SHANDONG CHENMING PAPER HOLDINGS LIMITED
2015 Annual Report Summary
Stock Code: 000488, 200488 Stock abbreviation: Chenming Paper, Chenming B Announcement No.: 2016-030
2015 Annual Report Summary of Shandong Chenming Paper
Holdings Limited*
I. IMPORTANT NOTICE
This annual report summary is extracted from the text of the annual report. For the full understanding of the operating results,
financial position and plan for further development, investors should carefully read the text of the annual report published on media
as designated by the CSRC and the website of The Stock Exchange of Hong Kong Limited.
Non-standard auditor'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
Conversion of capital reserves into share capital
□ Yes √ No
The proposed profit distribution plan for ordinary shares of the Company was considered and passed by the Board: based on the
number of the shares as at the dividend distribution registration date, a dividend of RMB3 (tax inclusive) per 10 shares was to be paid
and no bonus shares (tax inclusive) were to be delivered to all shareholders without increase of share capital from reserves.
Plans for profit distribution on preference shares for the reporting period approved by the Board
□ Applicable √ Not applicable
Company profile
Stock abbreviation 晨鳴紙業 and 晨鳴 B Stock Code 000488 and 200488
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
Contact persons and contact Secretary to the Board Securities Affairs Representative Hong Kong Company Secretary
methods
Name Wang Chunfang Xiao Peng Poon Shiu Cheong
No. 2199 East Nongsheng 22nd Floor, World Wide House,
No. 2199 East Nongsheng Road,
Office address Road, Shouguang City, Central, Hong Kong
Shouguang City, Shandong Province
Shandong Province
Telephone (86)-0536-2158977 (86)-0536-2158977 (852)-2501 0088
Facsimile (86)-0536-2158008 (86)-0536-2158008 (852)-2501 0028
Email address chenmmingpaper@163.com chenmmingpaper@163.com kentpoon_1009@yahoo.com.hk
II. MAJOR OPERATIONS OR PRODUCTS DURING THE REPORTING PERIOD
The Company is a large and integrated modern conglomerate principally engaged in paper making, finance, forestry and real
estate businesses while also involved in mining, energy, logistics, construction materials, hotel operation and others. It is also the
only listed company with three types of listed shares (i.e. A shares, B shares and H shares) and the first in the paper making industry
having a finance company and a financial leasing company integrated with its industrial activities in China.
(I) Paper Making Segment
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SHANDONG CHENMING PAPER HOLDINGS LIMITED
2015 Annual Report Summary
The Company is a leading paper making industry in China. It has established production bases in Shandong, Guangdong, Hubei,
Jiangxi and Jilin with annual pulp and paper production capacity of over 8,500,000 tonnes. It has the largest pulp paper production
base in the world and tens of pulp and paper production lines of international advanced standards. The product mix of the Company
gradually diversified into five major paper types, namely printing paper, packaging paper, office paper, industrial paper and
household paper, as well as the nine major product series which focused on high and middle end products, including high-end
cultural paper, coated paper, white paper board, news press paper, light weight coated paper, copy paper, industrial paper, special
paper and household paper.
(II) Financial Segment
The Company has established the financial segment which was based on the Shandong Chenming Financial Leasing Co., Ltd.,
Shandong Chenming Investment Co., Ltd., and Shandong Chenming Group Finance Co., Ltd. Since the establishment of the
financial segment, the Company, relying on strong capital strength and talent advantageous of the Chenming Paper Group while
giving full play to the advantages of internationalisation and marketised operation mechanisms of a listed company, has been actively
seeking the organic combination between industrial capital and financial capital. Externally, it provided financing and value-added
service solutions to state-owned enterprises, listed companies, quality private enterprises, new and high-tech enterprise with good
growth and government financing platforms. Internally, it adapted to the trend of diverse demand for the domestic financial market
and financial services comprehensiveness within the Group, and established a business structure focused on intensive capital
management and based on four core areas, namely the traditional commercial banking business, industrial financial services,
investment banking business and financial investment business, which constructed a diversified and value-added business
development pattern.
The financial segment experienced rapid development across businesses after steady operation for more than a year with ever
improving management systems and effective risk preventions. In 2015, the financial segment maintained good development
momentum and, through the leaseback business of the Financial Leasing Company and the credit business of the Finance Company,
became a new profit growth point of the Company.
