Bengang Steel Plates Co., Ltd.FINANCIAL STATEMENTS(From January to June 2019)
(Unaudited)
28 August 2019
INDEX | PAGES | ||
FINANCIAL STATEMENTS | |||
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AND STATEMENT OF FINANCIAL POSITION | 1-4 | ||
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND STATEMENT OF COMPREHENSIVE INCOME | 5-6 | ||
CONSOLIDATED STATEMENT OF CASH FLOWS AND STATEMENT OF CASH FLOWS | 7-8 | ||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AND STATEMENT OF CHANGES IN EQUITY | 9-12 | ||
NOTES TO THE FINANCIAL STATEMENTS | 1-98 |
Financial Statements Page 1
BENGANG STEEL PLATES CO., LTD.CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2019(Expressed in Renminbi unless otherwise indicated)
. | Notes | Ending balance | Beginning balance |
Current assets | |||
Cash at bank and on hand | 5(1) | 16,945,772,392.43 | 16,567,471,755.77 |
Settlement provisions | |||
Financial assets held for trading | |||
Financial assets at fair value through profit or loss | |||
Derivative financial assets | |||
Notes receivable | 5(2) | 4,518,016,226.76 | 3,580,145,843.38 |
Accounts receivable | 5 (3) | 614,718,839.21 | 639,482,481.45 |
Receivables financing | |||
Prepayments | 5 (4) | 1,314,464,404.93 | 1,321,537,514.78 |
Premium receivable | |||
Reinsurance accounts receivable | |||
Receivable deposit for reinsurance contract | |||
Other receivables | 5 (5) | 205,466,650.77 | 202,763,964.98 |
Including: Interest receivable | 13,872,107.84 | 11,608,705.43 | |
Dividend receivable | |||
Inventories | 5 (6) | 11,967,579,023.47 | 10,677,747,112.40 |
Non-current assets due within one year | |||
Other current assets | 5 (7) | 247,612,982.23 | 292,119,771.13 |
Total current assets | 35,813,630,519.80 | 33,281,268,443.89 | |
Non-current assets | |||
Available-for-sale financial assets | 5 (8) | 1,041,824,829.00 | |
Held-to-maturity investment | |||
Long-term receivables | |||
Long-term equity investments | 5 (9) | 2,481,589.04 | 2,455,681.55 |
Other equity investment | 5 (10) | 1,041,824,829.00 | |
Investment property | |||
Fixed assets | 5 (11) | 22,672,967,771.15 | 23,924,504,539.97 |
Construction in progress | 5 (12) | 1,374,410,959.70 | 836,594,457.82 |
Productive biological assets | |||
Oil and gas assets | |||
Intangible assets | 5 (13) | 274,783,708.74 | 278,062,441.04 |
Development expenditure | |||
Goodwill | |||
Long-term deferred expenses | |||
Deferred tax assets | 5 (14) | 175,524,513.32 | 191,452,547.21 |
Other non-current assets | 5 (15) | 68,303,165.35 | 76,341,975.35 |
Total non-current assets | 25,610,296,536.30 | 26,351,236,471.94 | |
Total assets | 61,423,927,056.10 | 59,632,504,915.83 |
The notes to the financial statements attached form part of these financial statements.
Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 2
BENGANG STEEL PLATES CO., LTD.CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Continued)
As at 30 June 2019(Expressed in Renminbi unless otherwise indicated)
Liabilities and equities | Notes | Ending balance | Beginning balance |
Current Liabilities | |||
Short-term loans | 5 (16) | 12,298,193,000.00 | 11,938,490,375.85 |
Financial liabilities at fair value through profit or loss | |||
Notes payable | 5 (17) | 11,650,282,357.86 | 10,013,192,014.02 |
Accounts payable | 5 (18) | 5,626,838,770.27 | 5,522,042,811.65 |
Advance from customers | 5 (19) | 3,345,451,646.56 | 3,331,854,098.42 |
Employee benefits payable | 5 (20) | 50,261,386.01 | 51,466,231.72 |
Current tax liabilities | 5 (21) | 62,888,848.55 | 515,752,369.68 |
Other payables | 5 (22) | 899,997,986.06 | 862,511,178.96 |
Including: Interest payables | 9,343,905.54 | 9,658,681.99 | |
Dividend payables | 193,768,576.60 | ||
Non-current liabilities due within one year | 5 (23) | 1,036,582,163.28 | 350,965,576.32 |
Other current liabilities | |||
Total current liabilities | 34,970,496,158.59 | 32,586,274,656.62 | |
Non-current liabilities | |||
Long-term loans | 5 (24) | 6,213,054,564.15 | 7,083,640,094.16 |
Bonds payable | |||
Including: Preferred stock | |||
Perpetual bond | |||
Long-term payables | 5 (25) | 52,733,529.65 | 13,686,705.92 |
Estimated liabilities | |||
Deferred income | 5 (26) | 248,232,002.97 | 289,499,002.97 |
Deferred tax liabilities | |||
Other non-current liabilities | |||
Total non-current liabilities | 6,514,020,096.77 | 7,386,825,803.05 | |
Total liabilities | 41,484,516,255.36 | 39,973,100,459.67 | |
Shareholders' equity: | |||
Share capital | 5 (27) | 3,875,371,532.00 | 3,875,371,532.00 |
Other equity instruments | |||
Including: Preferred stock | |||
Perpetual bond | |||
Capital reserves | 5 (28) | 12,343,209,847.29 | 12,343,209,847.29 |
Less: treasury shares | |||
Other comprehensive income | |||
Special reserves | 5 (29) | 21,013,956.29 | 683,937.71 |
Surplus reserves | 5 (30) | 961,105,529.85 | 961,105,529.85 |
General risk reserve | |||
Undistributed profits | 5 (31) | 2,205,328,308.98 | 1,945,887,269.82 |
Total equity attributable to equity holders of the parent company | 19,406,029,174.41 | 19,126,258,116.67 | |
Non-controlling interests | 533,381,626.33 | 533,146,339.49 | |
Total shareholder's equity | 19,939,410,800.74 | 19,659,404,456.16 | |
Total of liabilities and owners’ equity | 61,423,927,056.10 | 59,632,504,915.83 |
The notes to the financial statements attached form part of these financial statements.
