631.32|20,020,242,550.74|
|OWNERS’ EQUITY (ORSHAREHOLDERS’ EQUITY):|||
|Paid-up capital (or share capital)|1,975,471,967.00|1,975,471,967.00|
|Capital reserves|6,005,426,779.17|6,005,426,779.17|
|Less: treasury shares|92,333,379.10|30,954,891.40|
|Special reserves|||
|Surplus reserves|1,119,926,524.49|1,119,926,524.49|
|General risk provisions|||
|Retained profit|4,824,471,196.65|4,798,391,156.43|
|Differences in foreign currencyconversion|||
|Total owners’ equity (or Shareholders’equity)|13,832,963,088.21|13,868,261,535.69|
|TOTAL LIABILITIES AND OWNERS’EQUITY (OR SHAREHOLDERS’EQUITY)|34,899,211,719.53|33,888,504,086.43|

 Legal Representative: Head in charge of Head of the financial Chen Hongguo accounting: department:
Li Dong Liu Jun
3. Consolidated income statement
Prepared by: Shandong Chenming Paper Holdings Limited
Unit: RMB
||||
|-|-|-|
|Item|Am ounts for thecurrent period|Am ounts for theprior period|
|I. Total operating revenue|4,078,069,314.47|4,923,810,623.61|
|Including: Revenue|4,078,069,314.47|4,923,810,623.61|
|Interest income|||
|Earned insurancepremium|||
|Handling charges andcommission income|||
|II. Total operating costs|4,148,662,180.31|4,913,951,918.42|
|Including: Operating costs|3,344,912,892.71|4,128,552,799.42|
|Interest expenses|||
|Handling charges andcommission expenses|||
|Surrenders|||
|Net claims paid|||
|Net change in insurancecontract reserves|||
|Policyholder dividendexpenses|||
|Expenses for reinsuranceaccepted|||
|Business taxes andsurcharges|12,633,196.68|17,772,499.02|
|Selling and distributionexpenses|225,061,937.13|258,765,041.02|
|General andadministrative expenses|242,648,227.81|247,016,598.02|
|Finance expenses|332,434,073.98|266,915,275.72|
|Loss on impairment ofassets|-9,028,147.99|-5,070,294.78|
|Plus: Gain on change in fairvalue (“-” denotes loss)|||
|Investment income (“-”denotes loss)|-3,377,138.33|-61,544.44|
|Including: Investmentincome from associatesand joint ventures|-873,265.33|-61,544.44|
|Foreign exchange gains(“-” denotes loss)|||

||||
|-|-|-|
|Item|Am ounts for thecurrent period|Am ounts for theprior period|
|III. Operating profit (“-” denotes loss)|-73,970,004.17|9,797,160.75|
|Plus: Non-operating income|176,033,614.08|75,195,949.69|
|Less: Non-operating expenses|7,932,048.84|8,033,514.35|
|Including: Loss ondisposal of non-currentassets|7,846,801.90|6,384,949.31|
|IV. Total profit (“-” denotes total loss)|94,131,561.07|76,959,596.09|
|Less: Income tax expenses|21,288,605.27|12,445,693.81|
|V. Net profit (“-” denotes net loss)|72,842,955.80|64,513,902.28|
|Including: Net profit achieved by theacquiree before businesscombination|||
|Net profit attributable toshareholders of the Company|81,273,928.14|71,411,642.71|
|Minority interests|-8,430,972.34|-6,897,740.43|
|VI. Earnings per share:|—|—|
|(I) Basic earnings per share|0.04|0.03|
|(II) Diluted earnings per share|0.04|0.03|
|VII. Other comprehensive income|-3,614,222.32|388,992.69|
|VIII.Total comprehensive income|69,228,733.48|64,902,894.97|
|Total comprehensive incomeattributable to shareholders of theCompany|77,659,705.82|71,800,635.40|
|Total comprehensive incomeattributable to minority interests|-8,430,972.34|-6,897,740.43|