(III) Other business segments
1. Electricity and heat
Based on the operating principle of “energy-saving, serving production and environmental protection”, the Company has
established its own power plants in all of its production bases, which mainly provide electricity and gas to each subsidiary with the
surplus sold externally to contribute sales revenue. The green, low-carbon and sustainable ecological cycle constructed had
substantial economic and social benefits.
2. Hotel
Chenming International Hotel is a luxury business hotel that integrates accommodation, catering, entertainment and conference.
The hotel follows the European-style architecture of compounds with a beautiful environment and elegant style. The guest rooms are
comfortable and luxurious, the cuisine is distinctive, a comprehensive set of recreational and leisure facilities are at service and
business centres with advanced facilities are ready to provide thoughtful and fast services. In addition, the majestic and fully
functional hotel meeting centres will help you achieve unexpected success for your commercial activities.
3. Construction materials
Chenming Construction Materials integrates the manufacturing, processing and sales of new-type environmental materials such
as planks, cement and aerated concrete brickwork. Leveraging the strong platform and brand influence of the Chenming Group, it has
introduced advanced production equipment and established a quality guaranteeing system of high-starting point, high-level and
all-roundness with first-class quality products that apply to various buildings.
4. Logistics
With the deepening of “One Belt One Road” strategy of China, the Chenming Group has made huge investment to establish an
international logistics centre and auxiliary proprietary railways, which not only provided comprehensive logistic services including
container transportation, bonded warehousing, transit and terminal storage, but also realised “one-stop” customs clearance. This helps
Chenming Paper and Chinese enterprises fully explore the international market and open a modern logistic “express way”.
5. Mining
Haicheng Haiming Mining Company Limited was established on 6 November 2012. The Phase I project mainly carried out
magnesite mining and high purity magnesium grains production. The subsequent project will realise diversification of products
including manufacturing of magnesium products including firebrick and magnesium metal, which will fill the blank of relevant
industries in China.
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SHANDONG CHENMING PAPER HOLDINGS LIMITED
2015 Annual Report Summary
III. MAJOR ACCOUNTING DATA AND FINANCIAL INDICATORS
1. Major accounting data and financial indicators for the last three years
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
Unit: RMB million
Increase/decrease for
2015 2014 the year as compared to 2013
the prior year
Revenue 20,241.91 19,101.68 5.97% 20,388.89
Net profit attributable to
1,021.22 505.20 102.14% 710.66
shareholders of the Company
Net profit after extraordinary gains
or losses attributable to shareholders 719.89 130.45 451.87% 406.17
of the Company
Net cash flows from operating
-9,721.36 985.40 -1,086.54% 1,122.62
activities
Basic earnings per share (RMB per
0.50 0.26 92.31% 0.35
share)
Diluted earnings per share (RMB
0.50 0.26 92.31% 0.35
per share)
Rate of return on net assets on
6.73% 3.62% 3.11% 5.11%
weighted average basis
Increase/decrease as at
the end of the year
As at the end of 2015 As at the end of 2014 As at the end of 2013
compared to the end of
the prior year
Total assets 77,961.70 56,822.03 37.20% 47,521.88
Net assets attributable to
16,871.49 13,917.34 21.23% 14,039.89
shareholders of the Company
Explanation: Net profit attributable to ordinary shareholders of the Company should exclude the effect of interest payment deferred
and accumulated to subsequent periods for perpetual bonds under other equity instruments. When calculating financial indicators
such as earnings per share and rate of return on net assets on weighted average basis, the interests incurred but not declared for
perpetual bonds from the value date up to 31 December 2015 (amounted to RMB61,506,739.43) are deducted. For details, please
refer to Note XVII. 2 of section XII of this report.