Legal Representative: Chief Financial Officer: Chief Accountant
Financial Statements Page 3
BENGANG STEEL PLATES CO., LTD.STATEMENT OF FINANCIAL POSITION
As at 30 June 2019(Expressed in Renminbi unless otherwise indicated)
Assets | Notes | Ending balance | Beginning balance |
Current assets | |||
Cash at bank and on hand | 14,845,582,986.81 | 15,536,305,375.00 | |
Financial assets at fair value through profit or loss | |||
Notes receivable | 4,296,253,321.51 | 3,356,020,598.89 | |
Accounts receivable | 13(1) | 402,397,751.85 | 409,553,059.27 |
Receivables financing | |||
Prepayments | 1,292,855,972.17 | 1,309,194,738.97 | |
Other receivables | 13(2) | 228,691,383.89 | 235,037,391.46 |
Including: Interest receivable | 12,222,112.07 | 9,815,280.04 | |
Dividend receivable | |||
Inventories | 10,420,332,375.72 | 8,681,362,081.72 | |
Non-current assets due within one year | |||
Other current assets | 194,348,087.50 | 193,989,096.20 | |
Total current assets | 31,680,461,879.45 | 29,721,462,341.51 | |
Non-current assets | |||
Available-for-sale financial assets | 1,041,624,829.00 | ||
Held-to-maturity investment | |||
Long-term receivables | |||
Long-term equity investment | 13(3) | 2,016,281,902.16 | 2,016,281,902.16 |
Other equity investment | 1,041,624,829.00 | ||
Investment property | |||
Fixed assets | 20,954,291,845.88 | 22,035,187,328.57 | |
Construction in progress | 1,357,632,503.06 | 825,553,510.15 | |
Productive biological assets | |||
Oil and gas assets | |||
Intangible assets | 147,123,109.32 | 148,776,177.96 | |
Development expenditure | |||
Goodwill | |||
Long-term deferred expenses | |||
Deferred tax assets | 80,910,940.25 | 96,220,003.00 | |
Other non-current assets | 68,303,165.35 | 76,341,975.35 | |
Total non-current assets | 25,666,168,295.02 | 26,239,985,726.19 | |
Total assets | 57,346,630,174.47 | 55,961,448,067.70 |
The notes to the financial statements attached form part of these financial statements.
Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 4
BENGANG STEEL PLATES CO., LTD.STATEMENT OF FINANCIAL POSITION (Continued)
As at 30 June 2019(Expressed in Renminbi unless otherwise indicated)
Liabilities and shareholders' equities | Notes | Ending balance | Beginning balance |
Current liabilities | |||
Short-term loans | 10,998,193,000.00 | 10,624,270,375.85 | |
Financial liabilities at fair value through profit or loss | |||
Notes payable | 9,985,911,079.49 | 9,213,748,427.22 | |
Accounts payable | 6,566,943,730.51 | 5,940,816,426.48 | |
Advance from customers | 3,042,304,493.12 | 3,189,143,565.45 | |
Employee benefits payable | 49,866,464.88 | 49,378,095.47 | |
Current tax liabilities | 47,720,744.95 | 507,003,883.57 | |
Other payables | 689,660,196.29 | 538,051,513.13 | |
Including: Interest payables | 7,250,794.60 | 7,341,833.33 | |
Dividend payables | 193,768,576.60 | ||
Liabilities held for sale | |||
Non-current liabilities due within one year | 1,036,582,163.28 | 350,965,576.32 | |
Other current liabilities | |||
Total current liabilities | 32,417,181,872.52 | 30,413,377,863.49 | |
Non-current liabilities | |||
Long term loans | 6,213,054,564.15 | 7,083,640,094.16 | |
Bonds payable | |||
Including: Preferred stock | |||
Perpetual bond | |||
Long-term payables | 52,733,529.65 | 13,686,705.92 | |
Estimated liabilities | |||
Deferred income | 248,232,002.97 | 289,499,002.97 | |
Deferred tax liabilities | |||
Other non-current liabilities | |||
Total non-current liabilities | 6,514,020,096.77 | 7,386,825,803.05 | |
Total liabilities | 38,931,201,969.29 | 37,800,203,666.54 | |
Shareholder’s equity: | |||
Share capital | 3,875,371,532.00 | 3,875,371,532.00 | |
Other equity instruments | |||
Including: Preferred stock | |||
Perpetual bond | |||
Capital reserves | 11,923,058,165.17 | 11,923,058,165.17 | |
Less: Treasury shares | |||
Other comprehensive income | |||
Special reserves | 18,126,059.79 | 525,218.48 | |
Surplus reserves | 961,105,529.85 | 961,105,529.85 | |
Undistributed Profits | 1,637,766,918.37 | 1,401,183,955.66 | |
Total shareholder's equity | 18,415,428,205.18 | 18,161,244,401.16 | |
Total liabilities and shareholder’s equity | 57,346,630,174.47 | 55,961,448,067.70 |
The notes to the financial statements attached form part of these financial statements.
Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 5
BENGANG STEEL PLATES CO., LTD.CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period Jan.-Jun. 2019(Expressed in Renminbi unless otherwise indicated)
Items | Notes | Jan.-Jun. 2019 | Jan.-Jun. 2018 |
1. Total operating income | 24,102,595,167.14 | 23,441,247,377.14 | |
Including: Operating income | 5(32) | 24,102,595,167.14 | 23,441,247,377.14 |
Interest income | |||
Premium earned | |||
Income from handling charges and commission | |||
2. Total operating cost | 23,621,825,282.23 | 22,738,904,288.94 | |
Including: Operating cost | 5(32) | 22,067,612,729.65 | 20,804,207,420.98 |
Interest expense | |||
Expenditure for handling charges and commission | |||
Surrender value | |||
Net expenditure for compensation | |||
Net provision for insurance contract appropriated | |||
Bonus payment for policy | |||
Reinsurance premium | |||
Tax and surcharges | 5(33) | 114,125,362.97 | 153,307,375.64 |
Selling and distribution expenses | 5(34) | 574,445,199.14 | 514,038,008.95 |
General and administrative expenses | 5(35) | 446,767,811.77 | 461,842,424.56 |
Research and development expenses | 5(36) | 15,408,472.28 | 2,470,641.53 |
Financial expenses | 5(37) | 403,465,706.42 | 803,038,417.28 |
Including: Interest expense | 586,490,262.69 | 575,001,615.20 | |
Interest income | 127,083,779.58 | 61,605,403.34 | |
Add: Other income | 5(38) | 41,695,000.00 | 41,274,238.70 |
Income on investment(“-” for loss) | 5(39) | 25,907.49 | 3,493,150.68 |
Including: Income from associates and joint ventures | 25,907.49 | ||
Gains from change of fair value (“-” for loss) | |||
Credit impairment loss (“-” for loss) | 5(40) | 3,751,513.83 | |
Asset impairment loss (“-” for loss) | 5(41) | 20,917,963.64 | |
Assets disposal gains(“-” for loss) | 5(42) | 2,418,704.34 | 825,580.63 |
3. Operational profit(“-” for loss) | 528,661,010.57 | 768,854,021.85 | |
Add: Non-operating income | 5(43) | 8,210,182.24 | 2,138,397.80 |
Less: Non-operating expenses | 5(44) | 57,974,322.05 | 1,382,402.26 |
4. Total profit (“-” for loss) | 478,896,870.76 | 769,610,017.39 | |
Less: Income tax expenses | 5(45) | 25,962,181.73 | 11,636,226.04 |
5. Net profit(“-” for loss) | 452,934,689.03 | 757,973,791.35 | |
1.Classification by continuing operating | |||
1.Net profit from continuing operation | 452,934,689.03 | 757,973,791.35 | |
2.Net profit from discontinued operation | |||
2.Classification by ownership | |||
1. Net profit attributable to the owners of parent company | 453,209,615.76 | 756,951,987.59 | |
2. Net profit attributable to non-controlling shareholders | -274,926.73 | 1,021,803.76 | |
6.Other comprehensive income | |||
Other 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 | |||
2.Other comprehensive income that will be reclassified into profit or loss. | |||
1) Other comprehensive income under the equity method can be reclassified into profit or loss | |||
2) Gains and losses from changes in fair value of available for sale financial assets | |||
3) Gains and losses from reclassification of held-to-maturity investments to available-for-sale financial assets | |||
4) The effective portion of cash flow hedges and losses | |||
5) Translation differences in foreign currency financial statements | |||
6) Others | |||
Other comprehensive income attributable to non-controlling shareholders’ equity after tax | |||
7. Total comprehensive income | 452,934,689.03 | 757,973,791.35 | |
Total comprehensive income attributable to the owner of the parent company | 453,209,615.76 | 756,951,987.59 | |
Total comprehensive income attributable to non-controlling shareholders | -274,926.73 | 1,021,803.76 | |
8. Earnings per share | |||
1)Basic earnings per share | 0.12 | 0.20 | |
2)Diluted earnings per share | 0.12 | 0.20 |
The notes to the financial statements attached form part of these financial statements.
Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 6
BENGANG STEEL PLATES CO., LTD.STATEMENT OF COMPREHENSIVE INCOME
For the period Jan.-Jun. 2019(Expressed in Renminbi unless otherwise indicated)
Items | Notes | Jan.-Jun. 2019 | Jan.-Jun. 2018 |
1. Total operating income | 13(4) | 23,447,215,857.93 | 23,682,865,109.14 |
Less: Operating cost | 13(4) | 21,757,289,997.18 | 21,401,191,962.20 |
Tax and surcharges | 84,467,404.41 | 135,543,392.96 | |
Selling and distribution expenses | 335,094,548.06 | 265,554,867.46 | |
General and administrative expenses | 419,337,998.35 | 438,193,017.33 | |
Research and development expenses | 15,408,472.28 | 2,470,641.53 | |
Financial expenses | 388,071,914.59 | 774,523,490.60 | |
Including: Interest expense | 558,095,343.66 | 543,682,390.97 | |
Interest income | 114,189,626.94 | 58,304,426.91 | |
Add: Other income | 41,695,000.00 | 41,274,238.70 | |
Income on investment(“-” for loss) | 13(5) | 3,493,150.68 | |
Including: Income from associates and joint ventures | |||
Gains from change of fair value (“-” for loss) | |||
Credit impairment loss (“-” for loss) | 3,751,513.83 | ||
Asset impairment loss (“-” for loss) | 20,917,963.64 | ||
Assets disposal gains(“-” for loss) | 2,465,706.59 | 825,580.63 | |
2. Operational profit(“-” for loss) | 495,457,743.48 | 731,898,670.71 | |
Add: Non-operating income | 8,138,040.75 | 1,714,748.66 | |
Less: Non-operating expenses | 57,935,182.17 | 1,382,402.26 | |
3. Total profit (“-” for loss) | 445,660,602.06 | 732,231,017.11 | |
Less: Income tax expenses | 15,309,062.75 | 5,679,337.17 | |
4. Net profit(“-” for loss) | 430,351,539.31 | 726,551,679.94 | |
1.Net profit from continuing operation | 430,351,539.31 | 726,551,679.94 | |
2.Net profit from discontinued operation | |||
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 | |||
2)Other comprehensive income under the equity method cannot be reclassified into profit or loss | |||
2.Other comprehensive income that will be reclassified into profit or loss. | |||
1) Other comprehensive income under the equity method can be reclassified into profit or loss | |||
2) Gains and losses from changes in fair value of available for sale financial assets | |||
3) Gains and losses from reclassification of held-to maturity investments to available-for-sale financial assets | |||
4) The effective portion of cash flow hedges and losses | |||
5) Translation differences in foreign currency financial statements | |||
6) Others | |||
6. Total comprehensive income | 430,351,539.31 | 726,551,679.94 | |
7. Earnings per share | |||
1)Basic earnings per share | |||
2)Diluted earnings per share |
The notes to the financial statements form part of these financial statements
Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 7
BENGANG STEEL PLATES CO., LTD.CONSOLIDATED STATEMENT OF CASH FLOWS
For the period Jan.-Jun. 2019(Expressed in Renminbi unless otherwise indicated)
Items | Notes | Jan.-Jun. 2019 | Jan.-Jun. 2018 |
1.Cash flow from operating activities | |||
Cash received from sale of goods or rendering of services | 16,357,053,782.81 | 15,984,735,085.76 | |
Net increase of customers' deposit and interbank deposit | |||
Net increase of loan from central bank | |||
Net increase of loans from other financial institutions | |||
Cash received for premium of original insurance contract | |||
Net cash received for reinsurance business | |||
Net increase of deposit and investment of the insured | |||
Net increase of Financial assets at fair value through profit or loss | |||
Cash from receiving interest, handling charge and commission | |||
Net increase of loans from Borrowing funds | |||
Net increase of fund for buy-back business | |||
Tax rebate received | 247,667,635.74 | 246,514,404.27 | |
Other cash received relating to operating activities | 5(46) | 144,904,624.34 | 81,782,480.19 |
Subtotal of cash inflows from operating activities | 16,749,626,042.89 | 16,313,031,970.22 | |
Cash paid for goods and services | 13,876,838,386.74 | 14,086,077,537.47 | |
Net increase of customer's loan and advances | |||
Net increase of deposit in central bank and interbank deposit | |||
Cash for payment of compensation for original insurance contract | |||
Cash for payment of interest, handling charge and commission | |||
Cash for payment of policy bonus | |||
Cash paid to and on behalf of employees | 987,603,117.25 | 779,373,374.96 | |
Cash paid for all types of taxes | 653,208,180.03 | 406,064,168.90 | |
Other cash paid relating to operating activities | 5(46) | 247,189,353.20 | 310,997,147.42 |
Subtotal of cash outflows from operating activities | 15,764,839,037.22 | 15,582,512,228.75 | |
Net cash flows from operating activities | 984,787,005.67 | 730,519,741.47 | |
2. Cash flows from investing activities | |||
Cash received from return on investments | 500,000,000.00 | ||
Cash received from distribution of dividends or profit | 3,493,150.68 | ||
Net cash received from disposal of fixed assets, intangible assets and other long-term assets | |||
Net cash received from disposal of subsidiary and other operating units | |||
Other cash paid relating to investing activities | |||
Subtotal of cash inflows from investing activities | 503,493,150.68 | ||
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets | 545,199,197.41 | 680,441,782.39 | |
Cash paid for acquisition of investments | |||
Net increase of mortgage loan | |||
Net cash received from subsidiary and other operating unit | |||
Other cash paid relating to investing activities | |||
Subtotal of cash outflows from investing activities | 545,199,197.41 | 680,441,782.39 | |
Net cash flows from investing activities | -545,199,197.41 | -176,948,631.71 | |
3. Cash flows from financing activities | |||
Proceeds from investment | 3,965,799,988.19 | ||
Including: Proceeds from investment of non-controlling shareholders of subsidiary | |||
Proceeds from borrowings | 5,828,037,190.72 | 9,721,396,957.08 | |
Cash received from bond issuance | |||
Other proceeds relating to financing activities | |||
Subtotal of cash inflows from financing activities | 5,828,037,190.72 | 13,687,196,945.27 | |
Cash repayments of borrowings | 5,653,303,509.62 | 14,683,452,081.71 | |
Cash payments for distribution of dividends, profit or interest expenses | 626,178,049.57 | 661,538,139.82 | |
Including: Cash paid to non-controlling shareholders as dividend and profit by subsidiaries | |||
Other cash payments relating to financing activities | |||
Subtotal of cash outflows from financing activities | 6,279,481,559.19 | 15,344,990,221.53 | |
Net cash flows from financing activities | -451,444,368.47 | -1,657,793,276.26 | |
4. Effect of foreign exchange rate changes on cash and cash equivalents | 48,230,507.75 | 105,015,610.23 | |
5. Net increase in cash and cash equivalents | 36,373,947.54 | -999,206,556.27 | |
Add: Cash and cash equivalents at the beginning of the period | 11,752,548,621.97 | 17,037,713,410.49 | |
6. Cash and cash equivalents at the ending of the period | 11,788,922,569.51 | 16,038,506,854.22 |
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.
