Bengang Steel Plates Co., Ltd.
Annual Report 2020
April, 2021
I. Important Notice, Table of Contents, and Definitions
The Board of Directors, the Supervisory Committee and the Directors, members of theSupervisory Committee and senior management of the Company guarantee that thereare no misrepresentations or misleading statements, or material omission in this report,and individually and collectively accept full responsibility for the authenticity,accuracy andintegrity of the information contained in this report.Gao Lie, chairman of the Company, Lin Dong, Chief financial officer, and Cong Yajuan,the person in charge of the accounting department (the person in charge of theaccounting), make the pledge for the authenticity, accuracy and integrity of the attachedfinancial statements.All the members of the Board of Directors attended the board meeting on which thisreport was examined.The prospective statements contained in this annual report do not constitute anysubstantial commitment to the investors. Investors should pay attention to the risksattached to investment decisions. This report is prepared in both of Chinese and English.The Chinese version shall prevail when there are any controversial statements in thetwo versions.The company has described the existing risks and countermeasures in detail in thisreport. Please refer to Section 4-9 “Prospects for the Future Development of theCompany”. “China Securities Journal”, “Securities Times”, “Hong Kong CommercialDaily” and Juchao Information Network (www.cninfo.com.cn) are the company'sselected information disclosure media. All information of the company is based on theinformation published in the above-mentioned designated media. Investors are advisedto pay attention to investment risks.
The company’s profit distribution plan is approved by the board of directors. Taking3,875,371,532 shares as the base, a cash dividend of 0.1 yuan (tax included) will bedistributed to all shareholders for every 10 shares, and stock dividend is 0. The capitalreserve will not be converted into share capital.
Table of Contents
I.
IMPORTANT NOTICE, TABLE OF CONTENTS, AND DEFINITIONS ...... 2
II. COMPANY PROFILE AND MAIN FINANCIAL INDEX ...................................................................................... 5
III. SUMMARY OF COMPANY BUSINESS ................................................................................................................ 9
IV. MANAGEMENT DISCUSSION AND ANALYSIS .............................................................................................. 11
V. IMPORTANT EVENTS ............................................................................................................................................ 26
VI. STATUS OF SHARE CAPITAL CHANGES AND SHAREHOLDERS ............................................................ 66
VII. STATUS OF PREFERRED SHARES .................................................................................................................. 72
VIII. STATUS OF CONVERTIBLE CORPORATE BONDS ................................................................................... 73
IX. STATUS OF DIRECTORS, SUPERVISORS, SENIOR EXECUTIVES AND EMPLOYEES ........................ 75
X. CORPORATE GOVERNANCE .............................................................................................................................. 83
XI. RELEVANT INFORMATION ABOUT CORPORATE BONDS ....................................................................... 92
XII. FINANCIAL REPORT .......................................................................................................................................... 97
XIII. DOCUMENTS AVAILABLE FOR INSPECTION ......................................................................................... 253
DefinitionTerms to be defined Refers to DefinitionBengang Bancai, Bengang
Listed Company
Refers to Bengang Steel Plates Co., Ltd.Bengang Group Refers to Bengang Group Co., Ltd.Benxi Steel & Iron CO., Bengang Co. Refers to Benxi Steel & Iron (Group) Co., Ltd.Liaoning Provincial State-asset Administration Refers to Liaoning State-owned Asset Supervisory and Management CommitteeSSE Refers to Shenzhen Stock ExchangeBengang Puxiang Refers to Bengang Puxiang Cool Rolling Steel Sheet Co., Ltd.
II. Company Profile and Main Financial Index
I. Company Information
Stock abbreviation Bengang Bancai, Bengangban B Stock Code 000761, 200761Stock exchange for listing Shenzhen Stock ExchangeCompany name in Chinese本钢板材股份有限公司Abbreviation of Company name inChinese
本钢板材Company name in English (If any) BENGANG STEEL PLATES CO., LTD.Abbreviation of Company name inEnglish (If any)
BSPLegal representative Gao LieRegistration Address No.16, Renmin Road, Pingshan District, Benxi City, Liaoning ProvincePost Code of registration Address 117000Office address No.16, Renmin Road, Pingshan District, Benxi City, Liaoning ProvincePost Code of office address 117000Web Address NoneEmail bgbcdm@163.com
II. Contact Information
Secretary of Board of Directors Representative of Securities AffairsName Gao Desheng Chen LiwenAddress
Benxi City, Liaoning Province
| No.16, Renmin Road, Pingshan District, | No.16, Renmin Road, Pingshan District, |
Benxi City, Liaoning ProvinceTel 024-47827003 024-47828980Fax 024-47827004 024-47827004Email bgbcdm@163.com bgbcclw@126.com
III. Information Disclosure and Place for ConsultingPress media for information disclosure China Securities Journal, Securities Times, Hong Kong Commercial DailyWeb address for the annual report as assigned byCSRC
http://www.cninfo.com.cnPlace for inquiry of the annual report Secretary Office of the Board, Bengang Steel Plate Co., Ltd.IV. Change of Business RegistrationOrganization Code 91210000242690243EChanges of principal business activities since listing (if any) No changeChanges of the controlling shareholder in the past (is any) No change
V. Other InformationAccountants’ firm engaged by the Company:
Name of the accountants’ firm BDO China Shu Lun Pan Certified Public Accountants LLPAddress of the accountants’ firm Address: 4/F 61 Nanjing Rd. East, Huangpu, ShanghaiSigning name of accountants Zhu Jinmei, Li GuiyingSponsor engaged by the Company to conduct sustained supervision during the reporting period
√ Applicable □ Not applicable
Name of the sponsor institution
Address of the sponsorinstitution
Name of the sponsor
representative
Sustained supervision periodGuotai Junan Securities Co.,Ltd.
No. 768, Nanjing West Road,Jingan District, Shanghai
Chi Huitao, Yang Keyi
August 5
th, 2020 to December
st
, 2021
Financial consultancy institution engaged by the Company to conduct sustained supervision during the reporting period
□ Applicable √ Not applicable
VI. Main Accounting Data and Financial IndexWhether the Company makes retroactive adjustment or restatement of the accounting data of the last years due to change of theaccounting policy and correction of accounting errors
□ Yes √ No
2020 2019
Changes over last
year
2018Operating income（RMB） 48,684,792,685.58
52,741,353,582.28
-7.69%
50,181,869,721.54
Net profit attributable to the shareholdersof the listed company（RMB）
384,252,740.78
555,646,971.40
-30.85%
1,036,493,236.07
Net profit after deducting of non-
gain/loss attributable to the shareholdersof listed company（RMB）
381,469,784.99
| recurring |
549,528,817.13
-30.58%
1,093,065,140.59
Net Cash flow generated by businessoperation（RMB）
-2,039,000,213.29
6,977,824,041.16
-129.22%
3,619,937,841.93
Basic earnings per share (RMB/Share) 0.099
0.143
-30.77%
0.27
Diluted earnings per share (RMB/Share) 0.099
0.143
-30.77%
0.27
Weighted average net assets yield 1.90%
2.88%
-0.98%
5.64%
End of 2020 End of 2019
Changed over last
year
End of 2018Gross assets（RMB） 65,007,470,749.20
60,731,425,193.90
7.04%
59,632,504,915.83
Net assets attributable to shareholders ofthe listed company（RMB）
21,018,296,389.10
19,487,665,261.17
7.85%
19,126,258,116.67
The lower of the company’s net profit before and after deduction of non-recurring gains and losses in the most recent three fiscal yearsis negative, and the audit report of the most recent year shows that the company’s ability to continue operations is uncertain
□ Yes √ No
The lower of the net profit before and after non-recurring gains and losses is negative
□ Yes √ No
VII. Differences between Domestic and Foreign Accounting Standards
1. Differences of net profit and net assets disclosed in financial reports prepared under IFRS and Chinese
accounting standards.
□ Applicable √ Not applicable
There are no differences of net profit and net assets disclosed in financial reports prepared under IFRS and Chinese accounting standardsduring the reporting period.
2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese
accounting standards.
□ Applicable √ Not applicable
There are no differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accountingstandards during the reporting period.VIII. Main Financial Index by Quarters
Unit: YuanFirst quarter Second quarter Third quarter Fourth quarterOperation income 11,728,574,704.88
10,455,962,555.17
| 12,667,300,144.93 |
13,832,955,280.60
Net profit attributable to theshareholders of the listed company
177,998,575.36
76,645,628.97
| 28,865,084.77 |
100,743,451.68
Net profit after deducting non-recurring gain/loss attributable tothe shareholders of listed company
168,656,828.67
71,228,643.86
| 4,967,865.94 |
136,616,446.52
Net cash flows generated byoperating activities
684,846,620.22
-836,322,327.30
-
| 1,256,153,637.34 |
-631,370,868.87
Whether significant variances exist between the above financial index or the index with its sum and the financial index of the quarterlyreport as well as semi-annual report index disclosed by the Company
□ Yes √ No
IX. Items and Amount of Non-recurring Profits and Losses
√ Applicable □ Not applicable
Unit: YuanItem 2020 2019 2018 NotesGains and losses on disposal of non-currentassets (including the write off part of theprovision for impairment)
-92,695,525.95
-77,292,030.26
-
Government subsidy attributable to profit andloss of current period (except suchgovernment subsidy closely related to thecompany's normal business operation,meeting the regulation of national policy andenjoyed constantly in certain quota orquantity according to a certain standard)
81,193,591.56
| 148,409,630.35 | ||
83,914,522.47
| 86,085,297.03 |
Profit or loss from investment orassets entrusted to others
605,795.19
| 5,041,397.26 |
Gains and losses of debt restructuring 32,800.02
50,640.00
13,500,000.00
| Profits excluded effective hedging business |
operations, from holding transactionalfinancial assets, derivative financial assets,transactional financial liabilities, fair valuechanges in derivative financial liabilities, anddisposal of transactional financial assets andderivative financial assets, financial liabilitiesheld for trading, derivative financial liabilitiesand other debt investmentsOther non-operating income and expensesother than above
1,592,660.62
| related to the company's normal business | |
779,757.58
| 771,191.90 |
Other profit and loss items that meet thedefinition of non-recurring gains and losses
2,084.65
Less: impact of income tax 786,094.20
1,818,703.48
| 22,141.38 |
impact of minority equity (after tax) 54,476.26
123,911.88
| 38,018.98 |
Total 2,782,955.79
6,118,154.27
-
--Explanation for defining non-recurring gains and losses items according to the "Public Offering of Securities Information DisclosureExplanatory Notice No. 1 – Non-Recurring Gains and Losses", and reasons for defining non-recurring gains and losses items listed inthe document as recurring items.
□ Applicable√ Not applicable
There exists no situation of defining non-recurring gains and losses items listed in the document as recurring items.
III. Summary of Company Business
I. The Company's main business during the reporting period
(1) During the reporting period, the company’s main businesses include iron and steel smelting, rolling processing, power generation,
coal chemical industry, special steel profiles, railways, import and export trade, scientific research, product sales, etc. The introductionof world advanced equipment and technology to implement equipment upgrades for the main iron and steel industry and have built ahigh-quality steel base, formed more than 60 varieties, more than 7,500 specifications of product series, the proportion of high value-added and high-tech products reached more than 80%. The leading products for automotive surface panels, home appliance panels,petroleum pipeline steel, container panels, shipboard, etc. are widely used in the fields of automobiles, home appliances, petrochemicals,aerospace, machinery manufacturing, energy and transportation, building decoration and metal products, and are exported to more than60 countries and regions.During the reporting period, the main performance drivers were: the implementation of a new round of technological transformation,the new fifth furnace, the eighth casting machine, and the converter environmental protection transformation and other key projectsreached production and efficiency. Strengthen capital management operations, and complete the 6.8 billion yuan issuance of convertiblebonds. This is the first time in 20 years that the company has achieved super-large-scale direct refinancing through public issuance.Bengang Steel Plate Co., Ltd. won the Quality Award from the Governor of Liaoning Province and was identified as "the first batchof high-value patent cultivation centers in Liaoning Province."During the reporting period, no major changes occurred in the above content.
(2) Affected by the global epidemic during the reporting period, the production and operation of enterprises were severely affected at
the beginning of the epidemic. With the implementation of national policies such as "six stability and six guarantees" and the successof my country's epidemic prevention and control, the production and operation of my country's iron and steel enterprises have graduallyimproved. The company always adheres to the supply-side structural reform as the main line, implements high-quality developmentrequirements, resolutely implements the national, provincial, and municipal epidemic prevention and control work deployments andthe "six stability and six guarantees" requirements, grasps epidemic prevention and control on the one hand, and stabilizes productionand high yield on the other. , Achieved both epidemic prevention and control and production and operation, achieved stable economicdevelopment, continuously improved comprehensive competitiveness, and continued to consolidate industry status.
II.Major Changes in Main Assets
1. Major Changes in Main Assets
Main assets Notes to major changesAccounts receivable financing
The balance as of 31 December 2020 is RMB 4,189,977.9 thousand and it has increasedRMB 1,760,435.4 thousand compared to the beginning balance, which is mainly causedby the increase of notes receivable.Other current assets
The balance as of 31 December 2020 is RMB 5,523,646.8 thousand and it has increasedRMB 5,210,742 thousand compared to the beginning balance, which is mainly caused bythe increase of time deposit.Other non-current assets
The balance as of 31 December 2020 is RMB 995,840.3 thousand and it has increased
RMB 287,337.8 thousand compared to the beginning balance, which mainly due to theincrease in the rental deposit.
2. Main Information of Overseas Assets
□ Applicable √ Not applicable
III. Analysis on Core CompetitivenessThe company adheres to the innovation-driven and "quality + service" development model, with the strategic goal of building aninternationally competitive high-quality plate base, a domestic first-class special steel base and a comprehensive service provider, andexerts a strategic leading role, focusing on improving quality and efficiency, In terms of product upgrades, technological innovation,green and intelligent manufacturing, we will innovate management ideas, enhance the core competitiveness of enterprises, and promote
enterprises to achieve high-quality, green and intelligent development.
1. Manufacturing capabilities. Innovate management ideas, strengthen professional management and control of the entire chain, and
continuously improve corporate management efficiency. All departments and units interact with each other, continue to implement theconcept of priority on output, adhere to the iron system as the core, focus on the process connection of iron and steel, and rationallymatch the production line and resource production organization principles of the steel post process, so that the production process andoperation Continuously standardize and refine, make every effort to maximize quality, efficiency and production scale, and promotethe entire production chain toward high-end manufacturing.
2. Equipment transformation and upgrading. In 2020, the company issued a fixed asset investment plan of 5.14 billion yuan. A new
round of large-scale technological transformation represented by key projects such as the new No. 5 blast furnace, No. 8 castingmachine, No. 4-6 converter environmental protection transformation, and special steel electric furnace upgrade and transformation. Atpresent, the No. 5 blast furnace energy-saving and environmental protection renovation project, No. 8 casting machine, and thesteelmaking 4-6 converter energy-saving and environmental protection renovation project have been successfully completed and putinto production; the special steel electric furnace upgrade and renovation project, 50% of the project construction progress has beenachieved in 2020.
3. New product development capabilities. Successfully developed 36 new varieties. The high-strength complex phase steel CP980 for
roll forming has filled the blank of Bengang Steel Plates’s cold-rolling production; the oil drill uses steel series products to achievemass supply in the international market, and E4340 steel is produced by continuous casting instead of die casting. It is a domesticinitiative to replace imported high-end products. In terms of product certification, 33 certification projects have been carried out,involving 150 brands and 178 specifications. The 2000MPa hot-formed steel has passed the certification of AIWAYS and Great WallMotors; the cold-rolled CR420LA and galvanized CR240LA products have passed the Pan Asia certification.
4. Technological innovation ability. In terms of scientific and technological cooperation, to undertake meetings of the Expert Committee
of the Metals, establish the strategic docking between Bengang group and China Iron and Steel Research Group, strengthen cooperationwith Northeastern University and other universities and research institutes, and invite national academicians and authoritative expertsto discuss the latest technological progress and industry development trends. , To direct and to promote the high-quality developmentof Benxi Iron and Steel Group. In terms of scientific and technological achievements, it has won 4 metallurgical science and technologyawards and 3 scientific and technological progress awards in Liaoning Province. Among them, "the research and development of hotstamping steel with the highest strength and extra-thick specifications and its serial development" won the first prize in the metallurgicalindustry. The industry's highest award. In terms of intellectual property rights, 3 national standards and 11 corporate standards weredrafted; 211 patents were accepted by the National Bureau, a year-on-year increase of 21.2%; 108 patents were authorized by theNational Bureau, including 16 inventions and 92 utility models. Bengang Steel Plate Co., Ltd. won the Quality Award from theGovernor of Liaoning Province and was identified as "the first batch of high-value patent cultivation centers in Liaoning Province."
5. Green development capability. In combination with the steel industry and local ultra-low emission policy requirements, the company
has the courage to assume social responsibilities, relying on professional planning and research institutions to prepare an environmentalprotection improvement plan and an annual implementation plan. Through all-round green improvement such as cleaner productionlevel, three waste management, environmental protection management, the company is striving to achieve "ultra-low emissions",achieve community-based environmental quality, promote the integration of industry and city, and build the company into an"ecological steel" that develops harmoniously with the city. plant". At present, the two dust collectors of the second sintering productof the iron smelting plant have completed the transformation to meet the emission standards; the CCPP power generation project usingsurplus gas is planned to be completed and put into operation in August 2021; the new mixed material yard and the fully enclosedproject of the material yard are also being planned Under design, it is expected to be completed and put into operation in 2024.
6. Intelligent manufacturing capabilities. The company has steadily promoted the construction of related projects on the integration of
industrialization and industrialization, and intelligent chemical plants. In 2020, it has issued an investment plan of 63 million yuan forthe upgrading of information infrastructure, production and manufacturing management, intelligent equipment for cold rolling areas,and the upgrading and transformation of railway transportation dispatching and commanding information systems Intelligenttransformation in other fields. It plans to increase investment in information technology and intelligent manufacturing, keep up withthe pace of enterprise development in the era of big data, and achieve high-quality development.
7. Marketing ability. The company adheres to the benefit-oriented approach, optimizes the product structure, achieves steady growth
in the output of its leading products, and significantly enhances the core competitiveness of its products. Intensify market development,reasonably match resources, develop 32 new customers and 45 new steel grades, and achieve the goal of 100% production and salesrate. The products are sold to more than 30 countries along the "Belt and Road", with 1 million tons, accounting for 42% of total exports.It has completed the certification of 70 grades of cold-rolled, galvanized, pickled, and special steel products, an increase of 25% overlast year, covering users of automotive sheets, home appliance sheets, and special steel. Some of the company's automotive sheetproducts have been included in the Mercedes-Benz BQF (Global Purchasing) list. The key certification work of BMW, Mercedes-Benz,Renault and others have achieved phased results; the inspection of SGS, ELV and Reach products has been completed.
8. Brand building. The company builds a symbiosis and shared quality management model of "supporting a better life with steel power",
attaches importance to the construction of corporate culture, actively expands brand influence, strives to fulfill social responsibilities,enhances corporate social image, and successfully wins the 2019 Liaoning Provincial Governor Quality Award. The company is theonly steel company to win this honor.
IV. Management Discussion and Analysis
I. GeneralDuring the reporting period, the company adhered to the guidance of Xi Jinping’s Thought on Socialism with ChineseCharacteristics for a New Era, thoroughly implemented the spirit of General Secretary Jinping’s important speech duringhis inspection in Liaoning and the seminar on deepening the revitalization of Northeast China, and insisted on supply-side structural reform as the main line. Implement high-quality development requirements, resolutely implement thenational, provincial, and municipal epidemic prevention and control work deployment and the "six stability and sixguarantees" requirements, focus on epidemic prevention and control on the one hand, and stabilize production and highyield on the other, and achieved both epidemic prevention and control and production and operation and realized thestable development of economic operation. The annual production of pig iron was 10.069 million tons, a year-on-yearincrease of 3.52%; crude steel 10.31 million tons, a year-on-year increase of 3.47%; hot-rolled plates 12.235 million tons,a year-on-year decrease of 0.26%; cold-rolled plates 5.438 million tons, a year-on-year increase of 0.4%; special steel721,000 tons, an increase of 48.21% year-on-year, and the realization of "three zeros" in safe production with largepersonal accidents, large fire accidents and major equipment accidents. Reviewing the work of the year, it is mainlyreflected in the following aspects:
(1) Management innovation. Taking benefit as the guide, improve the assessment system of the responsibility certificate,
increase the "cost rejection index" for factories and mines on the basis of the bonus coefficient of the main contract, andimplement the "dual switch" assessment. Organize the signing of the letter of responsibility, and require each unit todecompose the indicators to the work area level by level, and guide the grassroots units to sign the responsibility letterindicators with the work area to achieve full coverage of the signing of the responsibility letter and no dead ends, so thatthe leadership team at all levels can focus more on the performance appraisal indicators and to achieve a goodperformance-oriented situation. The company learned from the advanced experience of steel companies such as AngangIron and Steel Co., Ltd., formulated a "three-step" benchmarking management model of “bright indicators, selectbenchmarks,” “align indicators, find gaps,” “determine measures, and create benefits”, and build a comprehensivebenchmarking management model and improve management level. Strengthen capital management operations, andcompleted the 6.8 billion yuan issuance of convertible bonds for plate companies. This is the first time in 20 years that ithas achieved super-large-scale direct refinancing through a public offering.
(2) Scientific and technological innovation work. Adhering to the design concept of lightweight, green and environmental
protection, aiming at stable quality, reasonable cost, high added value and strong market competitiveness, closelycombining market demand and future technological development, considering the characteristics of its own productionline, and developing marketable products New product. Successfully developed cold-rolled complex-phase steel CP980,filled the blank in the production of cold-rolled complex-phase steel, and seized the high-end product market; oil drillsused steel series products to achieve mass supply in the international market, and E4340 steel was successfully replacedby continuous casting instead of die casting production and such replacement of imported high-end products was the firstcase in China. Strengthen cooperation with Northeastern University and other universities and research institutes, invitenational academicians and authoritative experts to jointly discuss the latest technological progress and industrydevelopment trends, and direct and to promote high-quality development. Bengang Steel Plate Co., Ltd. was identified as"the first batch of high-value patent cultivation centers in Liaoning Province".
(3) Production and operation work. Adhere to the focus on smooth operation, cost, and quality, carry out hidden danger
investigations, benchmark potential, increase efficiency and reduce consumption in each process, and promote stable andhigh output. Further optimize the production organization, give full play to the role of dispatching, command andcoordination, scientifically and efficiently organize the comprehensive balance of various production, and steadilypromote the work of reducing costs and increasing efficiency. Adhere to the implementation of the cost management andcontrol system and the daily settlement mechanism, carry out comprehensive benchmarking and process cost analysis,and achieve dynamic management and control of key indicators and cost operations.
(4) Party building and group work. Earnestly implement the arrangements of the Party Central Committee, the Provincial
Party Committee, and the company’s party committees, and carry out the activities of "Grassroots Party Building WorkConstruction Year" and "Grassroots Party Building System Implementation Year". Revise and improve the party buildingwork system, strengthen the education and management of party members, and the standardization and standardizationof grassroots party organizations have been continuously improved. Organize the "Craftsman Cup" employee vocationalskills competition and the "Ankang Cup" competition to continuously stimulate the labor enthusiasm and innovationvitality of the majority of employees.
(5) People's livelihood and social responsibility. The multi-dimensional parking lot project at Gate 4 added 251 parking
spaces; the bus in the factory was put into operation, which met the commuting and parking needs of employees to thegreatest extent. Fully implement the three-year special rectification action for safety production, adhere to themanagement and control of major hazards and risk points, carry out the "clearing" of potential accidents, adhere to the"anti-three violations", and establish a sound safety assessment and evaluation system.
II. Main Business Analysis
1. General
For relevant information please refer to “Management Discussion and Analysis 1. General”.
2. Income and Cost
(1) Breakdown of Operating Income
Unit: Yuan
2020 2019
Change over last
yearAmount Proportion Amount ProportionTotal operating income 48,684,792,685.58
100%
52,741,353,582.28
100%
-7.69%
By industriesIndustry 48,684,792,685.58
100.00%
52,741,353,582.28
100.00%
-7.69%
By productsSteel plate 45,321,849,577.55
93.09%
46,805,252,792.90
88.74%
-3.17%
Others 3,362,943,108.03
6.91%
5,936,100,789.38
11.26%
-43.35%
By regionsNortheast 20,420,940,894.42
41.95%
20,024,243,641.60
37.97%
1.98%
North China 1,608,496,520.50
3.30%
5,084,223,402.71
9.64%
-68.36%
East China 21,783,663,312.31
44.74%
20,568,857,942.71
39.00%
5.91%
Northwest 48,736,790.89
0.10%
57,451,092.38
0.11%
-15.17%
Southwest 241,981,145.95
0.50%
232,028,336.48
0.44%
4.29%
Central south 25,508,604.19
0.05%
26,564,062.51
0.05%
-3.97%
Export 4,555,465,417.32
9.36%
6,747,985,103.89
12.79%
-32.49%
(2) Industry, Product and Regions Accounting for the Company’s Operating Income or Profit over 10%
√ Applicable □ Not applicable
Unit: Yuan Operating income
Operating costs Gross margin
| Operating income |
change over last
year
Operating costschange over last
year
Gross marginchange over lastyearBy industriesIndustry48,684,792,685.58
46,392,180,562.59
4.71%
-7.69%
-5.73%
-1.98%
By productsSteel plate45,321,849,577.55
43,322,474,075.93
4.41%
-3.17%
-1.32%
-1.79%
Others3,362,943,108.03
3,069,706,486.66
8.72%
-43.35%
-42.20%
-1.81%
By regionsNortheast20,420,940,894.42
19,414,606,651.84
4.93%
1.98%
4.48%
-2.27%
North China1,608,496,520.50
1,526,943,028.55
5.07%
-68.36%
-67.91%
-1.35%
East China21,783,663,312.31
20,791,821,739.26
4.55%
5.91%
8.27%
-2.09%
Northwest48,736,790.89
46,538,965.99
4.51%
-15.17%
-14.06%
-1.24%
Southwest241,981,145.95
231,749,437.80
4.23%
4.29%
6.74%
-2.20%
Central south25,508,604.19
24,194,939.67
5.15%
-3.97%
-2.56%
-1.37%
Export4,555,465,417.32
4,356,325,799.48
4.37%
-32.49%
-31.64%
-1.20%
Operating data of recent one year according to adjusted statistics caliber at the year-end in the case that the Company's main businessstatistics caliber has changed during the reporting period
□ Applicable √Not applicable
(3) Whether the Company’s Physical Sales Income Exceeded Service Income
√ Yes □ No
Industry classification Item Unit 2020 2019
Change over lastyearSteel rolling processingindustry
Sales ton12,968,385.12
12,936,378.68
0.25%
Production ton12,940,697.06
12,753,498.73
1.47%
Inventory ton 489,522.19
461,834.13
6.00%
The main reasons that the relevant data changed more than 30%
□ Applicable √ Not applicable
(4) Performance of Significant Sales Contract Signed-up in this Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Operating Cost
Industry classification
Unit: Yuan
Industryclassification
Item
2020 2019
Change over last
yearAmount Proportion Amount ProportionSteel rollingprocessing industry
Raw material23,138,475,447.81
49.88%
24,287,695,988.38
49.35%
0.52%
Steel rollingprocessing industry
S
| upplementary |
materials
2,089,395,547.62
4.50% 2,244,278,919.58
4.56%
-0.06%
Steel rollingprocessing industry
tools
737,780,144.94
| Spare parts and |
1.59%
792,470,544.15
1.61%
-0.02%
Steel rollingprocessing industry
Fuel12,727,140,058.39
27.43%
13,563,168,678.04
27.56%
-0.13%
Steel rollingprocessing industry
Energy2,687,362,561.57
5.79%
2,886,572,220.88
5.87%
-0.07%
Steel rollingprocessing industry
Salary andbenefits
1,980,205,516.91
4.27%
2,132,408,812.44
4.33%
-0.06%
Steel rollingprocessing industry
Depreciation2,191,070,638.31
4.72%
2,474,423,868.41
5.03%
-0.31%
Steel rollingprocessing industry
Others840,750,647.04 1.81% 830,395,613.74
1.69%
0.12%
Steel rollingprocessing industry
Total46,392,180,562.59 100.00%
49,211,414,645.62
100.00%
0.00%
(6) Whether Changes Occurred in Consolidation Scope in the Reporting Period
□ Yes √No
(7) Relevant Information of Significant Changes or Adjustment of the Business, Product or Service in the
Reporting Period
□ Applicable √ Not applicable
(8) Information of Main Customers and Main Suppliers
Information of the Company’s main customers
Total sales amount of the top five customers (Yuan) 9,461,208,019.24Total sales amount of the top five customers accounted for the
annual sales
19.43%
| proportion of total |
The proportion of the total sales of the related parties in the top five customers 3.35%
Information of the top 5 customersNo Name Amount (Yuan) Proportion1 Ouyeel Cloud Trade Co., Ltd. 3,427,597,868.74
7.04%
2 Benxi Beiying Steel & Iron (Group) Co., Ltd. 1,631,630,570.63
3.35%
3 Xiamen Jian Fa Metal Co., Ltd.1,561,111,934.43
3.21%
4 Ningbo AUX Trade Co., Ltd.1,492,384,207.69
3.07%
Shanghai Min Xing Da International Trade Co.,Ltd.
1,348,483,437.75
2.77%
Total -- 9,461,208,019.24
19.43%
Other information of principal customers
□ Applicable √ Not applicable
Information of the Company’s main suppliers
Total purchase amount of the top five suppliers (Yuan) 20,250,289,490.17Total purchase amount of the top five suppliers accounted for the proportion oftotal purchase
43.65%
The proportion of the total purchase of the related parties in the top five suppliers
34.29%
Information of the top 5 suppliersNo. Name Amount (Yuan) Proportion1 Benxi Beiying Steel & Iron (Group) Co., Ltd. 5,482,888,445.65
11.82%
Bengang
Trading Co., Ltd.
5,237,730,233.06
| Group International Economic and |
11.29%
3 Benxi Steel & Iron (Group) Mining Co., Ltd.5,186,341,981.67
11.18%
| Liaoning Electric Power Co., Ltd. Benxi Electric |
Power Supply Company
2,489,089,422.71
5.37%
5 Heilongjiang Dragon Coal Group Co., Ltd.1,854,239,407.08
4.00%
Total -- 20,250,289,490.17
43.65%
Other information of principal suppliers
□ Applicable √ Not applicable
3. Expenses
Unit: Yuan2020 2019 Change over last year
Notes to significantchange
Selling and distribution expenses 97,279,280.21
1,096,688,903.70
-91.13%
Due to the application ofnew revenue standardGeneral and administrative expenses 792,826,294.81
831,945,841.56
-4.70%
Financial expenses 364,775,155.62
681,842,689.23
-46.50%
Loss of exchangedecreases and interestincome increases duringthe current periodResearch and development expenses 37,989,623.28
30,780,463.74
23.42%
4. Research and Development Input
√ Applicable □ Not applicable
Comprehensively improve the level of innovation and the ability to generate profits and increase efficiency, strengthen varietyadjustment and market development, improve product quality stability and assurance capabilities, promote low-cost and greenmanufacturing technology, and determine the company's technology project plan based on the three elements of variety, quality andcost. ; Promote school-enterprise cooperation and industry-university-research cooperation, promote the transformation of scientificand technological achievements of universities and scientific research institutes, and drive technological development of enterprises;plan to develop 30 new products and more than 10 foreign cooperation projects throughout the year; The quality has been significantlyimproved due to the increased R&D investment and some products have reached the leading domestic level, which has improvedcorporate profitability.Information of research and development input by the company
2020 2019 Change over last yearNumber of Research andDevelopment personnel
1,732
1,632
6.13%
Proportion of number ofResearch and Developmentpersonnel
10.34%
9.18%
1.16%
Amount of Research andDevelopment Investment (InRMB)
1,541,000,000.00
1,287,080,000.00
19.73%
Proportion of Research andDevelopment investment tooperating income
3.17%
2.44%
0.73%
Amount of capitalized
and Development investment
0.00
| Research |
0.00
0.00%
Proportion of capitalizedResearch and Developmentinvestment accounted to totalResearch and Developmentinvestment
0.00%
0.00%
0.00%
Illustrations of the prominent change in proportion of research and development input occupying the operating income over sameperiod last year
□ Applicable √ Not applicable
Illustrations of significant change in the research and development input’s capitalization rate and its reasonableness
□ Applicable √ Not applicable
5. Cash Flow
Unit: YuanItem 2020 2019 Change over last yearSubtotal of cash inflows fromoperating activities
40,062,379,161.40
48,140,957,956.69
-16.78%
Subtotal of cash outflows fromoperating activities
42,101,379,374.69
41,163,133,915.53
2.28%
| Net cash flows from operating | -2,039,000,213.29 | 6,977,824,041.16 | -129.22% |
Subtotal of cash inflows frominvesting activities
14,037,738.77
| activities | |
53,984,827.07
-74.00%
Subtotal of cash outflows paidfor investing activities
6,213,928,829.62
4,598,859,687.86
35.12%
Net cash flows from investingactivities
-6,199,891,090.85
-4,544,874,860.79
36.42%
Subtotal of cash inflows fromfinancing activities
22,997,390,314.56
17,484,678,971.97
31.53%
Subtotal of cash outflows fromfinancing activities
18,941,067,286.47
18,304,173,598.95
3.48%
Net cash flows from financingactivities
4,056,323,028.09
-819,494,626.98
234.80%
Net increase in cash and cashequivalents
-4,211,997,393.46
1,688,866,366.61
-349.40%
Illustrations of key factors of significant changes over same period last year
√ Applicable □Not applicable
Notes:
(1) Net cash flows generated from operating activities decreased 129.22% compared to the previous period, mainly
because the increase of cash received from sales of goods is less than the increase of cash paid for goods.
(2) Subtotal of cash inflows from investing activities decreased 74% compared to the previous period, mainly because
the decrease of cash withdrawn from purchase of financial products.
(3) Subtotal of cash outflows from investing activities increased 35.12% compared to the previous period, mainly
because the increase of cash paid for investment.
(4) Net cash flows from investing activities increased 36.42% compared to the previous year, mainly because the increase
of cash paid for investment.
(5) Subtotal of cash outflows from financing activities increased 3.48% compared to the previous period, mainly because
the increase of cash repayment.
(6) Net cash flows from financing activities increased 234.8% compared to the previous period, mainly because the
issuance of convertible corporate bonds in the current period.
Illustrations of significant difference between cash flow from operating activities and net profit during the reporting period
□ Applicable √Not applicable
III. Analysis of Non-core Business
√Applicable □ Not applicable
Unit: YuanAmount Proportion in total profit Explanation of cause Whether sustainable
Investment income13,951,362.33
3.35%
Due to external equity investment NoImpairment of assets-67,185,869.37
-16.12%
Due to provision of impairment of
finished products
NoNon-operating income4,328,563.52
1.04%
Due to income raised fromscrapping of non-current assets
NoNon-operating expenses95,724,280.44
22.96%
Due to scrapping of assets incurrent period
NoIV. Assets and Liabilities
1. Significant Change of Assets Components
Adjustment to the beginning balance of the current period due to the first adoption of new revenue standards or new leasing standardssince 2020
√ Applicable □ Not applicable
Unit: Yuan
Ending balance of 2020 Beginning balance of 2020
Proportionchange
Notes tosignificant
changeAmount
Proportion inthe total assets
(%)
Amount
Proportion inthe total assets(%)Cash at bank and onhand
13,126,666,915.26
| 20.19% |
18,415,844,397.77
30.32%
-10.13%
Accounts receivable 245,217,182.66
0.38%
235,696,265.66
0.39%
-0.01%
Inventories 9,040,065,342.65
| 13.91% |
7,700,397,685.61
12.68%
1.23%
Long-term equityinvestment
0.00%
0.00%
Fixed assets2,742,064.73
0.00%
2,642,998.70
0.00%
0.00%
Construction inprocess
26,284,567,956.44
| 40.43% |
26,123,375,492.40
43.01%
-2.58%
Short-term loans 1,839,933,715.58
2.83%
1,833,853,572.58
3.02%
-0.19%
Long-term loans 10,067,731,000.00
| 15.49% |
13,151,478,000.00
21.66%
-6.17%
3,502,934,427.65
5.39%
4,849,675,910.73
7.99%
-2.60%
2. Assets and Liabilities Measured at Fair Value
√Applicable □ Not applicable
Unit: yuanItem
Beginning
balance
Profit andloss fromchanges infair value inthe currentperiod
Accumulated
fair valuechangesrecognised in
equity
Impairment
current period
Purchaseamountduring thecurrent period
Sales amountduring thecurrent period
Otherchanges
EndingbalanceFinancialassets
4.O
instrumentinvestments
1,042,024,829
.00
| ther equity |
1,042,024,8
29.00
Subtotal offinancialassets
1,042,024,829
.00
1,042,024,8
29.00
Total
1,042,024,829
.00
1,042,024,8
29.00
Financialliabilities
0.00
0.00
3. Restricted Assets by the End of the Period
Items Ending balance Reason
Cash at bank and on hand
3,897,249,320.14 Deposit for notes and L/C
| Cash at bank and on hand |
| Accounts receivable financing |
887,473,044.29 Pledged for acceptance bill
ther equity instrument investments 1,037,735,849.00 Pledged for loans
| O |
| F |
ixed assets 94,790,118.09 Mortgage for fund lending
ntangible assets 37,116,386.66 Mortgage for fund lending
Total 5,954,364,718.18
V. Investment
1. General
□ Applicable √ Not applicable
2. Acquiring Significant Equity Investment in the Reporting Period
□ Applicable √ Not applicable
3. Undergoing Significant Non-equity Investment in the Reporting Period
□ Applicable √ Not applicable
4. Investment of Financial Assets
(1) Investment in Securities
□ Applicable √ Not applicable
There was no investment in securities during the reporting period.
(2) Investment in Derivatives
□Applicable √ Not applicable
There was no investment in derivatives during the reporting period.
5. Use of Raised Funds
√ Applicable □ Not applicable
(1) Use of Raised Funds
√Applicable □ Not applicable
Unit: 10 thousand yuan
Year
Way ofraisingfunds
Total amount
of raised
funds
Usedamount of
raisedfund this
year
The total
used
fundsraised
Thetotalamount
| amount of | of funds |
raisedforchange
of
during
thereporting period
Cumulative totalamount of
fundsraised forchange of
purpose
Cumulativ
e
of totalraisedfunds for
| changes of |
purposes
The totalamount of
fundsraised not
used
Thepurpose
and
of theraisedfunds notyet used
| destination | Amount of |
funds
being idlefor morethan twoyears
2018
Privateplacementto raisefunds
396,580
| raised after | ||
9,390.49
327,758.9
68,821.1
Deposit
2020
Issue ofconvertible bonds
675,920
246,295.9
246,295.9
429,624.03
Deposit
Total -- 1,072,500
255,686.4
574,054.8
0.00%
498,445.13
-- 0
Description of the overall use of raised funds
1. The company's use of idle raised funds to
funds in disguised form or affecting the normal progress of the investment plan of raised funds. The sponsor of the company's non-public offering agreed to the company's use
| of idle raised funds to temporarily supplement liquidity and issued the "Guotai Junan |
Securities Co., Ltd. Verification Opinions on the Company's Use of Idle Raised Funds to Supplement Liquidity Provisionally".As of July 27, 2020, the company has returned the above-
supplementary liquidity to the company's special account for raised funds.The funds raised from the non-public offering of shares in July 2020 for temporarily supplement working capitalThe company used idle raised funds of RMB 666,000,000.00 (RMB 370,000,000.00 for the cold-rolled high-
| strength steel |
transformation project and RMB 296,000,000.00 for the third cold-rolling plant hot-
tempo
| rarily supplement the working capital. The 4th meeting and the 12th meeting of the 8th Board of Supervisors reviewed and |
approved. The independent directors of the company have issued clear opinions and fulfilled the necessary decision-
procedures. T
| he use of idle raised funds to temporarily supplement liquidity matters will not change the use of raised funds or affect |
the normal progress of the investment plan with raised funds, there is no situation that harms the interests of shareholders,
time for a single replenishment of liquidity does not exceed 12 months. The company has promised not to use idle raised funds
| for |
high-risk investments, which is in line with "Guidelines for the Supervision of Listed Companies". No.-Regulatory Requirements
relevant laws, regulations and regulatory documents.The company's use of idle raised funds to temporarily supplement working capital does not involve changing the use of raised
| funds |
in disguised form or affecting the normal progress of the investment plan of raised funds. The sponsor of the company's non-
offering agreed to the company's use of idle raised funds to temporarily supplement working capital and issued the "Guotai Ju
| nan |
Securities Co., Ltd. Verification Opinions on the Company's Use of Idle Raised F
December 31, 2020, the company used idle funds raised from non-
| public issuance of stocks to temporarily supplement the balance |
of working capital of RMB 666,000,000.00.
2. The temporary supplement of liquidity with funds raised from the public issuance of convertible corporate bonds
The company uses idle raised funds of 4,180,000,000.00 yuan (high grade high magnetic induction non-
1,010,000,000.00 yuan, steelmaking plant No. 8
| caster project 220,000,000.00 yuan, ironmaking plant No. 5 blast furnace capacity |
replacement project 800,000,000.00 yuan, special steel electric furnace upgrade and transformation project 1,300,000,000.00 y
CCPP power generation project 700,000,000.00 yuan, steelmaking plant No. 4-
| 6 converter environmental protection renovation project 150,000,000.00 yuan) temporary supplement of working capital matters. The fourteenth meeting of the eighth board of |
directors of the company held on July 28, 2020, Deli
independent directors of the company have issued clear consent and fulfilled the necessary decision-
| making procedures. This time |
the use of idle raised funds to temporarily suppl
of the investment of raised funds. There is no situation that harms the interests of shareholders, and the time for a single
| replenishment |
of liquidity does not exceed 12 months. The company has promised not to use idle raised funds for high-
complies with the "Guidelines for Supervision of Listed Companies No. 2-
| Listed Companies The regulatory requirements for the |
management and use of raised funds”, the “Shenzhen Stock Exchange Stock Listing Rules”, and the “
regulatory documents.The company's use of i
| dle raised funds to temporarily supplement working capital does not involve changing the use of raised funds |
in disguised form or affecting the normal progress of the investment plan of raised funds. The sponsor of the company’s publi
issuance of converti
| ble corporate bonds agreed to the company's use of idle raised funds to temporarily supplement liquidity and issued the "Guotai Junan Securities Co., Ltd. Verification Opinions on the Company's Use of Idle Raised Funds to Supplement |
Liquidity Provisionally".As of December 31, 2020, the company used idle funds raised from the public issuance of convertible corporate bonds to tempor
supplement the balance of working capital of RMB 4,180,000,000.00.
3. Use of surplus funds raised
During the reporting period, the company did not use surplus funds raised.
4. The use of over-raised funds
During the reporting period, the company did not use over-raised funds.
5. Purpose and destination of unused raised funds
As of December 31, 2020, the company has excluded t
| he aforementioned "Preliminary Investment and Replacement of Raised Funds Investment Projects", "Present Investment and Replacement of Funds Raised in Investment Projects with Idle Raised Funds" and |
"Use of Idle Raised Funds for Temporary Supplement of Wor
the remaining funds raised are temporarily stored in a special account for raised funds.
6. Other usage of raised funds
During the reporting period, the company had no other use of raised funds.
7. Change the use of funds for investment projects with raised funds
During the reporting period, the company's investment projects with raised funds remained unchanged.
8. Problems in the use and disclosure of raised funds
| During the reporting period, the company strictly followed the "Shenzhen Stock Exchange Stock Listing Rules", the "Guidelines for |
Shang [2015] No. 65) a
| nd the company's "Raise Funds" Management System" and other relevant regulations manage the special |
account of raised funds, and the investment projects of raised funds will be implemented as planned. The use and management o
company's raised funds ar
| e legal and effective, and it has strictly fulfilled its information disclosure obligations. There is no untimely, |
untrue, incorrect, or incomplete disclosure, and there is no violation of the management of raised funds.
9. Approval of special report
This special report was approved by the board of directors on April 26, 2021.
(2) Fundraising commitments
√Applicable □ Not applicable
Unit: 10 thousand yuan
projects and over-
raised funds
Whether
theprojecthas beenchanged(including partialchanges)
Raisedfunds
| Committed investment | promised |
totalinvestment
Totalamount
ofinvestme
nt afteradjustme
nt (1)
Amountinvested
during
the
period
Accumul
atedinvestme
ntamountas of the
| reporting | end of the period |
(2)
Investme
ntprogressas of theend
(3)＝
(2)/(1)
Date of
theprojectreaches
theexpected
usablestatus
Benefitsachieved
duringthe
| of the period | reporting |
period
Whether
theexpectedbenefits
areachieved
Whether
theproject
haschangedsignifican
tlyCommitted invested projectsHigh Strength ColdRolling SteelRenovation Project
No 226,580
feasibility
226,580
9,390.49
187,466.2
82.74%
31.12.2017
5,357.65
No No
| The Third Cold Rolling |
Work Hot-DipGalvanizingProduction LineProject
No 70,000
70,000
40,292.61
57.56%
31.12.2018
8,490.1
No NoRepayment of bankloans
No 100,000
100,000
100,000
100.00%
Not
applicabl
e
NoHigh grade, highmagnetic inductionnon-oriented siliconsteel project
No 101,620
101,620
0.12%
Notapplicable
NoSteelmaking Plant No.8 Casting MachineProject
No 33,500
33,500
9,864.44
9,864.44
29.45%
31.10.2020
2,819.04
No NoCapacity ReplacementProject of No. 5 BlastFurnace in IronmakingPlant
No 96,000
96,000
13,322.74
13,322.74
13.88%
31.11.2020
-3,749.14
No NoSpecial Steel ElectricFurnace UpgradeProject
No 141,600
141,600
11,703.34
11,703.34
8.27%
Not
applicabl
e
NoCCPP powergeneration project
No 83,300
83,300
9,570.15
9,570.15
11.49%
Notapplicable
NoSteelmaking plant No.4-6 converterenvironmentalprotection renovationproject
No 19,900
19,900
1,712.3
1,712.3
8.60%
31.12.2020
No NoRepayment of bankloans
No 200,000
200,000
200,000
200,000
Not
applicabl
e
No
Subtotal -- 1,072,500
1,072,500
255,686.4
574,054.8
----12,917.65
-- --Over-raised fundsNot applicable
NoTotal -- 1,072,500
1,072,500
255,686.4
574,054.8
-- -- 12,917.65
-- --
Situation and cause offailure to meet plannedprogress or projectedearnings (disclosed byproject)
1. The market environment has undergone major changes. Although the cold-rolled high-strength steel
transformation project and the third cold-rolling plant hot-dip galvanizing production line project havebasically reached production capacity and profitability has improved, there is still a need to steadilyincrease the production of high value-added products. More customers recognized the new line ofproducts.
2. The No. 8 caster engineering project of the steelmaking plant reached the expected usable state in
October 2020, and the capacity is in the ramp-up phase this year, and the expected profit in this period hasnot been reached; the capacity replacement project of the No. 5 blast furnace of the iron smelting plantreached the expected usable status in November 2020. This year is in a ramp-up phase of production
| capacity, and after considering the provision for impairment of assets related to the replacement capacity of | ||
the original No. 5 blast furnace, the expected profit has not been reached in this period.Description of majorchanges in projectfeasibility
None.Amount, use andprogress of usage ofover-raised funds
Not applicable
Change in theimplementationlocation of the raisedfunds investmentproject
Not applicable
Adjustment ofimplementationmethods of fund-raising investmentprojects
Not applicable
The initial investmentand replacement of thefundraising investmentproject
Applicable
Refer to the Contents in Special Report III 3Temporaryreplenishment ofworking capital withidle raised funds
Applicable
Refer to the Contents in Special Report III 4
for the rest of raisedfund in the projectimplementation
Applicable
There was no surplus of funds raised for project implementation this year.Use and destination ofraised funds that havenot been used
Refer to the Contents in Special Report III 7Problems or othersituations in the use
The amount and reasonand disclosure of raised
funds
None.
(3) The situation for raised funds change project
□ Applicable √ Not applicable
During the reporting period, the company did not have any changes in the fundraising project.
VI. Significant Assets and Equity Sold in Reporting Period
1. Significant Assets Sold
□ Applicable √ Not applicable
There was no significant asset sold during the reporting period.
2. Substantial Equity Sold
□ Applicable √ Not applicable
VII. Analysis on Main Subsidiaries and Share Participating Companies
√ Applicable □ Not applicable
Main subsidiaries and the joint-stock companies influencing over 10% net profit of the Company
Unit: YuanCompany Name
Companytype
Mainbusiness
Registered
capital
Total assets Net assets
Operating
income
Operatingprofit
Net Profit
Puxiang CoolRolling Steel
| Sheet Co., Ltd. |
Subsidiaries
and salesof steel
1,920,000,000.00
5,184,119,484.
2,024,536,003.56
7,327,060,880.66
56,003,512.60 42,005,550.17Acquirement and disposal of subsidiaries during the reporting period
□ Applicable √ Not applicable
Illustration of main joint-stock companiesNone
VIII. Structure Entities controlled by the Company
□ Applicable √ Not applicable
IX. Prospect for Future Development of the Company
(1) The development trend of the industry and the market competition pattern the company faces
In 2021, from the perspective of the international economic situation, there are many uncertainties in the changes in theepidemic and the external environment. Next year, the world economic situation will remain complex and severe, therecovery will be unstable and uneven, and various derivative risks caused by the impact of the epidemic cannot be ignored.From the perspective of the domestic economic situation, China will enter the "14th Five-Year Plan" period, and creatinga new pattern of "dual cycles" will be the main strategic direction, and "expansion of domestic demand" has become animportant strategic basis. At present, China has become the only major economy in the world to achieve positive economicgrowth. The three major battles have made decisive achievements. The rapid economic recovery will drive a significantincrease in steel demand. At the same time, we must also see that steel production maintains high strength under theexpected upward pull of demand, high steel inventories are running high, steel prices are under pressure, and other issuesare more prominent, and it is also very difficult for companies to improve economic efficiency. Therefore, we mustmaintain a clear understanding, fully implement the national "revitalizing the Northeast" decision and deployment, firmlygrasp the development opportunities of "digital Liaoning, intelligent building a strong province", give full play to the
advantages of resources, location and other advantages, maintain strategic determination, and actively Responding tomarket changes, we insist on focusing on economic benefits, improve quality and increase production, reduce costs andincrease efficiency, and ensure that the company achieves higher-quality development.
(2) Company development strategy
The overall work plan for 2021: guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,thoroughly study and implement the spirit of the 19th National Congress of the Communist Party of China and the 2nd,3rd, 4th, and 5th Plenary Sessions of the 19th National Congress of the Communist Party of China, and earnestlyimplement the Party Central Committee and the State Council , Provincial and municipal epidemic prevention and controland the "six stability" and "six guarantees" work requirements, comprehensively strengthen the party's leadership,standardize corporate governance, and adhere to the principle of benefit-centered and technological innovation on thebasis of normalizing epidemic prevention and control As a guide, with deepening reform as the driving force, and withstable and high output as the guarantee, we will strive to achieve a high starting point for the 14th Five-Year Plan.
(3) Business plan
The overall goal of production and operation in 2021: Strive to complete 10.76 million tons of pig iron, 11.303 milliontons of crude steel, 13.797 million tons of hot-rolled plates, 5.82 million tons of cold-rolled plates (deducting 200,000tons of chilled internal supply), and 700,000 tons of special steel, Safety production realizes "three for zero".In order to achieve the above goals, we will focus on the following aspects:
1. Promote the construction of smart enterprises and achieve higher quality development
2. Strengthen safety management and realize energy-saving and green development
3. Adhere to the innovation-driven strategy and promote the construction of smart factories
4. Consolidate various basic management and enhance corporate management efficiency
5. Unswervingly deepen reforms and stimulate the vitality of enterprise development
6. Adhere to the leadership of the party to the enterprise and provide strong political guarantee
(4) Maintain the current business and complete the funding arrangements required for the investment projects under
constructionThe company will use its own funds and bank loans to meet the funds required for production and operation andtechnological transformation.
(5) Possible risks
1. The risk of raw material price fluctuations
Risk: The company's main raw materials, iron ore, coal, etc., fluctuate greatly. In particular, iron ore prices continued torise during the reporting period, which had a greater impact on the company's profitability.Response measures: In terms of bulk raw material procurement, make efforts in market analysis and judgment, increasethe inventory through low-cost bulk material purchases, and strive to reduce procurement costs; adjust the inventory
structure to improve inventory turnover; solidly carry out cost reduction and efficiency enhancement work, and activelypromote the enterprise Competitiveness: Set research index items for the weak links and bottlenecks that affect the levelof the index, clarify the research goals, measures, time points, and responsible persons, and steadily advance the indeximprovement.
2. Risks of prevention and control of the COVID-19 epidemic
Risk: Since the outbreak of the COVID-19 in early 2020, the prevention and control of the epidemic has been continuingnationwide. With a series of strong epidemic prevention and control measures adopted by governments at all levels,domestic epidemic prevention and control has been effectively controlled, and various economic activities have graduallyresumed, but overseas epidemics are still continuing and facing greater uncertainty. The company will effectivelyimplement the government's requirements for epidemic prevention and control, and strengthen support for epidemicprevention and control, so as to reduce the impact of the epidemic on the company's normal production and operationactivities.Response measures: Establish various strict and normalized epidemic prevention and control mechanisms, strengthen thepublicity of all employees' health knowledge related to the epidemic, and highlight the supervision and inspection ofinternal epidemic prevention and control.