 Legal Representative: Head in charge of Head of the financial Chen Hongguo accounting: department:
Li Dong Liu Jun
4. Income statement of the parent company
Prepared by: Shandong Chenming Paper Holdings Limited
Unit: RMB
||||
|-|-|-|
|Item|Am ounts for thecurrent period|Am ounts for theprior period|
|I. Revenue|1,903,584,305.09|2,501,866,894.08|
|Less: Operating costs|1,513,584,658.28|2,074,927,777.28|
|Business taxes and surcharges|7,907,580.86|10,986,327.88|
|Selling and distributionexpenses|64,359,201.62|73,221,035.04|
|General and administrativeexpenses|129,561,706.59|138,614,841.83|
|Finance expenses|206,460,474.81|146,183,864.33|
|Loss on impairment of assets|297,314.42|2,114,559.70|
|Plus: Gain on change in fair value(“-” denotes loss)|||
|Investment income (“-”denotes loss)|11,097,565.47|38,468,626.91|
|Including: Investment incomefrom associates and jointventures|343.23|-61,544.44|
|II. Operating profit (“-” denotes loss)|-7,489,066.02|94,287,114.93|
|Plus: Non-operating income|32,419,650.20|21,413,134.01|
|Less: Non-operating expenses|181,032.31|19,104.24|
|Including: Loss on disposal ofnon-current assets|||
|III. Total profit (“-” denotes total loss)|24,749,551.87|115,681,144.70|
|Less: Income tax expenses|-1,330,488.35|7,767,162.94|
|IV. Net profit (“-” denotes net loss)|26,080,040.22|107,913,981.76|
|V.Earnings per share:|—|—|
|(I) Basic earnings per share|0.01|0.05|
|(II) Diluted earnings per share|0.01|0.05|
|VI. Other comprehensive income|||
|VII. Total comprehensive income|26,080,040.22|107,913,981.76|

 Legal Representative: Head in charge of Head of the financial Chen Hongguo accounting: department:
Li Dong Liu Jun
5. Consolidated cash flow statement
Prepared by: Shandong Chenming Paper Holdings Limited
Unit: RMB
||||
|-|-|-|
|Item|Am ounts for thecurrent period|Am ounts for theprior period|
|I. Cash flows from operating activities:|||
|Cash received from sales of goodsand rendering of services|3,254,244,610.20|3,745,148,352.92|
|Net increase in customer bankdeposits and due to banks andother financial institutions|||
|Net increase in borrowings from thecentral bank|||
|Net increase in placements fromother financial institutions|||
|Cash received from premiums underoriginal insurance contracts|||
|Net cash received from reinsurancebusiness|||
|Net increase in deposits frompolicyholders|||
|Net increase from disposal ofheld-for-trading financial assets|||
|Cash received from interest,handling charges and commissions|||
|Net increase in placements frombanks and other financialinstitutions|||
|Net capital increase of repurchasebusiness|||
|Tax rebates received||6,507,666.33|
|Cash received relating to otheroperating activities|54,267,362.88|135,101,295.02|
|Subtotal of cash inflows from operatingactivities|3,308,511,973.08|3,886,757,314.27|
|Cash paid for goods and services|2,198,868,884.22|3,025,224,912.12|
|Net increase in loans and advances tocustomers|||
|Net increase in deposits with thecentral bank and other financialinstitutions|||
|Cash paid for claims under originalinsurance contracts|||

||||
|-|-|-|
|Item|Am ounts for thecurrent period|Am ounts for theprior period|
|Cash paid for interest, handling chargesand commission|||
|Cash paid for policyholder dividend|||
|Cash paid to and for employees|210,850,810.31|211,241,085.50|
|Payments of taxes and surcharges|212,537,359.84|243,282,874.32|
|Cash paid relating to other operatingactivities|54,410,792.86|126,220,755.95|
|Subtotal of cash outflows fromoperating activities|2,676,667,847.23|3,605,969,627.89|
|Net cash flows from operatingactivities|631,844,125.85|280,787,686.38|
|II. Cash flows from investing activities:|||
|Cash received from investments|||
|Cash received from investmentincome|||
|Net cash received from disposal offixed assets, intangible assets andother long-term assets|107,087,245.8|87,447.58|
|Net cash received from disposal ofsubsidiaries and other businessunits|38,097,000.00||
|Cash received relating to otherinvestment activities|230,778,041.00||
|Subtotal of cash inflows from investmentactivities|375,962,286.87|87,447.58|
|Cash paid for purchase of fixed assets,intangible assets and other long-termassets|596,984,126.16|236,014,004.30|
|Cash paid on investments|||
|Net increase in pledged loans|||
|Net cash paid for acquisition ofsubsidiaries and other business units|||
|Cash paid relating to other investmentactivities|501,158,788.59||
|Subtotal of cash outflows frominvestment activities|1,098,142,914.75|236,014,004.30|
|Net cash flows from investment activities|-722,180,627.88|-235,926,556.72|