2. Key Accounting Data by Quarter
Unit: RMB million
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SHANDONG CHENMING PAPER HOLDINGS LIMITED
2015 Annual Report Summary
1Q 2Q 3Q 4Q
Revenue 4,456.65 5,262.04 5,176.53 5,346.68
Net profit attributable to
96.14 180.25 284.94 459.90
shareholders of the Company
Net profit after extraordinary gains
or losses attributable to shareholders 47.53 126.93 209.20 336.23
of the Company
Net cash flows from operating
-524.89 -1,697.86 -6,401.71 -1,096.90
activities
Whether the above indicators or their aggregated amounts have any material difference with the respective amounts as disclosed in
the quarterly report or interim report
□ Yes √ No
IV. SHARE CAPITAL AND SHAREHOLDERS
1. Number of holders of ordinary shares and preference shares with restored voting right and Top 10
shareholders
Unit: share
Total number
111,976, of of 109,021, of
Total number of Total number of
Total number which 84,823 shareholders which 82,311
shareholders of shareholders of
of shareholders were holders of ordinary were holders of
preference preference shares
of ordinary of A shares, shares as at A shares, 26,206
shares with with restored voting
shares as at the 26,646 were the end of the were holders of 0 0
restored voting right as at the end of
end of the holders of B month prior to B shares and
right as at the the month prior to the
reporting shares and 507 the 504 were
end of the disclosure date of the
period were holders publication holders of H
reporting period annual report
of H shares date of this shares
annual report
Shareholdings of Top 10 shareholders
Share pledged or
locked-up
Number of
Nature of Percentage of Number of shares
Name of shareholders restricted
shareholders shareholding held Status
shares held
of Number
shares
SHOUGUANG CHENMING HOLDINGS State-owned
15.13% 293,003,657 0 Pledged 47,000,000
COMPANY LIMITED legal person
Overseas legal
HKSCC NOMINEES LIMITED 15.08% 292,010,900 0
person
CHENMING HOLDINGS (HONG KONG) Overseas legal
3.71% 71,783,180 0
LIMITED (Note 1) person
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SHANDONG CHENMING PAPER HOLDINGS LIMITED
2015 Annual Report Summary
CENTRAL HUIJIN ASSET MANAGEMENT
Others 2.07% 40,137,900 0
LTD.
NATIONAL SOCIAL SECURITY FUND 110 Others 1.51% 29,261,612 0
AGRICULTURAL BANK OF CHINA
LIMITED - BAOYING TRANSITIONAL
Others 1.06% 20,502,241 0
MOMENTUM FLEXIBLE ALLOCATION
HYBRID SECURITIE INVESTMENT FUND
HUATAI SECURITIES CO., LTD. Others 0.91% 17,694,768 0
AGRICULTURAL BANK OF CHINA
LIMITED - E FUND RUIHUI FLEXIBLE
Others 0.88% 16,974,585 0
CONFIGURATION HYBRID SECURITIES
INVESTMENT FUND
NATIONAL SOCIAL SECURITY FUND 118 Others 0.62% 12,084,249 0
BBH A/C VANGUARD EMERGING Overseas legal
0.44% 8,608,238 0
MARKETS STOCK INDEX FUND person
A shareholder, Chenming Holdings (Hong Kong) Limited, which is an overseas legal
person, is a wholly-owned subsidiary of a shareholder, Shouguang Chenming
Holdings Company Limited, which is a state-owned legal person. Hence they are
Connected relationship or connected party persons acting in concert under Administration of Disclosure of Information on the
relationship among the above shareholders Change of Shareholdings in Listed 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.
Note 1: As at the disclosure date of this report, Chenming Holdings (Hong Kong) Limited holds 21,910,923 B shares and 79,200,000
H shares of the Company, amounting to 101,110,923 shares and accounting 5.22% of the share capital.
2. Total number of holders of preference shares and Top 10 holders of preference shares
□ Applicable √ Not applicable
There was no shareholding of shareholder of preference share during the reporting period.
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SHANDONG CHENMING PAPER HOLDINGS LIMITED
2015 Annual Report Summary
3. Diagram showing proprietary ownership and controlling relationships among the Company and its de facto
controller
Shouguang State-owned Assets Supervision and Administration Office
Shandong Shouguang Jinxin Investment Development Holdings Group Limited
(Note 1)
Shouguang Chenming Holdings Company Limited
Chenming Holdings (Hong Kong) Limited
(Note 2)
Shandong Chenming Paper Holdings Limited
Note 1: On 19 January 2016, Chenming Holdings completed the change in the industrial and commercial registration in relation to
reduction of registered capital with the Market Supervision Administration of Shouguang City and obtained the new business licence.
Its registered capital decreased by RMB1,685.4255 million to RMB1,238.7877425 million, of which Shandong Shouguang Jinxin
Investment Holdings Limited held 45.21%..
Note 2: As at the disclosure date of this report, Chenming Holdings (Hong Kong) Limited holds 21,910,923 B shares and 79,200,000
H shares of the Company, amounting to 101,110,923 shares and accounting 5.22% of the share capital.