3. Environmental risks
Risk: The country promotes carbon peaking and carbon neutrality. The steel industry is one of the important areas in mycountry to achieve emission reduction and carbon reduction. The industry faces more requirements for carbon emissionrestriction mechanisms and low-carbon development, making the company face greater environmental pressure.Countermeasures: Optimize the production process and further improve the recycling rate of various energy sources. Payattention to various national environmental protection policies, improve corporate environmental protection standards,and make them meet and appropriately exceed national standards. Strengthen the self-supervision and inspection of thecompany's various pollution sources and strengthen the environmental protection awareness of all employees. Acceleratethe construction progress of the identified environmental protection projects to ensure that the national environmentalprotection requirements are met.
4. Market risk
Risks: The competition in the steel industry is fierce, and the industry concentration is accelerating, driven by nationalpolicies and the market. At the same time, due to the continued overseas epidemic, the export business is facing morechallenges, and the company is facing fierce market competition risks.Response measures: increase the development of new products, increase investment in technology research anddevelopment, optimize product structure, and increase the market share of core products; comprehensively improvemanagement, improve management energy efficiency, reduce operating costs, and increase profitability; improve themarketing service system and continue to optimize the company's marketing strategy to enhance brand influence.
X. Researches, visits and interviews received in this reporting period
1. Registration form of researches, visits and interviews received in this reporting period
□ Applicable √ Not applicable
During the reporting period, the Company did not receive any research, communication, interviews and other activities.
V. Important Events
I. Profit Distribution or Capital Reserve ConversionFormulation, implementation and adjustment of profit distribution policy of common shares especially cash dividendpolicy during the reporting period
√ Applicable □ Not applicable
As audited by BDO China Shu Lun Pan Certified Public Accountants LLP., the company's net profit attributable to theparent company in 2020 is RMB 384,252,740.78, plus the undistributed profit at the beginning of the year of RMB2,307,765,664.6, and the undistributed profit at the end of the year is RMB 2,692,018,405.40.Profits distribution plan of 2019: based on the company’s existing share capital of 3,875,371,532 shares, a cash dividendof 0.1 yuan (including tax) will be distributed to all shareholders for every 10 shares. The proposed distribution of ordinaryshare dividends is RMB 38,753,715.32, and the remaining RMB 2,653,264,690.08 will be carried forward to the nextyear’s undistributed profits.
Special description of cash dividend policyWhether it meets the requirements of the company's articles ofassociation or the resolutions of the shareholders meeting:
YesWhether the dividend standard and ratio are clear: YesWhether the relevant decision-making procedures andmechanisms are complete:
YesWhether independent directors have performed their duties duediligence and played their due role:
YesWhether small and medium shareholders have sufficient
their legitimate rights and interests are fully protected:
YesIf the cash dividend policy is adjusted or changed, whether theconditions and procedures are compliant and transparent:
Yes
The profit distribution plan or proposal and the plan or proposal of conversion of the capital reserve into share capital inrecent three years (including the reporting period)
1. Profit distribution proposal of 2020
As audited by BDO China Shu Lun Pan Certified Public Accountants LLP., the company's net profit attributable to theparent company in 2020 is RMB 384,252,740.78, plus the undistributed profit at the beginning of the year of RMB2,307,765,664.62, and the undistributed profit at the end of the year is RMB 2,692,018,405.40.Based on the company’s existing share capital of 3,875,371,532 shares, a cash dividend of 0.1 yuan (including tax) willbe distributed to all shareholders for every 10 shares. The proposed distribution of ordinary share dividends is RMB38,753,715.32, and the remaining RMB 2,653,264,690.08 will be carried forward to the next year’s undistributed profits.
2. Profit distribution proposal of 2019
As audited by BDO China Shu Lun Pan Certified Public Accountants LLP., the net profit attributable to the parentcompany of the year 2019 was RMB 555,646,971.4. After adding the retained profit of RMB 1,945,887,269.82 at thebeginning of the year, and deducting the actual dividend of RMB 193,768,576.6 from the previous year, the balance ofundistributed profit was RMB 2,307,765,664.62.Profits distribution plan of 2019:
Considering the uncertainty of the Coronavirus on the economy, the company did not make profit distribution or convertthe provident fund into capital in 2019.
3. Profit distribution proposal of 2018
As audited by BDO China Shu Lun Pan Certified Public Accountants LLP., the net profit attributable to the parent
company of the year 2018 was RMB 1,036,493,236.07. After adding the retained profit of RMB 1,103,162,610.35 at thebeginning of the year, and deducting the actual dividend of RMB 193,768,576.6 from the previous year, the balance ofundistributed profit was RMB 1,945,887,269.82.Profits distribution plan of 2018: The company will take existing share capital 3,875,371,532 shares as the base,distributing cash dividends RMB 0.5 per 10 shares (including tax) to shareholders. The company plans to distributeRMB193,768,576.60 dividends of ordinary shares, and the remaining RMB 1,752,118,693.22 will be carried over to nextyear’s undistributed profits.
Cash dividend distribution in recent three years
Unit: Yuan
Year
Cashdividend(Including
Tax)
Net profitattributable to theparent company inthe consolidatedfinancial statements
Ratio in net profitattributable to theparent company inthe consolidatedfinancialstatements
A
dividends inother ways(repurchasing
shares)
Ratio of cashdividend in otherway in net profitattributable to the
| mount of cash | parent company in |
the consolidated
financialstatements
Amount of
cash
other ways
Proportion
of cash
| dividends in | dividends in |
other ways2020
384,252,740.78
| 38,753,715.32 |
10.09%
0.00
0.00%
| 38,753,715.32 | 9.69% |
2019 0.00
555,646,971.40
0.00%
0.00
0.00%
0.00
| 0.00% |
2018
1,036,493,236.07
| 193,768,576.60 |
18.69%
0.00
0.00%
| 193,768,576.60 | 18.69% |
Both the Company’s profit and the parent company’s retained earnings are positive however no proposal of cash dividend distributionwas proposed during the reporting period
□ Applicable √ Not applicable
II. Profit Distribution or Capital Reserve Conversion Proposal in the Reporting Period
√ Applicable □ Not applicable
Number of bonus shares for every 10 shares(shares)
Dividend per 10 shares (yuan) (tax included) 0.1
The base of the share capital of the distributionplan (shares)
3,875,371,532.00
Cash dividend amount (yuan) (tax included) 38,753,715.32
Cash dividend amount in other ways (such as sharerepurchase) (yuan)
0.00
Total cash dividends (including other methods)(yuan)
Distributable profit (yuan) 2,692,018,405.40
The ratio of total cash dividends (including othermethods) to total profit distribution
Cash dividend of the current periodIf the company's development stage is in the growth period and has major capital expenditure arrangements, when the profitdistribution is carried out, the proportion of cash dividends in this profit distribution should be at least 20%.
Notes to the profit distribution or capital reserve transfer planThe profit distribution plan or proposal and
in recent three years (including the reporting period)
1. Profit distribution proposal of 2020
As audited by BDO China Shu Lun Pan Certified Public Accountants LLP., the compan
| y's net profit attributable to the parent company in 2020 is RMB 384,252,740.78, plus the undistributed profit at the beginning of the year of RMB 2,307,765,664.62, and the undistributed profit at the end of the year is RMB 2,692,018,405.40. |
ordinary share dividends is RMB 38,753,715.32, and
| the remaining RMB 2,653,264,690.08 will be carried forward to |
the next year’s undistributed profits.
2. Profit distribution proposal of 2019
company of the year 2019 was RMB 555,646,971.40.
| After adding the retained profit of RMB 1,945,887,269.82 at the beginning of the year, and deducting the actual dividend of RMB 193,768,576.6 from the previous year, the balance of |
undistributed profit was RMB 2,307,765,664.62.Profits distribution plan of 2019:
the provident fund into capital in 2019.
3. Profit distribution proposal of 2018
| As audited by BDO China Shu Lun Pan Certified Public Accountants LLP., the net profit attributable to the parent company of the year 2018 was RMB 1,036,493,236.07. After adding the retained profit of RMB 1,103,162,610.35 at |
the beginning of the year, an
of undistributed profit was RMB 1,945,887,269.82.
| Profits distribution plan of 2018: The company will take existing share capital 3,875,371,532 shares as the base, |
dis
RMB193,768,576.60 dividends of ordinary shares, and the remaining RMB 1,752,118,693.22
| will be carried over to |
next year’s undistributed profits.
III. Performance of Committed Issues
1. The fulfilled commitments during the reporting period and under-fulfillment commitments by the end of
the period made by actual controller, acquirer, director, supervisor, senior management personnel and otherrelated parties.
√ Applicable □ Not applicable
Commitments
Commitmentparty
T
commitment
Contents
Commitmenttime
Commitmentperiod
Performance
| ype of | ||
| Commitment of shares |
reform
equity change report
| Commitment made in the acquisition report or the |
| Commitment made during |
asset restructuring
refinancing
Companydirectors,seniormanagement
Othercommitment
| Commitment made during initial public offering or | According to the relevant regulations of the China Securities Regulatory Commission, all directors and senior management of the Company have made the following commitments |
to the Company’
and safeguard
| the legitimate rights and interests of the Company |
May 22, 2019 Long term
fulfillment
interests. 3. I prom
| ise to |
restrict the position-
the Company’
| s assets to do investment and consumption activities that are not related to the performance of my |
duties. 5
implementation of the
company's
own
| responsibilities and jurisdiction, make every effort to promote the |
Company’
the Company’
| s implementation of the return measures, and to |
review the Company’
shareholders’
| general meetings and vote in favor of the relevant proposals reviewed by the company's board of directors and general meeting (If I have voting rights). 7. If the future issuance of this commitment and the implementation of the |
issuance
| of convertible corporate bonds are completed, if the China Securities Regulatory Commission makes other new regulatory provisions on the measures for filling returns and their commitments, and the above commitments cannot meet the requirements of the |
China
and Steel (Group
| ) Co., Ltd., promised not to interfere with the company's operation and management activities beyond its authority and not to infringe on the |
Company's interests.
Bengang
| Group Co., |
Ltd.
OtherCommitment
T
Trade Co.,
| Ltd. and |
Bengang
trade
| operators, taking into account the need to gradually improve the |
qualification
independent i
| mport and export business are still lacking. In order to ensure the normal business development of |
July 24,2019 Long term
Under norm
fulfillment
necessary supp
| ort for the establishment and improvement of Bengang's import and export business. In addition, the sales company under Bengang International Trade is only responsible for selling the products of Beiying Iron and Steel Group, and never sells |
third-party st
longer actually engage
| d in any business activities, as follows: (1 ) Shanghai Bengang Iron & Steel Sales Co., Ltd. filed for bankruptcy in 2014, and the Shanghai Changning District People's Court issued an announcement to appoint Guohao Lawyer (Shanghai) Office as the |
bankruptcy
bankruptcy
| administrator, it is expected that the bankruptcy and liquidation of Shanghai Bengang Iron and Steel Sales Co., Ltd. will be completed by the end of 2020. Upon completion of the aforementioned bankruptcy liquidation |
Bengang Iron & S
| teel Sales Co., Ltd., and its business license has been revoked. As the shareholder Shanghai Bengang Iron & Steel Sales Co., Ltd. is in the process of bankruptcy and liquidation, Shanghai Bengang Iron & Steel Materials Co., Ltd. was unable to |
convene a sha
& Steel Sales Co.,
| Ltd. are completed, the relevant procedures for cancellation of Shanghai Bengang Iron & Steel Materials Co., Ltd. will be processed immediately. (3) Guangzhou Free Trade Zone Bengang Sales Co., Ltd. has a contract arrears dispute with |
Jiedong County Tradin
local prote
| ction, property rights and other factors, the content of the judgment has not been enforceable. Later, after applying again from Guangzhou Free Trade Zone Bengang Sales Co., Ltd., the Intermediate |
issued an e
| xecution ruling again, and 62 properties of Jiedong County Trading |
Corporation were re-
Zone Bengang S
| ales Co., Ltd has not carried out other business activities. After the litigation is completed, the relevant procedures for the cancellation of Guangzhou Free Trade Zone Bengang Sales Co., Ltd. will be handled |
immediately.
Co., Ltd.
OtherCommitment
| Benxi Steel & Iron (Group) | The Group's horizontal competition with Benxi Steel Plates and the measures and commitments to avoid |
inter-industry
s
| hareholder of Bengang Steel Plates, in addition to the matters listed in Article 1 of this Commitment Letter, the Group and other enterprises controlled by the Group other than Bengang Steel Plates no longer produce or develop any products |
that compete or
comp
| etition, nor are they involved in investing in any other enterprise that competes with or may compete with products or businesses produced by Bengang Steel Plates and its subsidiaries. 2. If Bengang Steel Plates and |
July 24,2019 Long term
production
| line, and the |
industrycompetition
beencompletelyresolved.Othercommitments
| continue to be |
fulfilled
expand their bu
| siness scope, the Group and other enterprises controlled by the Group will not compete with the expanded business of Bengang Steel Plates and its subsidiaries; they may compete with Bengang Steel Plates and its subsidiaries If the company's expanded |
busine
Bengang Steel
| Plates and its subsidiaries in a legal and compliant manner; (3) Competitive business is transferred to unrelated third parties. 3. If the Group has any business opportunities to engage in or participate in the competition with |
Bengang Steel
operat
| ions, the Group shall immediately notify Bengang Steel Plates of the above commercial opportunities. Within a reasonable period specified in the notice, Bengang Steel Plates If an affirmative answer is made to take advantage of the business |
opportunity, th
will endeavor
| to give the business opportunity to Bengang Steel Plates on terms not less than that provided to any independent third party. 4. If the above commitments are violated, the Group is willing to bear all the responsibilities arising |
ther
Steel Plates and can
| not |
be changed or withdrawn
| Benxi Steel & Iron (Group) Co., Ltd. and |
Bengang
Ltd.
OtherCommitment
| Group Co., | In order to regulate and |
reduce the Company ’
and small and
| medium shareholders, Benxi Iron and Steel (Group) Co., Ltd. and Bengang Group Co., Ltd. have issued the following commitments: "Benxi Iron and Steel (Group) Co., Ltd. and Bengang Group Co., Ltd. (hereinafter collectively referred to as the "Group"), as a direct controlling shareholder and an indirect controlling shareholder of Bengang |
Steel Plates
Bengang Steel
| Plates, regulate The Group's related transaction with Bengang Steel Plates hereby promises: 1. The Group will fully respect the independent legal person status of Bengang Steel Plates, ensure the independent operation and independent |
decision-
Ben
| gang Steel Plates, ensure the independence |
of Bengang Steel
related transactions w
| ith Bengang Steel Plates and its subsidiaries. 2. The Group and other controlled companies promise not to use loans or occupy or misappropriate the funds |
July 24,2019 Long term
fulfillment
We ask
| Bengang Steel Plates and its subsidiaries to provide illegal guarantees for the Group and other companies under its control. 3. The Group and other controlled companies and Bengang Steel Plates will minimize related transactions. It is indeed |
necessary an
implement the decision-
| making authority, |
decision-making
decision-
| making system, give full play to the role of the board of supervisors and independent directors, and earnestly fulfill the obligation of information disclosure To ensure that transactions are conducted in accordance with the open, fair, and |
fair p
protect o
| ther shareholders of Benxi Steel Plates and the interests of Benxi Steel Plates from damage. 4. The Group guarantees that the above commitments are continuously effective and irrevocable as long as Bengang Steel Plates is listed on the domestic |
stock excha
Bengang Steel Plates.
Stock
| shareholder. If any violation of the above commitments occurs, the Group therefore bear all the losses caused to | ||
| option incentive |
commitment
shareholders
Whether Commitmentfulfilled on time or not
No
2. The Company made illustrations that there are assets or projects which meet the original profit forecast
and the reasons when there are assets or projects profit forecast of the Company and the reporting period isstill in the forecast period
□ Applicable √ Not applicable
IV. Illustrations of Non-Operating Occupation of Funds by the Controlling Shareholder andRelated Parties
□ Applicable √ Not applicable
There was no non-operating occupation of funds by the controlling shareholder and related parties
V. Illustrations of the Supervisory Committee and Independent Directors (If Applicable) on theQualified Audit Report Issued by the CPAs
□ Applicable √ Not applicable
VI. Illustrations of Changes in the Accounting Policy, Accounting Estimate and MeasurementMethods as Compared with the Financial Report of Last Year
√ Applicable □ Not applicable
A. Change of major accounting policy during this reporting period
(1) Implementation of "Accounting Standards for Business Enterprises No. 14-Revenue" (revised in 2017) (hereinafter referred
to as "New Revenue Standards")
The Ministry of Finance revised the "Accounting Standards for Business Enterprises No. 14-Revenue" in 2017. The revisedstandard stipulates that for the first implementation of the standard, the amount of retained earnings and other related items inthe financial statements at the beginning of the year should be adjusted according to the cumulative impact, and the informationfor the comparable period should not be adjusted.
The Company implemented the new revenue standard from January 1, 2020. According to the standard, the Company only
adjusts the retained earnings at the beginning of 2020 and the amount of other related items in the financial statements for thecumulative impact of contracts that have not been completed on the date of first implementation, and does not make adjustmentsto the comparative financial statements.
The major impact of the implementation of the above regulations are as follows:
Compared with the original revenue standards, the impact of the implementation of the new revenue standards on the relevantitems of the financial statements for the period of 2020 is as follows (increase/(decrease)):
Affected items in the statement of
financial position
Amount of impact on the balance on Dec 31, 2020Consolidated Financial
statement
Parent company financial
statementAdvance from customers -5,038,299,156.48 -6,016,524,270.87Contract liabilities 4,458,671,819.90 5,324,357,761.83Other current liabilities 579,627,336.58 692,166,509.04
Affected items in the statement of
comprehensive income
Impact amounts to the period of 2020Consolidated Financial statement
Parent company financial
statementOperating costs 1,112,122,323.44
655,370,940.93
Selling and distribution expenses -1,112,122,323.44
-655,370,940.93
(2) Implementation of "Accounting Standards for Business Enterprises No. 13 "
The Ministry of Finance issued the "Accounting Standards for Business Enterprises Interpretation No. 13" (Cai Kuai [2019] No.21, hereinafter referred to as "Interpretation No. 13") on December 10, 2019, which will come into force on January 1, 2020.
Change of accounting policy content
and reason
Amount of impact on the balance on Jan 1, 2020Affected items Consolidated Financial
statement
Parent companyfinancial statementThe Company implemented the"Accounting Standards for BusinessEnterprises No. 14-Revenue"(referred to as "New RevenueStandards") promulgated by theMinistry of Finance in 2017 onJanuary 1, 2020
Advance from customers-4,429,821,526.79
-5,597,707,687.22
Contract liabilities 3,920,196,041.41
4,953,723,617.01
Other current liabilities 509,625,485.38
643,984,070.21
No requirement of retrospective adjustment.
a. The recognition of related parties
Interpretation No. 13 clarifies that the following circumstances constitute a related party: a joint venture or joint venture betweenan enterprise and other member units (including parent companies and subsidiaries) of the enterprise group to which it belongs;a joint venture of the enterprise and other joint ventures or joint ventures of the enterprise. In addition, Interpretation No. 13 alsoclarifies that only two or more companies that are significantly affected by one party do not constitute related parties. It alsoadds that joint ventures include joint ventures and their subsidiaries.
b. The definition of businessInterpretation No. 13 completes the three elements of business composition, refines the judgment conditions of the businesscomposition, and introduces the "concentration test" option to simplify to a certain extent the judgment of whether a combinationobtained under the same control constitutes a business, etc.
The company implemented Interpretation No. 13 from January 1, 2020, and the comparative financial statements will not beadjusted. Implementation Interpretation No. 13 has not had a significant impact on the company's financial position andoperating results.
(3) Implementation of the "Interim Provisions on Accounting Treatment of Carbon Emissions Trading"
On December 16, 2019, the Ministry of Finance issued the "Interim Provisions on the Accounting Treatment of CarbonEmissions Trading" (Cai Kuai [2019] No. 22), which is applicable to the related companies in the key emission enterprises(hereinafter referred to as key emission companies) that conduct carbon emission rights business in accordance with the "InterimMeasures for the Administration of Carbon Emissions Trading" and other relevant regulations. This regulation came into effecton January 1, 2020, and key emission companies should adopt the prospective application to apply this regulation.
The Company implemented the above regulation from January 1, 2020, and the comparative financial statements will not beadjusted. The implementation of this regulation has not had a significant impact on the company's financial position andoperating results.
(4) Implement the "Regulations on Accounting Treatment of Rental Concessions Related to the Coronavirus Pandemic"
On June 19, 2020, the Ministry of Finance issued the "Regulations on Accounting Treatment of Rental Concessions Related tothe Coronavirus Pandemic " (Caikuai (2020) No. 10), which came into effect on June 19, 2020, allowing companies to adjustthe relevant rental concessions that occurred between Jan 1, 2020 and the implementation date of this regulation. According tothe regulation, companies can choose to adopt simplified methods for accounting treatments for rent reductions and deferredpayment of rents directly caused by the Coronavirus Pandemic that meet the conditions.
The company chooses to adopt a simplified method for accounting treatment for all rent concessions that fall within the scopeof the regulation, and adjusts the relevant rent concessions that occur between January 1, 2020 and the effective date of theregulation accordingly.
The implementation of the regulations did not have a significant impact on the company's financial position and operating results.
B. Change of accounting estimate during the reporting period
Items
Approval
procedure
Applicationdate
Affecteditems
Affectedamounts
depreciationperiod
Approved by the eighthmeeting of the eighthboard of directors
Jan 1, 2020
Accumulateddepreciation
633,195,486.72Operating costs 616,340,171.08General andadministrativeexpenses
16,855,315.64Total profit 633,195,486.72Net profit 474,896,615.04
C. The first implementation of the new revenue standard adjustment to the financial statements at the beginning of the
year
Consolidated Statement of Financial Position
Items
Change in
Ending balance of
the last period
B
| Ending balance of | eginning balance |
of the current period
Adjusted amountsReclassification Remeasurement TotalAdvancefromcustomers
4,429,821,526.79 -4,429,821,526.79 -4,429,821,526.79
Contractliabilities
3,920,196,041.41 3,920,196,041.41 3,920,196,041.41
Othercurrentliabilities
509,625,485.38 509,625,485.38 509,625,485.38
Statement of Financial Position of the Parent CompanyItems
the last period
B
| Ending balance of | eginning balance |
of the current period
Adjusted amountsReclassification Remeasurement Total
5,597,707,687.22 -5,597,707,687.22 -5,597,707,687.22
Items
the last period
B
| Ending balance of | eginning balance |
of the current period
Adjusted amountsReclassification Remeasurement TotalcustomersContractliabilities
4,953,723,617.01 4,953,723,617.01
4,953,723,617.01
O
| ther current |
liabilities
643,984,070.21 643,984,070.21
643,984,070.21
Ⅶ. Illustrations of Retrospective Restatement Due to Correction of Significant AccountingErrors in the Reporting Period
□ Applicable √ Not applicable
There was no retrospective restatement due to correction of significant accounting errors during the reporting periodVIII. Illustrations of Changes of the Consolidation Scope as Compared with the FinancialReport of Last Year
□ Applicable √ Not applicable
There is no change of the consolidation scope during the reporting period.IX. Appointment and Dismiss of Certified Accountant’s Firm
Accountant’s firm currently appointed
Name of the domestic accountant’s firm BDO China Shu Lun Pan Certified Public Accountants LLPPayment to the domestic accountant’s firm (RMB
thousand)
| 10 |
Service life of
audit service
| domestic accountant’s firm providing |
Name of CPAs from the domestic accountant’s firm Zhu Jinmei, Li Guiying
Service life of domestic accountants
| ’ providing audit |
service
Name of the overseas accountant’s firm (if any) None
Payment to overseas accountant’s firm (RMB
thousand) (if any)
| 10 |
Service life of
audit service (if any)
None
| overseas accountant’s firm providing | |
| Name of CPAs from the overseas accountant’s firm |
(if any)
None
Whether the accountant’s firm was changed during the reporting period
□ Yes √ No
Engagement of accountant’s firms, financial consultants or sponsors for internal control auditing
√ Applicable □ Not applicable
The Company appointed BDO China Shu Lun Pan Certified Public Accountants LLP as the auditor of internal control auditing at RMB600 thousand.During the year, due to the issue of convertible corporate bonds in this year, the company hired Guotai Junan Securities Co., Ltd. asthe sponsor at RMB 40.80 million.
X. Risk of Suspension or Termination of Listing after the Disclosure of Annual Report
□ Applicable √ Not applicable
XI. Bankrupt and Reforming Events
□ Applicable √ Not applicable
There was no bankrupt and reforming event during the reporting period.XII. Significant Lawsuits and Arbitrations
□ Applicable √ Not applicable
There was no significant lawsuit or arbitrations during the reporting period.XIII. Punishment and Rectification
□ Applicable √ Not applicable
There was no punishment or rectification during the reporting period.
XIV. Credit Status of the Company and its Controlling Shareholders and Actual Controllers
□ Applicable √ Not applicable
XV. Implementation Situation of Stock Incentive Plan of the Company, Employee Stock
Ownership Plan or Other Employee Incentive Measures
□ Applicable √ Not applicable
There was no implementation situation of stock incentive plan of the Company, employee stock ownership plan or otheremployee incentive measures during the reporting period.
XVI. Major Related Party Transactions
1. Related party transactions relevant to daily operations
√ Applicable □ Not applicable
Relatedparties
Relationshi
p
Typeofrelatedpartytransactions
Content ofrelate
dpartytransactions
Pricin
gprinciple ofrelate
dpartytransactions
Price
ofrelate
dpartytransactions
Amount ofrelate
dpartytransactions(in 10thousand)
Proportion
ofsimila
rtransactions
Theappro
vedtradin
g
limit
oftransactions(in 10thous
and)
Whet
herexceed theappro
vedlimite
d(Y/N)
Mean
s ofpayment ofrelate
d
partytransactions
Availablemarket price
ofsimila
rtransactions
Date
ofdisclo
sure
Index
ofdisclosure
BengangElectronicsandGas
samecontroller
Salesofgoodsandservices
Energy &Power
onagreement
Relatedagreementprice
72.4
0.00
%
500 No
Executeaccordingto theagreement
Yes
2020/
Relatedparties
Relationshi
p
Type
ofrelate
dpartytransactions
Content ofrelate
dpartytransactions
Pricingprinciple ofrelatedpartytransactions
Price
ofrelatedpartytransactions
Amount ofrelatedpartytransactions(in 10thousand)
Proportion
ofsimila
rtransactions
Theappro
vedtradin
g
limit
oftransactions(in 10thous
and)
Whet
herexceed theappro
vedlimite
d(Y/N)
Mean
s ofpayment ofrelate
d
partytransactions
Availablemarket price
ofsimila
rtransactions
Date
ofdisclo
sure
Index
ofdisclosure
Ltd.BenxiBeiyingSteel &Iron(Group)Co.,Ltd.
samecontroller
Salesofgoodsandservices
Rawmaterial &supplementarymaterials &spareparts
onagreement
Relatedagreementprice
138,4
09.84
2.84
%
300,0
No
Executeaccordingto theagreement
Yes
2020/
BenxiBeiyingSteel &Iron(Group)Co.,Ltd.
samecontroller
Salesofgoodsandservices
products
onagreement
Relatedagreementprice
2,150.
0.04
%
No
Executeaccordingto theagreement
Yes
2020/
BenxiBeiyingSteel &Iron(Group)Co.,Ltd.
samecontroller
Salesofgoodsandservices
Energy &Power
onagreement
Relatedagreementprice
22,60
2.26
0.46
%
No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)Real-estateDevelopmentCo.,Ltd.
samecontroller
Salesofgoodsandservices
Energy &Power
onagreement
Relatedagreementprice
8.65
0.00
%
500 No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)Steel &IronProcessandLogistics Co.,Ltd.
samecontroller
Salesofgoodsandservices
Energy &Power
onagreement
Relatedagreementprice
25.88
0.00
%
500 No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)
Co.,Steel &
samecontroller
Salesofgoodsand
products
onagreement
Relatedagreementprice
0.00
%
No
Executeaccording
| Steel & | to the |
Yes
2020/
Relatedparties
Relationshi
p
Type
ofrelate
dpartytransactions
Content ofrelate
dpartytransactions
Pricingprinciple ofrelate
dpartytransactions
Priceofrelate
dpartytransactions
Amount ofrelate
dpartytransactions(in 10thousand)
Proportion
ofsimila
rtransactions
Theappro
vedtrading
limit
oftransactions(in 10thous
and)
Whetherexceed theapprovedlimited(Y/N)
Means ofpayment ofrelate
dpartytransactions
Availablemarket price
ofsimila
rtransactions
Date
ofdisclo
sure
Index
ofdisclosure
ProcessandLogistics Co.,Ltd.
| Iron | servic |
es
ment
BenxiSteel &Iron(Group)MachineryManufactureCo.,Ltd.
samecontroller
Salesofgoodsandservices
products
onagreement
Relatedagreementprice
1,898.
0.04
%
8,000 No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)MachineryManufactureCo.,Ltd.
samecontroller
Salesofgoodsandservices
Energy &Power
onagreement
Relatedagreementprice
2,088.
0.04
%
No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)MachineryManufactureCo.,Ltd.
samecontroller
Salesofgoodsandservices
Rawmaterial &supplementarymaterials &spareparts
onagreement
Relatedagreementprice
338.5
0.01
%
No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)ConstructionCo.,Ltd.
samecontroller
Salesofgoodsandservices
Energy &Power
onagreement
Relatedagreementprice
699.1
0.01
%
10,00
No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)ConstructionCo.,Ltd.
samecontroller
Salesofgoodsandservices
Rawmaterial &supplementarymateri
agree
als &
onagreement
Relatedagreementprice
6,452.
0.13
%
No
Executeaccordingto theagreement
Yes
2020/
Relatedparties
Relationshi
p
Type
ofrelate
dpartytransactions
Content ofrelate
dpartytransactions
Pricin
gprinciple ofrelatedpartytransactions
Price
ofrelatedpartytransactions
Amount ofrelatedpartytransactions(in 10thousand)
Proportion
ofsimila
rtransactions
Theappro
vedtradin
g
limit
oftransactions(in 10thous
and)
Whet
herexceed theappro
vedlimite
d(Y/N)
Mean
s ofpayment ofrelate
d
partytransactions
Availablemarket price
ofsimila
rtransactions
Date
ofdisclo
sure
Index
ofdisclosure
partsBenxiSteel &Iron(Group)MiningCo.,Ltd.
samecontroller
Salesofgoodsandservices
Energ
y &
Power
onagreement
Relatedagreementprice
62,02
0.89
1.27
%
100,0
No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)MiningCo.,Ltd.
samecontroller
Salesofgoodsandservices
Raw
materi
al &
supple
menta
ry
materi
als &
spare
parts
onagreement
Relatedagreementprice
9,678.
0.20
%
No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)MiningCo.,Ltd.
samecontroller
Salesofgoodsandservices
Freigh
t
reven
ue
onagreement
Relatedagreementprice
743.9
0.02
%
No
Executeaccordingto theagreement
No
2020/
BenxiSteel &Iron(Group)MiningCo.,Ltd.
samecontroller
Salesofgoodsandservices
produ
cts
onagreement
Relatedagreementprice
1,107.
0.02
%
No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)Thermal PowerDevelopmentCo.,Ltd.
samecontroller
Salesofgoodsandservices
Energ
y &
Power
onagreement
Relatedagreementprice
2,995.
0.06
%
8,000 No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)Thermal PowerDevelo
sparepment
samecontroller
Salesofgoodsandservices
Raw
materi
al &
supple
menta
ry
materi
| pment | als & |
onagreement
Relatedagreementprice
1,750.
0.04
%
No
Executeaccordingto theagreement
Yes
2020/
Relatedparties
Relationshi
p
Type
ofrelate
dpartytransactions
Content ofrelate
dpartytransactions
Pricin
gprinciple ofrelate
dpartytransactions
Price
ofrelate
dpartytransactions
Amount ofrelate
dpartytransactions(in 10thousand)
Proportion
ofsimila
rtransactions
Theappro
vedtradin
g
limit
oftransactions(in 10thous
and)
Whet
herexceed theappro
vedlimite
d(Y/N)
Mean
s ofpayment ofrelate
d
partytransactions
Availablemarket price
ofsimila
rtransactions
Date
ofdisclo
sure
Index
ofdisclosure
Ltd.
| Co., | spare |
partsBenxiSteel &Iron(Group)Thermal PowerDevelopmentCo.,Ltd.
samecontroller
Salesofgoodsandservices
Freigh
t
reven
ue
onagreement
Relatedagreementprice
0.00
%
No
Executeaccordingto theagreement
No
2020/
BenxiSteel &Iron(Group)IndustrialDevelopmentCo.,Ltd.
samecontroller
Salesofgoodsandservices
Energ
y &
Power
onagreement
Relatedagreementprice
824.4
0.02
%
5,000 No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)IndustrialDevelopmentCo.,Ltd.
samecontroller
Salesofgoodsandservices
produ
cts
onagreement
Relatedagreementprice
3.97
0.00
%
No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)IndustrialDevelopmentCo.,Ltd.
samecontroller
Salesofgoodsandservices
Raw
materi
al &
supple
menta
ry
materi
als &
spare
parts
onagreement
Relatedagreementprice
1,914.
0.04
%
No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)InformationandAutomatic
samecontroller
Salesofgoodsandservices
Energ
y &
Power
onagreement
Relatedagreementprice
14.64
0.00
%
300 No
Executeaccordingto theagreement
Yes
2020/
Relatedparties
Relationshi
p
Type
ofrelate
dpartytransactions
Content ofrelate
dpartytransactions
Pricingprinciple ofrelatedpartytransactions
Priceofrelatedpartytransactions
Amount ofrelatedpartytransactions(in 10thousand)
Proportionofsimilartransactions
Theapprovedtradinglimitoftransactions(in 10thousand)
Whet
herexceed theappro
vedlimite
d(Y/N)
Mean
s ofpayment ofrelate
d
partytransactions
Availablemarket price
ofsimila
rtransactions
Date
ofdisclo
sure
Index
ofdisclosure
Ltd.BenxiSteel &Iron(Group)ConstructionandRepairing Co.,Ltd.
samecontroller
Salesofgoodsandservices
Energy &Power
onagreement
Relatedagreementprice
125.1
0.00
%
8,000 No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)ConstructionandRepairing Co.,Ltd.
samecontroller
Salesofgoodsandservices
Rawmaterial &supplementarymaterials &spareparts
onagreement
Relatedagreementprice
368.0
0.01
%
No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)MetallurgyResidues Co.,Ltd.
samecontroller
Salesofgoodsandservices
Energy &Power
onagreement
Relatedagreementprice
659.8
0.01
%
30,00
No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)MetallurgyResidues Co.,Ltd.
samecontroller
Salesofgoodsandservices
Rawmaterial &supplementarymaterials &spareparts
onagreement
Relatedagreementprice
26,83
9.91
0.55
%
No
Executeaccordingto theagreement
Yes
2020/
Co.,
Benxi
Steel &Iron(Group)MetallurgyResidues Co.,Ltd.
samecontroller
Salesofgoodsandservices
Freightrevenue
onagreement
Relatedagreementprice
0.00
%
No
Executeaccordingto theagreement
No
2020/
Relatedparties
Relationship
Type
ofrelate
dpartytransactions
Content ofrelate
dpartytransactions
Pricin
gprinciple ofrelatedpartytransactions
Price
ofrelatedpartytransactions
Amount ofrelatedpartytransactions(in 10thousand)
Proportion
ofsimila
rtransactions
Theapprovedtradinglimitoftransactions(in 10thousand)
Whetherexceed theappro
vedlimited(Y/N)
Means ofpayment ofrelatedpartytransactions
Availablemarket price
ofsimila
rtransactions
Date
ofdisclo
sure
Index
ofdisclosure
BenxiSteel &Iron(Group)MetallurgyResidues Co.,Ltd.
samecontroller
Salesofgoodsandservices
products
onagreement
Relatedagreementprice
423.5
0.01
%
No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)Co.,Ltd.
ParentCompany
Salesofgoodsandservices
Energy &Power
onagreement
Relatedagreementprice
205.4
0.00
%
2,000 No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)Co.,Ltd.
ParentCompany
Salesofgoodsandservices
Rawmaterial &supplementarymaterials &spareparts
onagreement
Relatedagreementprice
1,013.
0.02
%
No
Executeaccordingto theagreement
Yes
2020/
BenxiNewCareerDevelopmentCo.,Ltd.
samecontroller
Salesofgoodsandservices
Energy &Power
onagreement
Relatedagreementprice
38.37
0.00
%
500 No
Executeaccordingto theagreement
Yes
2020/
DalianBoluoleSteelTubeCo.,Ltd.
samecontroller
Salesofgoodsandservices
products
onagreement
Relatedagreementprice
1,136.
0.02
%
1,000 No
Executeaccordingto theagreement
Yes
2020/
LiaoningBengang Steel& IronTradingCo.,Ltd.
samecontroller
Salesofgoodsandservices
products
onagreement
Relatedagreementprice
0.00
%
No
Executeaccordingto theagreement
Yes
2020/
Steel &Iron
| (Group) |
samecontroller
ofgoods
| and |
Energy &Power
onagreement
Relatedagree
0.00
%
50 No
teaccor
| ding |
Yes
2020/
Relatedparties
Relationshi
p
Type
ofrelate
dpartytransactions
Content ofrelate
dpartytransactions
Pricingprinciple ofrelate
dpartytransactions
Priceofrelatedpartytransactions
Amount ofrelatedpartytransactions(in 10thousand)
Proportionofsimilartransactions
Theapprovedtradinglimitoftransactions(in 10thousand)
Whetherexceed theapprovedlimited(Y/N)
Means ofpayment ofrelate
dpartytransactions
Availablemarket price
ofsimila
rtransactions
Date
ofdisclo
sure
Index
ofdisclosure
Hospital
| General | servic |
es
price
| ment | to the |
agreementBenxiSteel &Iron(Group)ZhengtaiConstructionMaterials Co.,Ltd.
samecontroller
Salesofgoodsandservices
Energy &Power
onagreement
Relatedagreementprice
2.16
0.00
%
500 No
Executeaccordingto theagreement
Yes
2020/
LiaoningHengtongMetallurgicalEquipmentManufactureCo.,Ltd.
samecontroller
Salesofgoodsandservices
Energy &Power
onagreement
Relatedagreementprice
0.00
%
5,000 No
Executeaccordingto theagreement
Yes
2020/
LiaoningHengtongMetallurgicalEquipmentManufactureCo.,Ltd.
samecontroller
Salesofgoodsandservices
Rawmaterial &supplementarymaterials &spareparts
onagreement
Relatedagreementprice
731.8
0.02
%
No
Executeaccordingto theagreement
Yes
2020/
LiaoningHengtongMetallurgicalEquipmentManufactureCo.,Ltd.
samecontroller
Salesofgoodsandservices
products
onagreement
Relatedagreementprice
908.8
0.02
%
No
Executeaccordingto theagreement
Yes
2020/
Relatedparties
Relationshi
p
Type
ofrelate
dpartytransactions
Content ofrelate
dpartytransactions
Pricingprinciple ofrelatedpartytransactions
Priceofrelatedpartytransactions
Amount ofrelatedpartytransactions(in 10thousand)
Proportionofsimilartransactions
Theapprovedtradinglimitoftransactions(in 10thousand)
Whet
herexceed theappro
vedlimite
d(Y/N)
Mean
s ofpayment ofrelate
d
partytransactions
Availablemarket price
ofsimila
rtransactions
Date
ofdisclo
sure
Index
ofdisclosure
Bengang Cold-rolledStainless SteelDandong Co.,Ltd.
samecontroller
Salesofgoodsandservices
Rawmaterial &supplementarymaterials &spareparts
onagreement
Relatedagreementprice
0.00
%
50,00
No
Executeaccordingto theagreement
Yes
2020/
Bengang Cold-rolledStainless SteelDandong Co.,Ltd.
samecontroller
Salesofgoodsandservices
products
onagreement
Relatedagreementprice
2,716.
0.06
%
No
Executeaccordingto theagreement
Yes
2020/
SuzhouBengangIndustrial Co.,Ltd.
samecontroller
Salesofgoodsandservices
products
onagreement
Relatedagreementprice
49,98
3.82
1.03
%
65,00
No
Executeaccordingto theagreement
Yes
2020/
BengangGroupFinanceCo.,Ltd.
samecontroller
Salesofgoodsandservices
Energy &Power
onagreement
Relatedagreementprice
1.3
0.00
%
50 No
Executeaccordingto theagreement
Yes
2020/
BengangGroupCo.,Ltd.
controller
Salesofgoodsandservices
Energy &Power
onagreement
Relatedagreementprice
7.33
0.00
%
No
Executeaccordingto theagreement
Yes
2020/
BengangGroupCo.,Ltd.
controller
Salesofgoodsandservices
Rawmaterial &supplementarymaterials &spareparts
onagreement
Relatedagreementprice
1,539.
0.03
%
500 No
Executeaccordingto theagreement
Yes
2020/
Relatedparties
Relationshi
p
Type
ofrelate
dpartytransactions
Content ofrelatedpartytransactions
Pricin
gprinciple ofrelatedpartytransactions
Priceofrelatedpartytransactions
Amount ofrelatedpartytransactions(in 10thousand)
Proportionofsimilartransactions
Theapprovedtradinglimitoftransactions(in 10thousand)
Whet
herexceed theappro
vedlimite
d(Y/N)
Mean
s ofpayment ofrelate
d
partytransactions
Availablemarket price
ofsimila
rtransactions
Date
ofdisclo
sure
Index
ofdisclosure
LiaoningHengtaiHeavyMachinery Co.,Ltd.
samecontroller
Salesofgoodsandservices
products
onagreement
Relatedagreementprice
29.54
0.00
%
No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)Co.,Ltd.
ParentCompany
Purchase ofgoodsandservices
repairfees
onagreement
Relatedagreementprice
30,20
6.47
0.65
%
50,00
No
Executeaccordingto theagreement
No
2020/
BenxiSteel &Iron(Group)Co.,Ltd.
ParentCompany
Purchase ofgoodsandservices
Rawmaterial &supplementarymaterials
onagreement
Relatedagreementprice
2,121.
0.05
%
No
Executeaccordingto theagreement
Yes
2020/
Bengang Cold-rolledStainless SteelDandong Co.,Ltd.
samecontroller
Purchase ofgoodsandservices
inventory
onagreement
Relatedagreementprice
22.39
0.00
%
500 No
Executeaccordingto theagreement
No
2020/
BenxiSteel &Iron(Group)MiningCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
laborcosts
onagreement
Relatedagreementprice
3,213.
0.07
%
650,0
No
Executeaccordingto theagreement
No
2020/
BenxiSteel &Iron(Group)MiningCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
Rawmaterial &supplementarymaterials
onagreement
Relatedagreementprice
514,1
93.5
11.08
%
No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)Mining
samecontroller
Purchase ofgoodsandservices
Freight
onagreement
Relatedagreementprice
1,227.
0.03
%
No
Executeaccordingto the
No
2020/
Relatedparties
Relationshi
p
Type
ofrelate
dpartytransactions
Content ofrelatedpartytransactions
Pricingprinciple ofrelatedpartytransactions
Price
ofrelatedpartytransactions
Amount ofrelatedpartytransactions(in 10thousand)
Proportionofsimilartransactions
Theapprovedtradinglimit
oftransactions(in 10
thousand)
Whetherexceed theappro
vedlimite
d(Y/N)
Mean
s ofpayment ofrelate
d
partytransactions
Availablemarket price
ofsimila
rtransactions
Date
ofdisclo
sure
Index
ofdisclosure
Ltd.
| Co., | agree |
mentBenxiSteel &Iron(Group)MetallurgyResidues Co.,Ltd.
samecontroller
Purchase ofgoodsandservices
Rawmaterial &supplementarymaterials
onagreement
Relatedagreementprice
34,30
3.84
0.74
%
40,00
No
Execu
te
accor
ding
to the
agree
ment
Yes
2020/
BenxiSteel &Iron(Group)Steel &IronProcessandLogistics Co.,Ltd.
samecontroller
Purchase ofgoodsandservices
Processingfees
onagreement
Relatedagreementprice
63.22
0.00
%
300 No
Execu
te
accor
ding
to the
agree
ment
No
2020/
BenxiSteel &Iron(Group)Real-estateDevelopmentCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
Rawmaterials
onagreement
Relatedagreementprice
0.00
%
10,00
No
Execu
te
accor
ding
to the
agree
ment
Yes
2020/
BenxiSteel &Iron(Group)MachineryManufactureCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
spareparts
onagreement
Relatedagreementprice
5,984.
0.13
%
25,00
No
Execu
te
accor
ding
to the
agree
ment
Yes
2020/
BenxiSteel &Iron(Group)MachineryManufactureCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
repairservices
onagreement
Relatedagreementprice
2,773.
0.06
%
No
Execu
te
accor
ding
to the
agree
ment
No
2020/
Relatedparties
Relationshi
p
Type
ofrelate
dpartytransactions
Content ofrelate
dpartytransactions
Pricingprinciple ofrelatedpartytransactions
Priceofrelatedpartytransactions
Amount ofrelate
dpartytransactions(in 10thousand)
Proportionofsimilartransactions
Theapprovedtradinglimitoftransactions(in 10thousand)
Whetherexceed theappro
vedlimite
d(Y/N)
Mean
s ofpayment ofrelate
d
partytransactions
Availablemarket price
ofsimila
rtransactions
Date
ofdisclo
sure
Index
ofdisclosure
BenxiSteel &Iron(Group)ConstructionCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
spareparts
onagreement
Relatedagreementprice
1,624.
0.04
%
50,00
No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)ConstructionCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
project fees
onagreement
Relatedagreementprice
20,27
4.33
0.44
%
No
Executeaccordingto theagreement
No
2020/
BenxiSteel &Iron(Group)ConstructionCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
repairservices
onagreement
Relatedagreementprice
18,02
2.98
0.39
%
No
Executeaccordingto theagreement
No
2020/
BenxiSteel &Iron(Group)ConstructionCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
Rawmaterial &supplementarymaterials
onagreement
Relatedagreementprice
1,241.
0.03
%
No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)ConstructionCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
Freight
onagreement
Relatedagreementprice
51.39
0.00
%
No
Executeaccordingto theagreement
No
2020/
BenxiSteel &Iron(Group)IndustrialDevelopmentCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
Rawmaterial &supplementarymaterials
onagreement
Relatedagreementprice
21,09
5.06
0.45
%
30,00
No
Executeaccordingto theagreement
Yes
2020/
Relatedparties
Relationshi
p
Type
ofrelate
dpartytransactions
Content ofrelatedpartytransactions
Pricingprinciple ofrelatedpartytransactions
Price
ofrelatedpartytransactions
Amount ofrelatedpartytransactions(in 10thousand)
Proportionofsimilartransactions
Theappro
vedtradin
g
limit
oftransactions(in 10thous
and)
Whet
herexceed theappro
vedlimite
d(Y/N)
Mean
s ofpayment ofrelate
d
partytransactions
Availablemarket price
ofsimila
rtransactions
Date
ofdisclo
sure
Index
ofdisclosure
BenxiSteel &Iron(Group)IndustrialDevelopmentCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
repairservices
onagreement
Relatedagreementprice
1,537.
0.03
%
No
Executeaccordingto theagreement
No
2020/
BenxiSteel &Iron(Group)IndustrialDevelopmentCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
Freight
onagreement
Relatedagreementprice
0.00
%
No
Executeaccordingto theagreement
No
2020/
BenxiSteel &Iron(Group)IndustrialDevelopmentCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
projectfunds
onagreement
Relatedagreementprice
107.0
0.00
%
No
Executeaccordingto theagreement
No
2020/
BenxiSteel &Iron(Group)ConstructionandRepairing Co.,Ltd.
samecontroller
Purchase ofgoodsandservices
Rawmaterial &supplementarymaterials &spareparts
onagreement
Relatedagreementprice
228.1
0.00
%
35,00
No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)ConstructionandRepairing Co.,Ltd.
samecontroller
Purchase ofgoodsandservices
project fees
onagreement
Relatedagreementprice
1,911.
0.04
%
No
Executeaccordingto theagreement
No
2020/
Relatedparties
Relationshi
p
Type
ofrelate
dpartytransactions
Content ofrelate
dpartytransactions
Pricingprinciple ofrelate
dpartytransactions
Price
ofrelate
dpartytransactions
Amount ofrelate
dpartytransactions(in 10thousand)
Proportion
ofsimila
rtransactions
Theappro
vedtradin
g
limit
oftransactions(in 10thous
and)
Whet
herexceed theappro
vedlimite
d(Y/N)
Mean
s ofpayment ofrelatedpartytransactions
Availablemarket price
ofsimila
rtransactions
Date
ofdisclo
sure
Index
ofdisclosure
BenxiSteel &Iron(Group)ConstructionandRepairing Co.,Ltd.
samecontroller
Purchase ofgoodsandservices
repairfees
onagreement
Relatedagreementprice
17,47
5.94
0.38
%
No
Executeaccordingto theagreement
No
2020/
BengangElectronicsandGasCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
Rawmaterial &supplementarymaterials
onagreement
Relatedagreementprice
13,85
6.3
0.30
%
20,00
No
Executeaccordingto theagreement
Yes
2020/
BengangElectronicsandGasCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
repairservices
onagreement
Relatedagreementprice
3,063.
0.07
%
No
Executeaccordingto theagreement
No
2020/
BenxiHigh-techDrillingToolsManufactureCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
spareparts
onagreement
Relatedagreementprice
0.00
%
500 No
Executeaccordingto theagreement
Yes
2020/
BenxiNewCareerDevelopmentCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
repairservices
onagreement
Relatedagreementprice
0.00
%
1,800 No
Executeaccordingto theagreement
No
2020/
BenxiNewCareerDevelopmentCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
Rawmaterial &supplementarymaterials &food
onagreement
Relatedagreementprice
1,028.
0.02
%
No
Executeaccordingto theagreement
Yes
2020/
Relatedparties
Relationshi
p
Type
ofrelatedpartytransactions
Content ofrelatedpartytransactions
Pricingprinciple ofrelate
dpartytransactions
Priceofrelatedpartytransactions
Amount ofrelatedpartytransactions(in 10thousand)
Proportionofsimilartransactions
Theapprovedtradinglimitoftransactions(in 10thousand)
Whet
herexceed theappro
vedlimite
d(Y/N)
Mean
s ofpayment ofrelate
d
partytransactions
Availablemarket price
ofsimila
rtransactions
Date
ofdisclo
sure
Index
ofdisclosure
LiaoningMetallurgyTechnicianCollege
samecontroller
Purchase ofgoodsandservices
spareparts
onagreement
Relatedagreementprice
933.2
0.02
%
1,500 No
Executeaccordingto theagreement
Yes
2020/
LiaoningMetallurgyVocationalTechnicalCollege
samecontroller
Purchase ofgoodsandservices
project fees
onagreement
Relatedagreementprice
0.00
%
1,000 No
Executeaccordingto theagreement
No
2020/
LiaoningMetallurgyVocationalTechnicalCollege
samecontroller
Purchase ofgoodsandservices
repairservices
onagreement
Relatedagreementprice
648.2
0.01
%
No
Executeaccordingto theagreement
No
2020/
BengangGroupInternationalEconomic andTradingCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
Rawmaterial &supplementarymaterials
onagreement
Relatedagreementprice
508,9
61.39
10.97
%
25,00
No
Executeaccordingto theagreement
Yes
2020/
BengangGroupInternationalEconomic andTradingCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
agency fees
onagreement
Relatedagreementprice
5,531.
0.12
%
No
Executeaccordingto theagreement
No
2020/
BengangGroupInternationalEcono
samecontroller
Purchase ofgoodsandservices
Portsurcharges
onagreement
Relatedagreementprice
9,279.
0.20
%
No
Executeaccordingto theagreement
No
2020/
Relatedparties
Relationshi
p
Type
ofrelate
dpartytransactions
Content ofrelate
dpartytransactions
Pricingprinciple ofrelatedpartytransactions
Priceofrelatedpartytransactions
Amount ofrelate
dpartytransactions(in 10thousand)
Proportion
ofsimila
rtransactions
Theappro
vedtradin
g
limit
oftransactions(in 10thous
and)
Whet
herexceed theappro
vedlimite
d(Y/N)
Mean
s ofpayment ofrelate
d
partytransactions
Availablemarket price
ofsimila
rtransactions
Date
ofdisclo
sure
Index
ofdisclosure
Co.,Ltd.BenxiSteel &Iron(Group)InformationandAutomaticTechCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
spareparts
onagreement
Relatedagreementprice
850.3
0.02
%
10,00
No
Executeaccordingto theagreement
Yes
2020/
BenxiSteel &Iron(Group)InformationandAutomaticTechCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
project fees
onagreement
Relatedagreementprice
1,121.
0.02
%
No
Executeaccordingto theagreement
No
2020/
BenxiSteel &Iron(Group)InformationandAutomaticTechCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
repairservices
onagreement
Relatedagreementprice
1,732.