Financial Statements Page 8
STATEMENT OF CASH FLOWS
For the period Jan.-Jun. 2019(Expressed in Renminbi unless otherwise indicated)
Items | Notes | Jan.-Jun. 2019 | Jan.-Jun. 2018 |
1. Cash flow from operating activities | |||
Cash received from sale of goods or rendering of services | 15,970,406,775.11 | 15,778,223,117.53 | |
Tax rebate received | 219,614,786.86 | 119,119,395.04 | |
Other cash received relating to operating activities | 140,536,583.70 | 76,026,838.22 | |
Subtotal of cash inflows from operating activities | 16,330,558,145.67 | 15,973,369,350.79 | |
Cash paid for goods and services | 13,842,821,616.84 | 13,721,886,325.25 | |
Cash paid to and on behalf of employees | 928,568,022.64 | 726,170,588.86 | |
Cash paid for all types of taxes | 576,260,568.31 | 341,018,028.32 | |
Other cash paid relating to operating activities | 165,446,890.35 | 222,352,157.09 | |
Subtotal of cash outflows from operating activities | 15,513,097,098.14 | 15,011,427,099.52 | |
Net cash flows from operating activities | 817,461,047.53 | 961,942,251.27 | |
2. Cash flows from investing activities | |||
Cash received from return on investments | 500,000,000.00 | ||
Cash received from distribution of dividends or profit | 3,493,150.68 | ||
Net cash received from disposal of fixed assets, intangible assets and other long-term assets | |||
Net cash received from disposal of subsidiary and other operating units | |||
Other cash received relating to investing activities | |||
Subtotal of cash inflows from investing activities | 503,493,150.68 | ||
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets | 539,451,276.57 | 677,920,104.21 | |
Cash paid for acquisition of investments | 259,300,000.00 | ||
Net cash paid for acquisition of subsidiary and other operating unit | |||
Other cash paid relating to investing activities | |||
Subtotal of cash outflows paid for investing activities | 539,451,276.57 | 937,220,104.21 | |
Net cash flows from investing activities | -539,451,276.57 | -433,726,953.53 | |
3. Cash flows from financing activities | |||
Proceeds from investment | 3,965,799,988.19 | ||
Cash received from borrowings | 4,902,327,190.72 | 8,986,529,900.00 | |
Cash received from bond issuance | |||
Other cash received relating to financing activities | |||
Subtotal of cash inflows from financing activities | 4,902,327,190.72 | 12,952,329,888.19 | |
Cash repayments of borrowings | 4,713,373,509.62 | 13,939,938,977.79 | |
Cash payments for distribution of dividends, profit or interest | 589,497,122.29 | 635,530,683.74 | |
Other cash payments relating to financing activities | |||
Subtotal of cash outflows from financing activities | 5,302,870,631.91 | 14,575,469,661.53 | |
Net cash flows from financing activities | -400,543,441.19 | -1,623,139,773.34 | |
4. Effect of foreign exchange rate changes on cash and cash equivalents | 48,222,621.42 | 105,012,744.72 | |
5. Net increase in cash and cash equivalents | -74,311,048.81 | -989,911,730.88 | |
Add: Cash and cash equivalents at the beginning of the period | 10,807,824,843.20 | 16,713,104,199.65 | |
6. Ending balance of cash and cash equivalents | 10,733,513,794.39 | 15,723,192,468.77 |
The notes to the financial statements form part of these financial statements
Legal Representative: Chief Financial Officer: Chief Accountant
Financial Statements Page 9
BENGANG STEEL PLATES CO., LTD.CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period Jan.-Jun. 2019(Expressed in Renminbi unless otherwise indicated)
Items | Jan.-Jun. 2019 | ||||||||||||
Owner's equity attributable to parent company | Non-controlling interest | Total of owner's equity | |||||||||||
Share capital | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | General risk reserve | Undistributed profit | |||||
Preference 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 | 533,146,339.49 | 19,659,404,456.16 | ||||||
Add: 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 | 533,146,339.49 | 19,659,404,456.16 | ||||||
3. Changes in current year (“-” for decrease) | 20,330,018.58 | 259,441,039.16 | 235,286.84 | 280,006,344.58 | |||||||||
1) Total comprehensive income | 453,209,615.76 | -274,926.73 | 452,934,689.03 | ||||||||||
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 | |||||||||||||
(4) Others | |||||||||||||
3) Profit distribution | -193,768,576.60 | -193,768,576.60 | |||||||||||
(1) Appropriation to surplus reserves | |||||||||||||
(2) Appropriation to general risk reserve | |||||||||||||
(3) Profit distribution to shareholders | -193,768,576.60 | -193,768,576.60 | |||||||||||
(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 | 20,330,018.58 | 510,213.57 | 20,840,232.15 | ||||||||||
(1) Provision of special reserves | 25,542,658.45 | 510,213.57 | 26,052,872.02 | ||||||||||
(2) Use of special reserves | 5,212,639.87 | 5,212,639.87 | |||||||||||
6) Others | |||||||||||||
4. Ending balance of current year | 3,875,371,532.00 | 12,343,209,847.29 | 21,013,956.29 | 961,105,529.85 | 2,205,328,308.98 | 533,381,626.33 | 19,939,410,800.74 |
The notes to the financial statements attached form part of these financial statement
Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 10
BENGANG STEEL PLATES CO., LTD.CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued)
For the period Jan.-Jun. 2019(Expressed in Renminbi unless otherwise indicated)
Items | Jan.-Jun. 2018 | ||||||||||||
Owner's equity attributable to parent company | Non-controlling interest | Total shareholder's equity | |||||||||||
Share capital | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | General risk reserve | Undistributed profit | |||||
Preference shares | Perpetual bond | Others | |||||||||||