V. MANAGEMENT DISCUSSION AND ANALYSIS
1. Operation during the reporting period
In 2015, the Company had been actively adapting to the “new normal” economic development by accelerating transformation and
upgrade and enhancing operation quality. Confronted by the continuous economic slowdown and weak industry demand, the
Company adopted “Team Building, Strict Management, Outstanding Business Performance, Achieving Good Results” as its policy to
cope with difficulties and make practical innovations for fulfilling its annual goals. Its development was showing favourable signs
including stronger efficiency, management, capabilities and growth momentum.
During the reporting period, the Company conducted production and sales of machine-made paper of 4.18 million tonnes and 4.15
million tonnes respectively and achieved revenue of RMB20.242 billion, a year-on-year increase of 5.97%. The Company recorded
operating costs of RMB14.765 billion, a year-on-year decrease of 3.64%. Total profit and net profit attributable to equity holders of
the Company were respectively RMB1,411 million and RMB1,021 million, up by 151.36% and 102.14% from the prior year.
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SHANDONG CHENMING PAPER HOLDINGS LIMITED
2015 Annual Report Summary
(1) Strengthening sub-divided management lifting corporate management to a new level. Firstly, the overall management of the
Company was comprehensively enhanced through continuously strengthening primary management and measures to improve
systems, inspections and rectifications. Secondly, dynamics for team building were heightened through increased training, position
management and introduction of talents, which produced stronger teams, internal energy and thus significant progress in this respect.
(2) Flexible strategies attaining breakthroughs in marketing. Firstly, team building efforts were revamped. Excellent human resources
were actively introduced under a competition mechanism based on merits. The appraisal methodology was optimised to reward the
diligent. Regular training for all staff was organised and sales personnel were equipped with better theoretical knowledge and
hands-on competence. Secondly, marketing strategies were effective and efficient. The market-based sales work assignment toolkit
significantly enhanced performance while the development of major and new customers was strengthened. Thirdly, structural
optimisation was actively carried out. High value-added products such as cigarette card, cigarette pack, high-bulk white paper board,
rosewood copperplate card, premium electrostatic paper and Biyuntian duplex press paper were prioritised with a view to enlarging
market share.
(3) Proprietary innovations to revamp production and operation. Firstly, the operational efficiency was significantly enhanced. The
operational parameters and technical standards of machinery were standardised and the appraisal methodology was improved to
strengthen real-time control over and adjustment to production lines and enhance efficiency. Secondly, the effect of primary
management was taking shape. Standardised management and processes was consistently adhered to while production management
systems were improved by adding regular inspection and continuous rectification of issues. A competition mechanism based on
merits was put in place to promote and make good use of competent and outstanding staff, which significantly improved the primary
management. Thirdly, flexible restructuring produced efficiency. The production of high value-added products such as mid-level
aging resistant paper, high-bulk white paper board for export, Biyuntian electrostatic paper, glassine paper and cigarette card was
boosted to enlarge market share and gain the initiative in the market as well as increase efficiency. Fourthly, quality management was
steadily enhanced. Through the strict implementation of a defective product examination system, wholesale orders for cigarette cards
were received and the market recognition of glassine paper and thermal paper was significantly raised.
(4) Accelerated projects and new blood. During the reporting period, new projects picked up speed. The 300,000-tonne high-end
cultural paper project and the biomass vaporisation upgrade project of Zhanjiang Chenming and the 350,000 food packaging paper
project of Jiangxi Chenming had commenced operation upon completion and became new efficiency growth points of the Company.
The 400,000 chemical pulp project of Shouguang Chenming completed the tender of its principal equipment and preparations for full
operation. The white coated linerboard project of Shouguang Chenming was safely relocated to Zhanjiang. The magnesite project of
Haiming Mining started to install equipment. The pulp and paper project integrated forestry of Huanggang Chenming has
commenced construction. These new projects are vital forces to drive up the core competitiveness of the Company.
(5) Stronger financing management to create new advantages for the financial segment. In order to proactively adapt to the “new
normal”, the Company put greater efforts in transformation and upgrade through the strategies of being high-end, high-quality and
highly-efficient and by striving to reinforce its principal operations while diversifying its businesses. The Company is a large and
comprehensive modern corporate group mainly engaged in paper making, finance, forestry and real estate businesses while also
involved in mining, energy, logistics, construction materials, hospitality and others. The financial segment made exceptional
contribution for 2015 with significantly higher revenue and operating profit and became a new growth point bearing the strongest and
advantageous profitability. The Company, through innovative financing instruments, registered its first super and short term
commercial paper and perpetual note amounting to RMB13.8 billion and RMB2.6 billion respectively in the interbank market and
entered into a RMB20.0 billion strategic cooperation agreement with the Bank of China, which elevated its cooperation with banks to
a new height.