0.04
%
No
Executeaccordingto theagreement
No
2020/
BenxiSteel &Iron(Group)Thermal PowerDevelopmentCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
heatingcosts
onagreement
Relatedagreementprice
0.00
%
500 No
Executeaccordingto theagreement
No
2020/
BenxiSteel &
TradingIron
samecontroller
Purchase of
| Iron | goods |
Rawmateri
onagreement
Related
| al & | agree |
71.04
0.00
%
No
Execute
Yes
2020/
Relatedparties
Relationshi
p
Type
ofrelate
dpartytransactions
Content ofrelatedpartytransactions
Pricin
gprinciple ofrelate
dpartytransactions
Price
ofrelate
dpartytransactions
Amount ofrelate
dpartytransactions(in 10thousand)
Proportionofsimilartransactions
Theapprovedtradinglimitoftransactions(in 10thousand)
Whetherexceed theapprovedlimited(Y/N)
Means ofpayment ofrelate
dpartytransactions
Availablemarket price
ofsimila
rtransactions
Date
ofdisclo
sure
Index
ofdisclosure
Thermal PowerDevelopmentCo.,Ltd.
| (Group) | and |
services
mentarymaterials
| supple | ment |
price
to theagreementBenxiSteel &Iron(Group)DesigningInstitute
samecontroller
Purchase ofgoodsandservices
designfees
onagreement
Relatedagreementprice
125.9
0.00
%
2,000 No
Executeaccordingto theagreement
No
2020/
BenxiBeiyingSteel &Iron(Group)Co.,Ltd.
samecontroller
Purchase ofgoodsandservices
Rawmaterial &supplementarymaterials
onagreement
Relatedagreementprice
492,3
90.02
10.61
%1,550,
No
Executeaccordingto theagreement
Yes
2020/
BenxiBeiyingSteel &Iron(Group)Co.,Ltd.
samecontroller
Purchase ofgoodsandservices
Energy &Power
onagreement
Relatedagreementprice
46,58
9.86
1.00
%
No
Executeaccordingto theagreement
Yes
2020/
BenxiBeiyingSteel &Iron(Group)Co.,Ltd.
samecontroller
Purchase ofgoodsandservices
Freight
onagreement
Relatedagreementprice
407.5
0.01
%
No
Executeaccordingto theagreement
No
2020/
BenxiBeiyingSteel &Iron(Group)Co.,Ltd.
samecontroller
Purchase ofgoodsandservices
laborcosts
onagreement
Relatedagreementprice
7,190.
0.15
%
No
Executeaccordingto theagreement
No
2020/
BenxiBeiyingSteel &Iron(Group)Co.,Ltd.
samecontroller
Purchase ofgoodsandservices
spareparts
onagreement
Relatedagreementprice
1,710.
0.04
%
No
Executeaccordingto theagreement
Yes
2020/
Relatedparties
Relationshi
p
Type
ofrelate
dpartytransactions
Content ofrelate
dpartytransactions
Pricingprinciple ofrelate
dpartytransactions
Priceofrelatedpartytransactions
Amount ofrelatedpartytransactions(in 10thousand)
Proportionofsimilartransactions
Theapprovedtradinglimitoftransactions(in 10thousand)
Whetherexceed theapprovedlimite
d(Y/N)
Mean
s ofpayment ofrelate
d
partytransactions
Availablemarket price
ofsimila
rtransactions
Date
ofdisclo
sure
Index
ofdisclosure
LiaoningHengtongMetallurgicalEquipmentManufactureCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
rawmaterial &spareparts
onagreement
Relatedagreementprice
8,336.
0.18
%
15,00
No
Executeaccordingto theagreement
Yes
2020/
LiaoningHengtongMetallurgicalEquipmentManufactureCo.,Ltd.
samecontroller
Purchase ofgoodsandservices
repair&laborcosts
onagreement
Relatedagreementprice
661.1
0.01
%
No
Executeaccordingto theagreement
No
2020/
LiaoningHengtaiHeavyMachinery Co.,Ltd.
samecontroller
Purchase ofgoodsandservices
rawmaterial &spareparts
onagreement
Relatedagreementprice
138.5
0.00
%
8,000 No
Executeaccordingto theagreement
Yes
2020/
LiaoningHengtaiHeavyMachinery Co.,Ltd.
samecontroller
Purchase ofgoodsandservices
repair&laborcosts
onagreement
Relatedagreementprice
716.9
0.02
%
No
Executeaccordingto theagreement
No
2020/
BengangGroupCo.,Ltd.
controller
Purchase ofgoodsandservices
propertymanagementfees
onagreement
Relatedagreementprice
0.00
%
20,00
No
Executeaccordingto theagreement
No
2020/
BengangGroupCo.,Ltd.
controller
Purchase ofgoodsandservices
laborcosts
onagreement
Relatedagreementprice
18,87
6.38
0.41
%
No
Executeaccordingto theagreement
No
2020/
Relatedparties
Relationshi
p
Type
ofrelate
dpartytransactions
Content ofrelatedpartytransactions
Pricin
gprinciple ofrelatedpartytransactions
Priceofrelate
dpartytransactions
Amount ofrelate
dpartytransactions(in 10thousand)
Proportion
ofsimila
rtransactions
Theappro
vedtradin
g
limit
oftransactions(in 10thous
and)
Whet
herexceed theappro
vedlimite
d(Y/N)
Mean
s ofpayment ofrelate
d
partytransactions
Availablemarket price
ofsimila
rtransactions
Date
ofdisclo
sure
Index
ofdisclosure
Total -- --
2,144,
591.3
--3,141,
-- -- -- -- --Details of any sales return of a largeamount
No applicableGive the actual situation during thereporting period where a forecasthad been made for the total amountsof routine related-partytransactions，by type to occur inthe current period(if any)
No applicableReason for any significantdifference between the transactionprice and the Market price forreference (if applicable)
No applicable
2. Related transactions relevant to asset acquisition or sold
□ Applicable √ Not applicable
There was no related transaction relevant to asset acquisition or sold during the reporting period.
3. Related transactions relevant to joint investments
□ Applicable √ Not applicable
There was no related transaction relevant to joint investments during the reporting period.
4. Credits and liabilities with related parties
□Applicable √ Not applicable
There were no non-operating related credits and debts during the reporting period.
5. Other significant related transactions
□Applicable √ Not applicable
XVII. Major Contracts and Their Performance
1. Trusteeship, contracting and lease
(1) Trusteeship
□ Applicable √ Not applicable
There was no trusteeship during the reporting period.
(2) Contracting
□ Applicable √ Not applicable
There was no contracting during the reporting period.
(3) Lease
√ Applicable □ Not applicable
Lessee Lease capital category
(included tax)
| Lease income of 2020 | Lease income of |
2019 (included
tax)Benxi Steel & Iron (Group) Steel &Iron Process and Logistics Co., Ltd.
| Benxi Steel & Iron (Group) Steel & Iron Process and Logistics Co., Ltd. | Warehouse and Affiliated facilities | 500,000.00 | 500,000.00 |
| Benxi Steel & Iron (Group) Machinery Manufacture Co., Ltd. | Plants and Affiliated facilities | 122,500.03 | |
| Lessor | Lease capital category | Lease income of 2020 (without tax) | Lease income of 2019 (without tax) |
Benxi Steel & Iron (Group) Co., Ltd.
| Land use rights 7,669,068.17 square |
meters, land use rights 42,920.00
| square meters |
55,277,544.11
54,984,486.36Benxi Steel & Iron (Group) Co., Ltd.
| 2300 hot rolling mill production line, related properties | 16,098,161.06 | 167,859,103.82 | |
| Benxi Beiying Steel & Iron (Group) Co., Ltd. | 1780 hot rolling mill production line, related properties | 15,006,983.06 | 83,686,698.60 |
Bengang Group Co., Ltd
| Land use rights 728,282.30 square meters | 9,945,423.08 | 4,972,711.56 |
Gains or losses from lease counted over 10% of total profit.
□ Applicable √ Not applicable
During the reporting period, there were no lease projects that resulted in a profit or loss of more than 10% of the total profit of thecompany during the reporting period
2. Guarantee
□ Applicable √ Not applicable
There was no guarantee during the reporting period.
3. Entrusting Others for Managing Cash Asset
(1) Entrusted Finance
□ Applicable √ Not applicable
There was no entrusted finance during the reporting period.
(2) Entrusted Loans
□ Applicable √ Not applicable
There was no entrusted loan during the reporting period.
4. Other Major Contracts
□ Applicable √ Not applicable
There was no other major contract during the reporting period.
XVIII. Social Responsibilities
1. Performing other corporation social responsibilities
During the reporting period, the company actively protected the legitimate rights and interests of creditors and allemployees while pursuing the economic benefits of the company and protecting the interests of shareholders, inaccordance with the spirit of corporate social responsibility, and actively treated suppliers, customers and consumers.Public welfare undertakings such as environmental protection and community building. In the business activities,consciously follow the principles of voluntariness, fairness, equal pay, honesty and credit, consciously abide by socialmorality, professional ethics, consciously accept the supervision of the government and the public, and actively fulfill thecorporate social responsibility.
2. Performing corporation social responsibility of targeted poverty alleviation
In the annual report of the company, there has been no accurate poverty alleviation work, and there is no follow-upaccurate poverty alleviation plan.
3. Environmental protection-related conditions
Whether the listed company and its subsidiaries belong to the key pollutant discharge units announced by theenvironmental protection department.YesName
Mainpollutantsand s
pollutants
Dischargemodes
The
| pecific | number of |
discharge
hatch
The distribution
of discharge
hatch
Emissionconcentra
tion
Theemissionstandard
Totalemission
Approved
totalemission
Surpass the
emissionstandardBengangSteel PlatesCo., Ltd.
COD、Ammonia
Continuous 1
Energy integralfactory sewagetreatment plant.
SewageCOD24、Ammonia
SewageCOD50、Ammonia 8
COD：240tons；Ammonia：
5.43 tons
by thegovernment
None
BengangSteel PlatesCo., Ltd.
ParticulateMatter
Continuousandintermittent
Raw materialdumper, transferstation,receiving oretank, pre-batch;coke ovenadding coal,pushing cokedry quenching;ironmakingtapping field,furnace roof,fuel, solvent,granulation, orecoke tank;sintering head,machine Tail;iron and steelwaterpretreatment,ferroalloyfeeding, north-south infusionstation, tundish,primary dustremoval,secondary dustremoval,refining dust
Rawmaterials14-23;Sintering8-40;Ironmaking 7-35;Steelmaking 7-27;Specialsteel 7-15;Coking15-30;Powergeneration 5-10;Coldrolling;6-18 ;hotrolling 6-15.Scrapsteel 20
Rawmaterials25;Sintering30-50;Ironmaking25-50;
| removal; special | Steelmaking |
20-50;Specialsteel 20-50;Coking 15-50;powergeneration10-30;cold rolling20; hotrolling 20;Scrap steel20.
13081 tons
by thegovernment
None
furnace, electricslag furnace;powergenerationboilerdesulfurizationanddenitrification;cold rolling acidregeneration,Pickling,drawingstraightening,weldingmachine,smoothing,annealing,roasting; hotrolling heatingfurnace. Scrapsteel cutting
BengangSteel PlatesCo., Ltd.
SO?
Continuousandintermittent
Sintering head;Powergenerationboiler; Cokeoven chimney;cold rollingroasting,annealing; hotrolling furnace.
Sinteringhead 12-40;Powergeneration boiler10-70;Cokeoven 40;Coldrolling80-100;Hotrolling118-128.
Sinteringhead 200;Powergeneration100; Cokeoven 50;Cold rolling150; Hotrolling 150.
5262.76tons
| steel electric furnace, refining | ||
| Unapproved |
by thegovernment
None
BengangSteel PlatesCo., Ltd.
Oxides ofnitrogen
Continuousandintermittent
Sintering head;powergenerationboiler; coldrolling roasting,annealing; hotrolling furnace.furnace.
Sinteringhead 100-230;Powergeneration 50-140;Coldrolling69-172;Hotrolling105-124.
Sinteringhead 300;Coke ovenchimney150; Powergeneration100-200;Cold rolling300; Hotrolling 300.
11267 tons
Unap
by thegovernment
None
Construction and operation of pollution prevention facility:
The company has a total of 179 sets of environmental pollution prevention and control facilities. All processes are equipped with dustremoval, desulfurization and denitrification, and online facilities in accordance with pollutant emission standards. Environmentalprotection facilities such as wet desulfurization of sintering machine head, dry desulfurization and denitrification of coke oven chimney,and wet desulfurization and SCR denitrification of power generation have been put into use normally.Environmental Impact Assessment and Other Environmental Protection Administrative Licensing of Construction Projects
(1) Advanced treatment and reuse project of board water. Obtained EIA approval: Benxi City Ecological Environment
Bureau, Ben Huan Jian Table Zi [2020] No. 03.
(2) Special steel rolling mill renovation project (Phase II, Phase III) project. Obtained EIA approval: Benxi City Ecological
Environment Bureau, Ben Huan Jian Table Zi [2020] 05.
(3) Upgrade and transformation project of plate special steel electric furnace. Obtained EIA approval: Liaoning Provincial
Department of Ecology and Environment, Liaohuanhan [2019] No. 172.
(4) Production capacity replacement project for plate No. 5 blast furnace. Obtained EIA approval: Liaoning Provincial
Department of Ecology and Environment, Liaohuanhan [2019] No. 171.
(5) The flue gas desulfurization and denitrification project of No. 7 coke oven in the plate coking plant. Obtained EIA
approval: Benxi City Ecological Environment Bureau, Ben Huan Jian Biao Zi [2019] No. 10.
(6) Ultra-low emission transformation project for thermal power workshop of sheet power plant. It has completed the EIA
registration form for the record, record number: 202021050200000075.
(7) A new tower type desulfurization renovation project was added to the plate coking plant. It has completed the EIA
registration form for the record, record number: 202021050200000081.
(8) Plate steelmaking plant 1#2#3#7# converter secondary and tertiary dust removal system transformation project: It has
completed the environmental assessment registration form for the record, record number: 202021050200000084.
(9) The converter gas recovery and efficiency improvement project in the plate plant area has obtained the environmental
impact assessment approval: Benxi City Ecological Environment Bureau, Ben Huan Jian Biao Zi [2020] No. 10.
(10) The flue gas desulfurization and denitrification project of No. 8 and 9 coke ovens of the plate coking plant, obtained
the environmental impact assessment approval: Benxi City Ecological Environment Bureau, Ben Huan Jian Table Zi[2020] No. 11.
(11) The Caixi Special Steel Feeding Station Project of Benxi Iron and Steel Plate Scrap Plant has obtained environmental
assessment approval: Benxi City Ecological Environment Bureau, Benhuan Jianbiao Zi [2020] No. 12.
Emergency plan for emergency environmental incidentsThe company and its subordinate 13 units are revised the emergency plans for emergency environmental incidents, andcarried out related work such as risk assessment and investigation of emergency resources in accordance with the "Lawof the People's Republic of China on Incident Responses", "Notice on Printing and Distributing the Guidelines for RiskAssessment of Enterprises' Environmental Emergencies (Trial)", and "Emergency Preparedness for EnvironmentalIncidents of Enterprises and Institutions" Existing laws and regulations such as the Administrative Measures (Trial).
Environmental self-monitoring project.In 2020, the self-monitoring plan was carried out in accordance with the requirements of the pollutant discharge permit.The monitoring points of Bengang Steel pollution sources: 168 flue gas, 10 wastewater monitoring points, 13 noise pointsat the boundary of the plant, 27 atmospheric dustfall points, and 71 unorganized monitoring. From the plate factory to themine, the monitoring is divided into weekly, monthly, seasonal, semi-annual and annual frequency monitoring. The mainmonitoring items of the automatic air quality monitoring station obtained total of 52,560 monitoring data throughout theyear; 27 steel dust points were distributed in the steel plant area, and 324 monitoring data were obtained; routinemonitoring tasks for flue gas were completed, and monitoring was achieved throughout the year 1624 data; 13 noisemonitoring points at the boundary of the plant, 416 monitoring data; 10 wastewater monitoring points, 4,847 monitoringdata; 251 temporary monitoring data, and a total of 7,462 monitoring data reported by the monitoring station. Monthly,quarterly reports and separate monitoring reports for each mine are reported.Other environmental information that should be disclosedNoneOther environmental protection related informationNone
XIX. Other Major Issues
√ Applicable □ Not applicable
1. Issuance and listing of convertible bonds
Approved by the China Securities Regulatory Commission "Zheng Jian Xu Ke [2020] No. 46", the company publicly issued 68 millionconvertible corporate bonds on June 29, 2020, each with a face value of RMB 100 and a total issuance of RMB 6.8 billion. Theconvertible bonds of this public offering are given priority placement to the original shareholders of the company registered after themarket close on the equity registration date, and the balance of the original shareholders' priority placement (including the portion thatthe original shareholders waived the priority placement) is used online to public investors through the Shenzhen Stock Exchange Theway the trading system is sold. The part of the subscription amount less than 6.80 billion will be underwritten by the lead underwriter.With the approval of the “Shenzhen Stock Exchange [2020] No. 656” of the Shenzhen Stock Exchange, the company’s RMB 6.80billion of convertible corporate bonds will be listed on the Shenzhen Stock Exchange on August 4, 2020. The abbreviation of the bondsis "Bengang Convertible Bonds" and the bond code is " 127018".
2. Benxi Iron and Steel (Group) Co., Ltd., the controlling shareholder of the company, plans to increase its own funds through methods
permitted by laws and regulations (including but not limited to centralized bidding and block transactions) within 6 months fromFebruary 14, 2020. Holding company shares. The total amount of this shareholding increase plan is not less than RMB 50 million, notmore than RMB 100 million, and there is no price range. The implementation of the share increase plan was completed on August 13,2020. Benxi Iron and Steel Company has increased its holdings of the company’s shares by 28,523,000 shares, accounting for 0.74%of the company’s total share capital, the total amount of holdings increased by RMB 99,976,300, and the average holding price was
RMB 3.51 per share.XX. Major Issues of Subsidiaries
□ Applicable √ Not applicable
VI. Status of Share Capital Changes and Shareholders
I. Share Capital Changes
1. Share capital changes
Unit: Share
Before the change
，
| -) |
After the ChangeQuantity
Percenta
ge
share
Bonusshares
| Issuing of new | Capitaliz |
ation of
reserve
| fund |
Others Subtotal
Quantity
Percenta
ge
| I. Restricted Shares | |||||||||
| 2. State-own Legal-person Shareholding |
| 3. Other domestic shareholdings |
| Including: Domestic legal person holding |
| Domestic person holding |
| II. Non-restricted Shares | 3,875,371,532 | 100.00% | 3,875,371,532 | 100.00% | |||||
| 1. Common shares in RMB |
3,475,371,532
89.68%
3,475,371,532
89.68%
| 2. Foreign shares in domestic market |
400,000,000
10.32%
400,000,000
10.32%
| III. Total shares | 3,875,371,532 | 100.00% | 3,875,371,532 | 100.00% |
Causation of share capital changes
□Applicable √Not applicable
Approval of share capital changes
□Applicable √Not applicable
Status of registration process of transferred shares
□Applicable √Not applicable
Progress of Share Repurchase
□ Applicable √ Not applicable
Implementation Progress of Reducing Holdings of Repurchase Shares by Centralized Bidding
□ Applicable √ Not applicable
Influences of share capital changes on financial indices such as basic earnings per share, diluted earnings per share, and net asset pershare attributed to common shareholders
□ Applicable √ Not applicable
Other information the Company deems necessary to be disclosed or required by the authority
□ Applicable √ Not applicable
2. Changes of Restricted Shares
□ Applicable √ Not applicable
II. Securities Issuance and Listing
1. Status of Security Issuance (Excluding Preferred Shares) in the Reporting Period
√ Applicable □ Not applicable
The name ofthe stock andderivativesecurities
Issue date
Issue price（or interestrate）
Issue number
Listing date
Number ofapproved
listingtransactions
Transactiontermination
date
Disclosure
Index
Disclosure
dateStocksConvertible corporate bonds, separately traded convertible corporate bonds, corporate bondsBengangConvertibleBonds
June 29 ,2020
6,800,000,00
August04,2020
6,800,000,00
June 28,2026Other derivative securitiesNotes to securities issuance (excluding preferred shares) during the reporting periodApproved by the China Securities Regulatory Commission "Zheng Jian Xu Ke [2020] No. 46", the company publicly issued 68 millionconvertible corporate bonds on June 29, 2020, each with a face value of RMB 100 and a total issuance of RMB 6.8 billion. Theconvertible bonds of this public offering are given priority placement to the original shareholders of the company registered after themarket close on the equity registration date, and the balance of the original shareholders' priority placement (including the portion thatthe original shareholders waived the priority placement) is used online to public investors through the Shenzhen Stock Exchange Theway the trading system is sold. The part of the subscription amount less than RMB 6.80 billion will be underwritten by the leadunderwriter.With the approval of the “Shenzhen Stock Exchange [2020] No. 656” of the Shenzhen Stock Exchange, the company’s RMB 6.80billion of convertible corporate bonds will be listed on the Shenzhen Stock Exchange on August 4, 2020. The abbreviation of the bondsis "Bengang Convertible Bonds" and the bond code is " 127018".Bond’s term to maturity: The maturity of the convertible corporate bonds issued this time is 6 years from the date of issuance, that is,from June 29, 2020 to June 28, 2026.Coupon interest rates: 0.6% in the first year, 0.8% in the second year, 1.5% in the third year, 2.9% in the fourth year, 4.0% in the fifthyear, and 5.0% in the sixth year.Conversion period: The conversion period of the convertible corporate bonds issued this time starts from six months after the firsttrading day issuance of the convertible corporate bonds (July 3, 2020) to the convertible corporate bonds The expiry date is fromJanuary 4, 2021 to June 28, 2026.Initial conversion price: RMB 5.03 /share.
2. Total Share and Shareholder Change and Asset and Liability Structure Change
□ Applicable √ Not applicable
3. Employee Shareholding Status
□ Applicable √ Not applicable
III. Shareholders and Actual Controller
1. Total Number of shareholders and shareholding
In Shares
Total number of
common shareholders
at the end of thereporting period
50,293
Totalshareholders atthe end of themonth from thedate ofdisclosing theannual report
51,611
The total number ofpreferred shareholdersvoting rights restored at
| common shareholders | the end of the reporting |
period (See Notes 8)
Total preferredshareholders at the
the date of disclosingthe annual report (ifany) (See Notes 8)
Shareholding of shareholders holding more than 5% or top 10 shareholdersName of theshareholder
Nature ofshareholder
Holding
(%)
Number ofshares held at
period-end
Changes inreportingperiod
Restrictedshares held
Un-restricted
shares held
Number of pledged orfrozen sharesStatus NumberBenxi Steel & Iron(Group) Co., Ltd.
State-ownedlegal person
62.18%
| Percentage |
2,409,628,094
| 28,523,000 |
2,409,628,094
Pledged
| 712,545,000 | ||
Frozen
| 102,100,000 | |||
| CCB Principal Asset |
Management – ICBC– CR Trust – CRTrust · Xing ShengNo. 5 Collective Fund
Others 4.77%
| Trust Plan |
184,842,883
184,842,883
| Bei Xin Rui Feng |
Fund – ChinaMerchants Bank – BeiXin Rui Feng FundFeng Qing No. 229Asset Management
Others
4.77%
| Plan |
184,842,883
184,842,883
| China Life AMP |
Fund– ICBC – ChinaLife AMP – Hua XinTrust TargetedAdditional SharesIssuance No. 10 Asset
Others
4.77%
| Management Plan |
184,842,883
184,842,883
| Liaoning Provincial |
TransportationInvestment Group
State-ownedlegal person
3.88%
| Co., Ltd. |
150,470,883
-
| 34,248,500 |
150,470,883
| Shanghai Yicun |
InvestmentManagement Co.,Ltd.-Yicun ShenghuiNo. 3 Private EquitySecurities Investment
Others
0.31%
| Fund |
12,000,000
12,000,000
12,000,000
Fang Lei
Domesticnatural person
0.28%
10,885,300
10,885,300
10,885,300
VANGUARDEMERGINGMARKETS STOCKINDEX FUND
Foreign legalperson
0.28%
10,702,004
10,702,004
10,702,004
Fang Huaiyue
Domesticnatural person
0.24%
9,205,501
9,205,501
9,205,501
Shanghai YingshuiInvestmentManagement Co.,Ltd.-Yingshui FulinNo. 10 PrivateSecurities InvestmentFund
Others
0.24%
9,175,030
9,175,030
9,175,030
Strategy investors or general legal
to rights issued (if any) (See Notes 3)
NoneNotes to relationship or ‘action inconcert’ among the top 10 shareholders.
It is unknown to the Company whether there is any related connection
| person becomes top 10 shareholders due | |
| or ‘Action in Concert’ as described by Rules of Information Disclosing Regarding Changing of Shareholding Status of |
Listed Companies existing among the above shareholders.
Shareholding of top 10 unrestricted shareholdersName of the shareholder
Un-restricted shares held atthe end of the reporting period
Category of sharesCategory of shares Quantity
Benxi Steel & Iron (Group) Co., Ltd.2,409,628,094
Common shares in RMB 2,409,628,094
CCB Principal Asset Management – ICBC – CRTrust – CR Trust · Xing Sheng No. 5 CollectiveFund Trust Plan
184,842,883
Common shares in RMB 184,842,883
Bei Xin Rui Feng Fund – China MerchantsBank – Bei Xin Rui Feng Fund Feng Qing No.229 Asset Management Plan
184,842,883
Common shares in RMB 184,842,883
China Life AMP Fund– ICBC – China LifeAMP – Hua Xin Trust Targeted AdditionalShares Issuance No. 10 Asset Management Plan
184,842,883
Common shares in RMB184,842,883
Liaoning Provincial Transportation InvestmentGroup Co., Ltd.
150,470,883
Common shares in RMB150,470,883
Shanghai Yicun Investment Management Co.,Ltd.-Yicun Shenghui No. 3 Private EquitySecurities Investment Fund
12,000,000
Common shares in RMB12,000,000
Fang Lei10,885,300
Common shares in RMB10,885,300
VANGUARD EMERGING MARKETSSTOCK INDEX FUND
10,702,004
Common shares in RMB10,702,004
Fang Huaiyue9,205,501
Common shares in RMB9,205,501
Shanghai Yingshui Investment ManagementCo., Ltd.-Yingshui Fulin No. 10 PrivateSecurities Investment Fund
9,175,030
Common shares in RMB9,175,030
Notes to relationship or ‘action in concert’among the top 10 non-restricted shareholders,and among the top 10 non-restrictedshareholders and top 10 shareholders
action-in-concert parties by the Information Disclosure Regulations
| for Change of |
Shareholding in PLC.
shareholders, neither being regarded as action-in-
| concert parties by the Information |
Disclosure Regulations for Change of Shareholding in PLC. The Company is no
of any relationship among the top 10 shareholders, neither being regarded as action-in-
| concert parties by the Information Disclosure Regulations for Change of Shareholding in |
PLC.
Shareholders among the top 10 participating insecurities margin trading (if any) (see Note 4)
through credit security account and holds 239,000,000 shares of the Compa
| ny’s stock, |
totaling 2,409,628,094 shares. Shanghai Yicun Investment Management Co., Ltd.-
company's stock through investor credit securities account; Fang Lei holds 10,8
| 85,300 shares of the company's stock through investor credit securities account; Fang Huaiyue holds 9,205,501 shares of the company's stock through the investor's credit securities |
account; Shanghai Yingshui Investment Management Co., Ltd.-Yingshui Fulin N
the investor's credit securities account.
Whether top 10 common shareholders and top 10 un-restricted common shareholders have a buy-back agreementdealing in reporting period
□ Yes √ No
Top 10 common shareholders and top 10 un-restricted common shareholders had no buy-back agreement dealing inreporting period.
2. Controlling Shareholder
Nature of Controlling Shareholders: Local state holdingType of Controlling Shareholders: Legal person
o. 10Private Securities Investment Fund holds 9,175,030 shares of the company's stock throughName of the
Controlling
| shareholder | Legal representative |
/ person in charge
Date ofincorporation
Organization
Code
Principal business activities
(Group) Co., Ltd.
Yang Chengguang July 10,1996
91210500119726263U
| Benxi Steel & Iron | Business scope: steel smelt, mine exploitation, panel rolling, oxygen manufacturing, pipe manufacturing, power generating, coal industry, special steel material manufacturing, heating, supply of the water, electricity, |
and mark
| eting, development of real estate, scientific research, design, information service, property management, telecommunication, processing of waste iron, property leasing, exchange of steel material, and |
recycling of waste oils (to the extent of licensed to t
| he subsidiary companies) , property management; publishing of Bengang Daily; designing and making of presswork and advertisement, releasing, producing of TV advertisements in the country and abroad. | ||
| Equity of other |
domestic/foreignlisted companywith sharecontrolling andshare participationby controllingshareholder in
None
Changes of controlling shareholders during the reporting period
□ Applicable √ Not applicable
The controlling shareholder of the company has not changed during the reporting period.
3. Actual Controller
Actual controller nature: Local state owned assets managementActual controller type: Legal personName of the controlling shareholder
reporting periodLegal representative/ person in charge
| Legal representative / person in charge | Date of incorporation |
Organization Code
Liaoning Provincial State-owned AssetsSupervision and Administration Commission
Unknown Unknown Unknown
Principal business
activitiesEquity of other domestic/foreign listed
company with share controlling and shareparticipation by controlling shareholder in
| reporting period | The Company was not informed of the actual controller's control of the equity of other |
domestic and foreign listed companies during the reporting period.Change of actual controller during the reporting period
□ Applicable √ Not applicable
There is no change of actual controller during the reporting period.Block diagram of the ownership and control relations between the Company and the actual controller
Bengang Steel Plates Co., Ltd.
Bengang Group Co., Ltd.
Benxi Steel & Iron (Group) Co., Ltd.
Liaoning Provincial State-owned Assets
Liaoning Council for social security fund
Supervision and Administration Commission
80%
20%
85.33%
62.18%
Huatai Securities (Shanghai) Asset Management Co., Ltd.
14.67%
Whether the actual controller is controlling the Company through trusteeship or other asset management service
□ Applicable √ Not applicable
4. Shareholders holding More than 10% of the Shares
□ Applicable √ Not applicable
5. Status of Share Reduction Limitation of Controlling Shareholders, Actual Controller, Restructuring Party
and Other Commitment Subjects
□ Applicable √ Not applicable
VII. Status of Preferred Shares
□ Applicable √ Not applicable
There was no preferred stock in the company during the reporting period.
VIII. Status of Convertible Corporate Bonds
√ Applicable □ Not applicable
I. Previous adjustments to the conversion priceWith the approval of the Shenzhen Stock Exchange "Shenzhen Securities [2020] No. 656", the company’s RMB 6.8 billion convertiblecorporate bonds will be listed on the Shenzhen Stock Exchange on August 4, 2020. The abbreviation of the bonds is "BengangConvertible Bonds" and the bond code is " 127018". Since the listing of the convertible bonds, the company has not adjusted theconversion price, and the initial conversion price is RMB 5.03/share.
II. Cumulative share conversion
□ Applicable √ Not applicable
III. Top ten holders of convertible bonds
Unit: shares
No.
Convertible bond
holders
Nature ofconvertible bond
holders
Number ofconvertible bonds
reporting period
(sheets)
Amount ofconvertible bonds
| held at the end of the | held at the end of the |
reporting period(yuan)
Percentage ofconvertible bonds
reporting period
Benxi Iron and Steel(Group) Co., Ltd.
State-owned legalperson
5,500,000
| held at the end of the | ||
550,000,000.00
8.09%
Shanghai PudongDevelopment BankCo., Ltd.-YifangdaYuxiang ReturnBond SecuritiesInvestment Fund
Others 2,646,781
264,678,100.00
3.89%
Huaxin InternationalTrust Co., Ltd.-Huaxin Trust·ZhiduInvestment No. 16Single Fund Trust
Others 1,046,355
104,635,500.00
1.54%
CITIC SecuritiesCo., Ltd.
State-owned legalperson
1,000,000
100,000,000.00
1.47%
E Fund-MinshengBank-Bank ofHangzhou Co., Ltd.
Others 888,048
88,804,800.00
1.31%
Huaxin InternationalTrust Co., Ltd.-HuaxinTrust · CaitongInvestment No. 12Single Fund Trust
Others 857,768
85,776,800.00
1.26%
E Fund Stable
| Return Fixed-income |
Others 779,998
77,999,800.00
1.15%
Bank ofCommunicationsCo., Ltd.
Industrial and
| Pension Product- |
| Commercial Bank of |
China Co., Ltd.-EFund SecurityReturn BondSecuritiesInvestment Fund
Others 776,230
77,623,000.00
1.14%
China EverbrightBank Co., Ltd.-EFund E Fund 6-month regularopening of bond
| securities investment |
funds
Others 761,925
76,192,500.00
1.12%
China ConstructionBank Corporation-EFund Double BondEnhanced BondSecuritiesInvestment Fund
Others 733,755
73,375,500.00
1.08%
IV. Significant changes in the guarantor’s profitability, asset status, and credit status
□ Applicable √ Not applicable
V. At the end of the reporting period, the company’s liabilities, credit changes, and cash
arrangements for debt repayment in future yearsFor details, please refer to Section XI. VIII. As of the end of the reporting period, the company’s main accounting data and financialindicators for the past two years, the company’s convertible bond credit rating for the current year has not changed.
IX. Status of Directors, Supervisors, Senior Executives and
Employees
I. Change in Shares held by Directors, Supervisors and Senior Executives
Name Position
Officestatus
Sex Age
Starting
| date of |
office term
Expiry
| date of |
officeterm
Shares
theyear-begin
Sharesincreased
| held at | during the |
reportingperiod
Sharesdecreased
reportingperiod
Otherincrease/decrease
| during the |
Shares
the year-endGao Lie
Director,Chairman
In office
| held at | ||
Male 53
2019
May16,2022
| Mar 14, |
Cao Aimin
Director,ViceChairman
In office
Male 53
2010
May16,2022
| Jun 03, |
ShenQiang
Director,GeneralManager
In office
Male 52
| May 16, |
2019
May16,2022
HuangXinghua
Director In office
Male 57
2018
May16,2022
| May 24, |
YuanZhizhu
Director
In office
| Independent |
Male 39
M
2020
May21,2023
| ay 21, |
ZhaoXinan
Director
In office
| Independent |
Male 60
2015
| May 21, | May 21, |
2021
ZhangSuxun
Director
In office
| Independent |
Female
2019
May16,2022
| May 16, |
Han Mei
Supervisor,
SupervisoryCommittee
In office
| Chairman of |
Female
2014
May16,2022
| Feb 19, |
Li Lin Supervisor In office
Female
| Feb 19, |
2014
May16,2022
Li Xiaowei
Supervisor In office
Male 45
| Mar 14, |
2019
May16,2022
ZhaoXingtao
Supervisor In office
Male 48
2019
May16,2022
| Jun 26, |
ZhangYanlong
Supervisor In office
Male 43
| Jan 26, |
2014
May16,2022
BaoMingwei
DeputyGeneralManager
In office
Male 57
2012
May16,2022
| Dec 28, |
WangFengmin
DeputyGeneralManager
In office
Male 55
| Jan 26, |
2014
May16,2022
Huo Gang
DeputyGeneralManager
In office
Male 47
March14,2019
May16,2022
ZhaoZhonghua
D
| irector of |
Finance
In office
Female
A
| pril 18, |
2019
May16,2022
GaoDesheng
| Secretary of |
the Board
In office
Male 46
September20,2018
May16,2022
ZhongTianli
Director
| Independent | Leaving |
office
Female
64 20-May-14
May21,2020
Total -- -- -- -- -- --
II. Change in Directors, Supervisors and Senior Executives
√Applicable □ Not applicable
Name Position Type of change Date ReasonZhong Tianli
IndependentDirector
expiry of term
May 21, 2020
Leaving office after expiry of
term
III. Posts holdingWork experience, professional background and currently mainly responsibilities of Directors, Supervisors and SeniorExecutives in current office
Gao Lei, Male, 53, undergraduate, master of engineering, professor-level senior engineer. Once Chairman of BenxiIron and Steel(Group)Mining Co.,Ltd; Manager of Mineral Resources Development Company; Assistant GeneralManager of Bengang Group Co., Ltd. and Manager of Mineral Resources Development Company; He is nowMember of the Standing Committee of the company's party committee, Deputy General Manager of Bengang GroupCo.,Ltd, chairman of Bengang Steel Plate Co., Ltd.
Cao Aimin, Male, 53, undergraduate, professor-level senior accountant. Once Head of Capital Division of FinanceDepartment; Head of Planning and Finance Division; and Chief Accountant. Director and Chief Accountant of BenxiIron and Steel (Group) Co., Ltd., Ltd. He is now Member of the Standing Committee of the company's party
committee, Director and Chief Accountant of Bengang Group Co., Ltd,, Vice Chairman of Bengang Steel Plates Co.,Ltd.
Shen Qiang, Male, 52 years old, undergraduate, master of engineering, senior engineer. He has served as Secretaryof the Board of Directors and Director of the Board of Directors of Bengang Group Corporation, Director of theOffice, Director of the Secretary of Secretaries, Secretary of the Party Committee of Bengang Group Corporation,Chairman of the Board of Directors of the Real Estate Company, Secretary of the Party Committee; Director ofBenxi Iron and Steel Company, Deputy Secretary of the Party Committee, Deputy General Manager, Board ofDirectors Secretary; Assistant General Manager of Bengang Group Corporation, Minister of Human ResourcesDepartment (Organization Department); assistant to the General Manager, Secretary of the Board of Directors,Director of the Office of the Board of Directors, and Minister of the Organization Department (Human ResourcesDepartment) of Bengang Group; current Director and General Manager of Bengang Steel Plate Co., Ltd.
Huang Xinghua, Male, 57, College degree, senior accountant. Once Deputy director of the planning and financedepartment of Benxi Iron and Steel (Group) Co., Ltd.; Director and Chief accountant of Benxi Iron and Steel (Group)Co., Ltd.; Director of the finance department of Bengang Group Co., Ltd. He is now the head of the financedepartment of Bengang Group Co., Ltd., Director of Benxi Iron and Steel (Group) Co., Ltd., Director of BengangSteel Plate Co., Ltd.
Zhao Xinan, Male, 60, professor (doctoral supervisor) of Northeastern University. Served as the vice dean of theSchool of Business Administration of Northeastern University, and a member of the National Education DepartmentManagement Science and Engineering Teaching Steering Committee; currently a professor of the School of BusinessAdministration of Northeastern University, independent director of Bengang Steel Plate Co.
Zhang Suxun, Female, 65, bachelor degree, professor. Former Liaoning University Business School teacher; nowretired. The current independent director of Bengang Steel Plate Co., Ltd.
Yuan Zhizhu, male, 39, PhD degree, associate professor of accounting at Northeastern University, master supervisor,non-practicing member of Chinese certified public accountant. Served as a lecturer in the School of BusinessAdministration of Northeastern University; currently the director of the Accounting Department of the School ofBusiness Administration of Northeastern University, and a director of the Liaoning Accounting and Abacus MentalArithmetic Society, and a director of the Liaoning Auditing Society; independent director of Bengang Steel PlateCo., Ltd.
Profiles of the Supervisory Committee:
Han Mei, Female, 50, undergraduate, senior accountant. Once she was the vice head of financial department of theCompany; vice head of auditing department and head of administration department of the supervisory committee ofBengang Group; Provincial Government Liaison in Bengang Benxi Steel & Iron (Group) Co., Ltd. Director of AuditDept. She now is Head of Audit Department, Director of Finance Company; Chairman of Board of Supervisors ofBengang Steel Plate Co., Ltd.
Li Lin, Female, 52, postgraduate, engineer. Once she was the administrator of HR department of Bengang Group;Vice Chief Engineer of Transportation Department of the Company; Substitute Chairman of the Trade Union ofTransportation Department of the Company, Secretary of Commission for Discipline Inspection of Transportation
Department and Chairman of the Labour Union of Bengang Steel Plates Co. Ltd, Group leader of DisciplineInspection and Supervision group One Assigned by Discipline Inspection Commission of Bengang Group Co., Ltd.She is now Party secretary of Railway company; Supervisor of Bengang Steel Plates Co. Ltd.
Li Xiaowei, Male, 45, undergraduate, economist. He was once senior officer of the audit department and Divisionchief of the operation audit department of Bengang Group Co., Ltd. He is now the deputy director of the AuditDepartment of Bengang Group Co., Ltd., the supervisor of the board of supervisors of Bengang Steel Plate Co., Ltd.
Zhang Yanlong, Male, 43, undergraduate, senior engineer. He once was the workshop manager of steel-makingfactory; Vice Chief of QC department of iron-making factory, Director of Steel-making plant, Manager ofManufacturing Department of Bengang Steel Plates Co., Ltd., Assistant of Director of Production Division of Steel-Making Plant; He is now Vice Director of Production Division of Steel-Making Plant and Supervisor of BengangSteel Plates Co. Ltd.
Zhao Xingtao, Male, 49, university degree, master of engineering, senior engineer. Served as Deputy Director of theCold Rolling Plant of Bengang Steel Plate Co., Ltd.; Party Secretary and Chairman of the Labor Union of the ColdRolling Plant of Bengang Steel Plate Co., Ltd.
Executives other than directors:
Bao Mingwei, Male, 57 years old, Undergraduate, senior engineer. Served as Secretary of the Party Committee,Deputy Plant Manager and Plant Manager of the Hot Strip Mill of Bengang Steel Plate Co., Ltd.; Deputy GeneralManager and Plant Manager of the Third Cold Rolling Plant of Bengang Steel Plate Co., Ltd.; Deputy Chief Engineer,Planning and Development Department of Bengang Steel Group Co., Ltd. (Science and Technology DevelopmentDepartment) Minister; Deputy Chief Engineer of Bengang Group Co., Ltd.; current Deputy General Manager ofBengang Plate Co., Ltd.
Wang Fengmin, Male, 55, graduate degree, professor and researcher-level senior engineer. Served as deputy director,director and party secretary of the ironmaking plant of Benxi Iron and Steel Plate Co., Ltd.; deputy general managerand head of the manufacturing department of Benxi Iron and Steel Plate Co., Ltd.; deputy chief engineer of BenxiIron and Steel Group Co., Ltd.; The current deputy general manager of Bengang Steel Plate Co., Ltd.
Huo Gang, Male, 47, graduate degree, doctor of engineering, professor and researcher-level senior engineer. Servedas acting general manager and general manager of the cold rolling mill of Benxi Iron and Steel Pohang Company;Party Secretary and Executive Deputy Director of the Third Cold Rolling Plant of Bengang Steel Plate Co., Ltd.;Party Secretary and Plant Manager of the Third Cold Rolling Plant of Bengang Steel Plate Co., Ltd.; Director ofBengang Steel Plate Co., Ltd. Cold Rolling Plant and General Manager of Pohang Cold Rolling.
Zhao Zhonghua, Female, 36, graduate degree, master of management, accountant. She has successively been deputydirector and director of the Finance Department of Bengang Steel Plate Co., Ltd., assistant director of the FinanceDepartment of Bengang Group Co., Ltd., deputy manager of Bengang Group Finance Co., Ltd., and currently theCFO and finance minister of Bengang Steel Plate Co., Ltd.
Gao Desheng, Male, 46, undergraduate, master of management, senior economist. He has been the acting director
of the Business Planning Department of the Operation Improvement Department of Bengang Group Co., Ltd., thedirector of the Ownership Management Department of the Operation Improvement Department of Bengang GroupCo., Ltd., the director of the Ownership Management Department of the Operation Improvement Department ofBengang Group Co., Ltd., the vice-chairman of the First Supervisory Board, and now he is the director of the officeand Secretary of the board of Bengang Group Co., Ltd..
Posts holding in Shareholders
√ Applicable □ Not applicable
Names of the
persons inoffice
Names of theshareholders
Titles engaged in the
shareholders
Starting date of
office term
Expirydate ofofficeterm
Does he /she
receiveremunerationor allowance
from theshareholderGao Lie
Bengang Group Co.,Ltd.
Vice General Manager March 1, 2014 YesCao Aimin
Bengang Group Co.,Ltd.
Director, Chief Accountant
November 4,2010
YesHuang Xinghua
Bengang Group Co.,Ltd.
Minister of Finance August 1, 2017
YesHuang Xinghua
Benxi Iron and Steel(Group) Co., Ltd.
Director April 1, 2018 NoHan Mei
Bengang Group Co.,Ltd.
Director of Audit Department
February 1,2016
YesLi Xiaowei
Bengang Group Co.,Ltd.
Vice Director of AuditDepartment
January 1,2018
YesPosts holding in other companies
√Applicable □Not applicable
Names of thepersons in
office
Names of the other
companies
Titles engaged
in othercompanies
Starting date of
office term
Expirydate ofoffice term
Does he /shereceive
| remuneration or |
allowance fromthe shareholderGao Lie
Bengang Puxiang Cold-rolled Sheet Co., Ltd.
Chairman December, 1,2019 NoCao Aimin
Bengang Group FinanceCo., Ltd.
Chairman October, 1,2016 NoCao Aimin
Zhongtian Securities Co.,Ltd.
Director December, 1,2016 NoHan Mei
Bengang Group FinanceCo., Ltd.
Director December, 1,2016 NoPunishment by the securities regulatory authorities in last three years
□ Applicable √ Not applicable
IV. Remuneration to Directors, Supervisors and Senior Executives
Decision-making procedures, basis of recognition and actual payment of the remuneration to Directors, Supervisorsand Senior Executives
Decision making procedures
1. The Remuneration and Assessment Committee will produce a plan or proposal, which will be implemented upon
approval of the Board or the Shareholders’ Meeting;
2. According to performance assessment criteria and procedures, the Remuneration and Assessment Committee
undertakes assessment on the Directors and Senior Executives;
3. Remuneration amounts and ways of rewards will be proposed according to the assessment and remuneration
policies for Directors, Supervisors and Senior Executives, and adopted by voting;
4. To be implemented upon approval of the Board.
Basis of recognitionRemuneration scheme for a particular position is recognized basing on the range of responsibilities, duties.Remunerations are distributed based on the assessment results and remuneration policies.
Actual payment of the remunerationRemuneration is paid on monthly basis according to the remuneration allocation policies.Remuneration of Directors, Supervisors and Senior Executives during the reporting period
Unit: RMB 10 thousandName Position Sex Age Office status
Totalremuneration
shareholder
Whether receiveremuneration inthe Company'srelated partiesGao Lie Director, Chairman Male
In office
| received from the |
YesCao Aimin Director, Vice Chairman Male
In office
YesShen Qiang Director, General Manager Male
In office 40.44
NoHuang Xinghua Director Male
In office
YesZhao Xinan Independent Director Male
In office 5
NoZhang Suxun Independent Director Female
In office 5
NoYuan Zhizhu Independent Director Male
In office 5
NoHan Mei
Supervisor, supervisory
board chairman
Female 51 In office
YesLi Lin Supervisor Female
In office 28.58
NoLi Xiaowei Supervisor Male
In office YesZhao Xingtao Supervisor Male
In office 32.28
NoZhang Yanlong Supervisor Male
In office 34.64
NoBao Mingwei Deputy General Manager Male
In office 34.24
No
Wang Fengmin Deputy General Manager Male
In office 34.44
NoHuo Gang Deputy General Manager Male 47 In office
34.07
NoZhao Zhonghua CFO Female
In office 29.72
NoGao Desheng Secretary of Board Male 46 In office
25.63
NoZhong Tianli Independent Director Female
Leaving office
NoTotal -- -- -- -- 309.04
--Incentive equity to Directors, Supervisors and Senior Executives during the reporting period
□ Applicable √ Not applicable
V. Staff Condition
1. Staff Population, Professional Structure and Education Level
Population of in-service staff in parent company 16,221
Population of in-service staff in main subsidiaries 524
Total population of in-service staff 16,745
| Total population of staff receiving remuneration in the current |
period
16,745
| Population of retired staff whose expense was borne by parent |
company and major subsidiary companies
23,377
Professional CompositionType of Professional Composition PopulationProduction Staff 12,922
Sales Staff 188
Technician 1,532
Financial Staff 141
Administrative Staff 1,962
Total 16,745
Educational DegreeType of Educational Degree PopulationPhD. 14
Postgraduate 359
Undergraduate 3,765
Junior College 5,325
Technical secondary school 390
High School and Technical School 3,166
Middle School and others 3,726
Total 16,745
2. Remuneration Policies
In 2020, we will further strengthen the management of salary distribution, continue to promote the total salarycontract, guide all units to rationally allocate human resources, optimize the distribution mechanism and increaselabor productivity, and give full play to the role of salary incentives and constraints. Implementing a job performancewage system that determines individual salaries based on job value, personal abilities and performance contributions,opening up career development channels for business, technical and operational positions; implementing an annualsalary assessment system linked to company benefits and employee income.
3. Training Plan
The company plans to complete 86 training projects and train 17,402 people throughout the year. The training rateof the whole staff reaches 70%, and the implementation rate of the annual training plan reaches 85%.
4. Outsourcing
□ Applicable √ Not applicable
X. Corporate GovernanceI. Basic Situation of Corporate GovernanceDuring the reporting period, the Company has been following the laws, regulations and documentssuch as the Company Law, Securities Law, Governance Guidelines for Listed Companies,Guidelines for the Normative Operation of Listed Companies on the Shenzhen Stock Exchange andArticles of Association. Based on the actual situation of the company, the Company has beencontinuously improving the corporate governance structure and internal control system of thecompany, improves the governance level, and promotes the company's standardized operation. Asof the end of the reporting period, the actual situation of corporate governance meets therequirements of the regulatory documents related to the governance of listed companies.
1. Shareholders and Shareholders' General Meeting: The company has formulated the "Rules of
Procedures for General Meetings of Shareholders" in strict accordance with the "Company Law","Rules for Shareholders' General Meetings of Listed Companies" and the company's "Articles ofAssociation" to ensure the exercise of the rights of the company's shareholders and the standardoperation of the shareholders' meeting. The company's previous shareholder meetings have providedtwo attendance channels, on-site voting and online voting, to facilitate shareholders. Involvingmajor issues that affect the interests of small and medium investors, the company counts the votesof small and medium investors individually and discloses them in a timely manner to ensure that allshareholders enjoy equal status and fully exercise their rights. And by hiring lawyers to witness andensure the legal compliance of the convening, convening and voting procedures of the meeting, thelegitimate rights and interests of the company and shareholders have been safeguarded.
2. Directors and the board of directors: the company's board of directors has clear responsibilities,
and the company's directors exercise their powers in strict accordance with the "Articles ofAssociation", "Rules of Procedures of the Company's Board of Directors", "Company IndependentDirectors Work System" and other related systems, perform their duties with integrity and diligence,and safeguard the legitimate rights and interests of the company and shareholders. The company'sboard of directors has four special committees, namely audit, strategy, nomination, remunerationand assessment, each of which performs its own responsibilities and functions, and can carry out itswork in accordance with the rules of procedure of each special committee. During the reportingperiod, the convening and holding procedures of the company's board of directors complied withthe “Company Law”, “Articles of Association” and “Rules of Procedure of the Board of Directors”and other relevant laws and regulations.
3. Supervisors and Board of Supervisors: The company's supervisors can earnestly perform their
duties, independently and effectively perform supervision and inspection functions. The company'ssupervisors attend shareholders' meetings, attend board meetings as non-voting delegates, regularlyinspect the company's legal operations and financial conditions, and issue opinions from the boardof supervisors. Supervise the company's finances, the performance of the company's directors and
senior management personnel, and the capital exchanges with related parties, so as to safeguard thelegal rights and interests of the company and shareholders. The number and structure of the boardof supervisors meet the requirements of laws and regulations, and its convening and convening arestrictly implemented in accordance with the "Articles of Association" and "Rules of Procedure ofthe Board of Supervisors" to ensure that the board of supervisors effectively performs its duties.
4. Controlling shareholders and the company: The company has independent and complete business
and independent management capabilities, and is independent of the controlling shareholders andactual controllers in terms of business, personnel, assets, institutions, and finances; The company'sboard of directors, board of supervisors and other internal institutions operate independently; Thecompany's major decisions are made by the board of directors or the general meeting of shareholdersin accordance with the law. There is no direct or indirect intervention in the company's decision-making and production and operation activities beyond the general meeting of shareholders, nordoes it harm the interests of the company and other shareholders.
5. Information disclosure and transparency: The company strictly complies with the requirements
of the "Shenzhen Stock Exchange Stock Listing Rules" and the "Information DisclosureManagement System" and other requirements, truthful, accurate, and complete, without falserecords, misleading statements or major omissions in performing information disclosure obligation,"China Securities Journal", "Securities Times", "Hong Kong Commercial Daily" andwww.cninfo.com.cn are the designated media for company information disclosure. The companypublishes regular reports and temporary announcements through the above-mentioned informationdisclosure media to ensure that all shareholders of the company can obtain information with equalopportunities.
6. Investor relationship management: The company continues to strengthen communication with
investors to deepen investors' understanding and recognition of the company. The company appointsthe secretary of the board of directors as the person in charge of investor relations management, andthe office of the board of directors is the organization that undertakes the daily work of investorrelations management. The company makes full use of on-site meetings, dedicated telephone calls,investor interaction platforms and other methods to communicate with the company's shareholders,listens carefully to the opinions and suggestions of investors on the company's strategicdevelopment and production and operation, and has established a good communication mechanismwith investors, which enhances investors' understanding and investment confidence in the company.
Whether there exists any difference in compliance with corporate governance, PRC Company Lawand relevant provisions of CSRC
□ Yes √ No
There exists no difference in compliance with corporate governance, PRC Company Law andrelevant provisions of CSRC.
II. Explanation on Structural Independence of the Company on Business, Personnel, Assets,Organization and Finance from the Controlling ShareholderThe Company is separated from the controlling shareholder in aspects of business, personnel, assets,organization and finance, etc. and has its own independent and complete business operation.
(1) In business operation: The Company has its own production and business planning, financial
affairs check and calculate, labor and personnel, raw material supplies and products selling businesssystem independently and completely.
(2) In personnel: The Company and controlling shareholder are separate in such aspects as labor,
personnel and salary management. Such senior executives as company's chairman, general manager,vice general manager, secretary of Board of Directors, etc. get salary from the Company, and holdthe important position other than a director in shareholder department.
(3) In Asset: The Company is separated from the controlling shareholder's clearly in asset. The
Company has its own independent purchase, production, and marketing system.