1. Ending balance of last year | 3,136,000,000.00 | 9,114,845,542.05 | 475,046.75 | 961,105,529.85 | 1,103,162,610.35 | 533,475,744.19 | 14,849,064,473.19 | ||||||
Add: Change of accounting policies | |||||||||||||
Correction of errors for last period | |||||||||||||
Business consolidation under common control | |||||||||||||
Others | |||||||||||||
2. Beginning balance of current year | 3,136,000,000.00 | 9,114,845,542.05 | 475,046.75 | 961,105,529.85 | 1,103,162,610.35 | 533,475,744.19 | 14,849,064,473.19 | ||||||
3. Changes in current year (“-” for decrease) | 739,371,532.00 | 3,228,364,305.24 | 208,890.96 | 842,724,659.47 | -329,404.70 | 4,810,339,982.97 | |||||||
1) Total comprehensive income | 1,036,493,236.07 | -315,177.71 | 1,036,178,058.36 | ||||||||||
2) Capital increase and decrease by shareholders | 739,371,532.00 | 3,228,364,305.24 | 3,967,735,837.24 | ||||||||||
(1) Common share invested by shareholders | 739,371,532.00 | 3,228,364,305.24 | 3,967,735,837.24 | ||||||||||
(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 to surplus reserves | |||||||||||||
(2) Appropriation to general risk reserves | |||||||||||||
(3) Profit distribution to shareholders | -193,768,576.60 | -193,768,576.60 | |||||||||||
(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 | 208,890.96 | -14,226.99 | 194,663.97 | ||||||||||
(1) Provision of special reserves | 46,823,964.39 | 46,823,964.39 | |||||||||||
(2) Use of special reserves | 46,615,073.43 | 14,226.99 | 46,629,300.42 | ||||||||||
6) Others | |||||||||||||
4. Ending 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 | 533,146,339.49 | 19,659,404,456.16 |
The notes to the financial statements attached form part of these financial statement
Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 11
BENGANG STEEL PLATES CO., LTD.STATEMENT OF CHANGES IN EQUITYFor the period Jan.-Jun. 2019(Expressed in Renminbi unless otherwise indicated)
Items | Jan.-Jun. 2019 | ||||||||||
Share capital | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Undistributed profits | Total shareholder’s equity | |||
Preference 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 | 18,161,244,401.16 | |||||
Add: Change of accounting policies | |||||||||||
Correction of errors for last period | |||||||||||
Others | |||||||||||
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) | 17,600,841.31 | 236,582,962.71 | 254,183,804.02 | ||||||||
1) Total comprehensive income | 430,351,539.31 | 430,351,539.31 | |||||||||
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 | |||||||||||
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 | 17,600,841.31 | 17,600,841.31 | |||||||||
(1) Provision of special reserves | 22,722,987.71 | 22,722,987.71 | |||||||||
(2) Use of special reserves | 5,122,146.40 | 5,122,146.40 | |||||||||
6) Others | |||||||||||
4. Ending balance of current year | 3,875,371,532.00 | 11,923,058,165.17 | 18,126,059.79 | 961,105,529.85 | 1,637,766,918.37 | 18,415,428,205.18 |
The notes to the financial statements attached form part of these financial statements
Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 12
BENGANG STEEL PLATES CO., LTD.STATEMENT OF CHANGES IN EQUITY (Continued)
For the period Jan.-Jun. 2019(Expressed in Renminbi unless otherwise indicated)
Items | Jan.-Jun. 2018 | ||||||||||
Share capital | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Undistributed profits | Total shareholder’s equity | |||
Preference shares | Perpetual bond | Others | |||||||||
1. Ending balance of last year | 3,136,000,000.00 | 8,694,693,859.93 | 276,727.96 | 961,105,529.85 | 613,351,724.38 | 13,405,427,842.12 | |||||
Add: Change of accounting policies | |||||||||||
Correction of errors for last period | |||||||||||
Others | |||||||||||
2. Beginning balance of current year | 3,136,000,000.00 | 8,694,693,859.93 | 276,727.96 | 961,105,529.85 | 613,351,724.38 | 13,405,427,842.12 | |||||
3. Changes in current year (“-” for decrease) | 739,371,532.00 | 3,228,364,305.24 | 248,490.52 | 787,832,231.28 | 4,755,816,559.04 | ||||||
1) Total comprehensive income | 981,600,807.88 | 981,600,807.88 | |||||||||
2) Capital increase and decrease by shareholders | 739,371,532.00 | 3,228,364,305.24 | 3,967,735,837.24 | ||||||||
(1) Common share invested by shareholders | 739,371,532.00 | 3,228,364,305.24 | 3,967,735,837.24 | ||||||||
(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 | |||||||||||
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 | |||||||||||
(5) Others | |||||||||||
5) Special reserves | 248,490.52 | 248,490.52 | |||||||||
(1) Provision of special reserves | 40,685,554.06 | 40,685,554.06 | |||||||||
(2) Use of special reserves | 40,437,063.54 | 40,437,063.54 | |||||||||
6) Others | |||||||||||
4. Ending 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 |
The notes to the financial statements attached form part of these financial statements
Legal Representative: Chief Financial Officer: Chief Accountant:
Notes to the financial statements Page 1
Bengang Steel Plates Co., Ltd.
Notes to the financial statementsFor the period from Jan. to Jun. 2019(Expressed in Renminbi unless otherwise indicated)
1. Basic Information of the Company
(1) Company profile
Bengang Steel Plates Co., Ltd. (hereinafter referred to as “the Company”), as approved in Liao-Zheng (1997) No. 57by Liaoning People’s Government on 27 March 1997, was incorporated as a joint stock limited company throughpublic share offer of domestic listed foreign currency denominated shares (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 ofoperations, assets and liabilities of its plants, namely, Steel Smelting Plant, Primary Rolling Plant and Continuous HotRolling Plant.