2. Outlook on the future development of the Company
(I) Competition overview and development trend of the industry
In recent years, on the one hand, with the impact of macroeconomic slowdown, demand was continuously weak in the paper making
industry. On the other hand, new production capacity of the paper making industry had been released together over the past few years,
resulting in the transitional overcapacity of some paper types. Due to fierce competition, product prices continued to decline,
narrowing profit margins of papermaking enterprises.
In the long run, the development conditions of the paper making industry are gradually improving. Elimination of outdated
production capacity and increasingly stringent environmental policies are forcing some small and medium-sized enterprises out of the
market. To some extent, this eases the pressure of new capacity on the supply of the industry, which is conducive for enterprises to
initiate a price rise. For major paper making enterprises, fully utilising advantages of capital, technology and scale to achieve a
change in the growth pattern may help them gain new market share. Meanwhile, with the impact of a weak demand, raw material
prices have been hovering at a low level, easing the pressure of operating costs on paper making enterprises. Eliminating outdated
production capacity will remove obstacles for the industry’s development, while replenishment of and substitution of advanced
production capacity will bring fresh blood and drive to the industry, conductive to a higher concentration ratio to creating a
favourable industry lifecycle.
Under the slowing macro-economic growth and economic transformation, the financial leasing industry as a favoured supplementary
corporate financing channel and an effective tool to use assets at hand embraced continuously mounting market demand and was
stepping into a golden age for its development. As an important bridge between the financial industry and the industries in the real
economy, the financial leasing industry and the modern business model that centres on it will provide substantial capital support to
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SHANDONG CHENMING PAPER HOLDINGS LIMITED
2015 Annual Report Summary
the upgrade and transformation of the manufacturing industry in China. However, the penetration rate of financial leasing in the
Chinese market is only around 5%, as compared with 20% in the European and US markets in general. The financial leasing industry
in China is at the early stage and has a promising outlook. In fact, it is on a solid track of rapid growth. It is expected that the market
size will reach RMB1,200 billion by 2020. Under the “new normal” of the economy, the financial leasing industry in China has great
development potential as a result of its good growth momentum.
Looking forward, the Company will adhere to the principal of achieving growth amid stability, and emphasise on environmental
protection, low carbon, recycling and sustainable development. Following the “Made in China 2025 Plan” and the principles of
scientific development and quality and efficiency enhancement, it will comprehensively improve its quality and efficiency,
management level, technology application, sense of happiness and brand image through the integration between its production and
manufacture segment and financial services segment, incorporation of smart technology into its industrial activities, reorganised
methodology and restructuring so as to expand and improve itself and strive to become one of the world-class companies with the
highest growth rate in the “Thirteenth Five Year Plan” period.
(II) Development strategy
Transformation and upgrade strategy: the Company will optimise its business structure and regional development planning, focus on
developing the major industries, namely paper making, finance, forestry and real estate, and develop an industrial system that gives
synergy and high efficiency.
Green development strategy: the Company will adhere to the operating philosophy of integration of the “forestry, pulp, paper
businesses”. It will achieve clean production through technology upgrade, advanced equipment and refined management in order to
promote circular economy and establish itself as a benchmark enterprise in resources conservation and environmental protection. It
strives to maintain balance between development and environmental protection by stepping up environmental protection efforts in
scientific development so as to seek for a win-win solution for both economic benefits and environmental conservation.
International strategy: the Company will expand to the international market based on its development in China. It will leverage the
PRC “One Belt One Road” strategy to accelerate its pace of “going global”. It will reinforce cooperation with international
companies to gradually develop the overseas market.
Excellent operation strategy: the management of the Company will aim to achieve “management enhancement, team building,
outstanding business performance and good results”. The Company will continuously enhance the whole process management on
production and operation, marketing, finance costs and project construction, which will effectively integrate resources and keep on
promoting management quality and profitability.
Talent strategy: the Company will enhance the nurturing, recruitment, appointment and incentive mechanism of employees, with a
view to developing a high-end, comprehensive, innovative and international team of talents to establish Chenming as a world leading
and fast growing enterprise.