(4) In organization: The internal operations of the Company are independent; organization structure
and working function are totally independent.
(5) In finance: The company has independent financial management department, the accounting and
financial management system where are complete and operated independently, and has bank accountand pay taxes independently.
III. Competition Situations of the Industry
□ Applicable
√Not applicable
IV. Annual General Meeting and Extraordinary Shareholders’ Meetings in the ReportingPeriod
1. Annual General Meeting
Sessions Type
Investorparticipation ratio
Meeting Date Date of disclosure
disclosureAnnual GeneralMeeting of 2019
Annual General
Meeting
76.79% May 21, 2020 May 22, 2020
Announcement No.:
2020-030
2. Request for Extraordinary General Meeting by Preferred Stockholders Whose Voting Rights
Restore
□ Applicable √ Not applicable
V. Duty fulfillment of Independent Directors in Reporting Period
1. The situation of independent directors attending the BOD and shareholders meeting
Index of information
Attendance of independent directors
Independent
Directors
Number ofBoardmeetings
attendedduring thereportingperiod
Number of
spotattendances
Number ofmeetingsattended byCommunicatio
n
Number ofattendancesbyrepresentative
| necessary to be |
Number ofabsence
Failure topersonallyattend boardmeetingssuccessivelytwice (Yes/No)
Number ofgeneral
| meetings to be |
attended
Zhao Xinan
No
Zhang Suxun
No
Yuan Zhizhu
No
Zhong Tianli
No
Illustration to failure to personally attend Board Meetings Twice Successively
2. Objection of Independent Directors on Relevant Issues
Objection of independent directors on some relevant issues
□ Yes √ No
Independent directors proposed no objection against the relevant matters during the reporting period.
3. Other Notes to Duty Fulfillment of Independent Directors
Whether any independent director’s advice to the Company was accepted
√ Yes □ No
Illustration of acceptance of or failure to accept an independent director’s advice to the CompanyIndependent directors have not made recommendations during the reporting period.
VI. Duty Fulfillment of the Special Committees under the Board during the reporting periodThere are four special committees under the company's board of directors, namely, the auditcommittee, the remuneration and appraisal committee, the nomination committee, and thedevelopment strategy committee. During the reporting period, the special committees carried outtheir work in accordance with the relevant laws and regulations, regulatory documents and otherrelevant provisions based on the principle of diligence and due diligence.
(1) Performance of Audit Committee
During the reporting period, the audit committee of the company's board of directors activelyperformed its duties in accordance with the “Company Law”, “Listed Company GovernanceGuidelines”, “Articles of Association”, “Rules of Procedure of Audit Committee” and otherrelevant regulations. Reviewed the company's regular reports, internal control self-evaluationreports, financial final accounts reports, special reports on the deposit and use of raised funds,renewal of the appointment of an accounting firm, Anticipating daily connected transactions, usingraised funds to replace self-raised funds invested in investment projects with raised funds in advanceand paid issuance fees, using temporarily idle funds for cash management, using idle raised funds
to temporarily supplement working capital, etc.
(2) Performance of the Remuneration and Appraisal Committee of the Board of Directors
During the reporting period, the Remuneration and Appraisal Committee conscientiously performedits duties in accordance with the Articles of Association, the Rules of Procedure for theRemuneration and Appraisal Committee of the Board of Directors and other relevant regulations.The Remuneration and Appraisal Committee reviewed the remuneration of the company's directorsand senior management in 2019, and believed that the remuneration system implemented by thecompany's senior management staff, the company's directors, supervisors, and senior managementstaff's remuneration during the reporting period were true and in line with the company'sperformance appraisal indicators.
(3) Performance of the Nomination Committee
During the reporting period, the Nomination Committee carried out its work and performed itsduties in accordance with the Articles of Association, the Rules of Procedure for the NominationCommittee of the Board of Directors and other relevant regulations. Deliberated the company'snomination of independent director candidates, and put forward suggestions on the selection criteriaand procedures for company directors and senior executives.
(4) Performance of the Development Strategy Committee
During the reporting period, the Development Strategy Committee conscientiously performed itsduties in accordance with the Articles of Association, the Rules of Procedure for the DevelopmentStrategy Committee of the Board of Directors and other relevant regulations, and reviewed thecompany's 2019 Board of Directors Work Report and the 2020 Investment Framework PlanProposal. , According to the actual situation of the company, formulate development strategies,discuss and analyze development plans and foreign investment, put forward opinions andsuggestions, and make decisions.VII. Duty Fulfillment of the Supervisory CommitteeWhether the supervisory board made any objection against the supervision issue during the reportingperiod
□ Yes √ No
The Supervisory Board made no objection against the supervision issue during the reporting period.
VIII. Appraisal and Incentive System for Senior ExecutivesThe Company’s performance assessment scheme for executives implements a combination of dailyaccountability and annual comprehensive assessment and evaluation. Senior Executives shall bepunished if they fail to perform their duties properly, make mistakes or neglect their duty. The annualcomprehensive assessment is conducted in the form of positive evaluation, horizontal evaluationand reverse democratic evaluation. The comprehensive evaluation results are an important basis forselecting and appointing senior management personnel, cultivating education, management
supervision and incentives.
IX. Internal Control
1. Significant defects of the internal control found in the internal control self-assessment report in
the reporting period
□ Yes √ No
2. Self-Evaluation Report on Internal Control
Disclosing date of internal control auditingreport full text
April 28, 2021
full text
http://www.cninfo.com.cnProportion of total assets of subsidiariesbelong to the scope of self-evaluationreport in the total assets of the Company’sconsolidated financial statements
| Index of the internal control auditing report | |
| 97.79% |
Proportion of operation income ofsubsidiaries belong to the scope of self-evaluation report in the operation incomeof the Company’s consolidated financialstatements
Standards of Defects EvaluationCategory Financial Report Non-financial Report
Qualitative criteria
1. Material deficiencies：
74.70%
The frauds made by
the directors, or
| supervisors, or senior management personnel that leads to significant losses and adverse effects to the |
company. 2. Significant deficiencies：
application of accounting policies; ；N
| ot |
established anti-
corresponding compensatory control on
| the |
accounting treatment of non-
special deals; there are one or more
| defects in the process control of the final financial report and which leads to cannot reasonably guaranteeing the financial report compiled to achieve the goal of being true and accurate. |
1.
deficiencies：
| Major errors caused by |
decision-making
c
| ompensatory control; serious drain of senior and middle level management personnel and senior technical staff; the results of internal control evaluation, especially the significant |
3. General deficiencies：
deficiencies except
| those constitute the material deficiencies and the significant |
deficiencies.
big ne
| gative impact on |
the company. 2.
Significantdeficiencies：
| General errors caused by |
decision-making
internal contr
| ol evaluation, especially the important deficiencies have not been corrected; other circumstances that have comparably big negative impact on the company. |
3. General deficiencies
low-
| efficiency on the |
decision-making
in the ordinar
| y business institution or system; serious drain of business personnel in general posts; general deficiencies that have |
not been corrected.
Quantitative criteria
1. Material deficiencies：1）
misstatement≥5% of the total profits; 2）misstatement≥3% of the total assets; 3）misstatement≥1% of the total operatingincome; 4）misstatement≥1% of the totalamount of the owner’s equity. 5) 3% of thetotal profits ≤misstatement＜5% of the totalprofits；2. Significant deficiencies：1）
0.5% of the total assets ≤misstatement＜3%
of the total assets；2）0.5% of the total
1. Material
deficiencies：1）
total profits；2）
| misstatement≥3% of the |
total assets；3）
total operating income.4）
| misstatement≥1% of |
the total amount of the
operating income ≤misstatement＜1% of thetotal operating income； 3）0.5% of thetotal amount of the owner’s equity≤misstatement＜1% of the total amount ofthe owner’s equity。3. Generaldeficiencies：1）misstatement＜3% of thetotal profits；2）misstatement＜
total assets；3）misstatement＜0.5% of thetotal operating income；4）misstatement＜
0.5% of the total amount of the owner’s
equity。
owner’s equity. 5) 3%of the total profits≤misstatement＜5% ofthe total profits；2.Significantdeficiencies：1）0.5%of the total assets≤misstatement＜3% ofthe total assets；2）
0.5% of the total
operating income≤misstatement＜1% ofthe total operatingincome；3）0.5% ofthe total amount of theowner’s equity≤misstatement＜1% ofthe total amount of theowner’s equity。3.General deficiencies：
1）misstatement＜3%of the total profits；2）misstatement＜0.5% ofthe total assets；3）misstatement＜0.5% ofthe total operatingincome；Number of major defects in financialreporting(a)
| 0.5% of the | |
Number of major defects in non-financialreporting (a)
Number of important defects in financialreporting(a)
Number of important defects in non-financial reporting(a)
X. Internal Control Audit Report
√ Applicable □ Not applicable
Opinion in the internal control audit reportWe acknowledge that internal control of Bengang Bancai is effective in all material respects and is compliancewith ‘Fundamental Rules of Enterprise Internal Control’ up to December 31, 2020.Internal Control Audit Report Disclosure
StatusDisclosure date of audit report ofinternal control (full-text)
April 28, 2021Index of audit report of internalcontrol (full-text)
http://www.cninfo.com.cnInternal audit report’s opinion Standard unqualified opinionWhether there is significant defectin non-financial report
NoWhether the accountants’ firm issued a qualified opinion on report of internal control audit
□ Yes √ No
Whether the internal control audit report issued by the accountants’ firm agree with the self-assessment report of the Board of Directors
√ Yes □ No
XI. Relevant Information about Corporate BondsWhether the company has publicly issued corporate bond which is listed on the stock exchange and is not due onthe date of approval of the annual report or has not been fully redeemed at the due dateYes
I. Basic information about corporate bondsBond name
Bondabbreviation
Bond Code Issue date Maturity Date
Bond balance（tenthousand）
Interest rate
Repayment ofprincipal andinterest
Convertiblecorporatebonds ofBengang SteelPlate Co., Ltd.
BengangConvertiblebond
127018 29th June 2020 28
th
June 2026 680,000
| The convertible bonds issued in |
this issuanceadopt themethod ofpaying interestonce a year,and thecompany willpay 119% ofthe face valueof theconvertiblebonds(including thelast annualinterest) toinvestors fortheunconvertedconvertiblebond atmaturity.Trading place for the listing ortransfer of corporate bonds
Shenzhen Stock ExchangeInvestor suitabilityarrangements
Not applicableInterest payment andredemption of corporate bonds
The interest payment date is not due during the reporting period
during the reporting periodThe implementation of therelevant clauses during thereporting period if corporatebonds are accompanied by
investor option clauses,exchangeable clauses, etc. (ifapplicable).
Not applicable
II. Information on bond trustees and credit rating agenciesBond trustee：
Name
Guotai JunanSecurities Co.,Ltd.
Office address
ShangchengRoad, China(Shanghai)Pilot FreeTrade Zone
Contact
Chi Huitao,Yang Keyi
Contact Tel 021-38676666
Credit rating agencies that tracked and rated corporate bonds during the reporting period：
Name
special clauses such as issuer orChina Chengxin International Credit Rating Co.,
Ltd.
Office address
No. 2 Nanzhugan Hutong, Dongcheng District,Beijing 60101During the reporting period, the bondtrustee and credit rating agency hired bythe company changed, the reason for thechange, the procedures performed, theimpact on the interests of investors, etc. (ifapplicable)
Not applicable
III. Use of proceeds from corporate bonds
The use of proceeds from corporate bondsand the procedures for implementation
Please refer to "5 Use of raised funds" in "Five. Analysis of Investment Status" in"Section IV Discussion and Analysis of Business Conditions" of this reportEnding balance（RMB ten thousand） 499,130.52
China Chengxin International Credit Rating Co.,
Operation of the special account for raisedfunds
In order to regulate the use and management of the company’s raised funds and protectthe rights and interests of small and medium-sized investors, in accordance with theChina Securities Regulatory Commission’s "Listed Companies Supervision GuidelinesNo. 2-Regulatory Requirements for the Management and Use of Funds Raised byListed Companies" and "Regulations for Listed Companies on the Shenzhen StockExchange" "Operation Guidelines" and the company’s fund-raising managementsystem and other relevant regulations, the company will cooperate with Industrial andCommercial Bank of China Co., Ltd. Benxi Branch, Bank of China Co., Ltd. Benxi
Branch, China Construction Bank Co., Ltd. Benxi Branch, and China ConstructionBank Co., Ltd. on July 9, 2020. Benxi Branch of Bank Co., Ltd., Benxi Xinhua Sub-branch of Agricultural Bank of China Co., Ltd., and the sponsor Guotai JunanSecurities Co., Ltd. signed the "Tripartite Supervision Agreement on Special Accountsfor Raising Funds" and disclosed them (Announcement No.: 2020-044)whether the use of raised funds consistentwith the promised purpose, use plan andother agreements in the prospectus
ConsistentIV. Information rating of corporate bondsOn December 10, 2019, China Chengxin International Credit Rating Co., Ltd. issued the "Bengang Steel Plate Co.,Ltd. Public Issuance of A-Share Convertible Corporate Bonds Credit Rating Report". The rating result: Thecompany's main body credit rating is AA+, and the rating outlook is Stable; the corporate bond credit rating is AAA.For details, please refer to the "Credit Rating Report of Bengang Steel Plate Co., Ltd. Public Issuance of A-ShareConvertible Corporate Bonds" disclosed on Juchao Information Website on June 23, 2020.On July 31, 2020, China Chengxin International Credit Rating Co., Ltd. issued the "Bengang Steel Plate Co., Ltd.Public Issuance of A-Share Convertible Corporate Bond Tracking Rating Report". The tracking rating result:
maintain the company's entity credit rating at AA+, rating the outlook is stable; the credit rating of the "BengangConvertible Bonds" is maintained at AAA. For details, please refer to the "Tracking Rating Report on the PublicIssuance of A-Share Convertible Bonds of Bengang Steel Plate Co., Ltd." disclosed by the company on Juchao.comon August 6, 2020.
V. Corporate bond credit enhancement mechanism, debt repayment plan andother debt repayment safeguard measures
1、Convertible corporate bond credit enhancement mechanism: Bengang Group Co., Ltd. provides a full
unconditional and irrevocable joint liability guarantee for the convertible corporate bonds issued by the companythis time. The guarantee scope includes bond principal, interest, default amount, and damages and the full cost ofrealizing the creditor's rights
2、Repayment plan：
1）The convertible bond issued this time adopts the interest payment method of paying interest once a year, and thestart date of interest calculation is the first day of issuance of the convertible bond；2）Interest payment date: The interest payment date of each year is the day of each full year from the first day ofissuance of the convertible bonds issued this time. If that day is a legal holiday or a rest day, it will be postponed tothe next trading day. The postponement period does not apply for interest payment. An interest accrual year is definedbetween every two adjacent interest payment dates；3）Creditor's interest rights registration date: The annual creditor's rights registration date is the trading day beforethe annual interest payment date, and the company will pay the current year's interest within five trading days afterthe annual interest payment date. For application of conversion of convertible bonds into the company's A sharesbefore the creditor's rights registration date (including the creditor's rights registration date), the company will nolonger pay its holders the interest of this year and interests of subsequent years；4）The tax payable on the interest income received by the holder of the convertible bond shall be borne by the holderof the convertible bond。
3、Repayment safeguard measures
From the end of 2018 to the end of 2020, the company's asset-liability ratio (consolidated basis) was 67.03%, 67.05%,and 66.85%, respectively, and the asset-liability ratio (parent company) was 67.55%, 67.87%, and 67.45%, showinga steady but declining trend; Overall, the company’s debt-to-asset ratio is still within a reasonable range.From the end of 2018 to the end of 2020, the company's current ratio was 1.02, 0.87, and 1.04, and the quick ratiowas 0.69, 0.65, and 0.77, respectively. The current ratio and quick ratio are on the rise, and the company's short-termdebt solvency has increased.From the end of 2018 to the end of 2020, the company's interest coverage ratio were 1.98, 1.59 and 1.4 respectively,and the interest repayment risk was relatively low.The source of funds for the interest payment and redemption of the convertible bonds mainly includes the incomeand cash inflows from the normal operations of the company's business. The company will formulate a fundutilization plan based on the interest payment and redemption of convertible bonds, rationally allocate funds, payinterest on schedule, and redeem relevant amounts of convertible bonds. In the past three years and the first quarter,the company has been operating well, with stable financial indicators and good debt solvency.VI. Meetings of bondholders held during the reporting period
During the reporting period, the company did not hold bondholder meetings。Ⅶ. The performance of the bond trustee's duties during the reporting period
The company’s convertible corporate bond trustee is Guotai Junan Securities Co., Ltd. During the reporting period,Guotai Junan strictly performed the duties of the trustee in accordance with the agreement, continued to pay attentionto the company’s production and operation, financial status and credit status, and urged the company to implementthe obligations stipulated in the document of the convertible bond prospectus and have actively performed the dutiesof bond trustees and effectively safeguarded the legitimate rights and interests of bondholders.The trustee has issued to the Public on May 12, 2020, the 2019 sponsorship report on the continuous supervision ofBengang Steel Plates, the 2019 training report on the continuous supervision of Bengang Steel Plates, the 2019 on-site inspection report on the continuous supervision of Bengang Steel Plates, and Summary Report on ContinuousSupervision and Sponsorship of the Non-public Issuance of A Shares of Bengang Steel Plates.VIII. As of the end of the reporting period, the Company's main accounting dataand financial indicators for the past 2 years
Unit：RMB10 thousandItem 2020 2019 ChangeEBITDA 299,275.63
334,839.47
-10.62%
Current ratio 1.04%
0.87%
0.17%
Assets and liabilities ratio 66.85%
67.05%
-0.20%
Quick ratio 0.77%
0.65%
0.12%
EBITDA total liabilities ratio 0.07%
0.08%
-0.01%
Interest coverage ratio 1.4
1.59
-11.95%
Cash interest coverage ratio -0.96
8.37
-111.47%
EBITDA interest coverage ratio
7.91
10.03
-21.14%
Loan repayment rate 100.00%
100.00%
0.00%
Interest repayment rate 100.00%
100.00%
0.00%
The main reason why the above accounting data and financial indicators have changed more than 30% year-on-year
□ applicable √ Not applicable
IX. Interest payment status of other bonds and debt financing instruments duringthe reporting periodDuring the reporting period, the Company did not make interest payments for other bonds and debt financinginstruments.X. The status of bank credits, usage, and repayment of bank loans during thereporting periodAt the end of the reporting period, the total bank credit of the company was 37.58 billion yuan,
28.35 billion yuan had been used, and the unused credit line was 9.23 billion yuan. The total amount
of loans at the beginning of the reporting period was 18.236 billion yuan, the net repayment of loansin the current period was 3.357 billion yuan, and the loan balance at the end of the period was 14.879billion yuan.XI. Implementation of relevant agreements or commitments in the corporate bondprospectus during the reporting period
During the reporting period, the Company strictly implemented the relevant agreements and commitments in theprospectus of convertible corporate bonds, and there was no damage to the interests of bond investors.XII. Significant events occurred during the reporting periodNone.
XIII. Whether there is any guarantor for corporate bonds
√ Yes □ No
Whether the guarantor of the corporate bonds is a legal person or other organization
√ Yes □ No
Whether to separately disclose the financial statements of the guarantor during the reporting period within 4 monthsfrom the end of each fiscal year, including the balance sheet, income statement, cash flow statement, statement ofchanges in owner's equity (shareholders' equity) and notes to the financial statements
√ Yes □ No
XII. Financial Report
Opinion of audit report Unqualified audit opinionDate of audit report 26th April 2021Name of CPA Firm BDO China Shu Lun Pan CPAs LLPAudit report number
PCPAR [2020] No. ZB10714
Name of CPA Zhu Jinmei, Li Guiying
Auditors’ Report
PCPAR [2021] No. ZB10714
To All Shareholders of Bengang Steel Plates Co., Ltd.:
Auditor’s Opinion
We have audited the accompanying financial statements of Bengang Steel Plates Co., Ltd.(hereinafter referred to as “the Company”) which comprise the consolidated statement offinancial position and statement of financial position as at 31 December 2020, theconsolidated statement of comprehensive income and statement of comprehensive income,the consolidated statement of changes in equity and statement of changes in equity, theconsolidated statement of cash flows and statement of cash flows for the year then ended,and notes to the financial statements.
In our opinion, the financial statements present fairly, in all material respects, theconsolidated financial position and financial position of the Company as at 31 December2020, and the consolidated results of operations and results of operations and theconsolidated cash flows and cash flows of the Company for the year then ended inaccordance with the requirements of Accounting standards for Business Enterprises.
Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing for CertifiedPublic Accountants. Our responsibilities under those standards are further described in theAuditor’s Responsibilities for the Audit of the Financial Statements section of our report.We are independent of the Company in accordance with the China Code of Ethics forCertified Public Accountants, and we have fulfilled our other ethical responsibilities inaccordance with China Code of Ethics for Certified Public Accountants. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.
Key Audit Matters
The key audit matters are matters that we consider to be the most important for the audit ofthe current financial statements based on professional judgment. The response to thesematters is based on the overall audit of the financial statements and the formation of auditopinions. We do not express a separate opinion on these matters.
We have identified the following items as key audit matters that need to be disclosed in theaudit report.
Key Audit Matters Audit Procedure
Please refer to the Note
| 1. Provision for Bad Debts | |
| (10) financial instruments under “3. Significant accounting policies and accounting | |
estimates” and Note (2) Accountsreceivable under “5. Notes to consolidatedfinancial statements”.
As at
amount of Accounts receivable is RMB733,850,787.45 and the bad debt is RMB488,633,604.79.
The management determines the estimatedrecoverable amount of accounts receivable
| based on the assessment of the credit status, financial status and actual |
repayment status of relevant customers.
estimated recoverable amount of accountsreceivable based on significant accountingestimation and judgement, and the impact
| amount is significant, we determine that |
the recoverability of accounts receivable isa key audit matter.
includes mainly:
| 1. Understand, evaluate and test management's aging analysis of |
receivables and the internal control processrelated to determine bad debt provision foraccounts receivable;
2. Review the management's consideration
and objective evidence for the impairmenttest of accounts receivable and pay closeattention to whether the management has
impaired;
3. Sample the acco
| unts receivable tested |
for impairment individually, and review on
future cash flows estimation made by themanagement;
| 4. For accounts receivable tested for impairment by portfolio, evaluate the |
reasonableness of the ba
proportion;
| 5. Perform confirmation procedure, and check the confirmation results with the |
amount recorded by the management;
reasonableness of provision for bad debtsmade by the management.
| 6. Check the amount received after the reporting period and evaluate the | |
| 2. Impairment of Inventory | |
Please refer to the Note （11）Inventory
Inventory under “5.
| Notes to |
consolidated financial statements”.
As at
| December 31,2020, the carrying amount of inventory in consolidated statement is RMB 9,073,623,111.13, impairment of inventory is RMB 33,557,768.48, the book value of inventory | The procedures carried out for the |
impairment of inventory include:
internal control related to the impairmentof inventory;
| 2. Supervise stock taking and check the |
quantity and status of inventory, especiallythe aged inventory;
3. Obtain the calculation of the impairment
of inventory. Check whether it follows the
rea
| lizable value. The sufficiency of |
impairment for inventory will exert a greatimpact on the financial statement.
products held for direct selling in the daily
| business activity shall be calculated by |
deducting the estimated sale expense andrelevant taxes from the estimated sale priceof inventories.
It involves significant judgement when the
selling price of the finished products basedon status.
As at December 31, 2020, the carrying
| amount of inventory was significant and involves the estimation of net realizable |
value. Therefore, we identified it as a keyaudit matter.
analyse the sufficiency of impairment;
| 4. For products with open market selling price, we inquired the open market price |
i
products with the latest actual selling priceor selling price after the reporting period.
5.Evaluate the esti
| mated sales expenses and related taxes and fees made by the management and compare with the historical data of similar products and compare with the actual costs occurred |
after the balance sheet date.
Other information
The management of the Company is responsible for the other information. The otherinformation comprises information of the Company's annual report for the period of 2020but excludes the financial statements and our auditor's report.
Our opinion on the financial statements does not cover the other information and we do notand will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read theother information identified above and, in doing so, consider whether the other informationis materially inconsistent with the financial statements or our knowledge obtained in theaudit if there appears to be a material misstatement.
Based on the work we have performed, if we determine that there is a material misstatementof other information, we should report that fact. In this regard, we have nothing to report.
Responsibilities of Management and Those Charged with Governance for the FinancialStatements
Management is responsible for the preparation and fair presentation of the financialstatements in accordance with requirements of Accounting Standards for BusinessEnterprises, and for such internal control as management determines is necessary to enablethe preparation of financial statements that are free from material misstatement, whetherdue to fraud or error.
In preparing the financial statements, management of the Company is responsible forassessing the Company's ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations, or has norealistic alternative but to do so.
Those charged with governance are responsible for supervising the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statementsare free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance but isnot a guarantee that an audit conducted in accordance with China Standards on Auditingfor Certified Public Accountants will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if, individually orin the aggregate, they could reasonably be expected to influence the economic decisions ofusers taken on the basis of these financial statements.
As part of an audit in accordance with accordance with Chinese Certified PublicAccountants Auditing Standards, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.The risk of not detecting a material misstatement resulting from fraud is higher than for oneresulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
(4) Conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty existsrelated to events or conditions that may cast significant doubt on Bengang Steel Plate’sability to continue as a going concern. If we conclude that a material uncertainty exists, weare required to draw attention in our auditor’s report to the related disclosures in thefinancial statements or, if such disclosures are inadequate, to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor’s report.However, future events or conditions may cause Bengang Steel Plates to cease to continueas a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient and appropriate audit evidence regarding the financial information of
entities or business activities within Bengang Steel Plates to express an opinion on thefinancial statements. We are responsible for guiding, supervising and executing the groupaudit and assume full responsibility for the audit opinion.
We communicate with those charged with governance regarding, among other matters, theplanned scope and timing of the audit and significant audit findings, including anysignificant deficiencies in internal control that we identify during our audit.
We also provide a statement to those charged with governance on compliance with theethical requirements associated with independence and communicate with those chargedwith governance all relationships and other matters that may reasonably be considered toaffect our independence, and related precautions (if applicable).
From the matters communicated with those charged with governance, we determine thosematters that were of most significance in the audit of the financial statements of the currentperiod and are therefore the key audit matters. We describe these matters in our auditor'sreport unless law or regulation precludes public disclosure about the matter or when, inextremely rare circumstances, we determine that a matter should not be communicated inour report because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.
BDO CHINA SHULUN PAN CERTIFIED Certified Public Accountants of China
PUBLIC ACCOUNTANTS LLP (Engagement Partner)
Certified Public Accountants of China
Shanghai, the People’s Republic of China 26 April 2021
This auditor’s report and the accompanying notes to the financial statement are English translation of theChinese auditors’ report. In case of doubt as to the presentation of these documents, the Chinese version shallprevail.
BENGANG STEEL PLATES CO., LTD.CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2020(Expressed in Renminbi unless otherwise indicated)Assets Notes 5 31 Dec, 2020 31 Dec, 2019Current assetsCash at bank and on hand (1) 13,126,666,915.26 18,415,844,397.77Settlement provisionsCapital lentFinancial assets held for tradingDerivative financial assetsNotes receivable -Accounts receivable (2)245,217,182.66 235,696,265.66Accounts receivable financing (3)4,189,977,871.92 2,429,542,461.88Prepayments (4)2,108,044,777.65 1,291,047,458.11Premium receivableReinsurance accounts receivableReceivable deposit for reinsurance contractOther receivables (5) 142,101,351.27 172,807,036.77Redemptory financial assets for saleInventories (6) 9,040,065,342.65 7,700,397,685.61Contract assetsAssets held for saleNon-current assets due within one yearOther current assets (7)5,523,646,836.01 312,904,824.09Total current assets34,375,720,277.42 30,558,240,129.89Non-current assetsLoan and advances issuedDebt InvestmentsOther debt investmentsLong-term receivablesLong-term equity investments (8) 2,742,064.73 2,642,998.70Other equity instrument investments (9) 1,042,024,829.00 1,041,824,829.00Other non-current financial assetsInvestment propertyFixed assets (10) 26,284,567,956.44 26,123,375,492.40Construction in progress (11) 1,839,933,715.58 1,833,853,572.58Productive biological assetsOil and gas assetsIntangible assets (12) 264,932,652.54 271,500,023.34Development expenditure
Assets Notes 5 31 Dec, 2020 31 Dec, 2019GoodwillLong-term deferred expensesDeferred tax assets (13) 201,708,932.84 191,485,595.49Other non-current assets (14)995,840,320.65 708,502,552.50Total non-current assets30,631,750,471.78 30,173,185,064.01Total assets65,007,470,749.20 60,731,425,193.90The notes to the financial statements attached form part of these financial statements.
Legal Representative: Chief Financial Officer: Chief Accountant:
BENGANG STEEL PLATES CO., LTD.CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Continued)
As at 31 December 2020(Expressed in Renminbi unless otherwise indicated)
Liabilities and equities Notes 5 31 Dec, 2020 31 Dec, 2019Current LiabilitiesShort-term loans (15) 10,067,731,000.00 13,151,478,000.00Loan from central bankLoan from other banksFinancial liability held for tradingDerivative financial liabilitiesNotes payable (16) 9,814,149,348.42 11,828,514,676.95Accounts payable (17) 5,914,228,256.82 4,527,513,030.27Advance from customers (18) 4,429,821,526.79Contract liabilities (19) 4,458,671,819.90Financial assets sold for repurchaseDeposits from customers and interbankReceipt from vicariously traded securitiesReceipt from vicariously underwriting securitiesEmployee benefits payable (20) 25,749,485.25 23,698,174.56Current tax liabilities (21) 55,302,080.96 284,825,814.80Other payables (22) 709,448,301.92 662,701,744.97Handling charges and commission payableReinsurance accounts payableLiabilities held for saleNon-current liabilities due within one year (23) 1,308,030,361.43 234,474,657.99Other current liabilities (24) 579,627,336.58Total current liabilities 32,932,937,991.28 35,143,027,626.33Non-current liabilitiesProvision for insurance contractLong-term loans (25) 3,502,934,427.65 4,849,675,910.73Bonds payable (26) 5,752,229,339.52Including: Preferred stock
Perpetual bondLong-term payables (27) 1,114,232,362.74 516,939,408.14Long-term employee benefits payableEstimated liabilities
Liabilities and equities Notes 5 31 Dec, 2020 31 Dec, 2019Deferred income (28) 154,451,833.23 208,955,407.30Deferred tax liabilitiesOther non-current liabilitiesTotal non-current liabilities 10,523,847,963.14 5,575,570,726.17Total liabilities 43,456,785,954.42 40,718,598,352.50Shareholders' equity:
Share capital (29) 3,875,371,532.00 3,875,371,532.00Other equity instruments (30) 1,146,290,662.42Including: Preferred stock
Perpetual bondCapital reserves (31) 12,343,209,847.29 12,343,209,847.29Less: treasury sharesOther comprehensive incomeSpecial reserves (32) 300,412.14 212,687.41Surplus reserves (33) 961,105,529.85 961,105,529.85General risk reserveUndistributed profits (34) 2,692,018,405.40 2,307,765,664.62Total equity attributable to equity holders of the parent company 21,018,296,389.10 19,487,665,261.17Non-controlling interests 532,388,405.68 525,161,580.23Total shareholder's equity 21,550,684,794.78 20,012,826,841.40Total of liabilities and owners’ equity 65,007,470,749.20 60,731,425,193.90The notes to the financial statements attached form part of these financial statements.Legal Representative： Chief Financial Officer: Chief Accountant:
BENGANG STEEL PLATES CO., LTD.STATEMENT OF FINANCIAL POSITION
As at 31 December 2020(Expressed in Renminbi unless otherwise indicated)Assets Notes 14 31 Dec, 2020 31 Dec, 2019Current assetsCash at bank and on hand 11,808,618,300.87 16,982,227,928.89Financial assets held for tradingDerivative financial assetsNotes receivableAccounts receivable (1) 289,865,462.20 388,997,108.46Accounts receivable financing (2) 4,143,431,412.08 2,193,319,842.60Prepayments 2,117,204,935.75 1,184,632,345.13Other receivables (3) 228,180,190.02 266,663,235.81Inventories 7,420,499,172.20 6,114,582,832.33Contract assetsAssets held for saleNon-current assets due within one year
Assets Notes 14 31 Dec, 2020 31 Dec, 2019Other current assets 5,437,282,088.94 191,249,460.42Total current assets 31,445,081,562.06 27,321,672,753.64Non-current assetsDebt investmentsOther debt investmentsLong-term receivablesLong-term equity investments (4) 2,016,281,902.16 2,016,281,902.16Other equity instrument investments 1,041,624,829.00 1,041,624,829.00Other non-current financial assetsInvestment propertyFixed assets 24,755,665,765.30 24,447,763,305.12Construction in progress 1,798,639,941.58 1,813,889,136.42Productive biological assetsOil and gas assetsIntangible assets 142,163,903.40 145,470,040.68Development expenditureGoodwillLong-term deferred expensesDeferred tax assets 98,480,706.23 93,555,276.54Other non-current assets 988,475,426.53 696,351,867.38Total non-current assets 30,841,332,474.20 30,254,936,357.30Total assets 62,286,414,036.26 57,576,609,110.94The notes to the financial statements attached form part of these financial statements.Legal Representative: Chief Financial Officer: Chief Accountant:
BENGANG STEEL PLATES CO., LTD.STATEMENT OF FINANCIAL POSITION (Continued)
As at 31 December 2020(Expressed in Renminbi unless otherwise indicated)Liabilities and shareholders' equities Notes 14 31 Dec, 2020 31 Dec, 2019Current liabilitiesShort-term loans 9,107,731,000.00 11,851,478,000.00Financial liability held for tradingDerivative financial liabilitiesNotes payable 8,348,607,405.21 10,225,969,445.22Accounts payable 6,280,468,684.34 4,909,389,629.86Prepayments 5,597,707,687.22Contract liabilities 5,324,357,761.83
Liabilities and shareholders' equities Notes 14 31 Dec, 2020 31 Dec, 2019Employee benefits payable 23,981,010.53 21,872,906.71Current tax liabilities 42,514,891.31 274,181,048.14Other payables 368,374,954.61 384,125,032.59Liabilities held for saleNon-current liabilities due within one year 1,308,030,361.43 234,474,657.99Other current liabilities 692,166,509.04Total current liabilities 31,496,232,578.30 33,499,198,407.73Non-current liabilitiesLong term loans 3,502,934,427.65 4,849,675,910.73Bonds payable 5,752,229,339.52Including: Preferred stock
Perpetual bondLong-term payables 1,108,412,163.50 516,939,408.14Long-term employee benefits payableEstimated liabilitiesDeferred income 154,451,833.23 208,955,407.30Deferred tax liabilitiesOther non-current liabilitiesTotal non-current liabilities 10,518,027,763.90 5,575,570,726.17Total liabilities 42,014,260,342.20 39,074,769,133.90Shareholder’s equity:
Share capital 3,875,371,532.00 3,875,371,532.00Other equity instruments 1,146,290,662.42Including: Preferred stock
Perpetual bondCapital reserves 11,923,058,165.17 11,923,058,165.17Less: Treasury sharesOther comprehensive incomeSpecial reserves 120,972.62 53,330.99Surplus reserves 961,105,529.85 961,105,529.85Undistributed Profits 2,366,206,832.00 1,742,251,419.03Total shareholder's equity 20,272,153,694.06 18,501,839,977.04Total liabilities and shareholder’s equity 62,286,414,036.26 57,576,609,110.94The notes to the financial statements attached form part of these financial statements.Legal Representative: Chief Financial Officer: Chief Accountant:
BENGANG STEEL PLATES CO., LTD.CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2020(Expressed in Renminbi unless otherwise indicated)
Items Notes 5 Current period Previous period
1. Total operating income 48,684,792,685.58 52,741,353,582.28
Items Notes 5 Current period Previous periodIncluding: Operating income (35) 48,684,792,685.58 52,741,353,582.28Interest incomePremium earnedIncome from handling charges and commission
2. Total operating cost 47,900,922,736.61 52,124,252,623.88Including: Operating cost (35) 46,392,180,562.59 49,211,414,645.62Interest expenseExpenditure for handling charges and commissionSurrender value
Net expenditure for compensationNet provision for insurance contract appropriatedBonus payment for policyReinsurance premiumTax and surcharges (36) 215,871,820.10 271,580,080.03Selling and distribution expenses (37) 97,279,280.21 1,096,688,903.70General and administrative expenses (38) 792,826,294.81 831,945,841.56Research and development expenses (39) 37,989,623.28 30,780,463.74Financial expenses (40) 364,775,155.62 681,842,689.23Including: Interest expense 1,028,857,436.14 948,799,627.90
Interest income 378,523,984.03 333,750,262.79Add: Other income (41) 81,305,181.92 83,916,607.12Income on investment（“-” for loss） (42) 13,951,362.33 1,058,377.90Including: Income from associates and joint ventures 374,119.86 452,582.71Income from derecognition of financial assets measured at amortized costExchange gains（“-” for loss）
Net exposure hedge income（“-” for loss）
Gains from change of fair value （“-” for loss）Credit impairment loss （“-” for loss）
(43) -304,019,761.75 -6,541,900.62
Asset impairment loss （“-” for loss）
(44) -67,185,869.37 -43,256,982.72
Assets disposal gains（“-” for loss） (45) 325,651.61 3,441,646.67
3. Operational profit（“-” for loss） 508,246,513.71 655,718,706.75Add: Non-operating income (46) 4,328,563.52 10,306,462.87Less: Non-operating expenses (47) 95,724,280.44 90,209,742.22
4. Total profit (“-” for loss) 416,850,796.79 575,815,427.40Less: Income tax expenses (48) 25,371,230.56 18,954,938.42
5. Net profit（“-” for loss） 391,479,566.23 556,860,488.98
1.Classification by continuing operating
1.Net profit from continuing operation（“-” for loss）
391,479,566.23 556,860,488.98
2.Net profit from discontinued operation（“-” for loss）
2.Classification by ownership
1. Net profit attributable to the owners of parent company （“-” for loss） 384,252,740.78 555,646,971.40
2. Net profit attributable to non-controlling shareholders （“-” for loss）
7,226,825.45 1,213,517.58
6.Other comprehensive incomeOther comprehensive income attributable to owners of the parent company after tax
1.Other comprehensive income items that will not be reclassified into gains/losses
1) Re-measurement of defined benefit plans of changes in net debt or net assets
2) Other comprehensive income under the equity method cannot be reclassified into
profit or loss
3) Changes in fair value of investments in other equity instruments
4) Changes in fair value of company's credit risk
2.Other comprehensive income that will be reclassified into profit or loss.
1) Other comprehensive income under the equity method which can be reclassified into
profit or loss
2) Changes in fair value of other debt investments
3) Amount of financial assets reclassified into other comprehensive income
Items Notes 5 Current period Previous period
4) Credit impairment provision of other debt investments
5) Cash flow hedges reserve
6) Translation differences in foreign currency financial statements
7) OthersOther comprehensive income attributable to non-controlling shareholders’ equity after tax
7. Total comprehensive income 391,479,566.23 556,860,488.98Total comprehensive income attributable to the owner of the parent company 384,252,740.78 555,646,971.40Total comprehensive income attributable to non-controlling shareholders 7,226,825.45 1,213,517.58
8. Earnings per share1）Basic earnings per share
0.099 0.1432）Diluted earnings per share
0.099 0.143
The notes to the financial statements attached form part of these financial statements.Legal Representative: Chief Financial Officer: Chief Accountant:
BENGANG STEEL PLATES CO., LTD.STATEMENT OF COMPREHENSIVE INCOMEFor the year ended 31 December 2020(Expressed in Renminbi unless otherwise indicated)
Items Notes 14 Current period Previous period
1. Total operating income (5) 48,811,106,474.73 52,605,113,207.02Less: Operating cost (5) 46,742,700,421.70 49,734,189,460.60Tax and surcharges 182,486,280.99 219,994,347.76Selling and distribution expenses 86,927,530.44 640,211,381.70General and administrative expenses 738,689,535.43 775,147,352.42Research and development expenses 37,989,623.28 30,780,463.74Financial expenses 339,059,288.37 654,332,095.34Including: Interest expense 973,520,152.09 889,827,373.77
Interest income 348,394,576.76 302,622,279.00Add: Other income 80,671,964.84 83,594,522.47Income on investment（“-” for loss）(6)13,577,242.47 27,594,915.42
Including: Income from associates and joint ventures
measured at amortized cost
Net exposure hedge income（“-” for loss）
Gains from change of fair value （“-” for loss）
Credit impairment loss（“-” for loss）
1,333,341.31 -4,408,068.83
Assets impairment loss（“-” for loss）
-67,185,869.37 -43,256,982.72Assets disposal gains（“-” for loss）
325,651.61 3,488,648.92
2. Operational profit（“-” for loss）
711,976,125.38 617,471,140.72
Add: Non-operating income 3,588,687.69 10,128,386.99Less: Non-operating expenses 95,171,437.11 90,098,761.28
3. Total profit (“-” for loss) 620,393,375.96 537,500,766.43Less: Income tax expenses -3,562,037.01 2,664,726.46
4. Net profit（“-” for loss）
623,955,412.97 534,836,039.97
1.Net profit from continuing operation (“-” for loss) 623,955,412.97 534,836,039.97
2.Net profit from discontinued operation (“-” for loss)
5.Other comprehensive income
1.Other comprehensive income items that will not be reclassified into
gains/losses
1) Re-measurement of defined benefit plans of changes
Items Notes 14 Current period Previous period
2) Other comprehensive income under the equity method cannot be
reclassified into profit or loss
3) Changes in fair value of investments in other equity instruments
4) Changes in fair value of company's credit risk
2.Other comprehensive income that will be reclassified into profit or
loss.
1) Other comprehensive income under the equity method investee
can be reclassified into profit or loss
2) Changes in fair value of other debt investments
3) Amount of financial assets reclassified into other comprehensive
income
4) Credit impairment provision of other debt investments
5) Cash flow hedges reserve
6) Translation differences in foreign currency financial statements
7) Others
6. Total comprehensive income 623,955,412.97 534,836,039.97
7. Earnings per share1）Basic earnings per share
2）Diluted earnings per share
The notes to the financial statements attached form part of these financial statements.Legal Representative: Chief Financial Officer: Chief Accountant:
BENGANG STEEL PLATES CO., LTD.CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2020(Expressed in Renminbi unless otherwise indicated)Items Notes 5 Current period Previous period
1.Cash flow from operating activitiesCash received from sale of goods or rendering of services38,849,024,657.06 47,399,776,780.22
Net increase of customers' deposit and interbank depositNet increase of loan from central bankNet increase of loans from other financial institutionsCash received for premium of original insurance contractNet cash received for reinsurance businessNet increase of deposit and investment of the insuredCash from receiving interest, handling charge and commissionNet increase of loans from borrowing fundsNet increase of fund for repurchase businessNet cash received from traded securitiesTax rebate received396,399,799.91 364,095,520.25
Other cash received relating to operating activities (48)816,954,704.43 377,085,656.22
Subtotal of cash inflows from operating activities40,062,379,161.40 48,140,957,956.69Cash paid for goods and services38,688,312,946.57 37,675,995,353.53
Net increase of customer's loan and advancesNet increase of deposit in central bank and interbank depositCash for payment of compensation for original insurance contractNet increase in capital lentCash for payment of interest, handling charge and commissionCash for payment of policy bonusCash paid to and on behalf of employees1,973,351,870.94 2,109,471,410.71
Items Notes 5 Current period Previous periodCash paid for all types of taxes952,434,837.20 1,054,705,726.35Other cash paid relating to operating activities (48)487,279,719.98 322,961,424.94Subtotal of cash outflows from operating activities42,101,379,374.69 41,163,133,915.53Net cash flows from operating activities-2,039,000,213.29 6,977,824,041.16
2. Cash flows from investing activitiesCash received from disposal of investments52,773,000.00
Cash received from return on investments13,852,296.30 871,060.75
Net cash received from disposal of fixed assets, intangible assets and other long-term assets
185,442.47 340,766.32Net cash received from disposal of subsidiary and other operating unitsOther cash paid relating to investing activitiesSubtotal of cash inflows from investing activities14,037,738.77 53,984,827.07Cash paid for acquisition of fixed assets, intangible assets and other long-term assets1,013,928,829.62 4,546,086,687.86Cash paid for acquisition of investments5,200,000,000.00 52,773,000.00
Net increase of mortgage loanNet cash received from subsidiary and other operating unitOther cash paid relating to investing activitiesSubtotal of cash outflows from investing activities6,213,928,829.62 4,598,859,687.86
Net cash flows from investing activities-6,199,891,090.85 -4,544,874,860.79
3. Cash flows from financing activitiesProceeds from investmentIncluding: Proceeds from investment of non-controlling shareholders of subsidiaryProceeds from borrowings21,667,514,000.00 15,913,409,000.00
Other proceeds relating to financing activities (48)1,329,876,314.56 1,571,269,971.97
Subtotal of cash inflows from financing activities22,997,390,314.56 17,484,678,971.97
Cash repayments of borrowings18,115,736,896.61 17,121,821,388.69
Cash payments for distribution of dividends, profit or interest expenses749,821,254.37 1,172,008,803.59
Including: Cash paid to non-controlling shareholders as dividend and profit bysubsidiaries
9,198,305.14
Other cash payments relating to financing activities (48)75,509,135.49 10,343,406.67
Subtotal of cash outflows from financing activities18,941,067,286.47 18,304,173,598.95
Net cash flows from financing activities4,056,323,028.09 -819,494,626.98
4. Effect of foreign exchange rate changes on cash and cash equivalents
-29,429,117.41 75,411,813.22
5. Net increase in cash and cash equivalents-4,211,997,393.46 1,688,866,366.61
Add: Cash and cash equivalents at the beginning of the period13,441,414,988.58 11,752,548,621.97
6. Cash and cash equivalents at the ending of the period9,229,417,595.12 13,441,414,988.58
The notes to the financial statements attached form part of these financial statements.Legal Representative: Chief Financial Officer: Chief Accountant:
BENGANG STEEL PLATES CO., LTD.STATEMENT OF CASH FLOWSFor the year ended 31 December 2020(Expressed in Renminbi unless otherwise indicated)
ItemsNotes 14Current period Previous period
1. Cash flow from operating activitiesCash received from sale of goods or rendering of services 43,332,373,821.90 45,925,314,655.54Tax rebate received 324,045,932.64 318,311,209.48Other cash received relating to operating activities 786,085,304.22 289,883,909.31Subtotal of cash inflows from operating activities 44,442,505,058.76 46,533,509,774.33
ItemsNotes 14Current period Previous periodCash paid for goods and services 43,585,984,954.05 35,992,848,593.70Cash paid to and on behalf of employees 1,870,605,772.33 1,975,902,597.93Cash paid for all types of taxes 824,396,654.24 897,467,468.84Other cash paid relating to operating activities 476,274,984.82 231,467,233.26Subtotal of cash outflows from operating activities 46,757,262,365.44 39,097,685,893.73Net cash flows from operating activities -2,314,757,306.68 7,435,823,880.60
2. Cash flows from investing activitiesCash received from disposal of investmentsCash received from return on investments 13,577,242.47 27,594,915.42Net cash received from disposal of fixed assets, intangibleassets and other long-term assets
1,637.16Net
operating units
Other cash received relating to investing activitiesSubtotal of cash inflows from investing activities 13,578,879.63 27,594,915.42Cash paid for acquisition of fixed assets, intangible assets andother long-term assets
1,013,911,078.29 4,500,165,073.02Cash paid for acquisition of investments 5,200,000,000.00Net cash paid for acquisition of subsidiary and other operatingunit
Other cash paid relating to investing activitiesSubtotal of cash outflows paid for investing activities 6,213,911,078.29 4,500,165,073.02Net cash flows from investing activities -6,200,332,198.66 -4,472,570,157.60
3. Cash flows from financing activitiesProceeds from investmentCash received from borrowings 20,607,514,000.00 14,603,409,000.00Other cash received relating to financing activities 1,294,921,225.43 1,484,945,138.77Subtotal of cash inflows from financing activities 21,902,435,225.43 16,088,354,138.77Cash repayments of borrowings 16,715,736,896.61 15,794,901,388.69Cash payments for distribution of dividends, profit or interest 701,262,726.60 1,101,521,395.66Other cash payments relating to financing activities 72,689,078.37 8,731,273.67Subtotal of cash outflows from financing activities 17,489,688,701.58 16,905,154,058.02Net cash flows from financing activities 4,412,746,523.85 -816,799,919.25
4. Effect of foreign exchange rate changes on cash and cash
equivalents
-29,414,313.38 75,337,651.52
5. Net increase in cash and cash equivalents -4,131,757,294.87 2,221,791,455.27Add: Cash and cash equivalents at the beginning of the period 13,029,616,298.47 10,807,824,843.20
6. Ending balance of cash and cash equivalents 8,897,859,003.60 13,029,616,298.47
The notes to the financial statements attached form part of these financial statements.Legal Representative: Chief Financial Officer: Chief Accountant:
BENGANG STEEL PLATES CO., LTD.CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2020(Expressed in Renminbi unless otherwise indicated)Items
Current period
Owner's equity attributable to parent company
Non-controllinginterest
Total of owner'sequityShare capital
Other equity instruments
Capital reserves
Less:
Treasuryshares
Othercomprehensive
income
Special reserves Surplus reserves
General
riskreserve
Undistributedprofit
SubtotalPreferenceshares
Perpetual
bond
Others
1. Ending balance of last year 3,875,371,532.00 12,343,209,847.29 212,687.41 961,105,529.85 2,307,765,664.62 19,487,665,261.17 525,161,580.23 20,012,826,841.40Add: Change of accounting policiesCorrection of errors for last periodBusiness consolidation under common controlOthers
2. Beginning balance of current year 3,875,371,532.00 12,343,209,847.29 212,687.41 961,105,529.85 2,307,765,664.62 19,487,665,261.17 525,161,580.23 20,012,826,841.40
3. Changes in current year (“-” for decrease) 1,146,290,662.42 87,724.73 384,252,740.78 1,530,631,127.93 7,226,825.45 1,537,857,953.38
1) Total comprehensive income 384,252,740.78 384,252,740.78 7,226,825.45 391,479,566.23
shareholders
1,146,290,662.42 1,146,290,662.42 1,146,290,662.42
(1) Common share invested by shareholders
(2) Capital input by the holder of other equity
instruments
1,146,290,662.42 1,146,290,662.42 1,146,290,662.42
(3) Share-
2) Capital increase and decrease by
based payment attributable to
owners' equity
(4) Others
3) Profit distribution
(1) Appropriation to surplus reserves
(2) Appropriation to general risk reserve
(3) Profit distribution to shareholders
(4) Others
4) Transfers within shareholders' equity
(1) Capital reserves transferred into paid-in
capital (or stock)
(2) Surplus reserves transferred into paid-in
capital (or stock)
(3) Surplus reserves to recover loss
(4) Net changes of defined contribution plans
transferred into Retained Earnings
(5) Other comprehensive income transferred
into Retained Earnings
(6) Others
Items
Current periodOwner's equity attributable to parent company
Non-controllinginterest
Total of owner'sequityShare capital
Other equity instruments
Capital reserves
Less:
Treasuryshares
Othercomprehensiveincome
Special reserves Surplus reserves
General
riskreserve
Undistributed
profit
SubtotalPreferenceshares
Perpetualbond
Others
5) Special reserves 87,724.73 87,724.73 87,724.73
(1) Provision of special reserves 54,000,536.58 54,000,536.58 54,000,536.58
(2) Use of special reserves 53,912,811.85 53,912,811.85 53,912,811.85
6) Others
4. Ending balance of current year 3,875,371,532.00 1,146,290,662.42 12,343,209,847.29 300,412.14 961,105,529.85 2,692,018,405.40 21,018,296,389.10 532,388,405.68 21,550,684,794.78
The notes to the financial statements attached form part of these financial statementsLegal Representative: Chief Financial Officer: Chief Accountant:
BENGANG STEEL PLATES CO., LTD.CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued)
For the year ended 31 December 2020(Expressed in Renminbi unless otherwise indicated)
Items
Previous periodOwner's equity attributable to parent company
Non-controllinginterest
Total of owner's
equityShare capital
Other equity instruments
Capital reserves
Less:
Treasuryshares
Othercomprehensive
income
Special reserves Surplus reserves
Generalriskreserve
Undistributed
profit
SubtotalPreference
shares
Perpetual
bond
Others
1. Ending balance of last year
3,875,371,532.00 12,343,209,847.29 683,937.71 961,105,529.85 1,945,887,269.82 19,126,258,116.67 533,146,339.49 19,659,404,456.16Add: Change of accounting policies
Correction of errors for last period
Business consolidation under common control
Others
2. Beginning balance of current year
3,875,371,532.00 12,343,209,847.29 683,937.71 961,105,529.85 1,945,887,269.82 19,126,258,116.67 533,146,339.49 19,659,404,456.16
3. Changes in current year (“-” for decrease)
-471,250.30 361,878,394.80 361,407,144.50 -7,984,759.26 353,422,385.24
1) Total comprehensive income
555,646,971.40 555,646,971.40 1,213,517.58 556,860,488.98
2) Capital increase and decrease by shareholders
(1) Common share invested by shareholders
(2) Capital input by the holder of other equity
instruments
(3) Share-based payment attributable to owners'
equity
Items
Previous periodOwner's equity attributable to parent company
Non-controlling
interest
Total of owner'sequityShare capital
Other equity instruments
Capital reserves
Less:
Treasuryshares
Othercomprehensiveincome
Special reserves Surplus reserves
Generalriskreserve
Undistributed
profit
SubtotalPreferenceshares
Perpetualbond
Others
(4) Others
3) Profit distribution
-193,768,576.60 -193,768,576.60 -9,198,305.14 -202,966,881.74
(1) Appropriation to surplus reserves
(2) Appropriation to general risk reserve
(3) Profit distribution to shareholders
-193,768,576.60 -193,768,576.60 -9,198,305.14 -202,966,881.74
(4) Others
4) Transfers within shareholders' equity
(1) Capital reserves transferred into paid-in capital
(or stock)
(2) Surplus reserves transferred into paid-in
capital (or stock)
(3) Surplus reserves to recover loss
(4) Net changes of defined contribution plans
transferred into Retained Earnings
(5) Other comprehensive income transferred into
Retained Earnings
(6) Others
5) Special reserves
-471,250.30 -471,250.30 28.30 -471,222.00
(1) Provision of special reserves
47,843,133.40 47,843,133.40 28.30 47,843,161.70
(2) Use of special reserves
48,314,383.70 48,314,383.70 48,314,383.70
6) Others
4. Ending balance of current year
3,875,371,532.00 12,343,209,847.29 212,687.41 961,105,529.85 2,307,765,664.62 19,487,665,261.17 525,161,580.23 20,012,826,841.40
The notes to the financial statements attached form part of these financial statementsLegal Representative: Chief Financial Officer: Chief Accountant:
BENGANG STEEL PLATES CO., LTD.STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2020(Expressed in Renminbi unless otherwise indicated)
Items
Current periodShare capital
Other equity instruments
Capital reserves
Less:
Treasury
shares
Othercomprehensive income
Specialreserves
Surplus reserves
Undistributed
profits
Total shareholder’s
equityPreference
shares
Perpetual
bond
Others
1. Ending balance of last year 3,875,371,532.00 11,923,058,165.17 53,330.99 961,105,529.85 1,742,251,419.03 18,501,839,977.04Add: Change of accounting policiesCorrection of errors for last periodOthers
2. Beginning balance of current year 3,875,371,532.00 11,923,058,165.17 53,330.99 961,105,529.85 1,742,251,419.03 18,501,839,977.04
3. Changes in current year (“-” for decrease) 1,146,290,662.42 67,641.63 623,955,412.97 1,770,313,717.02
1) Total comprehensive income 623,955,412.97 623,955,412.97
2) Capital increase and decrease by shareholders 1,146,290,662.42 1,146,290,662.42
(1) Common share invested by shareholders
(2) Capital input by the holder of other equity instruments 1,146,290,662.42 1,146,290,662.42
(3) Share-based payment attributable to shareholders' equity
(4) Others
3) Profit distribution
(1) Appropriation of surplus reserves
(2) Profit distribution to shareholders
(3) Others
4) Transfers within shareholders' equity
(1) Capital reserves transferred into paid-in capital (or stock)
(2) Surplus reserves transferred into paid-in capital (or stock)
(3) Surplus reserves to recover loss
(4) Net changes of defined contribution plans transferred into
Retained Earnings
(5) Other comprehensive income transferred into retained earnings
(6) Others
5) Special reserves 67,641.63 67,641.63
(1) Provision of special reserves 47,926,472.22 47,926,472.22
(2) Use of special reserves 47,858,830.59 47,858,830.59
Items
Current periodShare capital
Other equity instruments
Capital reserves
Less:
Treasuryshares
Othercomprehensive income
Specialreserves
Surplus reserves
Undistributedprofits
Total shareholder’sequityPreferenceshares
Perpetual
bond
Others
6) Others
4. Ending balance of current year 3,875,371,532.00 1,146,290,662.42 11,923,058,165.17 120,972.62 961,105,529.85 2,366,206,832.00 20,272,153,694.06The notes to the financial statements attached form part of these financial statementsLegal Representative: Chief Financial Officer: Chief Accountant:
BENGANG STEEL PLATES CO., LTD.STATEMENT OF CHANGES IN EQUITY (Continued)
For the year ended 31 December 2020(Expressed in Renminbi unless otherwise indicated)Items
Previous periodShare capital
Other equity instruments
Capital reserves
Less:
Treasury
shares
Othercomprehensi
ve income
Specialreserves
Surplus reserves
Undistributed
profits
Total shareholder’s
equityPreference
shares
Perpetual
bond
Others
1. Ending balance of last year 3,875,371,532.00 11,923,058,165.17 525,218.48 961,105,529.85 1,401,183,955.66 18,161,244,401.16Add: Change of accounting policiesCorrection of errors for last periodOthers
2. Beginning balance of current year 3,875,371,532.00 11,923,058,165.17 525,218.48 961,105,529.85 1,401,183,955.66 18,161,244,401.16
3. Changes in current year (“-” for decrease) -471,887.49 341,067,463.37 340,595,575.88
1) Total comprehensive income 534,836,039.97 534,836,039.97
2) Capital increase and decrease by shareholders
(1) Common share invested by shareholders
(2) Capital input by the holder of other equity instruments
(3) Share-based payment attributable to shareholders' equity
(4) Others
3) Profit distribution -193,768,576.60 -193,768,576.60
(1) Appropriation of surplus reserves
(2) Profit distribution to shareholders -193,768,576.60 -193,768,576.60
(3) Others
Items
Previous periodShare capital
Other equity instruments
Capital reserves
Less:
Treasury
shares
Othercomprehensive income
Specialreserves
Surplus reserves
Undistributed
profits
Total shareholder’s
equityPreferenceshares
Perpetualbond
Others
4) Transfers within shareholders' equity
(1) Capital reserves transferred into paid-in capital (or stock)
(2) Surplus reserves transferred into paid-in capital (or stock)
(3) Surplus reserves to recover loss
(4) Net changes of defined contribution plans transferred into
Retained Earnings
(5) Other comprehensive income transferred into retained earnings
(6) Others
5) Special reserves -471,887.49 -471,887.49
(1) Provision of special reserves 45,445,975.41 45,445,975.41
(2) Use of special reserves 45,917,862.90 45,917,862.90
6) Others
4. Ending balance of current year 3,875,371,532.00 11,923,058,165.17 53,330.99 961,105,529.85 1,742,251,419.03 18,501,839,977.04
The notes to the financial statements attached form part of these financial statementsLegal Representative: Chief Financial Officer: Chief Accountant:
Bengang Steel Plates Co., Ltd.