As approved by China Securities Regulatory Commission (hereinafter referred to as “the CSRC”), the Company issued400,000,000 B-shares at HKD2.38 each in Shenzhen Stock Exchange on 10 June 1997. On 3 November 1997, theCompany issued another 120,000,000 A-shares (Renminbi common Shares) at RMB 5.40 each, and listed in ShenzhenStock Exchange since 15 January 1998. The capital shares were totaled to 1,136,000,000 shares.
On 14 March 2006, according to the resolutions of the Shareholders’ Meeting regarding share equity relocation, theShare Equity Relocation Scheme, Response to Bengang Steel Plate Co., Ltd. about Share Equity Relocation issued byLiaoning Provincial Government State-owned Asset Administrative Committee, Bengang Group – the only holder ofnon-negotiable state-owned legal person shares paid the consideration to the current shareholders to obtain the currentoption for the 40,800,000 shares of the total 616,000,000 shares it was holding. Shareholding positions have beenregistered with China Securities Depository & Clearing Corporation Ltd. Shenzhen Office. However, the total amountof capital shares of Bengang Steel Plates Co., Ltd. was not changed through 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 shares particularly toBengang Group and the proceeds would be used to purchase the related assets of the Group. On the same day, BengangGroup received circular Zheng-Jian-Gong-Si-Zi [2006] No. 127 issued by China Securities Regulatory Committee, andwere exempted for the liability of undertaking the purchase offer. The liability was caused by subscribing of the 2billion new shares and the total shareholding was thus increased to 2.5752 billion shares (accounting for 82.12% of thetotal capital shares of the Company). On 28 August 2006, as approved by China Securities Depository & ClearingCorporation Ltd. Shenzhen Office, the registration and conditional placing procedures of the 2 billion new shares werecompleted. On 28 September 2006, the privately placed shares were approved by Shenzhen Stock Exchange to beplaced in the stock market. The placing price was RMB4.6733 per share.
Notes to the financial statements Page 2
Approved by the China Securities Regulatory Commission [2017] No. 1476, Bengang Steel Plate Co., Ltd. privatelyplaced no more than 739,371,534 RMB ordinary shares (A shares) to no more than 10 issuers. The non-public offeringwas completed on 9 February 2018, and 739,371,532 shares were actually issued. The placing price was RMB5.41 pershare.
As at 30 June 2019, 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 of Liaoningprovince.
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. Consolidation scope
The financial statements have been approved for reporting by the board of directors of the Company on 28 August2019.
(2) Consolidation scope
As at 30 June 2019, subsidiaries included in the Company’s consolidated financial statements are as follows:
Name of the subsidiaries |
Guangzhou 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., Ltd |
Shenyang Bengang Metallurgical Science and Technology Co., Ltd. |
Chongqing Liaoben Steel & Iron Trading Co., Ltd. |
Notes to the financial statements Page 3
For details of consolidation scope and change of the consolidation scope for the period, please refer to Note 6 “Equityin other entities”.
2. Basis of preparation
(1) Basis of preparation
The financial statements have been prepared on the going concern basis of actual trading and events in accordance with“Accounting Standards for Business Enterprises – Basic Standard” and relevant specific standards, applicationmaterials, interpretations (together hereinafter referred to as “Accounting Standards for Business Enterprises”) issuedby the Ministry of Finance, and “Information Disclosure Rules for Companies of securities for public issuance No. 15– General Regulations for Financial Statements” issued by the China Securities Regulatory Commission.
(2) Going concern
The Company is operating normally and in a good condition, and thus has the capability to continue to operate in thenext twelve months from the end of reporting period.
3. Significant accounting policies and accounting estimates
The following disclosed content covers the detailed accounting policies and accounting estimates that are adopted bythe Company according to the actual features of production or operation.
(1) Statement of compliance with China Accounting Standards for Business EnterprisesThe financial statements present truly and completely the financial position, operation results and cash flows of theCompany during the reporting period in accordance with China Accounting Standards for Business Enterprises.
(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 controlBusiness combination under common controlThe assets and liabilities that the Company acquired in a business combination shall be measured on the basis of theircarrying amount of aquiree’s assets, liabilities (as well as the goodwill arising from the business combination) in theconsolidated financial statement of the ultimate controller on the combining date. As for the balance between the
Notes to the financial statements Page 4
carrying amount of the net assets obtained by the Company and the carrying amount of the consideration paid by it (orthe total par value of the shares issued), capital reserve needs to be adjusted. If the capital reserve is not sufficient, anyexcess 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 them and theircarrying amounts into the profits and losses at the current period. The Company shall recognize the positive balancebetween the combination costs and the fair value of the identifiable net assets it obtains from the acquiree as goodwill.The Company shall treat the negative balance between the combination costs and the fair value of the identifiable netassets it obtains from the acquiree into the profits and losses of the current period.
The intermediary costs and relevant fees for the business combination paid by the acquirer, including the expenses foraudit, assessment and legal services, shall be recorded into the profits and losses at the current period. The transactionexpenses for the issuance of equity securities for the business combination shall be recorded into the initial recognitionamount 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 the subsidies(including separable sections of the investees controlled by the Company) have been consolidated into the scope ofconsolidation for this period ended.
2. Procedure of consolidation
The consolidated financial statements shall be presented by the parent based on the financial statements of the parentand its subsidiaries, and using other related information. When preparing consolidated financial statements, the parentshall consider the entire group as an accounting entity, adopt uniform accounting policies and apply the requirementsof Accounting Standard for Business Enterprises related to recognition, measurement and presentation. Theconsolidated financial statements shall reflect the overall financial position, operating results and cash flows of thegroup.
The accounting policy and accounting period of the subsidiaries within the consolidation scope shall be in accordancewith those of the Company. If not, it is necessary to make the adjustment according to the Company’s accountingpolicies and accounting period when preparing the consolidated financial statements. For subsidiaries throughacquisition that are now under common control, the financial statements are adjusted according to fair value ofidentifiable net assets on the acquisition date. For subsidiaries through acquisition that are under common control, theassets, liabilities (as well as the goodwill arising from purchasing the subsidiary by the ultimate controller) are adjustedaccording to book value of net assets in the financial statements of the ultimate controller.
Notes to the financial statements Page 5
The owners’ interests, profit or loss, and comprehensive income of the subsidiary attributable to the non-controllingshareholders shall be presented separately in the shareholders’ equity of the consolidated balance sheet and under theitem of net profit of the consolidated statement of comprehensive income and under the item of total comprehensiveincome. Where losses assumed 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 control during the reporting period,it shall adjust the beginning balance in the consolidated statement of financial position when preparing consolidatedstatement of financial position. The revenue, expenses and profits of the subsidiaries from the acquisition date to theend of the reporting period are included in the Company’s consolidated statement of comprehensive income. The cashflow of the subsidiaries from the acquisition date to the end of the reporting period is included in the Company’sconsolidated statement of cash flows. And meanwhile the Company shall adjust the relevant items of the comparativefinancial statements as if the reporting 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 common control due to additionalinvestment or other reasons, adjustment shall be made as if the reporting entity after the combination has been inexistence since the date the ultimate controlling party first obtained control. The investment income recognizedbetween date of previously obtaining equity investment and the date the acquiree and acquirer are under commoncontrol, which is later, and the combining date, other comprehensive income and other changes of net assets arisingfrom the equity investment previously-held before obtaining the control the acquiree shall be adjusted against theprior retained earnings of the comparative financial statements and the current profit or loss respectively.