Harmonious development strategy: the Company will step up efforts to build its corporate culture, and care for its employees. It will
actively fulfil its corporate social responsibility and enhance value creation in areas such as economic, social and environmental
development so as to develop a good corporate image of Chenming and establish it as an enterprise that develops in a harmonious
manner.
(III) Operating plan for 2016
The main goal of the Company for 2016 is to “develop into an enterprise with hundreds of billions in value” by adhering to the
principle of “achieving growth amid stability”. The Company will stick to its diversification strategy, and develop an industrial
system that centres on pulp production, paper making and finance to achieve synergy with forestry, real estate and mining so as to
boost the core competiveness and profitability. Meanwhile, the Company will be committed to “team building, management
enhancement, outstanding business performance and good results” in order to upgrade management quality. The measures to be taken
by the Company are as follows:
1. Enhance management to upgrade management quality
The Company will work with leading management consultants in China. It will identify the problems in management and formulate
practical plans to address the issues with the help of external experts in order to enhance the management level. It will improve
fundamental management and recruit competent employees in a timely manner to the management team to deal with the current
problems arising from lack of sufficient management. The Company will also further optimise the management system and
procedures to provide strong support to the strengthening of management standard.
2. Enhance operation management and take initiatives to expand market
The Company will step up efforts in team building and talent recruitment to develop a talent pool and promotion channels while
laying off unqualified employees. It will focus on efficiency in performance evaluation to stimulate employees’ incentives. It will
enhance fundamental management and perform monthly inspection to groundwork so as to “cover all aspects of the system”. The
Company will also optimise the system in a timely manner and set up standards for procedures, so that the implementation will be
strict, effective and highly efficient. The Company will formulate plans for major and difficult tasks and closely monitor, inspect and
evaluate such tasks to rectify problems. It will enhance efficiency management, adjust product structure, boost overseas sales, raise
price, and make investment in places with close proximity, in the pursuit of higher efficiency. Meanwhile, it will support strategic
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SHANDONG CHENMING PAPER HOLDINGS LIMITED
2015 Annual Report Summary
customers, boost volume of trade, secure contracts and strengthen control of cash in transit to reduce appropriation of funds. It will
enhance risk control and the marketing team will set its priority on the collection of receivables. The dedicated receivables collection
team will carry out their work and strictly monitor receivables. The Company will also accelerate the process in relation to collateral
security.
3. Enhance and refine production management
The Company will boost production efficiency through refining management. It will cooperate with professional consultants to
optimise management and actively recruit and nurture talents in order to enhance fundamental management capability. It will aim at a
higher market share of high value-added products and optimise the product structure by developing products with competiveness,
such as wine label, logistics label and liquid packaging paper. The Company will adjust the structure of pulp materials, upgrade
production process, and utilise new raw materials to promote technological progress. It will step up inspection efforts to identify
safety risks and protect the environment in accordance with the new national standards and requirements, thereby ensuring the
fulfilment of targets on time.
4. Enhance project management for high quality and efficiency
The Company will enhance implementation and management of Zhanjiang Chenming’s 600,000 tonne liquid packaging paper project,
Haiming Mining, Huanggang Chenming’s integrated forestry, pulp and paper project and Shouguang Chenming’s 400,000 tonne
chemical pulp project so as to ensure the timely commencement of operation, which will provide new sources of profit growth. The
Company will adopt strict quality control on project construction by clarifying responsibility and enhancing control so as to ensure
construction quality and safety at the work sites. The Company will fully prepare for the projects and optimise the organisational
structure. It will set up a management team and recruit technicians, while developing training programmes for the staff at all levels,
so as to lay a solid foundation for production and operation and ensure the smooth operation of the projects upon completion.
5. Enhance financing management to create extra value
The Financial Leasing Company will focus on risk control. It will actively explore for quality customers, seek to increase the direct
credit lines of domestic banks and obtain additional banking facilities. The Company will enhance the management of the Finance
Company with a focus on its fundamental business in relation to settlement, deposit and loans as well as bills, so as to boost the
recovery rate of funds. The Company will actively solicit interbank credit extension and diversify its interbank product offerings in
order to increase efficiency. At the same time, Qingdao Chenming will commence financial leasing business at bonded areas to
provide liquidity support to the Company’s operation and lower the financing cost.