Notes to the financial statements
For the year ended 31 December 2020(Expressed in Renminbi unless otherwise indicated)
1. Basic Information of the Company
(1) Company profile
Bengang Steel Plates Co., Ltd. (hereinafter referred to as “Bengang Steel Plates” or “the Company”), asapproved in Liao-Zheng (1997) No. 57 by Liaoning People’s Government on 27 March 1997, was incorporatedas a joint stock limited company through public share offer of domestic listed foreign currency denominatedshares (B shares) in the People’s Republic of China (the “PRC”) on 27 June 1997 by Benxi Steel and Iron(Group) Co., Ltd. (“Bengang Group”), through reorganization of operations, assets and liabilities of its plants,namely, Steel Smelting Plant, Primary Rolling Plant and Continuous Hot Rolling Plant.
As approved by China Securities Regulatory Commission (hereinafter referred to as “the CSRC”), the Companyissued 400,000,000 B-shares at HKD 2.38 each in Shenzhen Stock Exchange on 10 June 1997. On 3 November1997, the Company issued another 120,000,000 A-shares (Renminbi common Shares) at RMB 5.40 each, andlisted in Shenzhen Stock Exchange since 15 January 1998. The capital shares were totaled to 1,136,000,000shares.
On 14 March 2006, according to the resolutions of the Shareholders’ Meeting regarding share equity relocation,the Share Equity Relocation Scheme, Response to Bengang Steel Plate Co., Ltd. about Share Equity Relocationissued by Liaoning Provincial Government State-owned Asset Administrative Committee, Bengang Group –the only holder of non-negotiable state-owned legal person shares paid the consideration to the currentshareholders to obtain the current option for the 40,800,000 shares of the total 616,000,000 shares it was holding.Shareholding positions have been registered with China Securities Depository & Clearing Corporation Ltd.Shenzhen Office. However, the total amount of capital shares of Bengang Steel Plates Co., Ltd. was not changedthrough the share equity relocation action.
According to the approval document “Zheng-Jian-Gong-Si-Zi [2006] No. 126” by China Securities RegulatoryCommission on 30 June 2006, the Company was approved to place 2 billion Renminbi common sharesparticularly to Bengang Group and the proceeds would be used to purchase the related assets of the Group. Onthe same day, Bengang Group received circular Zheng-Jian-Gong-Si-Zi [2006] No. 127 issued by ChinaSecurities Regulatory Committee, and were exempted for the liability of undertaking the purchase offer. Theliability was caused by subscribing of the 2 billion new shares and the total shareholding was thus increased to
2.5752 billion shares (accounting for 82.12% of the total capital shares of the Company). On 28 August 2006,
as approved by China Securities Depository & Clearing Corporation Ltd. Shenzhen Office, the registration andconditional placing procedures of the 2 billion new shares were completed. On 28 September 2006, the privatelyplaced shares were approved by Shenzhen Stock Exchange to be placed in the stock market. The placing pricewas RMB4.6733 per share.
Approved by the China Securities Regulatory Commission [2017] No. 1476, Bengang Steel Plate Co., Ltd.privately placed no more than 739,371,534 RMB ordinary shares (A shares) to no more than 10 issuers. Thenon-public offering was completed on 9 February 2018, and 739,371,532 shares were actually issued. Theplacing price was RMB5.41 per share.
As at 31 December 2020, the capital shares were totaled to 3,875,371,532 shares.The Company’s uniform social credit code: 91210000242690243E.The Company’s registered address: 16th Renmin Road, Pingshan District, Benxi, Liaoning Province.The Company’s legal representative: Gao Lie.
The parent company of Bengang Steel Plates Co., Ltd is Benxi Steel and Iron (Group) Co., Ltd. and the actualcontroller is the State-owned Assets Supervision and Administration Commission of the State Council ofLiaoning province.
Bengang Steel Plates Co., Ltd. belongs to ferrous metal smelting and rolling processing industry and is mainlyinvolved in producing and trading of ferrous metal products.
The financial statements have been approved for reporting by the board of directors of the Company on 26April 2021.
(2) Consolidation scope
As at 31 December 2020, subsidiaries included in the Company’s consolidated financialstatements are as follows:
Name of the subsidiariesGuangzhou Bengang Steel & Iron Trading Co., Ltd.Shanghai Bengang Metallurgy Science and Technology Co., Ltd.Bengang Steel Plates Liaoyang Pellet Co., Ltd.Dalian Benruitong Automobile Material Technology Co., Ltd.Changchun Bengang Steel & Iron Sales Co., Ltd.Harbin Bengang Economic and Trading Co., Ltd.Nanjing Bengang Materials Sales Co., Ltd.Wuxi Bengang Steel & Iron Sales Co., Ltd.Xiamen Bengang Steel & Iron Sales Co., Ltd.Yantai Bengang Steel & Iron Sales Co., Ltd.Tianjin Bengang Steel & Iron Trading Co., Ltd.Bengang POSCO Cold-rolled Sheet Co., Ltd.Benxi Bengang Steel Sales Co., LtdShenyang Bengang Metallurgical Science and Technology Co., Ltd.Chongqing Liaoben Steel & Iron Trading Co., Ltd.
Bengang Baojin (Shenyang) Automobile New Material Technology Co., Ltd.
The scope of the consolidated financial statements in this period has not changed comparedwith the previous period.
2. Basis of preparation
(1) Basis of preparation
The financial statements have been prepared on the going concern basis of actual trading andevents in accordance with “Accounting Standards for Business Enterprises – Basic Standard”and relevant specific standards, application materials, interpretations (together hereinafterreferred to as “Accounting Standards for Business Enterprises”) issued by the Ministry ofFinance, and “Information Disclosure Rules for Companies of securities for public issuance No.15 – General Regulations for Financial Statements” issued by the China Securities RegulatoryCommission.
(2) Going concern
The Company is operating normally and in a good condition, and thus has the capability tocontinue to operate in the next twelve months from the end of reporting period.
3. Significant accounting policies and accounting estimates
Notes for specific accounting policies and accounting estimates:
The following disclosed content covers the specific accounting policies and accounting estimates that areadopted by the Company based on the actual production and operation characteristics. Please see Note (10)Financial instruments, (11) Inventory, (15) Fixed assets, (18) Intangible assets, (24) Revenue under“3.Significant accounting policies and accounting estimates” for details.
(1) Statement of compliance with China Accounting Standards for Business Enterprises
The financial statements present truly and completely the financial position, operation results and cash flowsof the Company during the reporting period in accordance with China Accounting Standards for BusinessEnterprises.
(2) Accounting year
The Accounting year is from 1 January to 31 December.
(3) Operating period
The operating period is twelve months.
(4) Functional currency
The Company’s functional currency is RMB.
(5) The accounting treatment for Business combination under/not under common control
Business combination under common controlThe assets and liabilities that the Company acquired in a business combination shall be measured on the basisof their carrying amount of aquiree’s assets, liabilities (as well as the goodwill arising from the businesscombination) in the consolidated financial statement of the ultimate controller on the combining date. As forthe balance between the carrying amount of the net assets obtained by the Company and the carrying amountof the consideration paid by it (or the total par value of the shares issued), capital reserve needs to be adjusted.If the capital reserve is not sufficient, any excess shall be adjusted against retained earnings.
Business combination not under common controlThe Company shall, on the acquisition date, measure the assets given and liabilities incurred or assumed by anenterprise for a business combination in light of their fair values, and shall record the balances between themand their carrying amounts into the profits and losses at the current period. The Company shall recognize thepositive balance between the combination costs and the fair value of the identifiable net assets it obtains fromthe acquiree as goodwill. The Company shall treat the negative balance between the combination costs and thefair value of the identifiable net assets it obtains from the acquiree into the profits and losses of the currentperiod.
The intermediary costs and relevant fees for the business combination paid by the acquirer, including theexpenses for audit, assessment and legal services, shall be recorded into the profits and losses at the currentperiod. The transaction expenses for the issuance of equity securities for the business combination shall berecorded into the initial recognition amount of equity securities.
(6) Consolidation of Financial Statements
1. Scope of consolidation
The scope of consolidation of consolidated financial statements is determined based on control. All thesubsidies (including separable sections of the investees controlled by the Company) have been consolidatedinto the scope of consolidation for this period ended.
2. Procedure of consolidation
The consolidated financial statements shall be presented by the parent based on the financialstatements of the parent and its subsidiaries, and using other related information. Whenpreparing consolidated financial statements, the parent shall consider the entire group as anaccounting entity, adopt uniform accounting policies and apply the requirements of AccountingStandard for Business Enterprises related to recognition, measurement and presentation. Theconsolidated financial statements shall reflect the overall financial position, operating resultsand cash flows of the group.
The accounting policy and accounting period of the subsidiaries within the consolidation scopeshall be in accordance with those of the Company. If not, it is necessary to make the adjustmentaccording to the Company’s accounting policies and accounting period when preparing theconsolidated financial statements. For subsidiaries through acquisition that are now under
common control, the financial statements are adjusted according to fair value of identifiable netassets on the acquisition date. For subsidiaries through acquisition that are under commoncontrol, the assets, liabilities (as well as the goodwill arising from purchasing the subsidiary bythe ultimate controller) are adjusted according to book value of net assets in the financialstatements of the ultimate controller.
The owners’ interests, profit or loss, and comprehensive income of the subsidiary attributableto the non-controlling shareholders shall be presented separately in the shareholders’ equity ofthe consolidated balance sheet and under the item of net profit of the consolidated statement ofcomprehensive income and under the item of total comprehensive income. Where lossesassumed by the minority exceed the minority’s interests in the beginning equity of a subsidiary,the excess shall be charged against the minority’s interests.
(1) Increasing new subsidiaries and businesses
If the Company has a new subsidiary due to business combination under common controlduring the reporting period, it shall adjust the beginning balance in the consolidated statementof financial position when preparing consolidated statement of financial position. The revenue,expenses and profits of the subsidiaries from the acquisition date to the end of the reportingperiod are included in the Company’s consolidated statement of comprehensive income. Thecash flow of the subsidiaries from the acquisition date to the end of the reporting period isincluded in the Company’s consolidated statement of cash flows. And meanwhile theCompany shall adjust the relevant items of the comparative financial statements as if thereporting entity for the purpose of consolidation has been in existence since the date theultimate controlling party first obtained control.
When the Company becomes capable of exercising control over an investee under commoncontrol due to additional investment or other reasons, adjustment shall be made as if thereporting entity after the combination has been in existence since the date the ultimatecontrolling party first obtained control. The investment income recognized between date ofpreviously obtaining equity investment and the date the acquiree and acquirer are undercommon control, which is later, and the combining date, other comprehensive income andother changes of net assets arising from the equity investment previously-held before obtainingthe control the acquiree shall be adjusted against the prior retained earnings of the comparativefinancial statements and the current profit or loss respectively.
If it is now under common control, the Company shall not adjust the beginning balance in theconsolidated statement of financial position when preparing consolidated statement offinancial position. The revenue, expenses and profits of the subsidiaries from the acquisition
date to the end of the reporting period are included in the parent company’s consolidatedstatement of comprehensive income. The cash flow of the subsidiaries from the acquisitiondate to the end of the reporting period is included in the Company’s consolidated statement ofcash flows.
When the Company becomes capable of exercising control over an investee now undercommon control due to additional investment or other reasons, the acquirer shall remeasure itspreviously held equity interest in the acquiree to its fair value at the acquisition date. Thedifference between the fair value and the carrying amount shall be recognized as investmentincome for the period when the acquisition takes place. When the previously-held equityinvestment is accounted for under the equity method, any other comprehensive incomepreviously recognized in relation to the acquiree’s equity changes shall be transferred to profitor loss for the current period when the acquisition takes place. Other comprehensive incomearising from remeasurement of defined benefit plan is excluded.
(2) Disposing subsidiaries or businesses
1. General treatment
If the Company disposes a subsidiary during the reporting period, the revenue, expenses andprofits of the subsidiary from the beginning of the reporting period to disposal date areincluded in the Company’s consolidated statement of comprehensive income. The cash flowof the subsidiaries from the beginning of the reporting period to disposal date is included inthe Company’s consolidated statement of cash flows.
When the Company loses control over an investee due to partial disposal or other reasons, theacquirer shall re-measure the remaining equity interests in the acquiree to its fair value at theacquisition date. The difference, between sums of consideration received for disposal equityshares and fair value of the remaining shares, and sums of share of net assets of the subsidiarycalculated continuously from the acquisition date or the combination date based on theprevious shareholding proportion and goodwill, shall be recognized as investment income forthe period when the Company loses control over acquiree. When the previously-held equityinvestment is accounted for under the equity method, any other comprehensive incomepreviously recognized in relation to the acquiree’s equity changes, and other equity changesrather than changes from net profit, other comprehensive income and profit distribution, shallbe transferred to investment income for the current period when the Company loses controlover acquiree. Other comprehensive income arising from re-measurement of defined benefitplan is excluded. When the Company loses control over a subsidiary due to the increase ofcapital from other investors and thus the shareholding ratio of the Company declines,accounting treatment shall be in accordance with the above-mentioned principles.
2. Disposing subsidiaries by multiple transactions
Where the Company loses control of a subsidiary in multiple transactions in which it disposesof its subsidiary in stages, in determining whether to account for the multiple transactions asa single transaction, the Company shall consider all of the terms and conditions of thetransactions and their economic effects. One or more of the following may indicate that theCompany shall account for the multiple arrangements as a single transaction:
(a) Arrangements are entered into at the same time or in contemplation of each other;(b) Arrangements work together to achieve an overall commercial effect;(c) The occurrence of one arrangement is dependent on the occurrence of at least oneother arrangement; and(d) One arrangement considered on its own is not economically justified, but it iseconomically justified when considered together with other arrangements.
If each of the multiple transactions forms part of a bundled transaction which eventuallyresults in loss of control of the subsidiary, these multiple transactions shall be accounted foras a single transaction. In the consolidated financial statements, the difference between theconsideration received and the corresponding proportion of the subsidiary’s net assets in eachtransaction prior to the loss of control shall be recognized in other comprehensive income andtransferred to the profit or loss when the Company eventually loses control of the subsidiary.
If each of the multiple transactions which eventually results in loss of control of the subsidiarydo not form part of a bundled transaction, apply the treatment of disposing partial long-termequity investments in a subsidiary without loss of control prior to the loss of control. Afterthe loss of control, apply the treatment of disposing the subsidiary in common cases.
(3) Acquiring the subsidiaries’ equity interest held by non-controlling shareholders
Where the Company has acquired a subsidiary’s equity interest held by non-controllingshareholders, the difference between the increase in the cost of long-term investments as aresult of acquisition of non-controlling interests and the share of net assets of the subsidiarycalculated continuously from the acquisition date or the combination date based on the newshareholding proportion shall be adjusted to the capital reserve( capital premium or sharepremium) in the consolidated financial statements. If the balance of the capital reserve is notsufficient, any excess shall be adjusted against retained earnings.
(4) Disposing portion of equity investments in subsidiaries without losing control
When the Company disposes of a portion of the long-term equity investments in a subsidiary without loss ofcontrol, the difference between the amount of the consideration received and the corresponding portion ofthe nest assets of the subsidiary calculated continuously from the acquisition date or the combination daterelated to the disposal of the long-term equity investments shall be adjusted to the capital reserve (capital
premium or share premium) in the consolidated financial statements. If the balance of the capital reserve isnot sufficient, any excess shall be adjusted against retained earnings.
(7) Classification of joint venture arrangements and accounting treatment
Joint venture arrangements are divided into joint operations and joint ventures.
When the Company is a joint venture party of a joint venture arrangement and have the assets related to thearrangement and assumes the liabilities related to the arrangement, it is a joint operation.
The Company confirms the following items related to the share of interest in the joint operation and performsaccounting treatment in accordance with the relevant enterprise accounting standards:
a. Confirm the assets held by the company separately, and confirm the assets held jointly by the Company'sshare;b. Recognize the liabilities assumed by the Company separately and the liabilities jointly assumed by thecompany's share;c. Recognize the income generated by the sale of the Company’s share of common operating output;d. Recognize the revenue generated from the sale of joint operations based on the Company's share;e. Confirm the expenses incurred separately and the expenses incurred in the joint operation according to theCompany's share.
(8) Recognition of cash and cash equivalents
The term “cash” refers to the cash on hand and the unrestricted deposit. And the term “cash equivalents” refersto short-term (maturing within three months from acquisition) and highly liquid investments that are readilyconvertible to known amounts of cash and which are subject to an insignificant risk of change in value.
(9) Foreign currency transaction and translation of foreign currency financial statements
1. Foreign currency transaction
Foreign currency transactions are translated into RMB at the current rate at the day of transactions.
The foreign currency monetary items shall be translated at the spot exchange rate on the balance sheet date.The balance of exchange arising from the difference between the spot exchange rate on the balance sheet dateand the spot exchange rate at the time of initial recognition or prior to the balance sheet date, except thosearising from the raising of special foreign debt for the purchase or construction of capitalizable assets thus shallbe capitalized according to the borrowing costs capitalization principle, shall be recorded into the profits andlosses at the current period.
2. Translation of foreign currency financial statements
The asset and liability items in the statement of financial position shall be translated at a spot exchange rate onthe balance sheet date. Among the owner's equity items, except the ones as "undistributed profits", others shallbe translated at the spot exchange rate at the time when they are incurred. The income and expense items in theincome statement shall be translated using an exchange rate that is determined in a systematic and reasonablemanner and approximates the spot exchange rate on the transaction date.
When disposing an overseas business, the Company shall shift the balance, which is presented under the itemsof the owner's equities in the statement of financial position and arises from the translation of foreign currencyfinancial statements related to this oversea business, into the disposal profits and losses of the current period.
(10) Financial instruments
Financial instruments include financial assets, financial liabilities and equity instruments
1. Classification of financial instruments
The Company shall classify financial assets on the basis of both the entity’s business model formanaging the financial assets and the contractual cash flow characteristics of the financial assetas: financial assets measured at amortised cost, financial assets measured at fair value throughother comprehensive income and financial assets measured at fair value through profit or lossat initial measurement.
A financial asset shall be measured at amortised cost if both of the following conditions are met.The financial asset is held within a business model whose objective is to hold financial assetsin order to collect contractual cash flows and the contractual terms of the financial asset giverise on specified dates to cash flows that are solely payments of principal and interest on theprincipal amount outstanding.
A financial asset shall be measured at fair value through other comprehensive income if both ofthe following conditions are met. The financial asset is held within a business model whoseobjective is achieved by both collecting contractual cash flows and selling financial assets andthe contractual terms of the financial asset give rise on specified dates to cash flows that aresolely payments of principal and interest on the principal amount outstanding.
The Company may make an election at initial recognition for non-trading equity instrumentinvestments whether it is designated as a financial asset (equity instrument) that is measured atfair value through other comprehensive income. The designation is made on the basis of a singleinvestment, and the related investment meets the definition of an equity instrument from theissuer's perspective.
Other financial assets other than these are classified as financial assets measured at fair valuethrough profit or loss. At the initial recognition, in order to eliminate or significantly reduceaccounting mismatches, financial assets that should be classified as measured at amortizedvalue or financial assets measured at fair value through other comprehensive income can bedesignated as financial assets measured at fair value through profit or loss.
The Company shall classify financial liabilities as financial liabilities measured at amortised
cost and financial liabilities measured at fair value through profit or loss at initial measurement.In the initial recognition, in order to eliminate or significantly reduce accounting mismatches,financial assets can be designated as financial assets measured at fair value and their changesincluded in the current profit and loss. According to the above conditions, the Company doesnot have such designated financial assets.
The Company may, at initial recognition, designate a financial liability as measured at fair valuethrough profit or loss because either:
(a) it eliminates or significantly reduces an accounting mismatch;(b) a group of financial liabilities or financial assets and financial liabilities is managed and itsperformance is evaluated on a fair value basis, in accordance with a documented riskmanagement or investment strategy, and information about the group is provided internallyon that basis to the entity’s key management personnel;(c) the financial liability contains embedded derivatives that need to be separated.
2. Recognition and measurement of financial instruments
(1) Financial assets measured at amortised cost
Financial assets measured at amortized cost include notes receivables, accounts receivables,other receivables, long-term receivables, debt investments, etc. At initial recognition, theCompany shall measure a financial asset at its fair value plus or minus transaction costs that aredirectly attributable to the acquisition or issue of the financial asset. The Company shallmeasure account receivables at their transaction price if the account receivables do not containa significant financing component and accounts receivables that the company has decided notto consider for a financing component of no more than one year.
Interests calculated by using the effective interest method during the holding period shall be.recognized in profit or loss.
When recovering or disposing the receivables, the difference between the price obtained and.the carrying value shall be recognized in current profit or loss.
(2) Financial assets measured at fair value through other comprehensive income (debt
instruments)Financial assets measured at fair value through other comprehensive income (debt instruments)include receivables financing, other debt investments, etc. At initial recognition, the Companyshall measure a financial asset at its fair value plus transaction costs that are directly attributableto the acquisition or issuance of the financial asset. The financial assets are subsequentlymeasured at fair value. Changes in fair value are included in other comprehensive incomeexcept for interest calculated using the effective interest method, impairment losses or gainsand exchange gains and losses. When the financial assets are derecognized, the accumulatedgain or loss previously recognized in other comprehensive income is transferred from othercomprehensive income and recognized in profit or loss.
(3) Financial assets at fair value through other comprehensive income (equity
instruments)Financial assets at fair value through other comprehensive income (equity instruments). includeother equity instrument investments, etc. At initial recognition, the Company shall measure afinancial asset at its fair value plus transaction costs that are directly attributable to theacquisition or issue of the financial asset. The financial assets are subsequently measured at fairvalue. Changes in fair value are included in other comprehensive income. The dividendsobtained are recognised in profit and loss.
When the financial assets are derecognized, the accumulated gain or loss previously. recognisedin other comprehensive income is transferred from other comprehensive income and recognisedin retained earnings.
(4) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include transactional financial assets,derivative financial assets, other non-current financial assets, etc.
The Company shall measure the financial assets at fair value at initial recognition. Transactioncosts are recognised in profit or loss. Changes in fair value are included in profit or loss.
When the financial assets are derecognized, the difference between the fair value and the.initially recorded amount is recognized as investment income, and the gains and losses fromchanges in fair value are adjusted.
(5) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include current financial liabilities,derivative financial liabilities, etc.
The Company shall measure the financial assets at fair value at initial recognition. Transactioncosts are recognised in profit or loss. Changes in fair value are included in profit or loss.
When the financial liabilities are derecognized, the difference between the fair value and the.initially recorded amount is recognized as investment income, and the gains and losses fromchanges in fair value are adjusted.
(6) Financial liabilities measured at amortised cost
Financial liabilities measured at amortised cost include short-term borrowings, notes. payables,accounts payables, other payables, long-term borrowings, bonds payables, long-term payables.
At initial recognition, the Company shall measure a financial liability at its fair value plus.transaction costs that are directly attributable to the acquisition or issue of the financial asset.Interests calculated by using the effective interest method during the holding period shall be.recognized in profit or loss.
When the financial liabilities are derecognized, the difference between the price obtained and.the carrying value shall be recognised in profit and loss.
3. Termination of recognition of financial assets and financial assets transfer
When one of the following conditions is met, the company terminates the recognition of financial assets.- Termination of contractual rights to receive cash flows from financial assets;- The financial assets have been transferred, and almost all the risks and rewards in theownership of the financial assets have been transferred to the transferee;
- The financial assets have been transferred. Although the company has neither transferred
nor retained almost all the risks and rewards of the ownership of the financial assets, it hasnot retained control of the financial assets.
If it retained nearly all of the risks and rewards related to the ownership of the financial asset, it shall not stoprecognizing the financial asset.
To judge whether the transfer of a financial asset can satisfy the conditions as prescribed in these Standards forstopping the recognition of a financial asset, the Company shall follow the principle of the substance over form.Transfer of an entire financial asset can be divided into partial financial assets transfer and entire financial assettransfer. If the transfer of an entire financial asset satisfies the conditions for de-recognition, the differencebetween the amounts of the following 2 items shall be recorded in the profits and losses of the current period:
(1) The book value of the transferred financial asset; and
(2) The sum of consideration received from the transfer, and the accumulative amount of the changes of the
fair value originally recorded in the owners' equities (in the event that the financial asset involved in thetransfer is a financial asset Available-for-sale).
If the transfer of partial financial asset satisfies the conditions to derecognize, the entire book value of thetransferred financial asset shall, between the portion whose recognition has been stopped and the portionwhose recognition has not been stopped (under such circumstance, the service asset retained shall be deemedas a portion of financial asset whose recognition has not been stopped), be apportioned according to theirrespective relative fair value, and the difference between the amounts of the following 2 items shall beincluded into the profits and losses of the current period :
(1) The book value of the portion whose recognition has been stopped; and
(2) The sum of consideration of the portion whose recognition has been stopped, and the portion of the
accumulative amount of the changes in the fair value originally recorded in the owner's equities which iscorresponding to the portion whose recognition has been stopped (in the event that the financial asset involvedin the transfer is a financial asset Available-for-sale).
If the transfer of financial assets does not satisfy the conditions to stop the recognition, it shall continue to berecognized as financial assets and the consideration received shall be recognized as financial liabilities.
4. Termination of recognition of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognitionof the financial liability be terminated in all or partly.
Where the Company (debtor) enters into an agreement with a creditor so as to substitute the existing financialliabilities by way of any new financial liability, and if the contractual stipulations regarding the new financialliability is substantially different from that regarding the existing financial liability, it shall terminate therecognition of the existing financial liability, and shall at the same time recognize the new financial liability.
Where the Company makes substantial revisions to part or all of the contractual stipulations of the existingfinancial liability, it shall terminated the recognition of the existing financial liability or part of it, and at thesame time recognize the financial liability after revising the contractual stipulations as a new financial liability.
Where the recognition of a financial liability is totally or partially terminated, the Company shall include intothe profits and losses of the current period the difference between the carrying amount which has beenterminated from recognition and the considerations it has paid (including the non-cash assets it has transferredout and the new financial liabilities it has assumed).
Where the Company buys back part of its financial liabilities, it shall distribute, on the date of repurchase, thecarrying amount of the whole financial liabilities in light of the comparatively fair value of the part thatcontinues to be recognized and the part whose recognition has already been terminated. The gap between thecarrying amount which is distributed to the part whose recognition has terminated and the considerations ithas paid (including the noncash assets it has transferred out and the new financial liabilities it has assumed)shall be recorded into the profits and losses of the current period.
5. Determination of the fair value of the financial assets (liabilities)
If active markets for the financial instruments exist, the fair value shall be measured by quoted prices in theactive markets. If active markets for the financial instruments do not exist, valuation techniques shall beapplied for the measurement. The Company uses valuation techniques appropriate in the circumstances andfor which sufficient data are available to measure fair value. The Company chooses relevant observable inputsfor identical or similar assets or liabilities. Only when relevant observable inputs are unavailable or should theCompany use unobservable inputs for the asset or liability.
6. Impairment provision of the financial assets (excluding accounts receivables)
The Company recognize the expected credit loss on financial assets measured at amortized cost, financial assetsmeasured at fair value through other comprehensive income (debt instruments) , financial guarantee contract,and so on, on the individual or portfolio basis.The Company considers all reasonable and relevant information, including past events, current conditions, andforecasts of future economic conditions, and uses the risk of default as the weight to calculate the probability-weighted amount of present value of difference between the cash flow receivable from the contract and the cashflow expected to be received to confirm the expected credit loss.
If the credit risk of the financial instrument has increased significantly since the initial confirmation, theCompany shall measure the loss allowance for a financial instrument at an amount equal to the lifetime expectedcredit losses. If the credit risk on a financial instrument has not increased significantly since initial recognition,the Company shall measure the loss allowance for that financial instrument at an amount equal to 12-monthexpected credit losses. The increase or reversal amount of loss allowance thus formed shall be included in thecurrent profits and losses as impairment losses or gains.
The measurement of expected credit loss depends on whether there is a significant increase in credit risk offinancial assets since the initial recognition.
The company compares the risk of default on the balance sheet date of financial instruments with the risk ofdefault on the date of initial recognition to determine the relative change in the risk of default during theexpected life of the financial instrument to assess whether there is a significant increase in credit risk of financialassets since the initial recognition. Generally, the Company believes that the credit risk of the financialinstrument has significantly increased over 30 days after the due date, unless there is solid evidence that thecredit risk of the financial instrument has not increased significantly since initial recognition.
If the credit risk of a financial instrument at the reporting date is relatively low, the Company considers that thecredit risk of the financial instrument has not increased significantly since the initial recognition.
If there is objective evidence indicating that a certain financial asset has been impaired, the Company shallrecognise provision for impairment of the financial asset individually.
For account receivables and contract assets recognized according to Accounting Standards for BusinessEnterprises No. 14 Revenue (2017), whether a significant financing component is contained or not, theCompany shall always measure the loss allowance at an amount equal to lifetime expected credit losses.
For lease receivables, the Company shall always measure the loss allowance at an amount equal to lifetimeexpected credit losses.
(11) Inventory
1. Inventory classification
Inventories include material in transit, raw material, turnover materials, finished goods, work in process, issuecommodity, materials for consigned processing, etc.
Inventory is initially measured at cost. Inventory cost includes purchase cost, processing cost and otherexpenditures incurred to bring inventory to its current location and state.
2. Valuation method for inventory dispatched
The weighted average method is used to confirm the actual cost of the inventories dispatched.
3. The basis for confirming the net realizable value of inventories and the methods to make provision for
the inventory impairment lossOn the balance sheet date, inventories shall be measured at the lower of cost and net realizable value. When thecost of inventories is higher than its net realizable value, provision for inventory impairment loss shall be made.The net realizable value refers to the amount of the estimated selling price of the inventory minus the estimatedcosts that will occur at the time of completion, estimated selling expenses, and relevant taxes in daily activities.
The net realizable value of inventories (finished products, stock commodity, material, etc.) held for directselling in the daily business activity shall be calculated by deducting the estimated sale expense and relevanttaxes from the estimated sale price of inventories; The net realizable value of inventories for further processingin the daily business activity shall be calculated by deducting the estimated cost of completion, estimated saleexpense and relevant taxes from the estimated sale price of inventories; The net realizable value of inventoriesheld for the execution of sales contracts or labor contracts shall be calculated on the ground of the contract price.If the Company holds more inventories than the quantities subscribed in the sales contract, the net realizablevalue of the excessive part of the inventories shall be calculated on the ground of the general sales price.
After the inventory impairment is withdrawn, if the factors that previously affected the write-down of theinventory value have disappeared, causing the net realizable value of the inventory to be higher than its bookvalue, it shall be reversed within the amount of the inventory impairment that has been withdrawn, and thereverted amount shall be included in the current profit and loss.
4. Inventory system
The Company uses perpetual inventory system.
5. Amortization of low-valued consumables and packing materials
(1) Low-valued consumables shall be amortized in full amount on issuance.
(2) Packing materials shall be amortized in full amount on issuance.
(12) Contract asset
Accounting Policies Adopted After January 1, 2020
1. Recognition methods and criteria of contract assets
When either party to a contract has performed, the Company shall present the contract in the statement offinancial position as a contract asset or a contract liability, depending on the relationship between theCompany’s performance and the customer’s payment. If the Company have the rights to receiveconsideration (the right is conditioned on factors other than the passage of time) by transferring goods orservices to a customer, the entity shall present the contract as a contract asset. Contract assets and contractliabilities under the same contract are disclosed in net amount. An entity shall present any unconditionalrights to consideration (only the passage of time is required) separately as a receivable.
2. Expected credit loss of contract assets
For the accounting policy of the expected credit loss of contract assets, please refer to Note (10) 6. Impairmentprovision of the financial assets under “3. Significant accounting policies and accounting estimates”
(13) Long-term equity investment
1. Criteria of joint control and significant influence
Joint control is the contractually agreed sharing of control of an arrangement, which exists onlywhen decisions about the relevant activities require the unanimous consent of the parties sharingcontrol. If the Company and other joint venture have joint control of the investee and have rightsto the net assets of the investee, the investee is a joint venture of the Company.
Significant influence is the power to participate in the financial and operating policy decisions of the investeebut not control or join control of those policies. If the Company could exert significant influence over theinvestee, the investee is the associate of the Company.
2. The initial cost of long-term equity investment from business acquisition
(1) Long-term equity investment from business acquisition
For a business combination under common control, if the consideration of the combination issatisfied by paying cash, transfer of non-cash assets or assumption of liabilities and issue ofequity securities, the initial investment cost of the long-term equity investment shall be theabsorbing party’s share of the carrying amount of the owner’s equity of the party being absorbedin the consolidated financial statements of the ultimate controlling party at combination date.When an investor becomes capable of exercising control over an investee under commoncontrol due to additional investment or other reasons, the initial investment cost shall be theabsorbing party’s share of the carrying amount of the owner’s equity of the party being absorbedin the consolidated financial statements of the ultimate controlling party at combination date.The difference between the initial investment cost and the carrying amount of the previously-held equity investment, together with the additional investment cost for new shares atcombination date, shall be adjusted to the capital reserve. If the balance of capital reserve is notsufficient, any excess shall be adjusted to retained earnings.
For a business combination not under common control, the initial investment cost of the long-
term equity investment shall be the acquisition cost at the acquisition date. When an investorbecomes capable of exercising control over an investee due to additional investment or otherreasons, the initial investment cost under the cost method shall be the carrying amount ofpreviously-held equity investment together with the additional investment cost.
(2) The initial cost of the long-term equity investment other than from business acquisition
The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase costwhich is actually paid.
The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be thefair value of the equity securities issued.
3. Subsequent measurement and profit or loss recognition
(1) Cost method
The Company adopts cost method for the long term investment in subsidiary company. Under the cost method,an investing enterprise shall, in accordance with the attributable share of the net profits or losses of the investedentity, recognize the investment profits or losses except the dividend declared but unpaid, which is included inthe payment when acquiring the investment.
(2) Equity method
A long-term equity investment in an associate or a joint venture shall be accounted for using the equity method.Where the initial investment cost of a long-term equity investment exceeds investor’s interest in the fair valuesof an investee’s identifiable net assets at the acquisition date, no adjustment shall be made to the initialinvestment cost. Where the initial cost is less than the investor’s interest in the fair values of the investee’sidentifiable net assets at the acquisition date, the difference shall be credited to profit or loss for the currentperiod, and the cost of long-term equity investment shall be adjusted accordingly.
The Company shall recognize its share of the investee’s net profits or losses, as well as its share of the investee’sother comprehensive income, as investment income or losses and other comprehensive income, and adjust thecarrying amount of the investment accordingly. The carrying amount of the investment shall be reduced by theportion of any profit distributions or cash dividends declared by the investee that is attributable to the investor.The investor’s share of the investee’s owners’ equity changes, other than those arising from the investee’s netprofit or loss, other comprehensive income or profit distribution, and the carrying amount of the long-termequity investment shall be adjusted accordingly.
The investor shall recognize its share of the investee’s net profits or losses after making appropriate adjustmentsaccording to the Company’s accounting principles and operating period based on the fair values of the investee’sidentifiable net assets at the acquisition date. During the holding period, if the investee makes consolidatedfinancial statements, the Company shall calculate its share based on the investee’s net profit, othercomprehensive income and the amount of other owners' equity attribute to the investee in the consolidatedfinancial statements.
The unrealized profits or losses resulting from transactions between the investor and its associate or jointventure shall be eliminated in proportion to the investor’s equity interest in the investee, based on whichinvestment income or losses shall be recognized, except the transaction of investment or sale of assets is abusiness. Any losses resulting from transactions between the investor and investee which are attributable toasset impairment shall be recognized in full.
The company’s net losses incurred by joint ventures or associates, in addition to assuming additional lossobligations, are limited to the book value of long-term equity investments and other long-term equity thatessentially constitutes net investment in joint ventures or associates. If a joint venture or associated enterpriserealizes net profits in the future, the company resumes recognizing its share of profits after the share of profitsmakes up for the share of unrecognized losses.
(3) Disposal of long-term equity investment
When disposing long-term equity investment, the difference between the proceeds actually received and thecarrying amount shall be recognized in profit or loss for the current period.
Partial disposal of long-term equity investments accounted for by the equity method, and the remaining equityis still accounted for by the equity method, the other comprehensive income recognized by the original equitymethod shall be carried forward according to the same basis as the direct disposal of related assets or liabilitiesby the investee. All other changes in the interests of the holders are carried forward to the current profit andloss on a pro rata basis.
When an investor can no longer exercise joint control of or significant influence over an investee due to partialdisposal of equity investment or other reasons, any other comprehensive income previously recognized shallbe accounted for on the same basis as would have been required if the investee had directly disposed of therelated assets or liabilities for the current period upon discontinuation of the equity method. Other owner'sequity change shall be transferred into profit or loss of current period in full when the Company cease to adoptthe equity method.
When an investor can no longer control the investee due to partial disposal, when the individual financialstatements are prepared, the remaining equity can exercise joint control or significant influence on the investee,the equity method shall be used to account for the remaining equity. It is deemed that the equity method isadopted for adjustment since the acquisition, and the other comprehensive income recognized before the controlof the investee is obtained is carried forward on the same basis as the direct disposal of related assets or liabilitiesby the investee, because the equity method is used for accounting. The confirmed changes in other owners’equity are carried forward to the current profit and loss on a pro rata basis. If the remaining equity cannotexercise joint control or exert significant influence on the investee, it shall be recognized as a financial asset,and the difference between its fair value and book value on the date when control is lost shall be included inthe current profit and loss, and other comprehensive income and other owner’s interests previously recognizedshall be transferred to profit or loss in full.
If the equity investment of a subsidiary is disposed through multiple transactions until it loses control, which is
a package transaction, each transaction shall be accounted as a transaction that disposes of the equity investmentof the subsidiary and loses control. Each transaction before the loss of control, the difference between thedisposal price and the book value of the corresponding disposed part of long-term equity investment is firstlyrecognized as other comprehensive income in individual financial statements, and then transferred to the currentprofit and loss when the control is lost. If it is not a package transaction, each transaction shall be accountedseparately.
(14) Investment property
Investment property refers to real estate held for the purpose of earning rent or capital appreciation, or both,including leased land use rights, land use rights held and prepared for transfer after appreciation, and leasedbuildings ( Buildings that are leased after completion of self-construction or development activities andbuildings that are being used for rental in the future during construction or development).
Subsequent expenditures related to investment property are included in the cost of investment property whenthe relevant economic benefits are likely to flow in and their costs can be reliably measured. Otherwise, theyare included in the current profit and loss when incurred.
The company uses the cost model to measure the existing investment property. For investment propertymeasured according to the cost model - the rental building adopts the same depreciation policy as the fixedassets of the company, and the land use right for rental is amortized according to the same amortization policyas the intangible assets.
(15) Fixed assets
1. Recognition of Fixed assets
The term "fixed assets" refers to the tangible assets held for the sake of producing commodities, rendering laborservice, renting or business management and of which useful life is in excess of one fiscal year. No fixed assetmay be recognized unless it simultaneously meets the conditions as follows:
(1) The economic benefits pertinent to the fixed asset are likely to flow into the enterprise; and
(2) The cost of the fixed asset can be measured reliably.
Fixed assets are initially measured at cost (and considering the impact of expected dismantling cost factors).
Subsequent expenditures related to fixed assets are included in the cost of fixed assets when the relatedeconomic benefits are likely to flow in and their costs can be reliably measured; the book value of the replacedpart is derecognized; all other subsequent expenditures are incurred shall be included in the current profit andloss.
2. Fixed assets depreciation
Fixed assets are depreciated under the straight line method. The depreciation rate is determined according tothe category of assets, the useful life and the expected residual rate. If the components of the fixed assets havedifferent useful lives or provide the economic benefits in a different way, then different depreciation rate ormethod shall be applied and the depreciation of the components shall be calculated separately.
Fixed assets acquired under financial leasing is depreciated over the useful life if it is reasonably certain thatthe ownership of the leased assets will be acquired upon expiry of lease, or over the shorter of lease term anduseful life if it is not reasonably certain that the ownership of the leased assets will be acquired upon expiry oflease.
Details of classification, depreciation period, residual value rate and annual depreciation rate are as follows:
Category Depreciation method
DepreciationPeriod
Residual ValueRate (%)
DepreciationRate(%)Plants and Buildings straight line method
10-45 years 0.00 2.22-10.00Machinery straight line method
10-28 years 3.00 3.46-9.70
other equipment
straight line method
| Transportation and |
8-22 years 3.00 4.41-12.13
3. Recognition criteria for fixed asset leased in by financial leasing and its valuation
Where a lease satisfies one or more of the following criteria, it shall be recognized as a financial leasing:
(1) The ownership of the leased asset is transferred to the lessee when the term of lease expires;
(2) The lessee has the option to buy the leased asset at a price which is expected to be far lower than the fair
value of the leased asset at the date when the option becomes exercisable;
(3) The lease term covers the major part of the use life of the leased asset;
(4) The present value of the minimum lease payments on the lease beginning date amounts to substantially all
of the fair value of the leased asset on the lease beginning date; and
(5) The leased assets are of a special nature, and unless major renovations are made, only the lessee can use it.
On the lease beginning date, the Company shall record the lower one of the fair value of the leased asset andthe present value of the minimum lease payments on the lease beginning date as the initial book value, recognizethe amount of the minimum lease payments as the initial book value of long-term account payable, and treatthe difference between the recorded amount of the leased asset and the long-term account payable asunrecognized financing charges.
4. Disposal of fixed assets
When a fixed asset is disposed, or it is expected that no economic benefits will be generated through use ordisposal, the recognition of fixed asset shall be de terminated. The amount of disposal income of fixed assetsraising from sell, transfer, scrapping or damage shall be included in the current profit and loss after deductingits book value and related taxes.
(16) Construction in progress
Construction in progress is measured at the actual cost incurred. The actual cost includes construction costs,installation costs, borrowing costs that meet the capitalization conditions, and other necessary expenditures
incurred before the construction in progress reaches its intended use status.
Construction in progress is transferred to fixed asset when it has reached its working condition for its intendeduse and depreciation will be accrued from the next month.
(17) Borrowing costs
1. Principle of the recognition of capitalized borrowing costs
Where the borrowing costs incurred to an enterprise can be directly attributable to the acquisition andconstruction or production of assets eligible for capitalization, it shall be capitalized and recorded into the costsof relevant assets. Other borrowing costs shall be recognized as expenses on the basis of the actual amountincurred, and shall be recorded into the current profits and losses.
Assets eligible for capitalization refer to the fixed assets, investment property, inventories and other assets, ofwhich the acquisition and construction or production may take quite a long time to get ready for its intendeduse or for sale.
2. The capitalization period of borrowing costs
The capitalization period shall refer to the period from the commencement to the cessation of capitalization ofthe borrowing costs, excluding the period of suspension of capitalization of the borrowing costs.
The borrowing costs shall not be capitalized unless they simultaneously meet the following requirements:
(1) The asset disbursements have already incurred, which shall include cash, transferred non-cash assets or
interest bearing debts paid for the acquisition and construction or production activities for preparing assetseligible for capitalization;
(2) The borrowing costs has already incurred; and
(3) The acquisition and construction or production activities which are necessary to prepare the asset for its
intended use or sale have already started.
When the qualified asset under acquisition and construction or production is ready for the intended use or sale,the capitalization of the borrowing costs shall be ceased.
3. The suspension of capitalization of borrowing costs
Where the acquisition and construction or production of a qualified asset is interrupted abnormally and theinterruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended.If the interruption is a necessary step for making the qualified asset under acquisition and construction orproduction ready for the intended use or sale, the capitalization of the borrowing costs shall continue. Theborrowing costs incurred during such period shall be recognized as expenses, and shall be recorded into theprofits and losses of the current period, till the acquisition and construction or production of the asset restarts.
4. Method of calculating the capitalization rate and capitalized amount of borrowing costs
For interest expense (minus the income of interests earned on the unused borrowing loans as a deposit in thebank or investment income earned on the loan as a temporary investment) and the ancillary expense incurred
to a specifically borrowed loan, those incurred before a qualified asset under acquisition, construction orproduction is ready for the intended use or sale shall be capitalized at the incurred amount when they areincurred, and shall be recorded into the costs of the asset eligible for capitalization.
The Company shall calculate and determine the to-be-capitalized amount of interests on the general borrowingby multiplying the weighted average asset disbursement of the part of the accumulative asset disbursementsminus the general borrowing by the capitalization rate of the general borrowing used. The capitalization rateshall be calculated and determined in light of the weighted average interest rate of the general borrowing.
During the capitalization period, the exchange difference between the principal and interest of the foreigncurrency special loan is capitalized and included in the cost of the assets that meet the capitalization conditions.Exchange differences arising from the principal and interest of foreign currency borrowings other than foreigncurrency special borrowings are included in the current profits and losses.
(18) Intangible Assets
1. Measurement of Intangible Assets
(1) Initial measurement is based on cost upon acquisition
The cost of an intangible asset on acquisition include the purchase price, relevant taxes and other necessarydisbursements which may be directly attributable to bringing the intangible asset to the conditions for theexpected purpose.
(2) Subsequent Measurement
The Company shall analyze and judge the beneficial period of intangible assets upon acquisition.
Intangible assets with finite beneficial period shall be amortized under the straight-line method during the periodwhen the intangible asset can bring economic benefits to the enterprise. If it is unable to estimate the beneficialperiod of the intangible asset, it shall be regarded as an intangible asset with uncertain service life and shall notbe amortized.
2. Estimated useful lives of intangible assets with limited useful lives
Item Estimated useful life CriteriaLand use right 50 years Land use right certificate
3. Determination of intangible assets with uncertain useful lives
As at the balance sheet date, the Company has no intangible assets with uncertain useful lives.
4. Classification criteria for internal research phase and development phase
The expenditures for its internal research and development projects of an enterprise shall be classified intoresearch expenditures and development expenditures.
Research phase refers to the phase of creative and planned investigation to acquire and study to acquire andunderstand new scientific or technological knowledge.
Development phase refers to the phase during which the result of research phase or other knowledge is appliedinto certain projects or designs for the manufacturing of new or substantially improved material, device andproduct before commercial manufacturing and use.
(19) Impairment of long-term assets
For long-term assets such as long-term equity investments, Investment property under the costmodel, fixed assets, construction in progress, intangible assets with limited useful lives etc.,the Company shall perform impairment tests at the period end if there is clear indication ofimpairment. If the recoverable amounts of long-term assets are less than their carrying amounts,the carrying amounts of the assets shall be written down to their recoverable amounts. Thewrite-downs are recognized as impairment losses and charged to current profit and loss. Therecoverable amounts of long-term assets are the higher of their fair values less costs to sell andthe present values of the future cash flows expected to be derived from the assets. TheCompany shall estimate its recoverable amount on an individual basis. Where it is difficult todo so, it shall determine the recoverable amount of the assets on the basis of the asset group towhich the asset belongs. The term "assets group” refers to a minimum combination of assetsby which the cash flows could be generated independently
The goodwill, intangible assets with uncertain useful life and intangible assets not meeting theexpected condition for use the shall be subject to an impairment test at least at the end of eachyear.
When the Company makes an impairment test of assets, it shall, as of the purchasing day, apportion the carryingvalue of the business reputation formed by merger of enterprises to the relevant asset groups by a reasonablemethod. Where it is difficult to do so, it shall be apportioned to the relevant combinations of asset groups. Whenapportioning the carrying value of the business reputation to the relevant asset groups or combinations of assetgroups, it shall be apportioned on the basis of the proportion of the fair value of each asset group or combinationof asset groups to the total fair value of the relevant asset groups or combinations of asset groups. Where it isdifficult to measure the fair value reliably, it shall be apportioned on the basis of the proportion of the carryingvalue of each asset group or combination of asset groups to the total carrying value of the relevant asset groupsor combinations of asset groups.