||||
|-|-|-|
|Item|Am ounts for thecurrent period|Am ounts for theprior period|
|III. Cash flows from financial activities:|||
|Cash received from capitalcontribution||66,000,000.00|
|Including: cash received fromminority interest contribution tosubsidiaries|||
|Cash received from borrowings|4,163,220,000.91|5,225,613,469.09|
|Cash received from bond issue|||
|Cash received relating to otherfinancial activities|117,626,757.04||
|Subtotal of cash inflows fromfinancial activities|4,280,846,757.95|5,291,613,469.09|
|Cash repayments of borrowings|3,592,001,541.79|4,756,587,751.21|
|Cash paid for dividend and profitdistribution or interest payment|271,198,731.49|126,163,715.81|
|Including: dividend and profit paidto minority interests bysubsidiaries|||
|Cash paid relating to other financialactivities|192,400,361.00|1,686,067,417.80|
|Subtotal of cash outflows from financialactivities|4,055,600,634.28|6,568,818,884.82|
|Net cash flows from financial activities|225,246,123.67|-1,277,205,415.73|
|IV. Effect of foreign exchange ratechanges on cash and cashequivalents|-8,617,565.75|-1,856,368.64|
|V. Net increase in cash and cashequivalents|126,292,055.89|-1,234,200,654.71|
|Plus: Balance of cash and cashequivalents as at thebeginning of the period|726,532,928.95|2,343,550,185.45|
|VI. Balance of cash and cash equivalentsas at the end of the period|852,824,984.84|1,109,349,530.74|

 Legal Representative: Head in charge of Head of the financial Chen Hongguo accounting: department:
Li Dong Liu Jun
6. Cash flow statement of the parent company
Prepared by: Shandong Chenming Paper Holdings Limited
Unit: RMB
||||
|-|-|-|
|Item|Am ounts for thecurrent period|Am ounts for theprior period|
|I. Cash flows from operating activities:|||
|Cash received from sales of goodsand rendering of services|1,554,908,976.13|2,278,102,776.22|
|Tax rebates received|||
|Cash received relating to otheroperating activities|42,325,614.38|34,113,690.48|
|Subtotal of cash inflows from operatingactivities|1,597,234,590.51|2,312,216,466.70|
|Cash paid for goods and services|1,742,167,010.96|1,341,433,481.16|
|Cash paid to and for employees|101,860,522.50|73,609,876.19|
|Payments of taxes and surcharges|96,035,474.74|128,754,932.37|
|Cash paid relating to other operatingactivities|-643,175,490.68|1,493,746,466.45|
|Subtotal of cash outflows from operatingactivities|1,296,887,517.52|3,037,544,756.17|
|Net cash outflows from operatingactivities|300,347,072.99|-725,328,289.47|
|II. Cash flows from investmentactivities:|||
|Cash received from investments|280,000,000.00||
|Cash received from investmentincome|1,375,000.00|20,612,500.00|
|Net cash received from disposal offixed assets, intangible assets andother long-term assets|120.00|86,922.24|
|Net cash received from disposal ofsubsidiaries and other businessunits|||
|Cash received relating to otherinvestment activities|||
|Subtotal of cash inflows from investmentactivities|281,375,120.00|20,699,422.24|
|Cash paid for purchase of fixedassets, intangible assets and otherlong-term assets|154,880,130.57|10,516,416.19|
|Cash paid on investments|220,889,592.00|78,083,235.00|

||||
|-|-|-|
|Item|Am ounts for thecurrent period|Am ounts for theprior period|
|Net cash paid for acquisition ofsubsidiaries and other businessunits|||
|Cash paid relating to otherinvestment activities|500,000,000.00||
|Subtotal of cash outflows frominvestment activities|875,769,722.57|88,599,651.19|
|Net cash flows from investmentactivities|-594,394,602.57|-67,900,228.95|
|III. Cash flows from financial activities:|||
|Cash received from capitalcontribution|||
|Cash received from borrowings|2,966,288,013.90|3,821,613,974.44|
|Cash received from bond issue|||
|Cash received relating to otherfinancial activities|||
|Subtotal of cash inflows fromfinancial activities|2,966,288,013.90|3,821,613,974.44|
|Cash repayments of borrowings|2,497,163,624.96|2,654,354,114.96|
|Cash paid for dividend and profitdistribution or interest payment|78,238,444.72|104,193,154.63|
|Cash paid relating to other financialactivities|108,171,440.69|1,827,433,967.31|
|Subtotal of cash outflows from financialactivities|2,683,573,510.37|4,585,981,236.90|
|Net cash flows from financial activities|282,714,503.53|-764,367,262.46|
|IV. Effect of foreign exchange ratechanges on cash and cashequivalents|-3,794,125.42|1,635,633.50|
|V. Net increase in cash and cashequivalents|-15,127,151.47|-1,555,960,147.38|
|Plus: Balance of cash and cashequivalents as at thebeginning of the period|64,392,029.09|1,786,622,854.08|
|VI. Balance of cash and cash equivalentsas at the end of the period|49,264,877.62|230,662,706.70|

 Legal Representative: Head in charge of Head of the financial Chen Hongguo accounting: department:
Li Dong Liu Jun
II. Audit report
Whether or not the first quarter report is audited
□ Yes √No
The first quarter report of the Company is unaudited.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 29 April 2014