If it is now under common control, the Company shall not adjust the beginning balance in the consolidated statementof financial position when preparing consolidated statement of financial position. The revenue, expenses and profitsof the subsidiaries from the acquisition date to the end of the reporting period are included in the parent company’sconsolidated statement of comprehensive income. The cash flow of the subsidiaries from the acquisition date to theend of the reporting period is included in the Company’s consolidated statement of cash flows.
When the Company becomes capable of exercising control over an investee now under common control due toadditional investment or other reasons, the acquirer shall remeasure its previously held equity interest in the acquireeto its fair value at the acquisition date. The difference between the fair value and the carrying amount shall berecognized as investment income for the period when the acquisition takes place. When the previously-held equityinvestment is accounted for under the equity method, any other comprehensive income previously recognized inrelation to the acquiree’s equity changes shall be transferred to profit or loss for the current period when theacquisition takes place. Other comprehensive income arising from remeasurement of defined benefit plan is excluded.
Notes to the financial statements Page 6
(2) Disposing subsidiaries or businesses
1. General treatment
If the Company disposes a subsidiary during the reporting period, the revenue, expenses and profits of the subsidiaryfrom the beginning of the reporting period to disposal date are included in the Company’s consolidated statement ofcomprehensive income. The cash flow of the subsidiaries from the beginning of the reporting period to disposal dateis included in the Company’s consolidated statement of cash flows.
When the Company loses control over an investee due to partial disposal or other reasons, the acquirer shallre-measure the remaining equity interests in the acquiree to its fair value at the acquisition date. The difference,between sums of consideration received for disposal equity shares and fair value of the remaining shares, and sums ofshare of net assets of the subsidiary calculated continuously from the acquisition date or the combination date basedon the previous shareholding proportion and goodwill, shall be recognized as investment income for the period whenthe Company loses control over acquiree. When the previously-held equity investment is accounted for under theequity method, any other comprehensive income previously recognized in relation to the acquiree’s equity changes,and other equity changes rather than changes from net profit, other comprehensive income and profit distribution,shall be transferred to investment income for the current period when the Company loses control over acquiree. Othercomprehensive income arising from re-measurement of defined benefit plan is excluded. When the Company losescontrol over a subsidiary due to the increase of capital from other investors and thus the shareholding ratio of theCompany 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 disposes of its subsidiary instages, in determining whether to account for the multiple transactions as a single transaction, the Company shallconsider all of the terms and conditions of the transactions and their economic effects. One or more of the followingmay indicate that the Company 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 one other arrangement; and(d) One arrangement considered on its own is not economically justified, but it is economically justified whenconsidered together with other arrangements.
If each of the multiple transactions forms part of a bundled transaction which eventually results in loss of control ofthe subsidiary, these multiple transactions shall be accounted for as a single transaction. In the consolidated financialstatements, the difference between the consideration received and the corresponding proportion of the subsidiary’snet assets in each transaction 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.
Notes to the financial statements Page 7
If each of the multiple transactions which eventually results in loss of control of the subsidiary do not form part of abundled transaction, apply the treatment of disposing partial long-term equity investments in a subsidiary withoutloss of control prior to the loss of control. After the loss of control, apply the treatment of disposing the subsidiary incommon cases.
(3) Acquiring the subsidiaries’ equity interest held by non-controlling shareholdersWhere the Company has acquired a subsidiary’s equity interest held by non-controlling shareholders, the differencebetween the increase in the cost of long-term investments as a result of acquisition of non-controlling interests andthe share of net assets of the subsidiary calculated continuously from the acquisition date or the combination datebased on the new shareholding proportion shall be adjusted to the capital reserve( capital premium or share premium)in the consolidated financial statements. If the balance of the capital reserve is not sufficient, any excess shall beadjusted against retained earnings.
(4) Disposing portion of equity investments in subsidiaries without lossing controlWhen the Company disposes of a portion of the long-term equity investments in a subsidiary without loss of control,the difference between the amount of the consideration received and the corresponding portion of the nest assets ofthe subsidiary calculated continuously from the acquisition date or the combination date related to the disposal of thelong-term equity investments shall be adjusted to the capital reserve (capital premium or share premium) in theconsolidated financial statements. If the balance of the capital reserve is not sufficient, any excess shall be adjustedagainst retained earnings.
(7) Recognition of cash and cash equivalents
For the purpose of preparing the statement of cash flows, the term “cash” refers to the cash on hand and theunrestricted deposit. And the term “cash equivalents” refers to short-term (maturing within three months fromacquisition) and highly liquid investments that are readily convertible to known amounts of cash and which are subjectto an insignificant risk of change in value.
(8) 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. Thebalance of exchange arising from the difference between the spot exchange rate on the balance sheet date and the spotexchange rate at the time of initial recognition or prior to the balance sheet date, except those arising from the raisingof special foreign debt for the purchase or construction of capitalizable assets thus shall be capitalized according to theborrowing costs capitalization principle, shall be recorded into the profits and losses at the current period.
2. Translation of foreign currency financial statements
Notes to the financial statements Page 8
The asset and liability items in the statement of financial position shall be translated at a spot exchange rate on thebalance sheet date. Among the owner's equity items, except the ones as "undistributed profits", others shall betranslated at the spot exchange rate at the time when they are incurred. The income and expense items in the incomestatement shall be translated using an exchange rate that is determined in a systematic and reasonable manner andapproximates the spot exchange rate on the transaction date.
When disposing an overseas business, the Company shall shift the balance, which is presented under the items of theowner's equities in the statement of financial position and arises from the translation of foreign currency financialstatements related to this oversea business, into the disposal profits and losses of the current period. If the overseasbusiness is disposed of partially, the Company shall calculate the balance arising from the translation of foreigncurrency statements of the part of disposal based on the disposal rate and shall shift them into the profits and losses ofthe current period.
(9) 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 for managing the financialassets and the contractual cash flow characteristics of the financial asset as: financial assets measured at amortised cost,financial assets measured at fair value through other comprehensive income (debt instrument) and financial assetsmeasured at fair value through profit or loss at initial measurement.
A financial asset shall be measured at amortised cost if both of the following conditions are met. The financial asset isheld within a business model whose objective is to hold financial assets in order to collect contractual cash flows andthe contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments ofprincipal and interest on the principal amount outstanding.