When making an impairment test on the relevant asset groups or combination of asset groups containingbusiness reputation, if any evidence shows that the impairment of asset groups or combinations of asset groupsis possible, the Company shall first make an impairment test on the asset groups or combinations of asset groupsnot containing business reputation, calculate the recoverable amount, compare it with the relevant carryingvalue and recognize the corresponding impairment loss. Then the Company shall make an impairment test ofthe asset groups or combinations of asset groups containing business reputation, and compare the carrying value
of these asset groups or combinations of asset groups (including the carrying value of the business reputationapportioned thereto) with the recoverable amount. Where the recoverable amount of the relevant assets orcombinations of the asset groups is lower than the carrying value thereof, it shall recognize the impairment lossof the business reputation.
Impairment losses on long-term assets shall not be reversed in subsequent accounting periodsonce recognized.
(20) Long-term deferred expense
The long-term deferred expense refers to the expenses incurred but shall be borne by currentand subsequent accounting period, which is more than one year.
The long-term deferred expense shall be amortized over its beneficiary period evenly
(21) Contract liability
Accounting Policies Adopted After January 1, 2020When either party to a contract has performed, the Company shall present the contract in thestatement of financial position as a contract asset or a contract liability, depending on therelationship between the Company’s performance and the customer’s payment. If a customerpays consideration, or the Company has a right to an amount of consideration before theCompany transfers a good or service to the customer, the Company shall present the contractas a contract liability. Contract assets and contract liabilities under the same contract aredisclosed in net amount.
(22) Employee benefits
1. Accounting treatment for short employee benefit
The Company shall recognise, in the accounting period in which an employee provides service,actually occurred short-term employee benefits as a liability, with a corresponding charge to theprofit or loss or cost of an asset for the current period.
Payments made by an enterprise of social security contributions for employees, payments ofhousing funds, and union running costs employee education costs provided in accordance withrelevant requirements shall, in the accounting period in which employees provide services, becalculated according to prescribed bases and percentages in determining the amount ofemployee benefits.
The employee welfare expenses incurred by the company are included in the current profit andloss or related asset costs based on the actual amount when they actually occur. Among them,non-monetary benefits are measured at fair value.
2. Accounting treatment of post-employment benefits
(1) Defined contribution plan
The Company shall recognize, in the accounting period in which an employee providesservice, pension fund and unemployment fund for employees as a liability according to thelocal government regulations. The amount shall be calculated according to local prescribedbases and percentages in determining the amount of employee benefits, with acorresponding charge to the profit or loss or cost of an asset for the current period.
(2) Defined benefit plan
None
3. Accounting treatment of termination benefits
The Company shall recognize an employee benefits liability for termination benefits, with acorresponding charge to the profit or loss for the current period, at the earlier of the followingdates: when the Company cannot unilaterally withdraw the offer of termination benefits becauseof an employment termination plan or a curtailment proposal; or when the Company recognizescosts or expenses related to a restructuring that involves the payment of termination benefits.
(23) Estimated liabilities
The obligation pertinent to a contingency shall be recognized as an estimated liability when the followingconditions are satisfied simultaneously:
(1) That obligation is a current obligation of the enterprise;
(2) It is likely to cause any economic benefit to flow out of the enterprise as a result of performance of the
obligation; and
(3) The amount of the obligation can be measured in a reliable way.
The estimated debts shall be initially measured in accordance with the best estimate of the necessary expensesfor the performance of the current obligation.
To determine the best estimate, an enterprise shall take into full consideration of the risks, uncertainty, timevalue of money, and other factors pertinent to the Contingencies. If the time value of money is of greatsignificance, the best estimate shall be determined after discounting the relevant future outflow of cash.
The best estimate shall be conducted in accordance with the following situations, respectively:
If there is a continuous range for the necessary expenses and if all the outcomes within this range are equallylikely to occur, the best estimate shall be determined in accordance with the average estimate within the range,that is, the average of the upper and lower limit.
If there is not a sequent range for the necessary expenses and if the outcomes within this range are not equallylikely to occur, the best estimate shall be determined as follows:
(1) If the Contingencies concern a single item, it shall be determined in the light of the most likely outcome.
(2) If the Contingencies concern two or more items, the best estimate shall be calculated and determined in
accordance with all possible outcomes and the relevant probabilities.
When all or some of the expenses necessary for the liquidation of an estimated debts of an enterprise is expectedto be compensated by a third party, the compensation shall be separately recognized as an asset only when it isvirtually certain that the reimbursement will be obtained. The amount recognized for the reimbursement shallnot exceed the book value of the estimated debts.
The company reviews the book value of the estimated liabilities on the balance sheet date. If there is conclusiveevidence that the book value does not reflect the current best estimate, the book value will be adjusted accordingto the current best estimate.
(24) Revenue
Accounting policy adopted after Jan 1, 2020
(1) The general principle of revenue recognition and measurement
The company shall recognise revenue when (or as) the company satisfies a performance obligation when (oras) the customer obtains control of a promised good or service. Control of a promised good or service refers tothe ability to direct the use of, and obtain substantially all of the remaining benefits from it.
If the contract contains two or more performance obligations, the company shall allocate the transaction priceto each individual performance obligation based on the relative proportion of the stand-alone selling price ofthe goods or services promised by each individual performance obligation on the date of the contract. Thecompany measures revenue based on the transaction price allocated to each individual performance obligation.
The transaction price is the amount of consideration to which the company expects to be entitled in exchangefor transferring promised goods or services to a customer, excluding amounts collected on behalf of third partiesor amounts expected to be returned to customers. The company shall consider the terms of the contract and itscustomary business practices to determine the transaction price. When determining the transaction price, thecompany shall consider the effects of all of the following: variable consideration, the existence of a significantfinancing component in the contract, non-cash consideration, and consideration payable to a customer. Thecompany determines the transaction price that includes variable consideration at an amount that does not exceedthe amount of accumulated recognized revenue that is unlikely to be materially reversed when the relevantuncertainty is eliminated. If there is a significant financing component in the contract, the company shallrecognise revenue at an amount that reflects the price that a customer would have paid for the promised goodsor services if the customer had paid cash for those goods or services when (or as) they transfer to the customer,and use the effective interest method to amortize the difference between the transaction price and the contractconsideration during the contract period. If the interval between the transfer of control and the payment by thecustomer does not exceed one year, the financing component will not be considered.
The company transfers control of a good or service over time and, therefore, satisfies a performance obligation
and recognises revenue over time, if one of the following criteria is met. Otherwise, the company satisfies theperformance obligation at a point in time.(a) the customer simultaneously receives and consumes the benefits provided by the company’s performanceas the company performs;(b) the company’s performance creates or enhances an asset that the customer controls as the asset is created orenhanced; or(c) the company’s performance does not create an asset with an alternative use to the company and the companyhas an enforceable right to payment for performance completed to date.The company shall recognise revenue over time by measuring the progress towards complete satisfaction ofthat performance obligation, except where the performance progress cannot be reasonably determined. Thecompany considers the nature of the goods or services and adopts the output method or the input method todetermine the progress of performance. Where the performance progress cannot be reasonable determined, butthe company expects to recover the costs incurred in satisfying the performance obligation, the company shallrecognise revenue only to the extent of the costs incurred until such time that it can reasonably measure theoutcome of the performance obligation.For performance obligations satisfied at a certain point in time, the company shall recognises revenue at thepoint when the customer obtains control of the relevant goods or services. To determine the point in time atwhich a customer obtains control of a promised goods or services, the company shall consider requirements asfollows:
(a) The company has a present right to payment for the promised goods or services and the customer is presentlyobliged to pay for that;(b) The company has transferred the legal title of the goods to the customer, that is, the customer has the legaltitle to the goods;(c) The company has transferred physical possession of the goods to the customer, that is, the customer hastaken possession of the goods;(d) The company has transferred the significant risks and rewards of ownership of the goods to the customer,that is, the customer has the significant risks and rewards of ownership of the goods;(e) The customer has accepted the promised goods or services.
(2) The specific criteria of revenue recognition and measurement
Commodity sales contracts between companies and customers usually only include performance obligationsfor the transfer of steel and other commodities. This type of performance obligation is a performance obligationperformed at a certain point in time.
The company recognizes revenue when the customer obtains control of the relevant goods or services. Whenjudging whether the customer has obtained control of goods or services, the company considers the followingsigns:
The company obtains the current right of collection of receivables, the legal ownership of the goods istransferred to the customer, the physical assets of the goods are transferred to the customer, the companytransfers the main risks and rewards of the ownership of the goods to the customer, and the customer hasaccepted the goods.Accounting policy adopted before Jan 1, 2020
(1) The general principle of revenue recognition and measurement
The Company has transferred to the buyer the significant risks and rewards of ownership of the goods.Retained neither continuing managerial involvement which usually relates to the ownership nor exerts effectivecontrol over the goods sold.The relevant amount of revenue can be measured reliably.The economic benefits related to the transaction will flow into the enterprise.The relevant costs incurred or to be incurred can be measured reliably.
(2) The specific criteria of revenue recognition and measurement
The Company mainly sells steel and other products. Domestic sales revenue is recognized when the followingconditions are met: The Company has delivered the products to buyer under the contract, amount of productsales revenue is determinable, received or the certificate of the right to receive the amount has been obtainedand the relevant economic benefits are likely to flow into the entity, and related costs can be measured reliably.Export sales revenue is recognized when the following conditions are met: the Company has undertaken theCustoms declaration and delivery has occurred under the contract, bill of lading has been obtained, amount ofproduct sales revenue is determinable, received or the certificate of the right to receive the amount has beenobtained and the relevant economic benefits are likely to flow into the entity, and related costs can be measuredreliably.
(3) Recognition Criteria for the Revenue from alienating of Assets Use Rights
When it is probable that economic benefits in relation to the transaction will flow into the enterprise; and theamount of revenues can be measured reliably. The Company shall ascertain the amount of revenues from thetransfer of Assets Use Right based on the following circumstances respectively:
(1) Interest income shall be calculated based on the duration of which the Company's cash is used by others and
the actual interest rate; or
(2) Royalty revenue shall be calculated based on the period and method of charging as stipulated in the relevant
contract or agreement.
(25) Contract costs
Accounting policy adopted before Jan 1, 2020Contract costs include costs to fulfill a contract and incremental costs of obtaining a contract.
If the costs incurred in fulfilling a contract with a customer are not within the scope of another Standard, forexample, Inventories, Property, Plant and Equipment or Intangible Assets, the company shall recognise an assetfrom the costs incurred to fulfil a contract only if those costs meet all of the following criteria:
(a) the costs relate directly to a contract or to an expected contract;(b) the costs generate or enhance resources of the Company that will be used in satisfying performanceobligations in the future; and(c) the costs are expected to be recovered.
The company shall recognise as an asset the incremental costs of obtaining a contract with a customer if the
company expects to recover those costs.
An asset recognised in accordance with contract costs shall be amortised in consistent with the transfer to thecustomer of the goods or services to which the asset relates. The company may recognise the incremental costsof obtaining a contract as an expense when incurred if the amortisation period of the asset is one year or less.
The company shall recognise an impairment loss in profit or loss to the extent that the carrying amount of anasset related to contract assets exceeds:
(a) the remaining amount of consideration that the company expects to receive in exchange for the goods orservices to which the asset relates; less(b) the costs that relate directly to providing those goods or services and that have not been recognised asexpenses.
The company shall recognise in profit or loss a reversal of some or all of an impairment loss previouslyrecognised when the impairment conditions no longer exist or have improved. The increased carrying amountof the asset shall not exceed the carrying amount that if no impairment loss had been recognised previously.
(26) Government Subsidies
1. Types
A government subsidy means the monetary or non-monetary assets obtained free of charge by the Companyfrom the government. Government subsidies consist of the government subsidies pertinent to assets andgovernment subsidies pertinent to income.
Government subsidies related to assets are government subsidies whose primarycondition is that an entity qualifying for them should purchase, construct or otherwiseacquire long-term assets. The government subsidies related to incomes refers togovernment subsidies other than those related to assets.
The standard of the Company recognizing the government subsidies related to assets is:
an entity qualifying for them should purchase, construct or otherwise acquire long-termassets.
The standard of the Company recognizing the government subsidies related to income is:
In addition to government subsidies related to assets, government subsidies that have beenclearly targeted for subsidies.
2. Recognition
Government subsidies related to assets shall be recognized by deducting the subsidies atthe caring amount of the assets or recognized as deferred income. Subsidies thatrecognized as deferred income shall be recognized in profit or loss over the periods duringthe useful lives of the relevant assets.
The government subsidies related to incomes to compensate future expenses, shall berecognized as deferred income and transferred to current profit or loss. Governmentsubsidies to compensate expenses or losses already incurred shall be recognized in currentprofit and loss.
3. Accounting treatment
Government subsidies related to assets shall be recognized by deducting the subsidies atthe caring amount of the assets or recognized as deferred income. Subsidies thatrecognized as deferred income shall be recognized in profit or loss on a systematic basisover the periods during the useful lives of the relevant assets (Subsidies related to dailyactivities should be recorded in Other Income. Subsidies that unrelated to daily activitiesshould be recorded in Non-operating Income).
The government subsidies related to incomes to compensate future expenses, shall berecognized as deferred income and transferred to current profit or loss (Subsidies relatedto daily activities should be recorded in Other Income. Subsidies that unrelated to dailyactivities should be recorded in Non-operating Income) in the period during which theexpenses compensation is recognized or deduct relevant cost or loss. Governmentsubsidies to compensate expenses or losses already incurred shall be recognized in currentprofit and loss (Subsidies related to daily activities should be recorded in Other Income.Subsidies unrelated to daily activities should be recorded in Non-operating Income) ordeduct relevant cost or loss.
The policy discount loans obtained by the company are divided into the following twosituations and are separately accounted for:
(a) The government allocates discounted funds to the loan bank, and the loan bankprovides loans to the company at a policy preferential interest rate. The preferentialinterest rate is used to calculate the relevant borrowing costs.(b) If the government directly allocates the discounted funds to the company, the companywill offset the relevant borrowing costs with the corresponding discounts, directlyaccounted for the current profit or loss or recognized as deferred income.
(27) Deferred tax assets and deferred tax liabilities
Income tax includes current income tax and deferred income tax. Except for income tax arising from businessmergers and transactions or events that are directly included in owner's equity (including other comprehensiveincome), the company will include current income tax and deferred income tax in current profit and loss.
Deferred income tax assets and deferred income tax liabilities are calculated and confirmed based on thedifference (temporary difference) between the tax base of assets and liabilities and their book value.
An enterprise shall recognize the deferred income tax assets arising from a deductible temporary difference tothe extent of the amount of the taxable income which it is most likely to be obtained and which can be deductedfrom the deductible temporary difference. As for any deductible loss or tax deduction that can be carriedforward to the next year, the corresponding deferred income tax assets shall be determined to the extent thatthe amount of future taxable income to be offset by the deductible loss or tax deduction to be likely obtained.
All taxable temporary differences shall be recognized as deferred tax liabilities with certain limited exceptions.
Exceptions when deferred tax assets and deferred tax liabilities are not recognized include: initial recognitionof goodwill; initial recognition of an asset or liability in a transaction or event that is not a businesscombination and at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).
For taxable temporary differences related to investments in subsidiaries, associates and joint ventures, deferredincome tax liabilities are recognized, unless the company can control the timing of the reversal of the
temporary differences and the temporary differences are likely not to be transferred back in the foreseeablefuture. For deductible temporary differences related to investments in subsidiaries, associates and jointventures, when the temporary differences are likely to be reversed in the foreseeable future and are likely tobe used to deduct the taxable income of deductible temporary differences in the future, income tax assets arerecognized.On the balance sheet date, deferred income tax assets and deferred income tax liabilities are measured at theapplicable tax rate during the period when the relevant assets are expected to be recovered or the relevantliabilities are expected to be recovered in accordance with the provisions of the tax law.On the balance sheet date, the company reviews the book value of deferred income tax assets. If it is probablethat sufficient taxable income cannot be obtained in the future to offset the benefits of deferred income taxassets, the book value of the deferred income tax assets shall be written down. When it is possible to obtainsufficient taxable income, the reduced amount shall be reversed.When the Company has the statutory right to offset and intend to offset or obtain assets and pay off liabilitiesat the same time, the current income tax assets and current income tax liabilities are presented at the net amountafter offsetting.
An entity shall offset deferred tax assets and deferred tax liabilities if, and only if: (a) the entity has a legallyenforceable right to set off current tax assets against current tax liabilities; and (b) the deferred tax assets andthe deferred tax liabilities relate to income taxes levied by the same taxation authority on either:(i) the sametaxable entity; or (ii) different taxable entities which intend either to settle current tax liabilities and assets ona net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in whichsignificant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
(28) Leases
1. Accounting treatment of operating lease
(1) The rents paid for operating leases shall be recorded in the profits and losses of the current period by using
the straight-line method over each period of the lease term. The initial direct costs paid by the Company shallbe recorded into the profits and losses of the current period
If the lessor has shouldered any expense related to the lease which shall have been borne by the Company,the Company shall deduct these expenses from the total rental expense and the remaining rental expense shallbe allocated to each period during the lease term
(2) The rents collected from operating leases shall be recorded in the profits and losses of the current period
by using the straight-line method over each period of the whole lease term in which free lease period isincluded. The initial direct costs paid by the Company shall be recorded into the profits and losses of thecurrent period. The initial direct costs shall be capitalized if it is material, and be allocated to each period asper the basis for rental revenue recognition.If the Company has shouldered any expense related to the lease which shall have been borne by the lessee,the company shall deduct these expenses from the total rental revenue and the remaining rental revenue shallbe allocated to each period during the lease term.
2. Accounting treatment of financial leasing
(1) Leased in asset
On the lease beginning date, a lessee shall record the lower one of the fair value of the leased asset and thepresent value of the minimum lease payments on the lease beginning date as the initial book value, recognizethe amount of the minimum lease payments as the initial book value of long-term account payable, and treatthe balance between the recorded amount of the leased asset and the long-term account payable asunrecognized financing charges. The lessee shall adopt the effective interest rate method to calculate andrecognize the financing charge in the current period. The unrecognized financing charge shall be amortizedto each period during the lease term. Initial direct costs incurred by the Company shall be recorded in thevalue of the leased asset.
(2) Leased out asset
On the lease beginning date, a lessee shall record the balance between the sum of finance lease receivablesplus unguaranteed residual value and the present value of the sum as unrealized financing income, and recordrental as revenue when received for each period in the future. Initial direct costs incurred by the Companyrelated to the leased asset shall be recorded in the initial measurement of the finance lease receivables, andreduce the amount of revenue recognized during the lease term.
(29) Discontinuing operation
Discontinuing operation is a component that has been disposed or classified as held for sale by the Company,and can be distinguished separately in operating and preparing financial statements when one of the followingconditions is met:
(1) The component stands for an independent main business or a major business area;
(2) The component is a part of disposal plan of an independent main business or a major business area;
(3) The component is a subsidiary which is acquired only for sale again.
The profit and loss from continuing operations and the profit and loss from discontinued operations areseparately listed in the income statement. Operational gains and losses such as impairment losses andreversal amounts and disposal gains and losses from discontinued operations are reported as discontinuedoperation gains and losses. For the discontinued operations reported in the current period, the Companyadjusts the information previously disclosed as continuing operations profits and losses in the currentfinancial statements as the discontinued operations profits and losses for the comparable accounting period.
(30) Major accounting estimates and judgments
When preparing financial statements, the Company's management needs to use estimates and assumptions,which will affect the application of accounting policies and the amount of assets, liabilities, income andexpenses. Actual conditions may differ from these estimates. The management of the company continuouslyevaluates the judgment of key assumptions and uncertainties involved in the estimation, and the impact ofchanges in accounting estimates will be recognized in the current and future periods.
The main uncertainties in the estimated amount are as follows:
1. Measurement of expected credit losses
The company calculates the expected credit loss through the default risk exposure and the expected credit lossrate, and determines the expected credit loss rate based on the default probability and the default loss rate.When determining the expected credit loss rate, the company uses internal historical credit loss experienceand other data, and adjusts the historical data in combination with current conditions and forward-lookinginformation. When considering forward-looking information, the indicators used by the Company include therisk of economic downturn, the expected increase in unemployment rate, changes in the external marketenvironment, technological environment and customer conditions. The Company regularly monitors andreviews assumptions related to the calculation of expected credit losses.
2. Inventory Impairment
As mentioned in note (11) Inventory under “3 Significant accounting policies and accounting estimates”, theCompany regularly estimates the net realizable value of the inventory, and recognizes the difference ininventory cost higher than the net realizable value. When estimating the net realizable value of inventory, theCompany considers the purpose of holding the inventory and uses the available information as the basis forestimation, including the market price of the inventory and the Company's past operating costs. The actualselling price, completion cost, sales expenses and taxes of the inventory may change according to changes in
market sales conditions, production technology, or the actual use of the inventory. Therefore, the amount ofinventory depreciation reserve may change according to the above reasons. Adjustments to the inventoryimpairment will affect the current profit and loss.
3. Impairment of other assets except inventory and financial assets
As mentioned in note (19) Long-term Asset Impairment under “3 Significant accounting policies andaccounting estimates”, the company performs an impairment assessment on assets other than inventory andfinancial assets on the balance sheet date to determine whether the recoverable amount of the asset has fallento a lower level than its book value. If the situation shows that the book value of the long-term assets may notbe fully recovered, the relevant assets will be deemed to be impaired and the impairment loss will berecognized accordingly.
The recoverable amount is the higher of the net value of the fair value of the asset (or asset group) minus thedisposal expenses and the present value of the asset (or asset group) 's expected future cash flow. Because theCompany cannot reliably obtain the public market price of assets (or asset groups), and cannot reliably andaccurately estimate the fair value of assets. Therefore, the Company regards the present value of the expectedfuture cash flow as the recoverable amount. When estimating the present value of future cash flows, it isnecessary to make a significant judgment on the output, selling price, related operating costs of the productsproduced by the asset (or asset group), and the discount rate used in calculating the present value. TheCompany will use all available relevant information when estimating the recoverable amount, including theprediction of output, selling price and related operating costs based on reasonable and supportableassumptions.
4. Depreciation and amortization of assets such as fixed assets and intangible assets
As described in note (15) Fixed Assets and note (18) Intangible Assets under “3 Significant accountingpolicies and accounting estimates”, the company shall accrue depreciation for the fixed assets andamortization for intangible assets within the useful life after considering their residual value. The companyregularly reviews the useful life of related assets to determine the amount of depreciation and amortizationexpenses to be included in each reporting period. The useful life of assets is determined by the company basedon past experience with similar assets and in combination with anticipated technological changes. If theprevious estimates change significantly, the depreciation and amortization expenses will be adjusted in thefuture.
5. Deferred tax assets
When it is estimated that sufficient taxable income can be obtained in the future to use the unrecovered taxlosses and deductible temporary differences, the relevant deferred tax assets are calculated and confirmed onthe basis of the applicable income tax rate during the period when the asset is expected to be recovered andthe amount of taxable income is limited to deductible tax losses and deductible temporary differences likelyto be obtained by the Company. The Company needs to use judgment to estimate the time and amount offuture taxable income, and make reasonable estimates and judgments on the future applicable income tax rateaccording to the current tax policy and other related policies to determine the deferred tax assets that shouldbe recognized. If the time and amount of profits actually generated in the future period or the actual applicableincome tax rate are different from the management's estimate, the difference will have an impact on the
amount of deferred tax assets.
(31) Change of significant accounting policy and accounting estimate
A. Change of major accounting policy during this reporting period
(1) Implementation of "Accounting Standards for Business Enterprises No. 14-Revenue" (revised in 2017)
(hereinafter referred to as "New Revenue Standards")
The Ministry of Finance revised the "Accounting Standards for Business Enterprises No. 14-Revenue" in2017. The revised standard stipulates that for the first implementation of the standard, the amount of retainedearnings and other related items in the financial statements at the beginning of the year should be adjustedaccording to the cumulative impact, and the information for the comparable period should not be adjusted.
The Company implemented the new revenue standard from January 1, 2020. According to the standard, theCompany only adjusts the retained earnings at the beginning of 2020 and the amount of other related items inthe financial statements for the cumulative impact of contracts that have not been completed on the date offirst implementation, and does not make adjustments to the comparative financial statements.
The major impact of the implementation of the above regulations are as follows:
Compared with the original revenue standards, the impact of the implementation of the new revenue standardson the relevant items of the financial statements for the period of 2020 is as follows (increase/(decrease)):
Change of accounting policy
content and reason
Amount of impact on the balance on Jan 1,
2020Affected items Consolidated
Financial statement
Parent companyfinancial statementThe Company implemented the"Accounting Standards forBusiness Enterprises No. 14-Revenue" (referred to as "NewRevenue Standards")promulgated by the Ministry ofFinance in 2017 on January 1,2020
Advance from customers-4,429,821,526.79
-5,597,707,687.22
Contract liabilities 3,920,196,041.41
4,953,723,617.01
Other current liabilities 509,625,485.38
643,984,070.21
Affected items in the
statement offinancial position
Amount of impact on the balance on Dec 31, 2020Consolidated Financial
statement
Parent companyfinancialstatementAdvance from customers -5,038,299,156.48 -6,016,524,270.87Contract liabilities 4,458,671,819.90 5,324,357,761.83Other current liabilities 579,627,336.58 692,166,509.04
Affected items in the statement of
comprehensive income
Impact amounts to the period of 2020Consolidated Financial
statement
Parent company financial
statementOperating costs 1,112,122,323.44
655,370,940.93
Selling and distribution expenses -1,112,122,323.44
-655,370,940.93
(2) Implementation of "Accounting Standards for Business Enterprises No. 13 "
The Ministry of Finance issued the "Accounting Standards for Business Enterprises Interpretation No. 13"(Cai Kuai [2019] No. 21, hereinafter referred to as "Interpretation No. 13") on December 10, 2019, whichwill come into force on January 1, 2020. No requirement of retrospective adjustment.
a. The recognition of related parties
Interpretation No. 13 clarifies that the following circumstances constitute a related party: a joint venture orjoint venture between an enterprise and other member units (including parent companies and subsidiaries) ofthe enterprise group to which it belongs; a joint venture of the enterprise and other joint ventures or jointventures of the enterprise. In addition, Interpretation No. 13 also clarifies that only two or more companiesthat are significantly affected by one party do not constitute related parties. It also adds that joint venturesinclude joint ventures and their subsidiaries.
b. The definition of businessInterpretation No. 13 completes the three elements of business composition, refines the judgment conditionsof the business composition, and introduces the "concentration test" option to simplify to a certain extent thejudgment of whether a combination obtained under the same control constitutes a business, etc. .
The company implemented Interpretation No. 13 from January 1, 2020, and the comparative financialstatements will not be adjusted. Implementation Interpretation No. 13 has not had a significant impact on thecompany's financial position and operating results.
(3) Implementation of the "Interim Provisions on Accounting Treatment of Carbon Emissions Trading"
On December 16, 2019, the Ministry of Finance issued the "Interim Provisions on the Accounting Treatmentof Carbon Emissions Trading" (Cai Kuai [2019] No. 22), which is applicable to the related companies in thekey emission enterprises (hereinafter referred to as key emission companies) that conduct carbon emissionrights business in accordance with the "Interim Measures for the Administration of Carbon EmissionsTrading" and other relevant regulations. This regulation came into effect on January 1, 2020, and key emissioncompanies should adopt the prospective application to apply this regulation.
The Company implemented the above regulation from January 1, 2020, and the comparative financialstatements will not be adjusted. The implementation of this regulation has not had a significant impact on thecompany's financial position and operating results.
(4) Implement the "Regulations on Accounting Treatment of Rental Concessions Related to the Coronavirus
Pandemic"
On June 19, 2020, the Ministry of Finance issued the "Regulations on Accounting Treatment of RentalConcessions Related to the Coronavirus Pandemic " (Caikuai (2020) No. 10), which came into effect on June19, 2020, allowing companies to adjust the relevant rental concessions that occurred between Jan 1, 2020 andthe implementation date of this regulation. According to the regulation, companies can choose to adoptsimplified methods for accounting treatments for rent reductions and deferred payment of rents directly causedby the Coronavirus Pandemic that meet the conditions.
The company chooses to adopt a simplified method for accounting treatment for all rent concessions that fallwithin the scope of the regulation, and adjusts the relevant rent concessions that occur between January 1,2020 and the effective date of the regulation accordingly.The implementation of the regulations did not have a significant impact on the company's financial positionand operating results.
B. Change of accounting estimate during the reporting period
Items
Approvalprocedure
Applicationdate
Affected items
Affectedamounts
depreciationperiod
Approved
| Change in | by the |
eighthmeeting of
directors
Jan 1, 2020
Accumulateddepreciation
633,195,486.72Operating costs 616,340,171.08General andadministrativeexpenses
16,855,315.64Total profit 633,195,486.72
Items
Approvalprocedure
Applicationdate
Affected items
AffectedamountsNet profit 474,896,615.04
C. The first implementation of the new revenue standard adjustment to the financial statements at thebeginning of the year
Consolidated Statement of Financial Position
Items
last period
B
| Ending balance of the | eginning balance of |
the current period
Adjusted amountsReclassification Remeasurement TotalAdvancefromcustomers
4,429,821,526.79
-4,429,821,526.79
-4,429,821,526.79Contractliabilities
3,920,196,041.41 3,920,196,041.41 3,920,196,041.41Othercurrentliabilities
509,625,485.38 509,625,485.38 509,625,485.38
Statement of Financial Position of the Parent CompanyItems
last period
B
| Ending balance of the | eginning balance of |
the current period
Adjusted amountsReclassification Remeasurement TotalAdvancefromcustomers
5,597,707,687.22
-5,597,707,687.22
-5,597,707,687.22
Contractliabilities
4,953,723,617.01 4,953,723,617.01 4,953,723,617.01
O
| ther current |
liabilities
643,984,070.21 643,984,070.21 643,984,070.21
4. Taxes
(1) Major type of taxes and corresponding tax rates
Tax Taxation Method Tax RateValue-added Tax (VAT)
The balance of output VAT calculatedbased on product sales and taxable
6%, 10%, 13%
tax laws after subtracting the deductibleinput VAT of the periodCity maintenance and construction tax
Based on VAT and business tax actuallypaid
7%, 5%Enterprise income tax Based on taxable profit 25%
(2) Tax Preference
None.
5. Notes to the consolidated financial statements
(1) Cash at bank and on hand
Items 20201231 20191231Cash on hand 3,026.68 5,588.98Cash at bank 9,229,414,568.44 13,441,409,399.60Other monetary funds 3,897,249,320.14 4,974,429,409.19
Total 13,126,666,915.26 18,415,844,397.77Including: Total amount deposited abroad
The details of restricted monetary funds resulted from guarantee or pledge or freeze accounts are asfollows:
Items 20201231 20191231Margin for bank acceptance bill
services revenue in accordance with the
3,306,509,320.14 4,803,950,250.12Margin for letter of credit 78,000,000.00 166,527,026.07Time deposit or notice depositfor guarantee
512,000,000.00Loan deposit 740,000.00 3,330,000.00Other 622,133.00
Total 3,897,249,320.14 4,974,429,409.19
(2) Accounts receivable
1. Accounts receivable disclosed by aging analysis
Items20201231 20191231
Within 1 year (inclusive) 245,084,695.28 187,728,755.631-2 years (inclusive) 57,537,987.36 31,659,160.022-3 years (inclusive) 251,762,129.07 24,710,744.49Over 3 years 179,465,975.74 177,928,572.30Sub-total 733,850,787.45 422,027,232.44
Less: Provision for bad
debts
488,633,604.79 186,330,966.78Total: 245,217,182.66 235,696,265.66
2. Accounts receivable disclosed by bad debt accrual method
Items
20201231Carrying amount Provision for bad debts
Book valueAmount
(%)
Amount
| Percentage | Bad |
debts
Provision for baddebts individually
352,985,418.30 48.10 352,985,418.30 100.00Provision for bad
ratio (%)debts based on
portfolio
380,865,369.15 51.90 135,648,186.49 35.62 245,217,182.66Include:
Portfolio 1: Agingportfolio
380,865,369.15 51.90 135,648,186.49 35.62 245,217,182.66Total 733,850,787.45 100.00 488,633,604.79 245,217,182.66
Items
20191231Carrying amount Provision for bad debts
Book valueAmount
debts based onPercentage
(%)
Amount
Baddebts
| Percentage | ratio (%) |
individually
47,762,337.18 11.32 47,762,337.18 100.00
| Provision for bad debts |
| Provision for bad debts |
based on portfolio
374,264,895.26 88.68 138,568,629.60 37.01 235,696,265.66Include:
Portfolio 1: Agingportfolio
374,264,895.26 88.68 138,568,629.60 37.01 235,696,265.66Total 422,027,232.44 100.00 186,330,966.78 235,696,265.66
Accounts receivables tested for impairment individually:
Items
20201231Carrying amount
Provision for
bad debts
Bad debtsratio (%)
ReasonBrilliance AutomotiveGroup Holdings Co., Ltd.
305,223,081.12 305,223,081.12 100.00
BankruptcyreorganizationBenxi Nanfen XinheMetallurgical FurnaceMaterial Co., Ltd
47,762,337.18 47,762,337.18 100.00
Discontinued
Total 352,985,418.30 352,985,418.30
Provision for bad debts by portfolio: Aging analysis
Items
20201231Account
Receivable
Provision for
baddebts
Bad debtratio（%）Within 1 year(inclusive)
240,240,563.27 2,402,405.64 1.001-2 year (inclusive) 2,420,911.77 242,091.18 10.002-3 year (inclusive) 6,500,255.55 1,300,051.11 20.00Over 3 year 131,703,638.56 131,703,638.56 100.00
Total 380,865,369.15 135,648,186.49
3. The provision for bad debts accrued, reversed or recovered in the current period
The amount of bad debt provision accrued in the current period is RMB 302,302,638.01.
4. No accounts receivable has been written off this year.
5. Top five debtors at the year-end
Company
20201231Amount
Percentage of total Accounts
receivable (%)
Provision for
bad debtsThe first305,223,081.12 41.59 305,223,081.12The second104,634,496.36 14.26 1,046,344.96
The third56,158,745.71 7.65 561,587.46
The fourth47,762,337.18 6.51 47,762,337.18
The fifth26,929,400.04 3.67 269,294.00
Total540,708,060.41 73.68 354,862,644.72
6. Accounts receivable derecognized due to the transfer of financial assets
None.
7. The amount of assets and liabilities formed by transferring accounts receivable and
continuing to be involved
None.
(3) Accounts receivable financing
1. Details of accounts receivable financing
Items 20201231 20191231Notes Receivable 4,189,977,871.92 2,117,763,147.67Including: Bank acceptance bill 1,875,594,439.85 2,108,970,139.40Commercial acceptance bill 2,314,383,432.07 8,793,008.27Accounts receivable 311,779,314.21
Total 4,189,977,871.92 2,429,542,461.88
Notes: Accounts receivable financing reflects notes receivable and accounts receivablethat are measured at fair value through other comprehensive income on the balance sheetdate.
2. The pledged acceptance bill at the year-end
Item The pledged acceptance bill at the year-endBank acceptance bill 484,093,073.28Commercial acceptance bill 403,379,971.01
Total 887,473,044.29
3. The amount of Notes receivable endorsed over or discounted but not yet matured at
the year-end
Item
Amount confirmed
at the end ofthe period
Amount not
confirmed atthe end of the
periodBank acceptance bill 19,140,766,051.06Commercial acceptance bill 2,277,888,430.86
Total 19,140,766,051.06 2,277,888,430.86
4. No Notes receivable has been transferred into accounts receivable due to inability of
drawer to meet acceptance bill at the year-end.
(4) Prepayments
1. Prepayments disclosed by aging
Aging
20201231 20191231Amount Percentage (%) Amount Percentage (%)Within 1 year2,096,232,640.14 99.44 1,284,678,069.97 99.511-2 years11,812,137.51 0.56 6,279,487.94 0.492-3 years53,900.20
Over 3 years36,000.00Total2,108,044,777.65 100.00 1,291,047,458.11 100.00Notes: As of December 31, 2020, there were no outstanding prepayments over 1 year.
2. Top five prepaid companies at the year-end
Name of the company Amount Percentage (%)The First1,146,621,194.17 54.39
The Second134,979,953.65 6.40
The Third133,093,798.08 6.31
The Fourth125,253,186.74 5.94The Fifth96,036,913.74 4.56Total1,635,985,046.38 77.60
(5) Other receivables
Items 20201231 20191231Interest receivables 33,685,359.01 20,504,422.47Dividend receivablesOther receivables108,415,992.26 152,302,614.30
Total142,101,351.27 172,807,036.77
1．Interest receivable
(1) Interest receivable disclosed by category
Items 20201231 20191231Deposit interest 33,685,359.01 20,504,422.47Subtotal 33,685,359.01 20,504,422.47Less: provision for bad debts
Total 33,685,359.01 20,504,422.47
(2) The company has no significant provision for overdue interest and bad debts.
2．Other receivables
(1) Other receivables disclosed by aging
Items20201231 20191231Within 1 year (inclusive) 53,420,775.41 135,162,016.851-2 years (inclusive) 42,323,476.43 15,306,496.222-3 years (inclusive) 12,988,305.06 3,479,413.70Over 3 years 68,267,923.76 65,222,052.19Sub-total 177,000,480.66 219,169,978.96
debts
68,584,488.40 66,867,364.66Total：
108,415,992.26 152,302,614.30
（2）Information of provision for bad debts
Less: Provision for bad
Provision for bad
debts
Stage one Stage two Stage three
Total12-month expectedcredit losses
Provision for badlifetime expected credit
losses(credit impairment has notoccurred)
lifetimeexpectedcredit losses(creditimpairment
| lifetime expected credit | has already |
occurred)Beginning balance 9,494,109.69 57,373,254.97 66,867,364.66--Transfer to thesecond stage
--Transfer to thethird stage
-768,390.73 768,390.73--Write-back to thesecond stage
--Write-back to thefirst stage
6,592.60 -6,592.60Accrual for thecurrent period
351,990.79 2,816,265.57 656,152.83 3,824,409.19
debts
Stage one Stage two Stage three
Total12-month expectedcredit losses
Provision for badlifetime expected credit
losses(credit impairment has notoccurred)
lifetimeexpectedcredit losses(creditimpairment
| lifetime expected credit | has already |
occurred)Reversal during thecurrent period
6,207.34 220,683.79 226,891.13Write-back of thecurrent period
1,747,858.43 132,535.89 1,880,394.32Write-off during thecurrent period
Other changesEnding balance 352,376.05 9,566,849.71 58,665,262.64 68,584,488.40
Changes in the book value of other receivables are as follows:
Book value
Stage one Stage two Stage three
Total12-monthexpected creditlosses
losses(credit impairment has notoccurred)
| lifetime expected credit | lifetime expected |
credit losses(credit impairment hasalready occurred)Beginning balance 137,511,976.11 24,284,747.88 57,373,254.97 219,169,978.96--Transfer to thesecond stage
--Transfer to thethird stage
-1,369,740.15 1,369,740.15--Write-back to thesecond stage
Book value
Stage one Stage two Stage three
Total12-monthexpected creditlosses
losses(credit impairment has notoccurred)
| lifetime expected credit | lifetime expected |
credit losses(credit impairment hasalready occurred)--Write-back to thefirst stage
14,813.42 -14,813.42Increase 376,415,795.03 6,006,395.62 54,905.00 382,477,095.65Termination ofconfirmation
416,212,048.83 8,302,009.23 132,535.89 424,646,593.95Other changesEnding balance 97,730,535.73 20,604,580.70 58,665,364.23 177,000,480.66
(3) No other accounts receivable actually written off in the current period
(4) Other receivables disclosed by nature
Nature 20201231 20191231Accounts 167,775,115.62 209,700,618.22Others 9,225,365.04 9,469,360.74
Total 177,000,480.66 219,169,978.96
(5) Top five debtors at the year-end
Company Nature Amount Aging
Percentage oftotal other
Provision for
bad debtsThe First Accounts 6,012,104.38within 1 year
3.40
receivables (%)
The Second Accounts 5,492,200.00 within 1 year 3.10
54,922.00The ThirdAccounts 3,408,537.26within 1 year
1.93
The Fourth Accounts 2,783,078.98within 1 year to over 3 year
1.57
2,538,389.24The Fifth Accounts 2,394,571.41 within 1 year
1.35
Total
20,090,492.03
11.35
2,593,311.24
(6) There is no other receivables relates to any government subsidies in the
reporting period.
(7) There is no other receivables derecognized due to the transfer of financial
assets in the reporting period
(8) There no assets and liabilities formed by transfer of other receivables and
continued involvement in the reporting period
(6) Inventories
1. Inventories disclosed by category
Items
20201231 20191231Carrying amount Impairment Book value Carrying amount Impairment Book valueRaw materialand main material
4,535,270,857.67
26,986,533.69 4,508,284,323.98 3,737,655,945.87 26,986,533.69
3,710,669,412.18Work in process and self-made semi-finishedproduct
1,732,705,334.71
1,946,088.69 1,730,759,246.02 1,302,249,713.48 25,995,508.16
1,276,254,205.32
Finished goods2,805,646,918.75
4,625,146.10 2,801,021,772.65 2,730,735,542.67 17,261,474.56
2,713,474,068.11
Total9,073,623,111.13
33,557,768.48 9,040,065,342.65 7,770,641,202.02 70,243,516.41
7,700,397,685.61
2. Provision for inventory impairment and provision for impairment of contract performance costs
Category 20191231 20200101
Increase Decrease
20201231Provision Others
Write-backor write-off
OthersRaw materialand main material
26,986,533.69 26,986,533.69 26,986,533.69
self-made semi-finishedproduct
25,995,508.16 25,995,508.16 1,946,088.69 25,995,508.16 1,946,088.69
Finished goods
17,261,474.56 17,261,474.56 4,625,146.10 17,261,474.56 4,625,146.10Total 70,243,516.41 70,243,516.41 6,571,234.79 43,256,982.72 33,557,768.48
(7) Other current assets
Items 20201231 20191231Prepaid tax183,320,437.20 182,484,616.27
VAT input tax86,091,954.53 130,420,207.82
Time deposit5,254,234,444.28
Total5,523,646,836.01 312,904,824.09
(8) Long-term equity investment
Investees
20191231
Increase/decrease
20201231
TotalImpairment Ending
BalanceAddInvestment
ReduceInvestment
Investment Gainsand LossesRecognized underthe Equity Method
OtherComprehensive IncomeAdjustment
OtherEquityChanges
Declaration of
| Cash Dividends |
or Profit
Provision
OthersJoint Venture
Zhejiang Bengang JingruiSteel Processing Co., Ltd..2,642,998.70 374,119.86 -275,053.83 2,742,064.73Subtotal
2,642,998.70 374,119.86 -275,053.83 2,742,064.73Total
2,642,998.70 374,119.86 -275,053.83 2,742,064.73
(9) Other equity instrument investments
Item 20201231 20191231Equity of Suzhou BengangIndustrial Co., Ltd.
3,888,980.00 3,888,980.00Equity of Zhonggang ShanghaiSteel Processing Co., Ltd.
Equity of Northeast SpecialSteel Group Co., Ltd.
1,037,735,849.00 1,037,735,849.00Equity of Guangzhou BenpuAutomobile Panel Sales Co.,Ltd.
200,000.00 200,000.00Equity of Wuhan BengangYuanhong Trading Co., Ltd.
200,000.00Total 1,042,024,829.00 1,041,824,829.00
Notes:
“Other equity instrument investment" items reflects the ending balance of non-tradingequity instrument investments designated as measured at fair value through othercomprehensive income.The Company holds 15% equity of Zhonggang Shanghai Steel Processing Co., Ltd.
9.93% equity of Northeast Special Steel Group Co., Ltd. held by the Company has been
pledged to Bank of Dalian, Shenyang branch.
(10) Fixed assets
1.Fixed assets and Disposal of fixed assets
Items 20201231 20191231Fixed assets 26,284,567,956.44 26,123,375,492.40Disposal of fixed assets
Total 26,284,567,956.44 26,123,375,492.40
2. Details of fixed assets
Items
Houses andbuildings
Mechanicalequipment
Transportationand otherequipment
Total
1. Total original value
2019123112,321,783,218.79 47,625,624,131.28 908,284,781.31 60,855,692,131.38Increasein current period
692,077,508.12 1,828,190,321.00 7,904,567.97 2,528,172,397.09Including: Purchase14,642,922.72 3,900,232.67 18,543,155.39
Transferred from construction inprogress
692,077,508.12 1,813,547,398.28 4,004,335.30 2,509,629,241.70Merging
period
21,686,964.04 533,554,926.88 3,269,036.43 558,510,927.35
| Decrease in current |
| Including: Disposal |
or scrapping
21,686,964.04 514,479,792.15 3,269,036.43 539,435,792.62
Others19,075,134.73 19,075,134.732020123112,992,173,762.87 48,920,259,525.40 912,920,312.85 62,825,353,601.12
2.Total accumulated
depreciation
201912315,843,160,062.67 28,243,587,548.42 604,346,279.82 34,691,093,890.91
Increasein current period
300,111,149.37 1,862,985,952.81 27,973,536.13 2,191,070,638.31Including: Provision300,111,149.37 1,862,985,952.81 27,973,536.13 2,191,070,638.31
period
9,982,342.40 427,152,414.07 3,187,684.13 440,322,440.60
| Decrease in current |
| Including: Disposal |
or scrapping
9,982,342.40 427,152,414.07 3,187,684.13 440,322,440.60
202012316,133,288,869.64 29,679,421,087.16 629,132,131.82 36,441,842,088.62
3. Total impairment
2019123138,596,028.99 2,626,719.08 41,222,748.07
Increasein current period
60,614,634.58 60,614,634.58
Including: accrued60,614,634.58 60,614,634.58Others
period
1,632,408.07 1,261,418.52 2,893,826.59
| Decrease in current |
| Including: Disposal |
or scrapping
1,632,408.07 1,261,418.52 2,893,826.59
2020123136,963,620.92 61,979,935.14 98,943,556.06
value of Fixed assets
202012316,821,921,272.31 19,178,858,503.10 283,788,181.03 26,284,567,956.44
201912316,440,027,127.13 19,379,409,863.78 303,938,501.49 26,123,375,492.40
3. Fixed assets idled temporarily
Items Gross value
Accumulateddepreciation
Impairment
Net bookvalue
NotesHouses and buildings 94,707,444.27 59,005,241.87 35,702,202.40Mechanical equipment 539,534,736.81 474,785,348.84 63,241,353.66 1,508,034.31Transportation and otherequipment
1,042,125.89 1,042,125.89Total 635,284,306.97 534,832,716.60 98,943,556.06 1,508,034.31
4. Fixed assets leased in through financial leasing
As of the end of this reporting period, the value of the fixed assets leased in through financial leasing was RMB1,114,232,362.74, all of which were leased from the related party Liaoning Hengyi Financial Leasing Co., Ltd.
5. Fixed assets leased out through financial leasing
Item Ending balanceHouses and buildings 6,755,257.55
Total 6,755,257.55
6. Fixed assets without property rights certificates at the year-end
Items Book value ReasonHouses and buildings 1,145,596,922.34 Being processed
(11) Construction in progress
1. Construction in progress and Construction materials
Items 20201231 20191231Construction in progress 1,837,160,389.66 1,820,264,689.19Project materials 2,773,325.92 13,588,883.39
Total 1,839,933,715.58 1,833,853,572.58
2. Details of construction in progress
Items
20201231 20191231Gross value
Total
impairment
Net book value Gross value
Totalimpairment
Net book valueSpecial Steel ElectricFurnace CapacityReplacement Project
358,101,195.01 358,101,195.01 62,311,284.01 62,311,284.01CCPP powergeneration project
300,907,874.71 300,907,874.71 85,320,752.59 85,320,752.59Special steel rollingmill renovation project
151,433,585.06 151,433,585.06 126,479,522.35 126,479,522.35Advanced Treatmentand Reuse Project ofReclaimed Water inGeneral Energy Plant
98,563,871.96 98,563,871.96 1,300,481.22 1,300,481.22
360 square metersintering machine
82,878,409.99 82,878,409.99 60,930,506.79 60,930,506.79No. 7 blast furnace drydust removal andenergy-savingtransformation of TRTpower generation
70,402,228.77 70,402,228.77 40,993,916.95 40,993,916.95
Environmentalprotection overhaulproject of No. 6 blastfurnace
66,322,604.36 66,322,604.36 30,937,257.41 30,937,257.41
360 square metersintering machinewaste heat utilization
56,547,049.50 56,547,049.50 55,089,094.50 55,089,094.50
One-towerdesulfurization revampin the coking plant
31,893,853.65 31,893,853.65 8,469,241.97 8,469,241.97
Items
20201231 20191231Gross value
Total
impairment
Net book value Gross value
Totalimpairment
Net book valueThe overallimprovement of BenxiSteel's manufacturingmanagement
29,824,289.00 29,824,289.00 20,685,421.72 20,685,421.72
denitrification of No. 7coke oven in the platecoking plant
28,774,283.25 28,774,283.25 17,437,798.33 17,437,798.33
Energy General PlantNo. 1 Converter GasTank SystemTransformation Project
24,008,553.86 24,008,553.86
Cold rolled high-
Flue gasdesulfurization andstrength steel
renovation project
23,961,023.15 23,961,023.15
| strength steel |
| 220kV Substation Project of General |
Energy Plant
23,302,571.03 23,302,571.03 773,057.78 773,057.78
Gas Project – Bengangtransferred to LiaoningCoal
21,840,791.70 21,840,791.70 21,840,791.70 21,840,791.70
| Chemical Coke Oven |
| 5#Blast furnace |
relocation overhaul
491,069,345.30 491,069,345.30
Improvement
39,806,201.09 39,806,201.09
Environmental
| 1700 Hot Rolling |
| protection |
69,541,903.74 69,541,903.74
Items
20201231 20191231Gross value
Total
impairment
Net book value Gross value
Totalimpairment
Net book value
4-6 converter1#
| transformation of No. |
| converter energy saving and |
environmentalprotectiontransformation
148,803,402.52 148,803,402.52
Newly built 8# single-
project
100,460,943.24 100,460,943.245#-
| strand slab caster |
| 7# Oxygen |
Generator Nitrogen-increasing and Energy-saving Modification
34,339,392.96 34,339,392.96
treatment
20,335,268.74 20,335,268.74
Transformation of No.2 Casting Machine inSteelmaking Plant
81,419,913.88 81,419,913.88
Other468,398,204.66 468,398,204.66 301,919,190.40 301,919,190.40Total1,837,160,389.66 1,837,160,389.66 1,820,264,689.19 1,820,264,689.19
3. The change of major construction in progress
Project
Budget(in 10thousandyuan)
20191231 Increase Transfer to FA
Otherdecrea
se
20201231
Input
ofBudget
(%)
Progress(%)
Accumulatedamount ofcapitalizedinterest
Including:
capitalizedinterest ofcurrent period
Capitalizationrate
Source offundSpecial SteelElectric FurnaceCapacityReplacementProject
161,761.00 62,311,284.01 295,789,911.00 358,101,195.01 22.00 20.00
Self-raisedfund
CCPP powergeneration project
106,000.00 85,320,752.59 215,587,122.12 300,907,874.71 28.00 30.00 6,359,003.29 3,831,836.54 4.35
Self-raisedfund & LoanSpecial steelrolling millrenovation project
59,607.00 126,479,522.35 29,779,762.70 4,825,699.99 151,433,585.06 26.00 25.00 3,905,897.06 1,923,970.35 4.35
Self-raisedfund & LoanAdvancedTreatment and
Reuse Project of
17,000.00 1,300,481.22 97,263,390.74 98,563,871.96 57.00 60.00
Self-raisedfund
Project
Budget(in 10thousandyuan)
20191231 Increase Transfer to FA
Otherdecrease
20201231
InputofBudget
(%)
Progress(%)
Accumulatedamount ofcapitalizedinterest
Including:
capitalizedinterest ofcurrent period
Capitalizationrate
Source of
fundReclaimed Waterin General EnergyPlantNo. 7 blastfurnace dry dustremoval andenergy-savingtransformation ofTRT powergeneration
9,332.00 40,993,916.95 29,408,311.82 70,402,228.77 75.00 70.00 293,980.07 123,401.63 4.35
Self-raisedfund & Loan
Environmentalprotectionoverhaul project ofNo. 6 blast furnace
25,225.00 30,937,257.41 35,385,346.95 66,322,604.36 75.00 70.00
Self-raisedfundOne-tower7,000.00 8,469,241.97 23,424,611.68 31,893,853.65 45.00 40.00Self-raised
Project
Budget(in 10thousandyuan)
20191231 Increase Transfer to FA
Otherdecrease
20201231
InputofBudget
(%)
Progress(%)
Accumulatedamount ofcapitalizedinterest
Including:
capitalizedinterest ofcurrent period
Capitalizationrate
Source offunddesulfurization
| revamp in the |
coking plant
fund
relocationoverhaul
124,086.50 491,069,345.30 335,096,315.94 826,165,661.24 - 66.00 70.00 31,410,224.05 13,027,763.86 4.35
Self-raisedfund & Loan1700 Hot RollingImprovement
25,000.00 39,806,201.09 139,473,010.30 179,279,211.39 - 71.00 70.00
Self-raisedfundNo. 7 blast furnace
5#Blast furnaceof the plate iron
plant builds a new
| 4# hot blast |
furnace
4,200.00 31,557,158.36 31,557,158.36 - 75.00
100.0
Self-raisedfund
Perfect function of
6,332.00 45,544,017.06 45,544,017.06 - 71.00
100.0
Self-raisedfund
Project
Budget(in 10thousand
yuan)
20191231 Increase Transfer to FA
Otherdecrea
se
20201231
InputofBudget
(%)
Progress(%)
Accumulatedamount ofcapitalizedinterest
Including:
capitalizedinterest ofcurrent period
Capitalizationrate
Source offundplate ironmakingplantEnvironmentalprotectiontransformation ofNo. 4-6 converter
27,000.00 69,541,903.74 92,467,786.33 162,009,690.07 - 60.00 95.00 2,799,798.26 1,548,185.22 4.35
Self-raisedfund & Loan1# converterenergy saving andenvironmentalprotectiontransformation
21,800.00 148,803,402.52 17,992,331.86 140,247,061.81
26,548,672.