6. Enhance procurement management to raise resources efficiency
Leveraging the development of “cross-border e-commerce” and “Internet Plus”, the Company will seek to gain market influence by
establishing an online marketing platform for import and export of goods. The Company will also develop complementary distributor
management policy and pricing policy to boost efficiency of external sales. In addition, it will set up an electronic merchandise
exchange centre for pulp and paper products, and develop an integrated supply chain for the storage and logistics of pulp and paper
products in the country, with the goal of building China’s market price index centre of pulp and paper products, and a global
information centre of paper products.
7. Enhance service operation and business expansion
The Company will enhance the management of the brick plant, cement and construction materials companies. In terms of internal
measure, it will enhance the service quality; and in terms of external measure, it will actively expand business to boost profit.
3. Material change in principal activities during the reporting period
□Yes √ No
4. Products accounting for over 10% of revenue or profit from principal activities of the Company
√ Applicable □ Not applicable
Unit: RMB
Increase/decrease
Increase/decrease Increase/decrease
of gross profit
of revenue as of profits as
margin as
Gross profit compared to the compared to the
Product name Revenue Operating costs compared to the
margin corresponding corresponding
corresponding
period of the prior period of the prior
period of the prior
year year
year
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SHANDONG CHENMING PAPER HOLDINGS LIMITED
2015 Annual Report Summary
Duplex press
4,460,441,279.15 3,359,857,786.59 24.67% 50.30% 42.26% 4.26%
paper
Coated paper 4,365,890,220.92 3,258,280,750.13 25.37% -1.41% -9.56% 6.73%
White paper
1,915,153,293.25 1,463,666,571.72 23.57% -3.84% -9.67% 4.93%
board
Electrostatic
1,580,897,670.32 1,043,674,436.61 33.98% -9.25% -20.29% 9.14%
paper
Financial leasing 1,084,860,187.11 127,769,086.46 88.22% 1,151.89% 754.06% 5.49%
5. Seasonal or cyclical operations requiring special attention
□ Yes √ No
6. Material difference of revenue, operating costs or net profit attributable to holders of ordinary shares of the
Company for the reporting period from the last reporting period
√ Applicable □ Not applicable
The Company has established the financial segment primarily based on the Shandong Chenming Financial Leasing Co., Ltd.,
Shandong Chenming Investment Co., Ltd., and Shandong Chenming Group Finance Co., Ltd. in order to promote diversified
development of the Chenming Group, further expand its business, improve risk resistance and enhance the overall strength and
comprehensive competitiveness.
The financial segment experienced rapid development across businesses after steady operation for more than a year with ever
improving management systems and effective risk preventions. In 2015, the financial segment maintained good development
momentum and, through the leaseback business of the Financial Leasing Company and the credit business of the Finance Company,
became a new profit growth point of the Company.
7. Suspension in trading or delisting
□ Applicable √ Not applicable
VI. 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 year
□ Applicable √ Not applicable
There was no change in accounting policies, accounting estimates and accounting methods of the Company during the reporting
period.
2. Reason for retrospective restatement to correct major accounting errors during the reporting period
□ Applicable √ Not applicable
No retrospective restatement was made to correct major accounting errors during the reporting period.
3. Reason for changes in scope of the consolidated financial statements as compared to the financial report for
the prior year
√ Applicable □ Not applicable
10
SHANDONG CHENMING PAPER HOLDINGS LIMITED
2015 Annual Report Summary
During the reporting period, the Company invested and established two companies, namely Jinan Chenming Investment Management
Co., Ltd. and Chenming Paper Korea Co., Ltd.
In order to expand the customer base of the Finance Company, fully utilise the investment and financing functions of Finance
Company and enhance its profitability, the Company established Jinan Chenming Investment Management Co., Ltd. The registered
capital of Jinan Chenming is RMB100.00 million. Its operations complemented those of the Finance Company and it has been
consolidated into the financial statements of the Company since January 2015.
In order to strengthen the paper product sales of the Company, further increase the market share of the Company’s products in Korea
and establish a wider and more comprehensive sales network, the Company established Chenming Paper Korea Co., Ltd. The
registered capital of Chenming Korea was US$1.00 million and it has been consolidated into the financial statements of the Company
since April 2015.
4. Opinions of the Board of Directors and the Supervisory Committee regarding the “modified auditor’s
report” for the reporting period issued by the accountants
□ Applicable √ Not applicable
Shangdong Chenming Paper Holdings Limited
30 March 2016
11
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