- 64.00 70.00 1,770,758.63 821,940.53 4.35
Self-raisedfund & Loan
Newly built 8#single-strand slabcaster project
64,341.00 100,460,943.24 249,198,752.55 349,659,695.79 - 54.00 60.00
Self-raisedfund
5#-7# Oxygen
4,726.10 34,339,392.96 4,947,418.50 39,286,811.46 - 83.00 85.00
| 5#-7# Oxygen | Self-raised |
Project
Budget(in 10thousand
yuan)
20191231 Increase Transfer to FA
Otherdecrease
20201231
InputofBudget
(%)
Progress(%)
Accumulatedamount ofcapitalizedinterest
Including:
capitalizedinterest ofcurrent period
Capitalizationrate
Source of
fundGeneratorNitrogen-increasing andEnergy-savingModification
fund
The cold rollingmill (three coldprocess) picklingrolling andcontinuousstrippinggalvanizing linehave perfectfunctions
5,600.00 54,854,105.81 54,854,105.81 - 97.00
100.0
Self-raisedfund
Renewal of 2#
5,800.00 56,302,688.85 56,302,688.85 - 97.00
| Renewal of 2# | 100.0 |
Project
Budget(in 10thousandyuan)
20191231 Increase Transfer to FA
Otherdecrea
se
20201231
Input
ofBudget
(%)
Progress(%)
Accumulatedamount ofcapitalizedinterest
Including:
capitalizedinterest ofcurrent period
Capitalizationrate
Source of
fundand 7# CastingMachineEquipment inPlate SteelmakingPlant
fund
The cold rollingmill (first coldprocess) siliconsteel productionline has perfectfunctions
5,200.00 48,647,411.29 48,647,411.29 - 93.00
100.0
Self-raisedfund
8#9# Coke ovenwastewateradvancedtreatment
2,306.00 20,335,268.74 20,335,268.74 - 88.00
100.0
Self-raisedfund
Project
Budget(in 10thousandyuan)
20191231 Increase Transfer to FA
Otherdecrease
20201231
InputofBudget
(%)
Progress(%)
Accumulated
amount ofcapitalizedinterest
Including:
capitalizedinterest ofcurrent period
Capitalizationrate
Source offundUpgrading andTransformation of4#, 5# ConverterEquipment inPlate SteelmakingPlant
3,800.00 35,253,273.23 35,253,273.23 - 92.00
100.0
Self-raisedfund
Transformation ofNo. 2 CastingMachine inSteelmaking Plant
10,090.00 81,419,913.88 1,418,076.05 82,837,989.93 - 82.00 85.00 284,551.59 155,425.89 4.35
Self-raisedfund & Loan
Total1,341,588,827.97 1,839,390,803.14 2,076,805,745.02
26,548,672.
1,077,625,213.
46,824,212.95 21,432,524.02
4. There is no impairment of construction in progress during the current period.
5. Construction materials
Items
20201231 20191231Gross value Impairment
Net Book
Value
Gross value Impairment
Net Book
ValueConstruction
materials
2,773,325.92 2,773,325.92 13,588,883.39 13,588,883.39Total 2,773,325.92 2,773,325.92 13,588,883.39 13,588,883.39
(12) Intangible assets
1. Details of intangible assets
Items Land use right Software Total
1.Total gross value
20191231327,028,797.84 310,401.55 327,339,199.39
Increase
Including: Purchase
Internal Research and Development
Merger
Decrease
Including: Disposal
Invalid and terminated confirmation
20201231327,028,797.84 310,401.55 327,339,199.39
2. Total of Accumulated Amortization
2019123155,717,267.98 121,908.07 55,839,176.05Increase6,540,576.22 26,794.58 6,567,370.80
Including: Accrued6,540,576.22 26,794.58 6,567,370.80
Decrease
Including: Disposal
Invalid and terminated confirmation
2020123162,257,844.20 148,702.65 62,406,546.85
3. Total Impairment
20191231
Increase
Including: Accrued
Decrease
Including: Disposal
Invalid and terminated confirmation
20201231
4. Total Net value
20201231264,770,953.64 161,698.90 264,932,652.54
20191231271,311,529.86 188,493.48 271,500,023.34
2. Land use right without Certificate of Land use right at the year-end
None.
(13) Deferred tax asset and deferred tax liability
1. Undedicated deferred tax asset
Items
20201231 20191231Deductibletemporarydifferences
Deferred tax asset
Deductibletemporarydifferences
Deferred taxassetImpairment of assets 398,431,973.43 99,607,993.35 378,651,125.80 94,662,781.44
profit
74,424,898.92 18,606,224.73 53,312,397.14 13,328,099.29Depreciation of fixedassets
333,978,859.03 83,494,714.76 333,978,859.03 83,494,714.76Total 806,835,731.38 201,708,932.84 765,942,381.97 191,485,595.49
2. Unrecognized deferred tax assets
Items 20201231 20191231Deductible temporary differences 305,702,137.30 428,163.12Deductible losses 54,629,940.42 653,832,187.01
Total 360,332,077.72 654,260,350.13
3. The deductible loss of unrecognized deferred tax assets due in the following period
Items 20201231 20191231 NotesYear 202019,216,380.38
Year 202110,945,961.04 10,981,383.41
Year 20221,001,166.72 589,299,581.01
Year 202314,114,953.21 16,327,268.19
Year 202417,910,573.13 18,007,574.02
Year 202510,657,286.32
Total54,629,940.42 653,832,187.01
(14) Other non-current assets
Items
20201231 20191231Gross value Impairment Net book value Gross value Impairment Net book valuePrepaid long-term assets
995,840,320.65 995,840,320.65 708,502,552.50 708,502,552.50Total 995,840,320.65 995,840,320.65 708,502,552.50 708,502,552.50
(15) Short-term loans
1. Short-term loan disclosed by type
Items 20201231 20191231Pledge loansMortgage loansGuaranteed loans 9,687,731,000.00 12,731,478,000.00Credit loans 380,000,000.00 420,000,000.00
Total 10,067,731,000.00 13,151,478,000.00
2.There is no short-term loans that were overdue at the end of the reporting period
(16) Notes payable
Items 20201231 20191231Bank acceptance bill7,747,043,186.29 8,897,442,732.91Commercial acceptance bill857,106,162.13 1,174,963,839.77Domestic letter of credit1,210,000,000.00 1,756,108,104.27
Total9,814,149,348.42 11,828,514,676.95At the end of the reporting period, there is no notes payable due and unpaid.
(17) Accounts payable
(1) Accounts payable disclosed by category
Items 20201231 20191231Accounts payable for goods5,122,416,750.84 3,481,176,373.75Accounts payable for labor18,697,483.74 56,959,052.87Accounts payable for project and equipment513,842,739.32 581,909,120.17Repair expense and others259,271,282.92 407,468,483.48
Total5,914,228,256.82 4,527,513,030.27
(2) Significant accounts payable aging over one year
Items Ending balance
one yearCompany 1
| Of which: more than | |
| 36,218,300.00 | 36,218,300.00 |
Company 2
| 35,081,745.24 | 30,361,745.24 |
Company 3
| 23,579,692.14 | 23,379,692.14 |
Company 4
| 15,810,625.07 | 15,810,625.07 |
Company 5
| 14,200,000.00 | 14,200,000.00 |
Company 6
| 14,126,435.78 | 12,651,035.78 |
Total
| 139,016,798.23 |
Other notes: The above significant accounts payable aged over one year have not yet reached the settlementconditions.
(18) Advance from customers
1. Advance from customers disclosed by category
Items 20201231 20191231Advance for goods 4,429,821,526.79
Total 4,429,821,526.79
2. There is no significant advance from customers aging over one year.
(19) Contract liabilities
1. Details of contract liabilities
Items 20201231Advance for goods 4,458,671,819.90
Total 4,458,671,819.90As of December 31, 2020, the value-added tax received in advance from customers was RMB 579,627,336.58(December 31, 2019: RMB 509,625,485.38) and disclosed as other current liabilities.
(20) Employee benefits payable
1. Employee benefits payable
Items 20191231 Increase Decrease 20201231Short-
benefits
22,208,442.94 1,813,558,032.80 1,810,017,573.44 25,748,902.30Post-employment benefits-
| term employee |
| defined contribution |
plans
62,312.32 166,603,750.88 166,665,480.25 582.95Termination benefits 1,427,419.30 43,733.23 1,471,152.53Other benefits due withinone year
Total 23,698,174.56 1,980,205,516.91 1,978,154,206.22 25,749,485.25
2. Short-term employee benefits
Items 20191231 Increase Decrease 20201231
allowance and subsidy
12,974,335.94 1,389,001,397.17 1,385,384,616.00 16,591,117.11
Items 20191231 Increase Decrease 20201231
(2) Employee welfare 137,995,433.01 137,995,433.01
(3) Social Insurance 756,616.34 131,390,670.04 131,493,573.64 653,712.74
insurance
106,650.30 102,065,806.41 102,168,773.60 3,683.11
| Including: Medical |
| Work injury |
insurance
649,966.04 27,066,935.19 27,066,871.60 650,029.63Maternityinsurance
2,257,928.44 2,257,928.44
(4) Housing funds 6,855,601.00 119,143,709.00 119,140,115.00 6,859,195.00
(5) Union funds and staff
education fee
1,621,889.66 36,026,823.58 36,003,835.79 1,644,877.45
(6) Short-term
compensated absences
(7) Short-term profit -
sharing scheme
Total 22,208,442.94 1,813,558,032.80 1,810,017,573.44 25,748,902.30
3. Defined contribution plans
Items 20191231 Increase Decrease 20201231Basic pension fund 60,423.10 161,461,180.42 161,521,038.24 565.28Unemployment insurance 1,889.22 5,142,570.46 5,144,442.01 17.67
Total 62,312.32 166,603,750.88 166,665,480.25 582.95
(21) Taxes payable
(22) Other payables
Items 20201231 20191231Interest payables 10,818,986.30Dividends payables
Items 20201231 20191231Value-added tax22,541,925.74 246,921,117.21
Corporate income tax9,589,798.62 6,250,204.39
City maintenance and construction tax4,490,656.56 11,416,274.65
House property tax3,661,600.13 3,445,290.84
Educational surcharges3,211,296.48 8,146,826.78
Land holding tax1,180,402.66 1,128,141.09
Environmental tax8,398,902.77 5,264,008.42
Others2,227,498.00 2,253,951.42
Total55,302,080.96 284,825,814.80
Items 20201231 20191231Other payables 709,448,301.92 651,882,758.67
Total 709,448,301.92 662,701,744.97
1. Interests payable
Items 20201231 20191231Loan interests 10,818,986.30
Total 10,818,986.30
2. Other payables
(1) Other payables disclosed by nature
Items 20201231 20191231Deposit1,713,563.89 1,933,435.69
Margin98,316,454.89 86,166,961.89
Accounts525,775,209.97 454,536,559.31Others83,643,073.17 109,245,801.78
Total709,448,301.92 651,882,758.67
(2) No significant other payables aged over one year
(23) Non-current liabilities due within one year
Items 20201231 20191231Long-term loans due within one year 1,287,630,361.43 234,474,657.99Bond payables due within one year 20,400,000.00Long-term payables due within one year
Total 1,308,030,361.43 234,474,657.99Notes: RMB 255,943,331.43 of long-term due within one year is guaranteed loans, and RMB 1,031,687,030.00 iscredit loans.
(24) Other current liabilities
Items 20201231 20191231Output tax to be transferred 579,627,336.58 509,625,485.38
Total 579,627,336.58 509,625,485.38Please refer to “Note 3 (31) Changes in Important Accounting Policies and Accounting Estimates” for details of thedifference between the beginning balance and the ending balance of the previous year (December 31, 2019).
(25) Long-term loans
Long-term loans disclosed by category
Categories 20201231 20191231Pledged loans622,600,000.00 622,600,000.00
Mortgage loan
Guaranteed loans798,714,362.65 1,106,159,800.73
Credit loans2,081,620,065.00 3,120,916,110.00Total3,502,934,427.65 4,849,675,910.73
(26) Bonds payables
(1) Bonds payables disclosed by category
Items 20201231 20191231Convertible Bond 5,752,229,339.52
Total 5,752,229,339.52
(2) Changes in Bonds payables ( Excluding other financial instruments such as preferred stocks and perpetual bonds classified as financial liabilities)
Items Book value
Issuedate
Term tomaturity
Issuance amount
Balance at the endof the previous year
Current issue
Interest accrued at
face value
Premium and discount
amortization
Balance at the end of
the current year
ConvertibleBond (Bondcode:127018)
6,800,000,000.00
Jun 29, 2
6 years6,800,000,000.00
6,800,000,000.00
20,400,000.00
1,047,770,660.48
5,752,229,339.52Total 6,800,000,000.00 6,800,000,000.00 6,800,000,000.00 20,400,000.00 1,047,770,660.48 5,752,229,339.52
Description:
Approved by the China Securities Regulatory Commission "Zheng Jian Xu Ke [2020] No. 46", the Company publicly issued 68 million convertible corporatebonds on June 29, 2020, each with a face value of 100 yuan and a total issuance of RMB 6.8 billion. The term to maturity is 6 years from June 29, 2020 to June28, 2026. The bond coupon rate is 0.6% in the first year, 0.8% in the second year, 1.5% in the third year, 2.9% in the fourth year, 3.8% in the fifth year, and 5.0%in the sixth year. The interest payment method is once a year, and the starting date of interest calculation is the first day of issuance of the convertible bond, thatis, June 29, 2020. The interest payment date of each year is the first day of the issuance of convertible bonds (June 29, 2020) on the day of each full year. If thatday is a legal holiday or a rest day, it will be postponed to the next working day, and no interest will be paid during the postponement period. Every two adjacentinterest payment dates constitute an interest calculation year.In the initial measurement of the convertible corporate bonds issued by the Company this time, the fair value of the corresponding liability component afterdeducting the allocated issuance expenses is RMB 5,612,624,636.40, which is included in the bonds payable; the fair value of the corresponding equity component
after deducting the allocated issuance cost of the Company is RMB 1,146,290,662.42, which is included in other equity instruments. In the subsequentmeasurement, the liability part is measured and adjusted by amortized cost using the effective interest rate method.
(3) Description of the conditions and time for conversion of convertible corporate bonds
Approved by Shenzhen Stock Exchange "Shen Zheng Shang [2020] No. 656", the Company’s RMB 6.80 billion convertible corporate bonds will be listed onthe Shenzhen Stock Exchange on August 4, 2020, and the abbreviation is "Bengang Convertible Bonds". The bond code is "127018". The conversion period ofthe convertible corporate bonds issued this time is from the first trading day after six months of the issuance of the convertible corporate bonds (July 3, 2020) tothe maturity date of the convertible corporate bonds, that is, from January 4, 2021 to June 28, 2026. The initial conversion price of the convertible bonds is RMB
5.03 per share.
(4) Notes to other financial instruments classified as financial liabilities
None.
(27) Long-term payables
Items 20201231 20191231Long-term payables 1,114,232,362.74 516,939,408.14Special payables
Total 1,114,232,362.74 516,939,408.14
Long-term payables
Items 20201231 20191231Financing lease payments 1,114,232,362.74 516,939,408.14Including: unrealized financing
779,232,152.85 427,091,325.39
Total 1,114,232,362.74 516,939,408.14
Notes: At the end of the reporting period, the amount of unrealized financing expenses due tofinance lease payments was RMB 779,232,152.85.The minimum financial lease payment to be paid after the balance sheet date wasRMB1,893,464,515.59.
The Company needs to pay interest on time, and the principal is paid in one lump-sum after thelease contract expires. The lease contracts that have not yet been executed are due for more than3 years.
(28) Deferred income
Items 20191231 Increase Decrease 20201231 ReasonGovernmentsubsidy
208,955,407.30 27,056,919.00 81,560,493.07 154,451,833.23
Total 208,955,407.30 27,056,919.00 81,560,493.07 154,451,833.23
Projects of government subsidies:
Items 20191231 Increase
Transfer tocurrent profit
and loss
Otherdecrease
20201231
Relatedto assetsorincomeCold-rolled high-strength steel reconstruction project150,000,000.00 50,000,000.00 100,000,000.00 Assets7 sets of 130 tons combustion boiler flue gas desulfurizationproject in power plant
14,400,000.00 4,800,000.00 9,600,000.00 AssetsProduction line of high-grade electro-galvanized sheet forautomobile
8,208,000.00 8,208,000.00 AssetsAdvanced Treatment Project of Carbon Fiber Wastewater inDongfeng Plant Area of Plate Coking Plant
9,500,000.00 9,500,000.00 AssetsPower plant three power plant cogeneration reform project6,000,000.00 2,000,000.00 4,000,000.00 AssetsIndustrial enterprise energy management center constructiondemonstration project
4,640,000.00 2,320,000.00 2,320,000.00 Assets
applicable technologies
4,000,000.00 2,000,000.00 2,000,000.00 AssetsDesulfurization and Denitrification Project of Coal-firedBoiler in High-pressure Workshop of Bengang Power Plant
4,200,000.00 600,000.00 3,600,000.00 AssetsResearch and development of high-strength steel for thethird generation of automobiles
2,900,000.00 580,000.00 2,320,000.00 AssetsEnergy saving and environmental protection project forsintering machine in ironworks
1,160,000.00 1,160,000.00 AssetsBengang Group Co., Ltd. Automotive Panel EngineeringLaboratory Project Construction
1,000,000.00 1,000,000.00 AssetsAutomatic air quality monitoring system105,000.00 70,000.00 35,000.00 AssetsLiaoning Artisan Subsidy100,002.97 99,981.08 21.89 Assets“Steel for high-strength pipelines under low-temperature and
Introduce special funds for overseas advanced andhigh-pressure service conditions” Project national support
121,000.00 90,322.26 30,677.74 Assets
Items 20191231 Increase
Transfer tocurrent profit
and loss
Otherdecrease
20201231
to assets
orincome
| Related | ||
| funds |
2018 Municipal Skill Master Workstation Fee
187,039.34 120,423.00 66,616.34 Assets
Engineering Laboratory
1,000,000.00 -1,000,000.00 AssetsResearch and development of anti-oxidation hot formingsteel PHS1500A
250,000.00 84,847.73 165,152.27 AssetsConstruction of professional technology innovation platformfor automobile steel industry
1,000,000.00 800,000.00 200,000.00 AssetsResearch on the Influence Mechanism and Control of RareEarth Oxide Sulfide on Automobile Steel Plasticity
184,364.99 184,364.99 Assets2019 Municipal Skills Master Workstation Cost
180,000.00 180,000.00 Assets2020 Ecological Civilization Construction Project (SpecialSteel Electric Furnace Upgrade Project)
20,000,000.00 20,000,000.00 Assets
Construction Project of Bengang Automotive SheetLiaoning Province "Hundred, Thousand, Thousand,
Thousand Talents Project" funding project in 2018
250,000.00 250,000.00 AssetsSupplementary Fund for Relocation of Railway Transport1,626,919.00 1,626,919.00 IncomeLiaoning Provincial Local
Liaoning Province "Hundred, Thousand, Thousand,
Financial Supervision and
Administration Bureau to support the development of specialfunds for enterprises to go public
5,000,000.00 5,000,000.00 IncomeTotal
208,955,407.30 27,056,919.00 80,560,493.07 -1,000,000.00 154,451,833.23
(29) Share capital
(30) Other equity instruments
1. Information of other financial instruments such as preferred stocks and perpetual bonds issued at the end of the period
The Company’s other equity instruments at the end of the period are the equity part of convertible corporate bonds. For details, please refer to “Note 5 (26) Bonds payable”.
2. Changes in financial instruments such as preferred stocks and perpetual bonds issued at the end of the period
Notes:
As of December 31, 2020, the convertible corporate bonds issued this time have not yet reached the conversion period, and there is no conversion into A-share ordinary shares in this period.
Items 20191231
Increase/decrease (+ , - )
20201231Issuing of new share
Bonusshares
Transferred fromreserves
Others SubtotalCapital shares 3,875,371,532.00
3,875,371,532.00
Items
20191231 Increase Decrease 20201231Number
Bookvalue
Number Book value Number Book value Number Book valueConvertiblecorporate bonds
68,000,000 1,146,290,662.42 68,000,000 1,146,290,662.42Total 68,000,000 1,146,290,662.42 68,000,000 1,146,290,662.42
(31) Capital reserves
(32) Special Reserves
Items 20191231 Increase Decrease 20201231Safety production cost 212,687.41 54,000,536.58 53,912,811.85 300,412.14
Total 212,687.41 54,000,536.58 53,912,811.85 300,412.14
(33)Surplus Reserves
Items 2019123120200101Increase Decrease 20201231
reserves
961,105,529.85 961,105,529.85 961,105,529.85Total 961,105,529.85 961,105,529.85 961,105,529.85
(34) Undistributed Profits
Items 2020 2019Before adjustments: undistributed profits at last year-end 2,307,765,664.62 1,945,887,269.82
Statutory surplusAdjustments of the beginning distributed profits
(increase + / decease -)
After adjustments: undistributed profit at this year-beginning
2,307,765,664.62 1,945,887,269.82Add: undistributed profit belonging to parent company384,252,740.78 555,646,971.40Less: Statutory surplus reservesDiscretionary reservesGeneral risk reservesCommon shares dividend payable 193,768,576.60Common shares dividend transferred to paid-in capitalEnding balance of undistributed profits2,692,018,405.40 2,307,765,664.62
(35) Operating income and operating cost
Items
2020 2019Revenue Cost Revenue CostPrincipal business 45,321,849,577.55 43,322,474,075.93 46,805,252,792.90 43,900,514,006.74Other business 3,362,943,108.03 3,069,706,486.66 5,936,100,789.38 5,310,900,638.88Total 48,684,792,685.58 46,392,180,562.59 52,741,353,582.28 49,211,414,645.62
Items 20191231 Increase Decrease 20201231Capital premium 12,227,292,378.47 12,227,292,378.47Other capital reserves 115,917,468.82 115,917,468.82
Total 12,343,209,847.29 12,343,209,847.29
Details for operating income:
Item
Principalbusiness
Other businessClassified by business area 45,321,849,577.55 3,362,943,108.03Including：Domestic40,766,384,160.23 3,362,943,108.03Abroad 4,555,465,417.32Classified by the time of commodity transfer 45,321,849,577.55 3,362,943,108.03Including: recognize at a certain point in time 45,321,849,577.55 3,362,352,384.22
recognize over a certain period of time 590,723.81
Total 45,321,849,577.55 3,362,943,108.03
(36) Tax and surcharges
Items 2020 2019City maintenance and construction tax39,002,807.95 74,291,089.29Educational surcharge28,155,477.26 53,346,630.36Housing property tax79,753,764.80 77,359,590.55Land use right tax13,090,099.93 13,076,581.16
Environmental tax28,417,193.46 22,681,208.92
Stamp duty26,523,801.64 29,816,392.95
Others928,675.06 1,008,586.80
Total215,871,820.10 271,580,080.03
(37) Selling and distribution expenses
Items 2020 2019Freight912,729,271.74Port surcharges70,973,850.23
Import and export agency fee55,316,442.53 63,097,328.89
Salary and benefits25,955,134.20 25,965,599.95
Package fee6,179,183.22 7,564,585.54
Others9,828,520.26 16,358,267.35
Total97,279,280.21 1,096,688,903.70
(38) General and administrative expenses
Items 2020 2019Salary and benefits368,149,507.51 374,106,639.18
Repair expense216,309,807.28 230,168,663.91
Land use right fee65,600,418.40 59,957,197.92
Depreciation39,060,982.28 44,362,834.97Heating fee25,929,633.73 28,855,893.31Water resources fee18,956,412.81 27,515,155.10
Sewage charges13,186,781.11 11,345,616.35Others45,632,751.69 55,633,840.82
Total792,826,294.81 831,945,841.56
(39) Research and development expenses
Items 2020 2019Depreciation, materials and compensation, etc. 37,989,623.28 30,780,463.74
Total 37,989,623.28 30,780,463.74
(40) Financial expenses
Items 2020 2019Interest expenditure1,028,857,436.14 948,799,627.90Less: Interest income378,523,984.03 333,750,262.79Exchange loss-307,919,937.19 44,724,851.35
Others22,361,640.70 22,068,472.77
Total364,775,155.62 681,842,689.23
(41) Other income
Items 2020 2019Government subsidy 81,193,591.56 83,914,522.47Others 111,590.36 2,084.65
Total 81,305,181.92 83,916,607.12
(42) Income on investment
Items 2020 2019
Income on long-term equity investment by equity method374,119.86 452,582.71Income on disposal of financial assets holding for trading 13,500,000.00Dividend income obtained during the holding period of otherequity instrument investments
77,242.47Income on bank short-term financial products 605,795.19
Total 13,951,362.33 1,058,377.90
(43) Credit impairment losses
Items 2020 2019Loss from bad debts of account receivable 302,302,638.01 4,618,663.91Loss from impairment of account receivablefinancing
Loss from bad debts of other receivables 1,717,123.74 1,923,236.71
Total 304,019,761.75 6,541,900.62
Note: Loss is shown as positive figures
(44) Assets impairment loss
Items 2020 2019Impairment of inventory and contractperformance costs
6,571,234.79 43,256,982.72Impairment of fixed assets 60,614,634.58
Total 67,185,869.37 43,256,982.72
Note: Loss is shown as positive figures
(45) Asset disposal income
Items 2020 2019
The amountrecognized in non-recurring profitDisposal gains or lossesarising from disposal offixed assets not held for sale
325,651.61 3,441,646.67 325,651.61
Items 2020 2019
The amountrecognized in non-recurring profitTotal 325,651.61 3,441,646.67 325,651.61
(46) Non-operating income
Items 2020 2019
The amountrecognized in non-
recurring profitNon-current assets scrapped gains 2,703,102.88 9,476,065.29 2,703,102.88Debt restructuring gain 32,800.02 50,640.00 32,800.02Others 1,592,660.62 779,757.58 1,592,660.62
Total 4,328,563.52 10,306,462.87 4,328,563.52
(47) Non-operating expense
Items 2020 2019
The amountrecognized in non-
recurring profitDonations
Non-current assets scrapped loss
95,724,280.44 90,209,742.22 95,724,280.44Others
Total
95,724,280.44 90,209,742.22 95,724,280.44
(48) Income tax expenses
1. Income tax expenses
Items 2020 2019Income tax payable for the current year35,594,567.91 18,987,986.70Adjustment of deferred income tax-10,223,337.35 -33,048.28Total25,371,230.56 18,954,938.42
2. Accounting profit and income tax expense adjustment process
Items 2020Total profit416,850,796.79Income tax expense calculate according to the official or applicable tax rate104,212,699.20Effect of different tax rates applied by subsidiaries
Effect of adjustment of the income tax expense of prior period
2,107,736.22
Items 2020Effect of non-taxable income-93,529.97Effect of undeductible costs, expenses or losses122,123.16Effect of use of deductible losses of unrecognized deferred tax asset of priorperiod
-158,710,195.23Effect of deductible temporary differences or deductible losses of unrecognizeddeferred tax asset of current period
77,732,397.18Changes in the balance of deferred income tax assets and liabilities at thebeginning of the period due to the additional deductible expenses and tax rateadjustments required by the tax law
Income tax expenses
25,371,230.56
(49) Earnings per share
1. Basic earnings per share
The basic earnings per share is calculated by dividing the consolidated net profit attributable to the commonstock shareholders of the parent company by the weighted average number of common stocks issued by thecompany:
Items 2020 2019Consolidated net profit attributable toordinary shareholders of parent company
384,252,740.78 555,646,971.40The weighted average number of commonshares issued by the company
3,875,371,532.00 3,875,371,532.00Basic earnings per share 0.099 0.143Including: basic earnings per share forcontinuing operations
0.099 0.143
Basic earnings per share for discontinuedoperations
2. Diluted earnings per share
Diluted earnings per share is calculated by dividing the consolidated net profit attributable. to the commonshareholders of the parent company (diluted) by the weighted average number of ordinary shares issued bythe company (diluted):
Since convertible bonds have caused anti-dilution, diluted earnings per share are disclosed in accordancewith basic earnings per share.
(50) Notes of statement of cash flows
1. Cash received related to other operating activities
Items 2020 2019Withdraw of current accounts, advance for another415,131,996.05 80,209,527.36
Interest income365,343,047.49 289,867,473.89
Special subsidy income27,624,696.63 3,378,441.11Non-operating income673,106.88 9,799.92
Others8,181,857.38 3,620,413.94
Total
816,954,704.43 377,085,656.22
2. Cash paid related to other operating activities
Items 2020 2019Current accounts, advance for another
347,552,655.29 67,238,789.58Sales expenses
72,862,184.48 139,977,333.30
Administrative expenses
44,664,338.51 77,588,717.78Bank charges
20,710,711.34 14,562,642.52Others
1,489,830.36 23,593,941.76Total
487,279,719.98 322,961,424.94
3. Cash received related to other financing activities
Items 2020 2019Margin for bill, letter of guarantee and letter of credit1,076,807,422.35 1,571,269,971.97Proceeds from negotiation253,068,892.21Total1,329,876,314.56 1,571,269,971.97
4. Cash paid related to other financing activities
Items 2020 2019Margin for bill, letter of guarantee and letter of credit
34,424,434.31 1,612,133.00
Convertible bond issuance costs
41,084,701.18
Others
8,731,273.67
Total
75,509,135.49 10,343,406.67
(51) Supplementary details of statement of cash flows
1. Supplementary details for statement of cash flows
Items 2020 2019
1. A reconciliation of net profit to cash
operating activities:
Net profit 391,479,566.23 556,860,488.98Add: Credit impairment loss 304,019,761.75 6,541,900.62Impairment of assets 67,185,869.37 43,256,982.72Depreciation of fixed assets 2,191,070,638.31 2,432,266,554.80Amortization of intangible assets 6,567,370.80 6,562,417.70Amortization of long-term deferred expensesLosses proceeds from disposal of fixed assets, intangibleassets and other long-term assets (Earnings marked“－”)
-325,651.61 -3,441,646.67
flows fromScrapped losses from fixed assets (Earnings
marked“－”)
93,021,177.5680,733,676.93Loss from changes in fair value (Earnings marked“－”)
Financial expenses (Earnings marked“－”)720,937,498.95 1,009,666,817.96Investment losses (Earnings marked“－”)-13,951,362.33 -1,058,377.90Deferred tax assets reduction (Addition marked“－”)-10,223,337.35 -33,048.28Deferred tax liabilities increased (Reduction marked“－”)
Reduction of inventory (Addition marked“－”)-1,302,981,909.11 2,992,064,351.09
Scrapped losses from fixed assets (EarningsOperating receivable items reduction (Addition
marked“－”)
-2,847,086,786.29 1,617,190,398.59Operating payable items increase (Less marked"－")-1,638,713,049.57 -1,762,786,475.38OthersNet cash flows generated from operating activities -2,039,000,213.29 6,977,824,041.16
Operating receivable items reduction (Addition
2. Payments of investing and financing activities not
involving cash:
Liabilities transferred to capitalConvertible corporate bonds due within one yearFixed assets financed by leasing
3. The net increase in cash and cash equivalents:
Ending balance of cash 9,229,417,595.12 13,441,414,988.58Less: Beginning balance of cash 13,441,414,988.58 11,752,548,621.97Add: Ending balance of cash equivalentsLess: Opening balance of cash equivalentsThe net increase in cash and cash equivalents -4,211,997,393.46 1,688,866,366.61
2. The structure of cash and cash equivalents
Items 20201231 20191231
1. Cash
9,229,417,595.12 13,441,414,988.58Including: Cash on hand
3,026.68 5,588.98Bank deposits available on demand
9,229,414,568.44 13,441,409,399.60
Items 20201231 20191231Other monetary funds available on demand
Central bank deposits available on demandBalances with other financial institutionsLoans to other financial institutions
2. Cash equivalentsIncluding: Investment of securities due within 3 months
3. Ending balance of cash and cash equivalents
9,229,417,595.12 13,441,414,988.58Including: Cash and cash equivalents limited to use by the
parent company of other subsidiary in the group
(52) Assets of which ownership or right to use are restricted
Items Ending balance ReasonCash at bank and on hand 3,897,249,320.14 Deposit for notes and letter of creditReceivables financing 887,473,044.29 Pledged for acceptance billO
investments
1,037,735,849.00 Pledged for loansFixed assets94,790,118.09 Mortgage for fund borrowingIntangible assets37,116,386.66 Mortgage for fund borrowing
Total 5,954,364,718.18
(53) Foreign currency monetary items
1． Foreign currency monetary items
Items
Ending balance inforeign currency
Exchange rate at
the year-end
Ending balancetranslated to RMBCash at bank and on hand
ther equity instrument
470,322,450.33Including: USD71,983,473.35 6.5249 469,684,965.31
EUR50,753.26 8.0250 407,294.97
HKD273,514.80 0.8416 230,190.05
Short-term loans1,239,731,000.00
Including: USD190,000,000.00 6.5249 1,239,731,000.00
within one year
108,050,361.43
Including: USD4,700,000.00 6.5249 30,667,030.00
EUR9,460,158.74 8.0250 75,917,773.89
JPY23,176,000.00 0.0632 1,465,557.54
Items
Ending balance inforeign currency
Exchange rate at
the year-end
Ending balancetranslated to RMB
Long-term loans388,134,427.65
Including: USD
11,850,000.00 6.5249 77,320,065.00
EUR
37,635,016.95 8.0250 302,021,017.45JPY
139,056,000.00 0.0632 8,793,345.20
2. The Company has no overseas operating entities.
(54) Government subsidies
1. Government subsidies related to assets
Item Amount
Items listed on
sheet
The amount included in the current profit or loss or offsetting theloss of related costs
Items included in the currentprofit or loss or offsetting theloss of related costs2020 2019Cold-rolled high-strength steel reconstructionproject
250,000,000.00
Deferredincome
50,000,000.00 50,000,000.00 Other incomeProduction line of high-grade electro-galvanized sheet for automobile
41,040,000.00
Deferredincome
8,208,000.00 8,208,000.00 Other income
the balance7 130t Boilers Flue Gas Desulfurization
Renovation Project of Power Plant
24,000,000.00
Deferredincome
4,800,000.00 4,800,000.00 Other incomeWaste heat
| 7 130t Boilers Flue Gas Desulfurization |
| utilization project and desulfurization transformation project of |
sintering machine in ironworks
21,020,000.00
Deferredincome
4,204,000.00 Other income
Environmental Pollution Control Project 26,170,000.00
Deferredincome
3,620,000.00 Other income
14,420,000.00
| Introduce special funds for overseas advanced | Deferred |
2,000,000.00 2,884,000.00 Other income
Item Amount
Items listed on
sheet
The amount included in the current profit or loss or offsetting theloss of related costs
Items included in the currentprofit or loss or offsetting theloss of related costs2020 2019and applicable technologies incomeIndustrial enterprise energy managementcenter construction demonstration project
11,600,000.00
Deferredincome
2,320,000.00 2,320,000.00 Other incomePower plant three power plant cogenerationreform project
10,000,000.00
Deferredincome
2,000,000.00 2,000,000.00 Other incomeMES Project Special Fund 8,600,000.00
Deferredincome
1,720,000.00 Other incomeSpecial funds for environmental protection 5,800,000.00
Deferredincome
1,160,000.00 Other income
the balanceEnergy saving and environmental protection
project for sintering machine in ironworks
5,800,000.00
Deferredincome
1,160,000.00 1,160,000.00 Other incomeDesulfurization and Denitrification Project ofCoal-fired Boiler in High-pressure Workshopof Bengang Power Plant
6,000,000.00
Deferredincome
600,000.00 600,000.00 Other income
Energy saving and environmental protectionEnvironmental governance projects and
2,400,000.00
| Environmental governance projects and | Deferred |
340,000.00 Other income
Item Amount
Items listed on
sheet
The amount included in the current profit or loss or offsetting theloss of related costs
Items included in the currentprofit or loss or offsetting theloss of related costs2020 2019comprehensive prevention and control projectsfor regional river basin environmentalprotection
income
Iron Smelter 360 Sintering Machine Flue GasDesulfurization Project
1,000,000.00
Deferredincome
200,000.00 Other incomeResearch on the Influence Mechanism andControl of Rare Earth Oxide Sulfide onAutomobile Steel Plasticity
357,520.00
Deferredincome
173,155.01 Other income
Automatic air quality monitoring system 350,000.00
Deferredincome
70,000.00 70,000.00 Other income“Steel for high-strength pipelines under low-temperature and high-
the balance
pressure service
conditions” Project national support funds
188,000.00
Deferredincome
90,322.26 67,000.00 Other income
2018 Municipal Skill Master Workstation Fee 240,000.00
Deferredincome
120,423.00 52,960.66 Other income
Item Amount
Items listed on
sheet
The amount included in the current profit or loss or offsetting theloss of related costs
Items included in the currentprofit or loss or offsetting theloss of related costs2020 2019Research and development of the third-generation high-strength steel for automobiles
2,900,000.00
Deferredincome
580,000.00 Other incomeBengang Group Co., Ltd. Automotive SheetEngineering Laboratory EngineeringConstruction Fund
1,000,000.00
Deferredincome
1,000,000.00 Other incomeResearch and development of anti-oxidationhot forming steel PHS1500A
250,000.00
Deferredincome
84,847.73 Other incomeConstruction of a professional technologyinnovation platform for the automotive steelindustry
1,000,000.00
Deferredincome
800,000.00 Other income
Liaoning craftsman subsidy 100,002.97
Deferredincome
99,981.08 Other income
2. Government subsidies related to income
Items Amount
The amount included in the current profit or loss or
offsetting the loss of related costs
Items included in thecurrent profit or lossor offsetting the loss
of related costs2020 2019Service support 240,000.00 240,000.00 Other incomeTechnical Support 80,000.00 80,000.00 Other incomeEducation-integratedenterprises reduce educationfees and local education fees
15,406.80 15,406.80 Other incomeSupplementary Fund forRelocation of RailwayTransport
1,626,919.00 1,626,919.00 Other income
special funds for enterprises togo public
5,000,000.00 5,000,000.00 Other income
Job stabilization subsidy 19,151.07 19,151.07 Other income
Items Amount
The amount included in the current profit or loss or
offsetting the loss of related costs
Items included in the
current profit or lossor offsetting the loss
of related costs2020 2019Subsidy for training by work 44,400.00 44,400.00 Other incomeTax refund 569,547.42 569,547.42 Other income
3. Return of government subsidies during the reporting period
None
6. Changes in the scope of consolidation
There is no changes to the scope of consolidation during the current period.
7. Equity in other entities
(1) Equity in subsidiaries
1. Constitution of enterprise group
Name of the subsidiaries
Principalplace ofbusiness
Registeredaddress
Notes ofbusiness
Shareholding ratio
Acquiring methodDirect Indirect
Co., Ltd.
Xiamen Xiamen Sales 100.00
Business combinationunder common controlWuxi
| Xiamen Bengang Steel & Iron Sales |
| Bengang Steel & Iron Sales Co., |
Ltd.
Wuxi Wuxi Sales 100.00
Business combinationunder common control
Co., Ltd.
Tianjin Tianjin Sales 100.00
Business combinationunder common controlNanjing Bengang
| Tianjin Bengang Steel & Iron Trading |
| Materials Sales Co., |
Ltd.
Nanjing Nanjing Sales 100.00
Business combinationunder common control
Co., Ltd.
Yantai Yantai Sales 100.00
Business combinationunder common controlHarbin Bengang
| Yantai Bengang Steel & Iron Sales |
| Economic and |
Trading Co., Ltd.
Harbin Harbin Sales 100.00
Business combinationunder common control
Sales Co., Ltd.
Changchun Changchun Sales 100.00
Business combinationunder common controlGuangzhou Bengang
| Changchun Bengang Steel & Iron |
| Steel & Iron |
Trading Co., Ltd.
Guangzhou Guangzhou Sales 100.00 Establishment
Science and Technology Co., Ltd.
Shanghai Shanghai Sales 100.00 EstablishmentBengang
| Shanghai Bengang Metallurgy |
| Steel Plates Liaoyang Pellet |
Co., Ltd.
Liaoyang Liaoyang
Manufactu
ring
100.00 Establishment
Material Technology Co., Ltd.
Dalian Dalian
Manufacturing
65.00 Establishment
Bengang POSCO Cold-
| Dalian Benruitong Automobile |
| rolled Sheet |
Co., Ltd.
Benxi Benxi
Manufactu
ring
75.00
Business combinationunder common controlBenxi Bengang Steel Sales Co., Ltd Benxi Benxi Sales 100.00 EstablishmentShenyang Bengang
Science and Technology Co., Ltd.
Shenyang Shenyang Sales 100.00 Establishment
| Metallurgical |
| Chongqing Liaoben Steel & Iron |
Trading Co., Ltd.
Chongqing Chongqing Sales 100.00 EstablishmentBengang Baojin
material technology Co., Ltd.
Shenyang Shenyang
Manufactu
ring
85.00
Business combinationunder common control
2. Significant but not wholly-owned subsidiaries
Name of the subsidiaries
Proportion
(Shenyang) auto new
of
non-controllinginterests (%)
Profits and
lossesattributing tonon-controlling
shareholders
Dividenddeclared todistribute tonon-controlling
shareholders
Endingbalance of
non-controlling
interestsBengang POSCO Cold-rolled Sheet Co., Ltd.
25.00 10,501,387.54 506,134,000.89
3. Financial information of significant but not wholly-owned subsidiaries
Name of thesubsidiaries
20201231Current assets
Non-currentassets
Total assets
Currentliabilities
Non-
sTotal liabilitiesBengang
| current liabilitie | ||
| POSCO |
Cold-
Co., Ltd.
3,799,519,376.39 1,384,600,108.47 5,184,119,484.86
| rolled Sheet |
3,159,583,481.30 3,159,583,481.30
20191231
subsidiaries
Currentassets
Non-currentassets
Total assets
Currentliabilities
Non-
| Name of the | current liabilities |
Total liabilitiesBengangPOSCO Cold-rolled Sheet Co.,Ltd.
4,305,831,723.98
1,509,417,518.88
5,815,249,242.86 3,832,718,789.47 3,832,718,789.47
Name of the subsidiaries
2020Operating
income
Net profit
Total
comprehensive
income
| Total | Net cash flows |
from operatingactivities
Bengang POSCO Cold-rolledSheet Co., Ltd.
7,327,060,880.66 42,005,550.17 42,005,550.17 301,022,342.34
Name of the subsidiaries
2019Operating
income
Net profit
Totalcomprehensiv
e income
Net cash flows fromoperating activitiesBengang POSCO Cold-rolledSheet Co., Ltd.
7,379,865,156.54 19,378,253.07 19,378,253.07 -517,602,292.64
4. Significant restrictions on the use of enterprise group assets and the settlement of enterprise group debts
None.
5. Financial or other support provided to structured entities included in the scope of consolidated financial
statementsNone.
(2) The shareholder's equity in the subsidiary has changed and still control the subsidiary's transactions
The Company does not exist such matters.
(3) Equity in joint venture or associates
1. Important joint ventures and associates
The Company has no important joint ventures or associates.
2. Summary of financial information of unimportant joint ventures and associates
20201231/2020 20191231/2019Joint ventures:
Total book value of investment: 2,742,064.73 2,642,998.70The total amount of the following itemscalculated according to the shareholdingratio
—Net profit 374,119.86 452,582.71—Other comprehensive income—Total comprehensive income 374,119.86 452,582.71
3. Explanation on the significant limitation of the ability of the joint venture or associate to transfer funds to
the company
The Company does not exist such matters.
4. Excess losses incurred by joint ventures or associates
The Company does not exist such matters.
5. Unconfirmed commitments related to joint venture investment
The Company does not exist such matters.
6. Contingent liabilities related to joint venture or associate investment
The Company does not exist such matters.
(4) Important joint operations
The Company does not exist such matters.
(5) Equity in structured entities that not included in the scope of consolidated financial statements
The Company does not exist such matters.
8. Risks associated with financial instruments
The company faces various financial risks in its operation: credit risk, market risk and liquidity risk. The company'sboard of directors is fully responsible for the determination of risk management objectives and policies, and assumesultimate responsibility for the risk management objectives and policies. However, the board of directors hasauthorized the company's planning and development department to design and implement procedures that ensure theeffective implementation of risk management objectives and policies. The board of directors reviews theeffectiveness of the implemented procedures and the rationality of risk management objectives and policies throughreports submitted by the planning and development department. The company's internal auditors also audit riskmanagement policies and procedures, and report relevant findings to the audit committee.The overall goal of the company's risk management is to formulate a risk management policy that minimizes riskswithout excessively affecting the company's competitiveness and resilience.
(1) Credit risk
Credit risk refers to a financial loss to a party due to failure to discharge an obligation by the counterparties.The Company is exposed to credit risk arising from customers’ failure to discharge an obligation in sales oncredit. Before signing a new contract, the company will assess the credit risk of new customers, includingexternal credit ratings and bank credit certificates in certain cases (when this information is available). Thecompany has set a credit limit for each customer, which is the maximum amount that does not require additionalapproval.
The Company ensures that the company's overall credit risk is within a controllable range through regularmonitoring of existing customers' credit ratings and periodic review of aging analysis of accounts receivable.In addition, the Company strictly approves the line of credit, and only sells on credit to important customers fornewly-developed products. In the monitoring of credit risk of customers, the Company sorts customers intogroups by their credit characteristics. Those customers which are rated as “high risk” will be put in the restrictedclient list. The Company can only sell to these customers on credit with additional approval; otherwise theCompany must ask for a corresponding deposit in advance.
(2) Market risk
Market risk of financial instruments refers to fluctuations of fair value or future cash flows due to market pricechanges, including currency risk, interest rate risk, and other price risk.
1. Interest rate risk
Interest rate risk refers to fluctuations of fair value or future cash flows due to market rate changes. TheCompany’s exposure to currency risk is primarily arising from variable-rate bank balances and variable-rateborrowings. Currently, the Company does not have a specific policy to manage its interest rate risk. The
management will carefully choose financing methods, and combine fixed interest rate with variable interestrate, short-term obligations with long-term obligations. By using effective interest rate risk managementmethods, the Company closely monitors interest rate risk and will consider interest-rate swaps to acquire anexpected structure of interest rates shall the need arise.
2. Currency risk
Currency risk refers to fluctuations of fair value or future cash flows due to exchange rate changes. TheCompany has been constantly working on the adjustment of the organizational framework of risk managementand optimization of debt structures to lower the currency risk.
The currency risk facing the Company originates from the assets and liabilities measured by US dollars, Euro,Hongkong dollars and Japanese Yen. The ending balance of the assets and liabilities after converted in RMB isshown as below:
(In 10 Thousand Yuan)Items
Ending balanceUSD Euro HKD Japanese Yen TotalAssets46,968.50
40.73
23.02
47,032.25
Liabilities134,771.81
37,793.88
1,025.89
173,591.58
Items
Beginning balanceUSD Euro HKD Japanese Yen TotalAssets
8,990.85
| 8,990.85 | 1,109.84 |
| 22.90 |
10,123.59
Liabilities
| 147,372.23 |
| 45,006.35 |
193,566.86
| 1,188.28 |
On December 31, 2020, with all other variables held constant, if the relevant currency appreciates or depreciatesagainst RMB by 5%, the company will increase or decrease the net profit of RMB 47,459,800 (on December31, 2018: RMB 91,721,600). Management believes that 5% reasonably reflects the reasonable range of possiblecurrency-to-renminbi changes in the next year.
(3) Liquidity risk
Liquidity risk refers to the risk of shortage of funds which occurs in fulfilling the obligation of settlement in amanner of delivering cash or other financial assets. The Company’s policy is to maintain sufficient cash to meetmaturing obligations. Liquidity risk is centralized controlled by the Company’s finance department. Throughthe monitoring of unrestricted cash and cash equivalents, bank acceptance bills due in short time and thecontinues forecasting of cash flow in the next 12 months, the finance department ensures that the Company hassufficient cash to meet obligations in all predicted reasonable circumstances.
The following table details the Company’s mature date of residual contract value of underivative financialliabilities to repay according to the contract terms. The table has been drawn up based on the undiscounted cashflows of financial liabilities based on the earliest date on which the Company can be required to pay. The table
includes both interest and principal cash flows.
(In 10 Thousand Yuan)Items
20201231Within 1 year 1-2 years 2-5 years
Over 5years
TotalTrade and other payables
1,643,593.66 111,423.24 1,755,016.90Loans and interests
1,137,576.14 25,647.04 321,586.21 3,060.20 1,487,869.59Total
2,781,169.80 25,647.04 321,586.21 114,483.44 3,242,886.49
(In 10 Thousand Yuan)Items
20191231Within 1 year 1-2 years 2-5 years
Over 5years
TotalTrade and other payables
1,700,791.05 51,693.94 1,752,484.99Loans and interests
1,339,677.16 328,523.94 133,765.16 22,678.49 1,824,644.75Total
3,040,468.21 328,523.94 133,765.16 74,372.43 3,577,129.74
9. Disclosure of fair value
The input value used in fair value measurement is divided into three levels:
The input value of the first level is the unadjusted quotation of the same asset or liability that can be obtained on themeasurement date in an active market.The input value of the second level is the input value of the related assets or liabilities that is directly or indirectlyobservable except the input value of the first level.The third level of input value is the unobservable input value of related assets or liabilities.The level to which the fair value measurement result belongs is determined by the lowest level to which the inputvalue that is important to the fair value measurement as a whole belongs.
(1) Fair value of assets and liabilities measured at fair value
Item
Fair value at the end of the period
measurement in the firstlevel
| Fair value | Fair value |
measuremen
second level
Fair value measurementin the third level
Total
| t in the | ||
| 1. Continuous fair |
Item
Fair value at the end of the period
measurement in the firstlevel
| Fair value | Fair value |
measuremen
second level
Fair value measurementin the third level
Total
value measurement◆Financial assetsheld for trading
(1) Financial assets
measured at fairvalue and whosechanges are includedin the current profitand loss
(a) Investment indebt instruments
(b) Investment inequity instruments
(c) Derivativefinancial assets
(d) Others
(2) Designated as a
financial assetmeasured at fairvalue and itschanges are includedin the current profitand loss
(1) Investment in
debt instruments
(2) Others
Item
Fair value at the end of the period
measurement in the firstlevel
| Fair value | Fair value |
measuremen
second level
Fair value measurementin the third level
Total
◆ Accountsreceivablefinancing
4,189,977,871.92 4,189,977,871.92◆ Other debtinvestments
◆ Investment in
other equityinstruments
1,042,024,829.00 1,042,024,829.00◆ Other non-current financialassets
(1) Financial assets
measured at fairvalue and whosechanges are includedin the current profitand loss
(a) Investment indebt instruments
(b) Investment inequity instruments
(c) Derivativefinancial assets
(d) Others
(2) Designated as a
financial asset
t in the
measured at fair
Item
Fair value at the end of the period
measurement in the firstlevel
| Fair value | Fair value |
measuremen
second level
Fair value measurementin the third level
Total
value and itschanges are includedin the current profitand loss(a) Investment indebt instruments
(b) Others
Total assetscontinuouslymeasured at fairvalue
5,232,002,700.92 5,232,002,700.92
◆Financialliabilities held fortrading
Including:
Issuedtradingbonds
Derivative financialliabilities
Others◆Designated as afinancial liabilitymeasured at fair
t in thevalue and its
Item
Fair value at the end of the period
measurement in the firstlevel
| Fair value | Fair value |
measuremen
second level
Fair value measurementin the third level
Total
changes included inthe current profitand loss
Total liabilitiescontinuouslymeasured at fairvalue
2. Non-continuous
fair valuemeasurement
(1) Assets held for
sale
Total assets notmeasuredcontinuously at fairvalue
For example:
Liabilities held forsale
Total liabilities notmeasuredcontinuously at fairvalue
(2) The basis for determining the market value of the continuous and non-continuous first-level fair value
measurement projects
The Company has no first level fair value measurement project.
(3) Continuous and non-continuous second-level fair value measurement items, using valuation techniques
and qualitative and quantitative information on important parameters
The Company has no second level fair value measurement items.
(4) Continuous and non-continuous third-level fair value measurement items, using valuation techniques and
qualitative and quantitative information on important parameters
The other equity instruments that continue the third level of fair value measurement are mainly unlisted equityinvestments held by the company. The company adopted valuation techniques for fair value measurement, mainlyusing valuation techniques of listed company comparison method, referring to stock prices of similar securities andconsidering liquidity discounts.
(5) For continuous fair value measurement projects, where conversion between various levels occurs during
the period, the reason for the conversion and the policy for determining the timing of conversion
During the current period, there was no conversion between various levels.
(6) Changes in valuation techniques and reasons for changes during the period
No changes during the period.
(7) Fair value of financial assets and financial liabilities not measured at fair value
No
10. Related party transactions
(1) Details of parent company
Name of parent company
Place ofRegistry
Notes ofBusiness
Registeredcapital
Shareproportion (%)
Votingrights (%)
Benxi Steel & Iron
(Group) Co., Ltd.
Benxi,Liaoning
Manufacturing 62.92 62.18 62.18
Note:
The ultimate controlling party of the Company is the State-owned Assets Supervision and AdministrationCommission of the People's Government of Liaoning Province.
(2) Details of the subsidiaries
For details of subsidiaries of the Company please refer to Note 7 “Equity in other entities”.
（3） The company's joint ventures and associates
Name of joint ventures and associates
RelationshipZhejiang Bengang Jingrui Steel Processing Co., Ltd. Associate
（4） Details of other related parties
Name of Other related parties Relationship
referred to as "Bengang Group")
Controlling shareholder of parent company.Bengang Group International Economic andTrading Co., Ltd.
Belongs to Bengang Group Co., Ltd.Bengang Cold-
Bengang Group Co., Ltd. (Hereinafter
rolled Stainless Steel
Dandong Co., Ltd.
Same parent companyBenxi Beiying Steel & Iron (Group) Co., Ltd.(Hereinafter referred to as "Beiying Steel")
Belongs to Bengang Group Co., Ltd.Bengang Electronics and Gas Co., Ltd. Associate of parent companyBenxi Steel & Iron (Group) Real-estateDevelopment Co., Ltd.
Same parent companyBenxi Steel & Iron (Group) Steel & IronProcess and Logistics Co., Ltd.
Same parent company
rolled Stainless SteelBenxi Steel & Iron (Group) Machinery
Manufacture Co., Ltd.
Same parent companyBenxi Steel & Iron (Group) Construction Co.,Ltd.
Same parent companyBenxi Steel & Iron (Group) Mining Co., Ltd. Same parent companyBenxi Steel & Iron (Group) Thermal PowerDevelopment Co., Ltd.
Same parent company
Benxi Steel & Iron (Group) MachineryBenxi Steel & Iron (Group) Designing
Institute
Same parent companyBenxi Steel & Iron (Group) IndustrialDevelopment Co., Ltd.
Same parent companyBenxi Steel & Iron (Group) Information andAutomatic Tech Co., Ltd.
Same parent company
Benxi Steel & Iron (Group) Construction andRepairing Co., Ltd.
Same parent companyBenxi Steel & Iron
Residues Co., Ltd.
Same parent companyBenxi Iron and Steel (Group) EngineeringConstruction Supervision Co., Ltd.
Same parent companyBenxi Steel & Iron (Group) ZhengtaiConstruction Materials Co., Ltd.
Same parent companyBenxi High-tech Drilling Tools ManufactureCo., Ltd.
Belongs to Bengang Group Co., Ltd.Benxi New Career Development Co., Ltd. Same parent companyDalian Boluole Steel Tube Co., Ltd. Belongs to Bengxi Steel and Iron (Group) Co., Ltd.Guangzhou Free Trade Zone Bengang SalesCo., Ltd.
Belongs to Bengxi Steel and Iron (Group) Co., Ltd.Benxi Steel & Iron (Group) General Hospital Belongs to Bengxi Steel and Iron (Group) Co., Ltd.Liaoning Bengang Steel & Iron Trading Co.,Ltd.
Same parent companyLiaoning Hengtai Heavy Machinery Co., Ltd. Same parent companyLiaoning Hengtong Metallurgical EquipmentManufacture Co., Ltd.
Same parent companyLiaoning Metallurgy Technician College Same parent company
(Group) MetallurgyLiaoning Metallurgy Vocational Technical
College
Same parent companySuzhou Bengang Industrial Co., Ltd. Shareholding companyBenxi Steel & Iron (Group) Medical ServicesDepartment;
Associate of parent company
Bengang Group Finance Co., Ltd. Belongs to Bengang Group Co., Ltd.Liaoning Hengyi Financial Leasing Co., Ltd. Belongs to Bengang Group Co., Ltd.
(5) Related Party Transactions
1. Related party transactions of purchasing goods and services
Company as the purchaser(In 10 Thousand Yuan)
Name
The content of relatedparty transactions
2020 2019Benxi Steel & Iron (Group) Co., Ltd. Repair expense
30,206.47 27,611.81
Benxi Steel & Iron (Group) Co., Ltd.
Raw material andsupplementary material
2,121.13
Bengang Cold-rolled Stainless Steel Dandong Co., Ltd. Products
22.39 171.87
Benxi Steel & Iron (Group) Mining Co., Ltd. Labor cost
3,213.23 864.66
Benxi Steel & Iron (Group) Mining Co., Ltd.
Raw material andsupplementary material
514,193.50 466,510.90
Benxi Steel & Iron (Group) Mining Co., Ltd. Freight
1,227.47 1,318.16Benxi Steel & Iron (Group) Metallurgy Residues Co.,Ltd.
Raw material andsupplementary material
34,303.84 27,932.17
Benxi Steel & Iron (Group) Steel & Iron Process andLogistics Co., Ltd.
Processing fee
63.22 127.67
Benxi Steel & Iron (Group) Real-estate DevelopmentCo., Ltd.
Raw materials
3,648.95Benxi Steel & Iron (Group) Machinery ManufactureCo., Ltd.
Spare parts5,984.04 11,131.68Benxi Steel & Iron (Group) Machinery ManufactureCo., Ltd.
Repair services2,773.62 2,922.74
Benxi Steel & Iron (Group) Construction Co., Ltd. Spare parts1,624.97 787.21
Benxi Steel & Iron (Group) Construction Co., Ltd. Project fee20,274.33 18,016.18Benxi Steel & Iron (Group) Construction Co., Ltd. Repair services18,022.98 21,561.78Benxi Steel & Iron (Group) Construction Co., Ltd.
Raw material andsupplementary material
1,241.22 236.10Benxi Steel & Iron (Group) Construction Co., Ltd. Freight
51.39 502.47
Benxi Steel & Iron (Group) Industrial Development Co., Raw material and21,095.06 19,118.00
Ltd. supplementary materialBenxi Steel & Iron (Group) Industrial Development Co.,Ltd.
Repair services1,537.66 2,157.65
Benxi Steel & Iron (Group) Industrial Development Co.,Ltd.
Freight
446.80
Benxi Steel & Iron (Group) Industrial Development Co.,Ltd.
Project fee
107.01 235.00
Benxi Steel & Iron (Group) Construction and RepairingCo., Ltd.
Raw material &supplementarymaterials & spare parts
228.18 256.76
Benxi Steel & Iron (Group) Construction and RepairingCo., Ltd.
Project fee1,911.38 4,998.34Benxi Steel & Iron (Group) Construction and RepairingCo., Ltd.
Repair expense17,475.94 19,506.98Bengang Electronics and Gas Co., Ltd.
Raw material andsupplementary material
13,856.30 13,763.00Bengang Electronics and Gas Co., Ltd. Repair services3,063.31 1,879.36Benxi High-tech Drilling Tools Manufacture Co., Ltd. Spare parts
39.00 26.63
Benxi New Career Development Co., Ltd. Repair services
487.81
Benxi New Career Development Co., Ltd.
Raw material andsupplementary material
and food
1,028.90 907.16
Liaoning Metallurgy Technician College Spare parts
933.26
1,202.01
Liaoning Metallurgy Vocational Technical CollegeProject fee
Liaoning Metallurgy Vocational Technical College Repair services
648.24
580.5
Co., Ltd.
Raw material andsupplementary material
| Bengang Group International Economic and Trading |
508,961.39
Co., Ltd.
Agency fee5,531.64
6,309.73
| Bengang Group International Economic and Trading |
| Bengang Group International Economic and Trading |
Co., Ltd.
Port surcharges9,279.98
7,099.20
Benxi Steel & Iron (Group) Information and AutomaticTech Co., Ltd.
Spare parts
850.35
785.28
Benxi Steel & Iron (Group) Information and AutomaticTech Co., Ltd.
Project fee1,121.38
1,942.52
Benxi Steel & Iron (Group) Information and AutomaticTech Co., Ltd.
Repair services1,732.50
3,483.24
Development Co., Ltd.
Heating costs
119.00 115.25
Company as the seller(In 10 Thousand Yuan)
Name
The content of related partytransactions
2020 2019Bengang Electronics and Gas Co., Ltd. Energy & Power
72.4
76.74
Benxi Beiying Steel & Iron (Group) Co., Ltd.
Raw material &supplementary materials& spare parts
138,409.84
500,154.15
Benxi Beiying Steel & Iron (Group) Co., Ltd. Products2,150.96
1,286.59
Benxi Beiying Steel & Iron (Group) Co., Ltd. Energy & Power22,602.26
21,662.54
Benxi Steel & Iron (Group) Real-estateDevelopment Co., Ltd.
Energy & Power
8.65
10.44
Benxi Steel & Iron (Group) Steel & IronProcess and Logistics Co., Ltd.
Energy & Power
25.88
36.79
Benxi Steel & Iron (Group) Steel & IronProcess and Logistics Co., Ltd.
Products
89.25
Products1,898.85
980.32
Benxi Steel & Iron (Group) MachineryBenxi Steel & Iron (Group) Thermal Power
Development Co., Ltd.
Raw material andsupplementary material
71.04 70.93
Benxi Steel & Iron (Group) Designing Institute Design fees
125.98
1,323.40
Benxi Beiying Steel & Iron (Group) Co., Ltd.
Raw material andsupplementary material
492,390.02
1,154,378.5
Benxi Beiying Steel & Iron (Group) Co., Ltd. Energy & Power46,589.86
54,489.91
Benxi Beiying Steel & Iron (Group) Co., Ltd. Freight
407.53
571.46
Benxi Beiying Steel & Iron (Group) Co., Ltd. Labor cost7,190.62
8,663.23
Benxi Beiying Steel & Iron (Group) Co., Ltd. Spare parts1,710.81
1,308.45
Benxi Steel & Iron (Group) Thermal PowerLiaoning Hengtong Metallurgical Equipment
Manufacture Co., Ltd.
Raw material and spare
parts
8,336.02
8,758.96
| Liaoning Hengtong Metallurgical Equipment |
| Liaoning Hengtong Metallurgical Equipment |
Manufacture Co., Ltd.
Repair services
661.14
Liaoning Hengtai Heavy Machinery Co., Ltd.
Raw material and spare
parts
138.59
231.09
Liaoning Hengtai Heavy Machinery Co., Ltd. Repair and labor cost
716.99
1,930.35
Bengang Group Co., Ltd.
Property management
fee
Bengang Group Co., Ltd. Labor cost18,876.38
15,507.90
Name
The content of related party
transactions
2020 2019
Manufacture Co., Ltd.
Manufacture Co., Ltd.
Energy & Power2,088.72
2,137.30
| Benxi Steel & Iron (Group) Machinery |
| Benxi Steel & Iron (Group) Machinery |
Manufacture Co., Ltd.
Raw material &supplementary materials& spare parts
338.56
641.3
Co., Ltd.
Energy & Power
699.16
593.8
Benxi Steel & Iron
| Benxi Steel & Iron (Group) Construction |
| (Group) Construction |
Co., Ltd.
Raw material &supplementary materials& spare parts
6,452.06
5,781.00
Benxi Steel & Iron (Group) Mining Co., Ltd. Energy & Power62,020.89
64,747.81
Benxi Steel & Iron (Group) Mining Co., Ltd.
Raw material &supplementary materials
& spare parts
9,678.23
10,078.34
Benxi Steel & Iron (Group) Mining Co., Ltd. Freight revenue
743.9
1,031.79
Benxi Steel & Iron (Group) Mining Co., Ltd. Products1,107.48
502.82
Benxi Steel & Iron (Group) Thermal PowerDevelopment Co., Ltd.
Energy & Power2,995.62
2,639.73
Benxi Steel & Iron (Group) Thermal PowerDevelopment Co., Ltd.
Raw material &supplementary materials
& spare parts
1,750.62
2,749.21
Benxi Steel & Iron (Group) Thermal PowerDevelopment Co., Ltd.
Freight revenue
Development Co., Ltd.
Energy & Power
824.47
827.49
| Benxi Steel & Iron (Group) Industrial |
| Benxi Steel & Iron (Group) Industrial |
Development Co., Ltd.
Products
3.97
Development Co., Ltd.
Raw material &supplementary materials& spare parts
1,914.44
2,295.96
Benxi Steel & Iron (Group) Information andAutomatic Tech Co., Ltd.
Energy & Power
14.64
15.87
Benxi Steel & Iron (Group) Construction andRepairing Co., Ltd.
Energy & Power
125.15
133.05
Benxi Steel & Iron (Group) Construction andRepairing Co., Ltd.
Raw material &supplementary materials& spare parts
368.03
93.84
Name
The content of related party
transactions
2020 2019
Residues Co., Ltd.
Energy & Power
659.84
532.33
Benxi Steel & Iron
| Benxi Steel & Iron (Group) Metallurgy |
| (Group) Metallurgy |
Residues Co., Ltd.
Raw material &supplementary materials& spare parts
26,839.91
25,018.15
Residues Co., Ltd.
Freight revenue
| Benxi Steel & Iron (Group) Metallurgy |
| Benxi Steel & Iron (Group) Metallurgy |
Residues Co., Ltd.
Products
423.53
Benxi Steel & Iron (Group) Co., Ltd. Energy & Power
205.47
232.43
Benxi Steel & Iron (Group) Co., Ltd.
Raw material &supplementary materials& spare parts
1,013.53
796.46
Benxi New Career Development Co., Ltd. Energy & Power
38.37
40.25
Dalian Boluole Steel Tube Co., Ltd. Products1,136.33
404.87
Liaoning Bengang Steel & Iron Trading Co.,Ltd.
Products
Benxi Steel & Iron (Group) General Hospital Energy & Power
5.09
Benxi Steel & Iron (Group) ZhengtaiConstruction Materials Co., Ltd.
Energy & Power
2.16
5.22
Liaoning Hengtong Metallurgical EquipmentManufacture Co., Ltd.
Energy & Power
Liaoning Hengtong Metallurgical EquipmentManufacture Co., Ltd.
Raw material &supplementary materials& spare parts
731.86
2,444.76
Liaoning Hengtong Metallurgical EquipmentManufacture Co., Ltd.
Products
908.89
352.89
Bengang Cold-
Dandong Co., Ltd.
Raw material &supplementary materials& spare parts
46.59
Bengang Cold-
| rolled Stainless Steel |
| rolled Stainless Steel |
Dandong Co., Ltd.
Products2,716.09
111.16
Suzhou Bengang Industrial Co., Ltd. Products49,983.82
41,269.54
Bengang Group Finance Co., Ltd. Energy & Power
1.3
1.39
Bengang Group Co., Ltd. Energy & Power
7.33
2.78
Bengang Group Co., Ltd.
Raw material &supplementary materials
1,539.32
Name
The content of related partytransactions
2020 2019& spare parts
Ltd.
products
29.54
Notes:
The pricing policy is based on the transaction content and pricing principles specified in the "Raw Material andService Supply Agreement" and "Land Use Right Leasing Contract" and supplementary agreements entered intobetween the Company and Bengang Group and Benxi Steel and Iron (Group) Co., Ltd. The main pricing principleis that if there is a market price, the market price will be used. If there is no market price, then the full cost plus thenational additional tax plus a reasonable profit will be used as the pricing standard.
2. Lease information of related parties
Operating LeaseCompany as the lessor
Currency unit: YuanLessee Lease capital category Lease income of 2020 Lease income of 2019
Liaoning Hengtai Heavy Machinery Co.,Benxi Steel & Iron(Group) Steel & IronProcess and Logistics
Co., Ltd.
Warehouse andancillary facilities
500,000.00 500,000.00
| Benxi Steel & Iron (Group) Steel & Iron Process and Logistics |
| Benxi Steel & Iron (Group) Machinery |
Manufacture Co., Ltd.
Plants and ancillaryfacilities
122,500.03
Company as the lessee
Currency unit: YuanLessor Lease capital category
Leasecharges of
2020
Lease charges of2019
(Group) Co., Ltd
Land use right7,669,068.17 sq.m.
Land use right
42,920.00 sq.m
57,383,355.31 54,984,486.36
| Benxi Steel & Iron |
| Benxi Steel & Iron |
(Group) Co., Ltd
2300 Hot rolling product line,related real estate
16,711,424.34 167,859,103.82
Benxi Beiying Steel &Iron (Group) Co., Ltd.
1780 Hot rolling product line,related real estate
15,578,677.65 83,686,698.60Bengang
Ltd.
Land use right728,282.30 sq.m.
9,945,423.08 4,972,711.56
Notes:
1. According to the "Land Use Right Leasing Contract" and subsequent supplementary agreements signed
between the Company and Bengang Steel (Group)on April 7, 1997, December 30, 2005 and subsequent, theCompany leases land from Benxi Steel (Group), with a monthly rent of 0.594 yuan per square meter. The leasedland is 7,669,068.17 square meters and the annual rent is 54,665.10 thousand yuan.
2. On August 14, 2019, the Company signed the "House Lease Agreement" with Benxi Steel (Group) and
Beiying Iron and Steel Company, and leased the houses and auxiliary facilities occupied by the 2300 hot rollingmill production line and the 1780 hot rolling mill production line. The lease term of the houses and ancillaryfacilities is until December 31, 2038.
3. On July 15, 2019, the Company signed "Land Lease Agreement" with Bengang Group and Bengang Steel
(Group) respectively, leased and used a total of 8 pieces of land from Bengang Group and Bengang GroupCompany, with leased areas of 42,920.00 square meters and 728,282.30 square meters. The lease term is 20years, the rental price is 1.138 yuan per square meter per month.
Notes of Financial LeasingDuring the reporting period, the Company purchased equipment from Liaoning Hengyi Financial Leasing Co.,Ltd. in the form of financial leasing. The annual purchase amount (including tax) in 2020 was RMB933,008,875.20, and interest and handling fees were RMB 43,807,781.54.
3. Information of Guarantee among related parties
Company as the warranteeWarrantor Amount of guarantee
Starting dateof Guarantee
Ending date of
Guarantee
Has the guarantee
been fulfilled
Group Co.,
Bengang Group
Co., Ltd.
RMB 15,000,000,000.00 2020/8/13 2022/8/12 No
| Bengang Group |
| Bengang Group |
Co., Ltd.
RMB 500,000,000.00 2020/6/19 2021/6/18 No
Co., Ltd.
RMB 310,000,000.00 2020/5/26 2021/5/25 No
| Bengang Group |
| Bengang Group |
RMB 670,000,000.00 2020/5/26 2021/5/25 No
Co., Ltd.
Co., Ltd.
RMB 400,000,000.00 2020/10/20 2021/10/19 No
| Bengang Group |
| Bengang Group |
Co., Ltd.
RMB 1,280,000,000.00 2020/11/5 2021/11/4 No
Co., Ltd.
RMB 400,000,000.00 2020/10/28 2021/10/27 No
| Bengang Group |
| Bengang Group |
Co., Ltd.
RMB 1,800,000,000.00 2020/12/1 2021/12/1 No
Co., Ltd.
RMB 6,024,000,000.00 2020/3/17 2021/3/17 NoBenxi Steel & Iron(Group) Co., Ltd.
RMB 5,024,000,000.00 2020/11/4 2021/11/4 No
Bengang GroupBengang Steel
Plates Co., Ltd
RMB 250,000.00 2020/5/25 2021/5/25 No
| Bengang Steel |
| Bengang Steel |
Plates Co., Ltd
RMB 490,000.00 2020/8/20 2021/8/20 NoBengang SteelPlates Co., Ltd
RMB 200,000,000.00 2020/12/24 2021/12/24 No
Co., Ltd. and Benxi
| Steel & Iron |
(Group) Co., Ltd.
RMB 70,000,000.00 2016/3/30 2025/3/20 No
Bengang GroupCo., Ltd. and Benxi
(Group) Co., Ltd.
RMB 430,000,000.00 2017/2/27 2025/2/20 No
| Steel & Iron |
| Bengang Group |
Co., Ltd.
RMB 622,600,000.00 2017/12/15 2024/8/20 No
Co., Ltd.
RMB 87,280,000.00 2018/3/26 2024/6/21 No
Bengang GroupCo., Ltd.
RMB 24,620,000.00 2017/11/15 2021/12/21 No
Co., Ltd.
RMB 30,560,000.00 2015/6/25 2021/9/21 No
| Bengang Group |
| Bengang Group |
Co., Ltd.
RMB 24,000,000.00 2015/12/9 2022/3/21 No
Co., Ltd.
EUR 166,579.87 2015/6/25 2025/9/30 No
| Bengang Group |
| Bengang Group |
Co., Ltd.
EUR 5,691,165.00 2015/8/20 2025/9/30 No
Co., Ltd.
EUR 407,161.22 2015/6/25 2026/4/30 No
| Bengang Group |
| Bengang Group |
Co., Ltd.
EUR 4,984,751.64 2015/12/28 2026/4/30 No
Co., Ltd.
EUR 2,077,667.88 2016/12/14 2026/4/30 No
| Bengang Group |
| Bengang Group |
Co., Ltd.
EUR 6,162.48 2015/6/25 2026/4/30 No
Co., Ltd.
EUR 4,069.11 2015/12/28 2026/4/30 No
| Bengang Group |
| Bengang Group |
Co., Ltd.
EUR 779,734.95 2017/6/30 2025/10/31 NoBengang GroupCo., Ltd.
EUR 2,733,223.28 2016/6/27 2020/4/30 No
Co., Ltd.
EUR 334,941.21 2015/6/25 2025/6/30 No
| Bengang Group |
| Bengang Group |
Co., Ltd.
EUR 9,577,728.02 2015/6/25 2025/6/30 No
Co., Ltd.
EUR 294,013.70 2015/12/28 2025/6/30 No
| Bengang Group |
| Bengang Group |
EUR 7,585,942.33 2015/6/25 2025/10/31 No
Co., Ltd.
Co., Ltd.
EUR 3,271,319.20 2015/12/28 2025/10/31 No
| Bengang Group |
| Bengang Group |
Co., Ltd.
EUR 8,390,619.39 2015/6/25 2025/8/31 No
Co., Ltd.
EUR 180,800.00 2015/12/28 2025/8/31 No
| Bengang Group |
| Bengang Group |
Co., Ltd.
EUR 609,296.41 2015/6/25 2025/8/31 No
Co., Ltd.
JPY 162,232,000.00 1997/10/10 2027/9/10 NoBenxi Steel & Iron(Group) Co., Ltd.
RMB 12,000,000,000.00 2019/3/16 2021/9/3 No
Bengang GroupBengang Group
Co., Ltd.
RMB 740,000,000.00 2020/1/8 2021/1/8 No
4. Asset transfer and debt restructuring of related parties
Currency unit: Yuan
Related Party
Relatedtransactioncontent
Current Amount(Excluding tax)
Amount of last period(Excluding tax)
Benxi Steel & Iron (Group) Co., Ltd.
Purchase of 2300hot rolling millproduction line
3,004,988,590.00
Benxi Beiying Steel & Iron (Group) Co., Ltd.
Purchase of 1780hot rolling millproduction line
684,727,905.00
Notes:
On August 14, 2019, the Company signed the "Asset Transfer Agreement" with Benxi Steel (Group) and BeiyingSteel, respectively, to acquire the related equipment assets of the 2300mm hot rolling mill production line held
by Benxi Steel (Group) and the 1780mm held by Beiying Steel.
5.Remuneration of key management personnel
(In 10 Thousand Yuan)Name 2020 2019
personnel
309.04 302.23
6. Other related party transactions
(1) Loan from and deposits in Bengang Group Finance Co., Ltd.
(In 10 Thousand Yuan)
Item Beginning balance Increase Decrease Ending balance NotesDeposits 1,364,312.51 17,703,820.82
Remuneration of key management
17,735,933.55
1,332,199.78
1. The interests income of deposits of Bengang Group Finance Co., Ltd. is RMB 308,242.3 thousand in
2020. As at 31 December 2020, the interest receivable from Bengang Group Finance Co., Ltd. is RMB87,919.8 thousand.
2. As at 31 December 2020, the restricted deposits in Bengang Group Finance Co., Ltd. is RMB
2,408,822.8 thousand.
3. In 2020, the company and its subsidiaries did not borrow money from financial companies.
4. Bengang Group Finance Co., Ltd. granted the Company an unsecured credit line of RMB 4.5 billion in
2020. The amount of acceptance bill issued by Bengang Group Finance Co., Ltd. was RMB 4.077 billionin 2020. As of December 31, 2020, the amount of acceptance bills that the Company entrusted FinanceCompany had issued and not yet paid was RMB 2.409 billion, with a margin ratio of 100.00%.
(2) The company's loan and interest payment to Benxi Steel and Iron (Group) Co., Ltd.
(In 10 Thousand yuan).Item Beginning balance Increase Decrease Ending balanceCapital lending 7,500.00
7,500.00
Total 7,500.00
7,500.00
Notes: In 2020, the interest accrued is RMB 3,545,625.00, and as of 31 December 2020, the Company has no interestthat has not been paid.
6. Receivables and payables of the related parties
1、Receivables of the Company
(in 10 thousand yuan)
Items Name
20201231 20191231Carryingamount
Provisionfor baddebts
Carryingamount
Provisionfor bad
debtsAccountsreceivablefinancing
(Group) Co., Ltd.
230,217.55
| Benxi Beiying Steel & Iron |
-
42,342.56
-
Benxi Steel & Iron (Group) Co.,Ltd.
81.99
-
402.17
-
Zhejiang Bengang Jingrui SteelProcessing Co., Ltd.
-
-
400.00
-
AccountsReceivable
Bengang Group International
Economic and Trading Co., Ltd.
10,463.45
| Bengang Group International |
104.63
5,892.34
58.92
| Benxi Steel & Iron (Group) Thermal Power Development |
Co., Ltd.
2,692.94
26.93
1,301.32
13.01
Bengang Cold-
Steel Dandong Co., Ltd.
188.46
| rolled Stainless |
1.88
188.80
1.89
| Benxi Steel & Iron (Group) |
Metallurgy Residues Co., Ltd.
0.10
-
0.14
-
Ltd.
-
| Benxi Steel & Iron (Group) Machinery Manufacture Co., |
-
7.70
0.08
Prepayments
Bengang Group International
Economic and Trading Co., Ltd.
114,662.12
| Bengang Group International |
-
-
-
| Benxi Steel & Iron (Group) Machinery Manufacture Co., |
Ltd.
6,470.61
-
3,559.63
-
Benxi Beiying
(Group) Co., Ltd.
-
| Steel & Iron |
-
93,762.24
-
Otherreceivables
Bengang Group International
Economic and Trading Co., Ltd.
601.21
| Bengang Group International |
-
432.77
0.20
Items Name
20201231 20191231Carryingamount
Provisionfor baddebts
Carryingamount
Provisionfor baddebts
Benxi Steel & Iron (Group) Real-estate Development Co., Ltd.
278.31
253.84
270.17
246.52
Zhengtai Construction MaterialsCo., Ltd.
27.05
| Benxi Steel & Iron (Group) |
19.96
24.60
12.30
Liaoning Metallurgy TechnicianCollege
5.80
5.80
5.80
5.80
| Benxi Steel & Iron (Group) |
Medical Services Department;
-
-
94.75
85.27
Industrial Development Co., Ltd.
-
| Benxi Steel & Iron (Group) |
-
0.02
-
Other non-current assets
Liaoning Hengyi Financial
Leasing Co., Ltd.
86,459.06 58,419.72
2、 Payables of the Company
(in 10 thousand yuan)Items Name 2020.12.31 2019.12.31Notes payable
Bengang GroupInternationalEconomic and TradingCo., Ltd.
345,103.76
Liaoning Hengyi Financial
| Benxi Steel & Iron (Group) Mining Co., |
Ltd.
91,857.00
69,292.59
and Gas Co., Ltd.
6,414.33
| Bengang Electronics |
2,285.78
| Benxi Steel & Iron (Group) Industrial |
Development Co., Ltd.
5,253.76
3,203.52
Items Name 2020.12.31 2019.12.31
Financial Leasing Co.,Ltd.
4,602.43
| Liaoning Hengyi |
1,758.01
| Liaoning Hengtong |
MetallurgicalEquipmentManufacture Co., Ltd.
868.28
| Benxi Steel & Iron (Group) Machinery |
Manufacture Co., Ltd.
255.94
186.51
Technician College
133.27
| Liaoning Metallurgy |
195.91
| Liaoning Hengtai |
Heavy Machinery Co.,Ltd.
84.78
| Liaoning Metallurgy Vocational Technical |
College
47.90
43.55
Residues Co., Ltd.
16.62
| Benxi Steel & Iron (Group) Metallurgy |
Benxi Beiying Steel &Iron (Group) Co., Ltd.
508,775.58
(Group) Real-estateDevelopment Co., Ltd.
684.81
| Benxi Steel & Iron |
Co., Ltd.
189.02
| Benxi Steel & Iron (Group) Information and Automatic Tech |
Bengang Cold-rolled
Dandong Co., Ltd.
71.84
| Stainless Steel |
Ltd.
14.82
| Benxi Steel & Iron (Group) Construction and Repairing Co., |
13.05
| Benxi Steel & Iron (Group) Construction |
Items Name 2020.12.31 2019.12.31
Co., Ltd.
Benxi High-tech
Manufacture Co., Ltd.
5.71
| Drilling Tools |
Accountspayable
Ltd.
20,807.68
| Benxi Steel & Iron (Group) Mining Co., |
8,524.77
| Liaoning Hengyi |
Financial Leasing Co.,Ltd.
5,799.10
| Benxi Steel & Iron (Group) Construction and Repairing Co., |
Ltd.
5,182.75
4,443.69
Benxi Beiying Steel &Iron (Group) Co., Ltd.
3,172.95
Co., Ltd.
2,394.63
| Benxi Steel & Iron (Group) Construction |
10,331.91
| Liaoning Hengtai |
Heavy Machinery Co.,Ltd.
2,171.25
3,246.28
and
| Automatic Tech |
Co., Ltd.
1,852.50
6,567.06
Residues Co., Ltd.
1,645.14
| Benxi Steel & Iron (Group) Metallurgy |
1,033.48
| Bengang Electronics |
and Gas Co., Ltd.
1,500.74
1,149.26
Technician College
1,388.84
| Liaoning Metallurgy |
724.86
| Liaoning Hengtong |
MetallurgicalEquipmentManufacture Co., Ltd.
1,297.91
1,487.15
Items Name 2020.12.31 2019.12.31
Ltd.
1,246.38
| Bengang Group Co., |
3,148.91
| Benxi Steel & Iron (Group) Machinery |
Manufacture Co., Ltd.
964.33
1,143.65
Liaoning Metallurgy
College
746.81
| Vocational Technical |
671.93
Bengang Cold-rolled
| Stainless Steel |
Dandong Co., Ltd.
616.72
521.64
InternationalEconomic and TradingCo., Ltd.
579.53
| Bengang Group |
70,193.27
| Benxi New Career |
Development Co., Ltd.
415.37
292.66
Development Co., Ltd.
385.20
| Benxi Steel & Iron (Group) Industrial |
11,311.75
| Benxi Steel & Iron (Group) Thermal Power Development |
Co., Ltd.
178.73
144.24
ConstructionSupervision Co., Ltd.
65.51
| Benxi Iron and Steel (Group) Engineering |
16.28
| Benxi Steel & Iron |
(Group) Real-estateDevelopment Co., Ltd.
61.52
62.65
Benxi High-tech
Manufacture Co., Ltd.
38.60
| Drilling Tools |
33.77
| Benxi Steel & Iron |
(Group) ZhengtaiConstructionMaterials Co., Ltd.
0.24
0.24
2.04
| Benxi Steel & Iron (Group) Medical |
Items Name 2020.12.31 2019.12.31
Services Department;
Advance from customers
Industrial Co., Ltd.
5,374.03
| Suzhou Bengang |
1,635.62
Dalian Boluole SteelTube Co., Ltd.
181.60
85.93
| Benxi Steel & Iron (Group) Metallurgy |
Residues Co., Ltd.
161.66
126.57
Development Co., Ltd.
55.77
| Benxi Steel & Iron (Group) Industrial |
35.79
Liaoning HengtongMetallurgicalEquipmentManufacture Co., Ltd.
52.81
82.00
| Bengang Group |
InternationalEconomic and TradingCo., Ltd.
43.70
| Benxi Steel & Iron (Group) Steel & Iron Process and Logistics |
Co., Ltd.
1,582.14
Other payables
Benxi Steel & Iron(Group) Co., Ltd.
13,013.80
18,278.27
Co., Ltd.
1,681.17
| Benxi Steel & Iron (Group) Steel & Iron Process and Logistics |
InternationalEconomic and TradingCo., Ltd.
1,277.85
| Bengang Group |
1,432.74
| Benxi Steel & Iron |
(Group) Thermal
Co., Ltd.
561.73
| Power Development |
437.69
Items Name 2020.12.31 2019.12.31
Co., Ltd.
436.25
| Benxi Steel & Iron (Group) Construction |
526.14
Guangzhou Free Trade
| Zone Bengang Sales |
Co., Ltd.
267.44
267.44
Liaoning HengyiFinancial Leasing Co.,Ltd.
208.60
0.39
Development Co., Ltd.
197.61
| Benxi New Career |
223.84
| Benxi Steel & Iron |
(Group) Real-estateDevelopment Co., Ltd.
143.59
143.59
Development Co., Ltd.
31.33
| Benxi Steel & Iron (Group) Industrial |
30.42
| Liaoning Metallurgy |
Technician College
1.34
1.34
Manufacture Co., Ltd.
1.01
| Benxi Steel & Iron (Group) Machinery |
1.01
| Bengang Group |
Finance Co., Ltd.
0.98
0.60
Benxi Beiying Steel &Iron (Group) Co., Ltd.
6.00
Non-current
Payables
Financial Leasing Co.,Ltd.
111,423.24
| Liaoning Hengyi |
51,693.94
11. Commitments and Contingencies
(1) Commitments
1. Lease contracts in progress or to be performed and their financial impacts
(1) According to the "Land Use Right Leasing Contract" and subsequent supplementary agreements signed
by the company and Benxi Steel (Group) on April 7, 1997, December 30, 2005, the Company leased landfrom Benxi Steel (Group). The monthly rent is 0.594 yuan per square meters, the leased land area is7,669,068.17 square meters, and the annual rent is 54,665,100 yuan.
（2）On August 14, 2019, the Company signed the "House Lease Agreement" with Benxi Steel (Group)
and Beiying Steel respectively, leasing the houses and auxiliary facilities occupied by 2300 and 1780 hotrolling mill production lines, and the lease term ends on December 31, 2038. The rental fee is based on thedepreciation of the original rent value and the national additional tax, plus reasonable profit negotiation.The estimated annual rent is not more than 20 million yuan and 18 million yuan respectively. The rental feeis settled and paid monthly. This related party transaction has been reviewed and approved at the fourthmeeting of the eighth board of directors of the Company.
(3) On July 15, 2019, the Company signed "Land Lease Agreement" with Bengang Group and Benxi Steel
(Group) respectively, and leased and used a total of 8 pieces of land of the two companies. The lease areasare 42,920.00 square meters and 728,282.30 square meters respectively, with a lease term of 20 years, anda rental price of 1.138 yuan per square meter per month. After the agreement comes into effect, consideringthe national law and policy adjustments every five years, both parties should determine whether the rentneeds to be adjusted according to the pricing basis stipulated in Article 2 of this agreement. This relatedparty transaction has been reviewed and approved at the third meeting of the eighth board of directors ofthe company.
(4) As of December 31, 2020, the amount of financial lease contracts that the Company and Liaoning Hengyi
Financial Leasing Co., Ltd. had signed but had not yet started to execute was 0.806 billion yuan.
2. Irrevocable letter of credit
As at December 31, 2020, the amount of irrevocable letter of credit that was not fulfilled was 1.21 billion
yuan.
(2) Contingencies
At the balance sheet date, no significant contingencies need to be disclosed.
12. Subsequent events
(1) Important non-adjustment matters
None
(2) Profit Distribution
Profit ordividend to bedistributed
On April 26, 2021, the seventeenth meeting of the eighth board of directors of thecompany passed the 2020 dividend distribution plan. It is planned to use the totalshare capital of 3,875,371,532 shares at the end of 2020 as the base number todistribute a cash dividend of 0.1 yuan for every 10 shares to all shareholdersIncluding tax), a total of 38,753,715.32 yuan of cash dividends will be distributed.This distribution will not be converted from capital reserves to share capital. Theabove profit distribution plan needs to be reviewed and approved by the generalmeeting of shareholders.
(3) Sales Return
Not applicable.
(4) Divided into assets held for sale and disposal portfolio
Not applicable.
(5) Other subsequent events
Not applicable.
13. Other significant events
(1) Correction of previous accounting errors
None
(2)Debt restructuringNone
(3)Asset replacementNone
(4)Termination of businessNone
(5) Segment information
Since the Company's main product is steel, other products account have a small proportion of sales,the main production base is in Liaoning, and the disclosure of the segment report is not applicable.
(6) Other important matters that have an impact on investor decisions
1. Financial leasing matters
In order to optimize the debt structure and broaden the financing channels, the Company signed the"Financial Leasing Cooperation Framework Agreement" with Liaoning Hengyi Financial LeasingCo., Ltd. in 2018. The financing amount is not more than RMB 5 billion per year. The Companyobtains funds through financing after-sales leaseback. The lease interest rate is not higher than thebenchmark loan interest rate announced by the People's Bank of China for the same period. Thelease interest rate during the lease period is dynamically adjusted with the changes in the benchmarkinterest rate announced by the People's Bank of China. The ratio of lease deposit is not higher than
30% of the lease principal amount.
2. The controlling shareholder pledges the Company's shares
As of the balance sheet date, the Company's controlling shareholder Benxi Iron and Steel (Group)Co., Ltd. held 2,409,628,094 shares of the Company, of which 712,545,000 shares were in pledgedstatus and 102,100,000 shares were in restricted sales and frozen status.
3. Major strategic restructuring of indirect controlling shareholders
The company received a notice from Bengang Group, the controlling shareholder of the parent company, and learnedthat Ansteel Group Co., Ltd. is planning to reorganize the Bengang Group, which may lead to changes in thecompany's control. As of the audit report, the restructuring is still in the planning stage, and after the plan isdetermined, the approval of the relevant departments is still required.
14. Notes to the financial statements of parent company
1. Accounts receivable
(1) Accounts receivable disclosed by aging
Items 201201231 20191231Within 1 year (inclusive)283,561,303.90 339,851,051.52
1-2 years (inclusive)2,420,511.80 31,642,073.272-3 years (inclusive)6,500,255.55 24,708,264.04Over 3 years177,111,797.34 175,744,519.91Sub-total469,593,868.59 571,945,908.74
debts
179,728,406.39 182,948,800.28
Total:
289,865,462.20 388,997,108.46
(2) Accounts receivable disclosed by category
Items
20201231 20191231Carrying amount Provision for bad debts
Book value
Carrying amount Provision for bad debts
Book valueAmount
Percentage (%)
Amount
Baddebts
Amount
| ratio (%) | Percentage |
(%)
Amount
ratio (%)
Provision forBad Deptindividually
47,762,337.18 10.17 47,762,337.18 100.00 47,762,337.18 8.35 47,762,337.18 100.00Provision forBad Dept byportfolio
421,831,531.41 89.83 131,966,069.21 31.28 289,865,462.20 524,183,571.56 91.65 135,186,463.10 25.79 388,997,108.46Include:
Portfolio 1:
Aging
245,720,903.60 52.33 131,966,069.21 53.71 113,754,834.39 268,981,818.03 47.03 135,186,463.10 50.26 133,795,354.93Portfolio2:Combinedrelated party
176,110,627.81 37.50 176,110,627.81 255,201,753.53 44.62 255,201,753.53Total 469,593,868.59 100.00 179,728,406.39 289,865,462.20 571,945,908.74 100.00 182,948,800.28 388,997,108.46
Accounts receivable tested for impairment individually
Items
20201231Accounts receivable
Provision for
bad debts
Bad debtsratio（%）
ReasonBenxi Nanfen Xinhe MetallurgicalCo., Ltd.
47,762,337.18 47,762,337.18 100.00
Xinhe
| has halt |
operation.Total 47,762,337.18 47,762,337.18
Accounts receivable tested for impairment by portfolio:
Portfolio tested by aging
Items
20201231Carrying amount Provision for bad debts Bad debts ratio (%)Within 1 year 107,450,676.091,074,506.76 1.00
1-2 years 2,420,511.80 242,051.18 10.002-3 years 6,500,255.55 1,300,051.11 20.00Over 3 years 129,349,460.16 129,349,460.16 100.00Total 245,720,903.60 131,966,069.21
(3) Information of provision, reversal or recovery of bad debts of current period.
The amount of bad debt provision reversed in the current period is 3,220,393.89 yuan
(4) No accounts receivable has been written off this year.
(5) Top five debtors at the year-end
Company
20201231Amount
Percentage of totalaccounts receivable (%)
Provision for
bad debtsThe first176,110,627.81 37.50The second
56,158,745.71 11.96 561,587.46The third47,762,337.18 10.17 47,762,337.18The fourth26,929,400.04 5.73 269,294.00The fifth
9,008,967.00 1.92 9,008,967.00Total315,970,077.74 67.28 57,602,185.64
(6) There is no accounts receivable derecognized due to the transfer of financial assets in the current
period.
(7) There is no assets and liabilities formed by continued involvement due to the
transfer of Account receivables.
3. Accounts receivable financing
(1) Details of accounts receivable financing
Items 20201231 20191231Notes receivable4,143,431,412.08 2,193,319,842.60
acceptance bill
1,876,753,316.46 2,184,526,834.33Commercialacceptance bill
2,266,678,095.62 8,793,008.27Total4,143,431,412.08 2,193,319,842.60Other information: The "receivable financing" item reflects the notes and accounts receivable that are measured atfair value at the balance sheet date and whose changes are included in other comprehensive income.
(2) Acceptance bills pledged by the company at the end of the period
Items Pledged amountBank acceptance bill484,093,073.28Commercial acceptance bill403,379,971.01
Total887,473,044.29
(3) Acceptance bills have been endorsed or discounted by the company and have not expired
at the year endItems Derecognized amount Not derecognized amountBank acceptance bill 13,819,427,581.34Commercial acceptance bill 2,230,183,094.41
Total 13,819,427,581.34 2,230,183,094.41
(4) There are no bills converted into accounts receivable due to the failure of the issuer to
perform the contract at the end of the period.
4. Other receivables
Item 20201231 20191231Interest receivables 23,028,942.73 19,658,230.77Dividend receivablesOther receivables 228,379,193.99 247,005,005.04
Total 251,408,136.72 266,663,235.81
1. Interest receivables
(1) Interest receivable disclosed by category
Items 20201231 20191231
Deposit interest 23,028,942.73 19,658,230.77Subtotal 23,028,942.73 19,658,230.77Less: provision for bad debt
Total 23,028,942.73 19,658,230.77
(2) There is no significant provision for overdue interest and bad debt provision.
2. Other receivables
(1) Other receivables disclosed by aging
Items Ending balance Beginning balanceWithin 1 year (inclusive)53,898,656.03 115,480,359.05
1-2 years (inclusive)47,649,189.02 15,711,856.932-3 years (inclusive)13,842,023.46 3,479,413.59Over 3 years180,717,695.14 177,724,723.88
Sub-total296,107,563.65 312,396,353.45
debts
67,728,369.66 65,391,348.41
Total:
228,379,193.99 247,005,005.04
(2) Provision for bad debt provision
Provision for bad debts
Less: Provision for badStage one
| Stage one | Stage two | Stage three |
Total12-monthexpected credit
losses
Lifetimeexpected creditlosses (no credit
impairment)
Lifetimeexpectedcredit losses
(creditimpairment
| occurred) | ||||
| Beginning balance | 9,179,698.89 | 56,211,649.52 | 65,391,348.41 |
Beginning balance in
| current period | ||||
| --Transfer to Stage two | ||||
| --Transfer to Stage three | -768,390.73 | 768,390.73 | ||
| --Reversal to Stage two | ||||
| --Reversal to Stage one | 6,592.60 | -6,592.60 | ||
| Current period provision | 801,959.46 | 2,816,265.56 | 601,252.83 | 4,219,477.85 |
| Current period reversal | 6,207.34 | 6,207.34 | ||
| Current period write-back | 1,745,713.37 | 130,535.89 | 1,876,249.26 | |
| Current period write-off | ||||
| Other change |
Provision for bad debts
| Stage one | Stage two | Stage three |
Total12-monthexpected credit
losses
Lifetimeexpected creditlosses (no credit
impairment)
Lifetimeexpectedcredit losses
(creditimpairment
| occurred) | ||||
| Ending balance | 802,344.72 | 9,475,267.75 | 57,450,757.19 | 67,728,369.66 |
Changes of other receivables
Provision for bad debts
| Stage one | Stage two | Stage three |
Total12-monthexpected creditlosses
Lifetimeexpected creditlosses (no creditimpairment)
Lifetimeexpectedcredit losses
(creditimpairment
| occurred) | ||||
| Beginning balance | 232,528,777.63 | 23,655,926.30 | 56,211,649.52 | 312,396,353.45 |
Beginning balance in
| current period | ||||
| --Transfer to Stage two | ||||
| --Transfer to Stage three | -1,369,740.15 | 1,369,740.15 | ||
| --Reversal to Stage two | ||||
| --Reversal to Stage one | 14,813.42 | -14,813.42 | ||
| Current period increase | 149,569,647.91 | 6,006,395.62 | 5.00 | 155,576,048.53 |
Current period
163,877,950.90 7,856,351.54 130,535.89 171,864,838.33
| derecognition | ||||
| Other change | ||||
| Ending balance | 218,235,288.06 | 20,421,416.81 | 57,450,858.78 | 296,107,563.65 |
(4) Provision for bad debts accrued, reversed or recovered in the current period.
(5) There is no other accounts receivable actually written off in the current period.
(6) Other receivables disclosed by nature
Nature 20201231 20191231Receivable and payable 288,295,814.93 304,483,575.55Other 7,811,748.72 7,912,777.90
Total 296,107,563.65 312,396,353.45
(7) Top five debtors at the year-end
Company Nature or content Amount Aging
Percentage of totalother receivables(%)
Provision forbad debtsThe First Receivable and payable 23,677,915.37
Within 1year:18,348,177.57Remaining：1-2
years
8.00
449,968.67
The Second Receivable and payable 5,492,200.00
Within 1 year 1.85 54,922.00
The Third
Receivable and payable
2,446,897.43
Within 1 year to 3
years
0.83
2,202,207.69
The Fourth
Receivable and payable
2,261,360.00
Over 3 years
0.76
2,261,360.00
The Fifth Receivable and payable 2,123,692.31
2-3years
0.72
424,738.46
Total
36,002,065.11
12.16
5,393,196.82
（8）No other receivables involving government subsidies in the current period.
（9）There are no other receivables derecognized due to the transfer of financial assets in the
current period.
（10）No assets and liabilities formed by continued involvement due to the transfer of other
receivables in the current period.
5. Long-term equity investment
Items
| Ending balance | Beginning balance |
Carrying
Impairme
| amount | nt |
Book value Carrying amount
Impair
Book value
| ment | ||||||
| Subsidiaries | 2,016,281,902.16 | 2,016,281,902.16 | 2,016,281,902.16 | 2,016,281,902.16 | ||
| Joint Venture | ||||||
| Total | 2,016,281,902.16 | 2,016,281,902.16 | 2,016,281,902.16 | 2,016,281,902.16 |
Details of investment in subsidiaries
Name of entity Beginning balance Increase Decrease
Endingbalance
Impairment ofcurrentperiod
Endingbalanceofimpairm
| ent | ||
| Guangzhou Bengang |
Steel & Iron Trading Co.,
30,000,000.00 30,000,000.00
| Ltd. |
| Shanghai Bengang Metallurgy Science and Technology Co., Ltd. |
30,000,000.00 30,000,000.00Bengang
529,899,801.38 529,899,801.38
| Steel Plates Liaoyang Pellet Co., Ltd. |
| Dalian Benruitong Automobile Material Technology Co., Ltd. |
65,000,000.00 65,000,000.00Bengang POSCO Cold-
1,019,781,571.10 1,019,781,571.10
| rolled Sheet Co., Ltd. |
| Changchun Bengang |
Steel & Iron Sales Co.,
28,144,875.36 28,144,875.36
| Ltd. |
| Harbin Bengang Economic and Trading Co., Ltd. |
29,923,398.23 29,923,398.23
2,081,400.65 2,081,400.65
| Nanjing Bengang Materials Sales Co., Ltd. |
| Wuxi Bengang Steel & Iron Sales Co., Ltd. |
29,936,718.57 29,936,718.57
1,095,711.66 1,095,711.66Yantai Bengang Steel &
| Xiamen Bengang Steel & Iron Sales Co., Ltd. |
| Iron Sales Co., Ltd. |
49,100,329.41 49,100,329.41Tianjin Bengang Steel &
60,318,095.80 60,318,095.80
Name of entity Beginning balance Increase Decrease
Endingbalance
Impairme
nt ofcurrentperiod
Endingbalance
ofimpairm
| ent | ||
| Benxi Bengang Steel Sales Co., Ltd |
5,000,000.00 5,000,000.00
30,000,000.00 30,000,000.00
| Shenyang Bengang Metallurgical Science and Technology Co., Ltd. |
| Chongqing Liaoben |
Steel & Iron Trade Co.,
30,000,000.00 30,000,000.00
| Ltd. |
| Bengang Baojin (Shenyang) Automobile New Materials Technology Co., Ltd. |
76,000,000.00 76,000,000.00
| Total | 2,016,281,902.16 | 2,016,281,902.16 |
6. Operating Income and Operating Cost
Operating income and operating costItems
| 2020 | 2019 | |||
| Revenue | Cost | Revenue | Cost | |
| Principal business | 44,436,384,616.09 | 42,659,983,317.54 | 45,495,328,832.91 | 43,241,111,129.03 |
| Other business | 4,374,721,858.64 | 4,082,717,104.16 | 7,109,784,374.11 | 6,493,078,331.57 |
| Total | 48,811,106,474.73 | 46,742,700,421.70 | 52,605,113,207.02 | 49,734,189,460.60 |
Breakdown of operating income
| Items | Principal Business | Other Business |
| Classified by business area | 44,436,384,616.09 | 4,374,721,858.64 |
| Including |
：
| Domestic | 40,653,042,300.78 | 4,374,721,858.64 |
| Abroad | 3,783,342,315.31 |
Classified by the time of commodity
44,436,384,616.09 4,374,721,858.64
| Items | Principal Business | Other Business |
Including: recognize at a certain point
44,436,384,616.09 4,374,131,134.83
| in time | ||
| recognize over a certain period of time | 590,723.81 |
合计
| 44,436,384,616.09 | 4,374,721,858.64 |
7. Income on investment
Items 2020 2019Income from long-term equity investment (cost method) 27,594,915.42Dividend income obtained during the holding period of otherequity instrument investments
77,242.47
Total 77,242.47 27,594,915.42
15. Supplementary information
(1) Details of non-recurring profit and loss
Items Amount NotesProfit or loss from disposal of non-current assets -92,695,525.95Tax refund, reduction or exemption of unauthorized approval or noformal approval document
Government subsidy attributable to profit and loss of current period
normal business operation, meeting the regulation of national policy andenjoyed constantly in certain quota or quantity according to a certainstandard)
81,193,591.56Fund occupation fee charged to non-financial enterprises included incurrent profit and loss
The investment cost of an enterprise acquiring subsidiaries, associatesand joint ventures is less than the income from the fair value of theidentifiable net assets of the investee when obtaining the investment
Non-monetary asset exchange gains and lossesProfit or loss from investment or assets entrusted to othersProvision for asset impairment due to unavoidable factors such as naturaldisasters
Profit or loss from debt restructuring 32,800.02Restructuring costs, such as the cost of relocating employees, integrationcosts, etc.
Profits and losses in excess of fair value from unfair transactionSubsidiary companies arising from business combinations under thesame control
Profits and losses from contingencies are not related to the company'snormal business operations
Profits excluded effective hedging business related to the company'snormal business operations, from holding transactional financial assets,derivative financial assets, transactional financial liabilities, fair valuechanges in derivative financial liabilities, and disposal of transactional
(except such government subsidy closely related to the company'sfinancial assets and derivative financial assets, trading financial
liabilities, derivative financial liabilities and other debt investments
13,500,000.00
Items Amount NotesReversal of impairment provision for individually tested impairment ofreceivables
Profits and losses from external entrusted loansProfits and losses from changes in fair value of investment real estatethat use the fair value model for subsequent measurement
Profit and loss affected due to the adjustm
taxation, accounting and other laws and regulations
Trustee income from trust operationsOther non-operating revenue and expenditure other than above items 1,592,660.62Other non-recurring profit and lossSubtotal 3,623,526.25Impact of income tax -786,094.20Impact of minority interests -54,476.26
Total 2,782,955.79
(2) Net asset yield and earnings per share
Profit in the Reporting Period
Weighted averagenet assets yield (%)
Earnings per share (Yuan)Basic EPS Diluted EPSNet profit attributable to ordinary shareholders 1.90 0.099 0.099Net profit attributable to ordinary shareholdersafter deducting non-recurring profit and loss
1.88 0.098 0.098
(3) Differences between Domestic and Foreign Accounting Standards
（1）The differences in net profit and net assets in financial reports disclosed under International Financial
Reporting Standards and Chinese accounting standards
□ applicable √ not applicable
（2）The difference between net profit and net assets in financial reports disclosed under overseas accounting
standards and Chinese accounting standards
□ applicable √ not applicable
（3）Explanation of the reasons for differences in accounting data under domestic and foreign accounting
standards. If the data that has been audited by an overseas audit institution is adjusted for differences, thename of the overseas institution should be indicated.
(4) Others
XIII. Documents available for inspection
1, Financial Statements signed and stamped by the legal representative, CFO, and accounting manager;2, All of the original copies of documents and announcements that have been published on China Securities Journal,Securities Times, and Hong Kong Commercial Daily;3, Original copy of the Auditors’ Report under the seal of the CPA and signed by and under the seal of certifiedaccountants.