A financial asset shall be measured at fair value through other comprehensive income if both of the followingconditions are met. The financial asset is held within a business model whose objective is achieved by both collectingcontractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specifieddates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Other financial assets other than these are classified as financial assets measured at fair value through profit or loss.
The Company may make an election at initial recognition for non-trading equity instrument investments whether it isdesignated as a financial asset (equity instrument) that is measured at fair value through other comprehensive income.
The Company shall classify financial liabilities as financial liabilities measured at amortised cost and financialliabilities measured at fair value through profit or loss at initial measurement.
Notes to the financial statements Page 9
The Company may, at initial recognition, designate a financial liability as measured at fair value through profit or lossbecause 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 its performance isevaluated on a fair value basis, in accordance with a documented risk management or investment strategy, andinformation about the group is provided internally on 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, the Company shall measure a financial asset at itsfair value plus or minus transaction costs that are directly attributable to the acquisition or issue of the financial asset.The Company shall measure account receivables at their transaction price if the account receivables do not contain asignificant financing component and accounts receivables that the company has decided not to consider for a financingcomponent of no more than one year.
Interests calculated by using the effective interest method during the holding period shall be recognized in profit orloss.
When recovering or disposing the receivables, the difference between the price obtained and the carrying value shall berecognized 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 receivablesfinancing, other debt investments, etc. At initial recognition, the Company shall measure a financial asset at its fairvalue plus transaction costs that are directly attributable to the acquisition or issuance of the financial asset. Thefinancial assets are subsequently measured at fair value. Changes in fair value are included in other comprehensiveincome except for interest calculated using the effective interest method, impairment losses or gains and exchangegains and losses.
When the financial assets are derecognized, the accumulated gain or loss previously recognized in othercomprehensive income is transferred from other comprehensive 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) include other equity instrumentinvestments, etc.
Notes to the financial statements Page 10
At initial recognition, the Company shall measure a financial asset at its fair value plus transaction costs that aredirectly attributable to the acquisition or issue of the financial asset. The financial assets are subsequently measured atfair value. Changes in fair value are included in other comprehensive income. The dividends obtained are recognised inprofit and loss.
When the financial assets are derecognized, the accumulated gain or loss previously recognised in other comprehensiveincome is transferred from other comprehensive income and recognised in 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. Transaction costs are recognised inprofit 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 isrecognized as investment income, and the gains and losses from changes 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. Transaction costs are recognised inprofit 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 amountis recognized as investment income, and the gains and losses from changes 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 aredirectly 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 orloss.
Notes to the financial statements Page 11
When the financial liabilities are derecognized, the difference between the price obtained and the carrying value shallbe recognised in profit and loss.
3. Recognition and measurement of financial assets transfer
Where the Company has transferred nearly all of the risks and rewards related to the ownership of the financial asset tothe transferee, it shall derecognize the financial asset. If it retained nearly all of the risks and rewards related to theownership of the financial asset, it shall not derecognize the financial asset.
To judge whether the transfer of a financial asset can satisfy the conditions as prescribed in these Standards for thederecognition of a financial asset, the Company shall follow the principle of the substance over form. Transfer of anentire financial asset can be divided into partial financial assets transfer and entire financial asset transfer. If thetransfer of an entire financial asset satisfies the conditions for derecognition, the difference between the amounts of thefollowing 2 items shall be recorded in the profit or loss 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 valueoriginally recorded in the owners' equities (in the event that the financial asset involved in the transfer is a financialasset Available-for-sale).
If the transfer of partial financial asset satisfies the conditions to be derecognized, the entire book value of thetransferred financial asset shall, between the portion derecognized and the portion not derecognized, be apportionedaccording to their respective relative fair value, and the difference between the amounts of the following 2 items shallbe included into the profit or loss of the current period :
(1) The book value of the portion derecognized; and
(2) The sum of consideration of the portion derecognized, and the portion of the accumulative amount of the changesin the fair value originally recorded in the owner's equities which is corresponding to the portion derecognized (in thecase that the financial asset involved in the transfer is a financial asset Available-for-sale).
If the transfer of financial assets does not satisfy the conditions of derecognition, it shall continue to be recognized asfinancial assets and the consideration received shall be recognized as financial liabilities.
4. Derecognition of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may the financial liability bederecognized in all or partly.
Where the Company (debtor) enters into an agreement with a creditor so as to substitute the existing financial liabilitiesby way of any new financial liability, and if the contractual stipulations regarding the new financial liability is
Notes to the financial statements Page 12
substantially different from that regarding the existing financial liability, it shall derecognize the existing financialliability, and shall at the same time recognize a new financial liability.
Where the Company makes substantial revisions to part or all of the contractual stipulations of the existing financialliability, it shall derecognize the existing financial liability or part of it, and at the same time recognize the financialliability after revising the contractual stipulations as a new financial liability.
Where a financial liability is totally or partially derecognized, the Company shall recognize in the profit or loss of thecurrent period the difference between the carrying amount derecognized and the considerations it has paid (includingthe non-cash assets it has transferred out 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, the carryingamount of the whole financial liabilities in light of the comparatively fair value of the part that continues to berecognized and the part recognized. The gap between the carrying amount which is distributed to the part derecognizedand the considerations it has paid (including the noncash assets it has transferred out and the new financial liabilities ithas assumed) shall be recognized into profit or loss 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 the activemarkets. If active markets for the financial instruments do not exist, valuation techniques shall be applied for themeasurement. The Company uses valuation techniques appropriate in the circumstances and for which sufficient dataare available to measure fair value. The Company chooses relevant observable inputs for identical or similar assets orliabilities. Only when relevant observable inputs are unavailable or should the Company use unobservable inputs forthe asset or liability.
6. Impairment of the financial assets
The Company shall recognize loss allowance for expected credit losses on financial asset measured at amortised cost,and financial assets measured at fair value through other comprehensive income, such as debt instrument investments,contract assets, financial guarantee contract, etc.
The Company considers reasonable and relevant information on past events, current conditions and forecasts of futureeconomic conditions, and takes the risk of default as a weight, and calculates the difference between the cash flowreceivable from the contract and the cash flow expected to be received. The probability-weighted amount of the presentvalue of the current value confirms the expected credit loss.
At each reporting date, the Company shall measure the expected credit losses of financial instruments at differentstages. If the credit risk on a financial instrument has not increased significantly since initial recognition, it is in thefirst stage, the Company shall measure the loss allowance for that financial instrument at an amount equal to 12-month
Notes to the financial statements Page 13
expected credit losses. If the credit risk has increased significantly since initial recognition but the credit impairmenthas not occurred, it is in the second stage, and the company shall measure the loss allowance for a financial instrumentat an amount equal to the lifetime expected credit losses. If the credit risk has increased significantly since initialrecognition and the credit impairment has occurred, it is in the third stage, and the company shall measure the lossallowance for a financial instrument at an amount equal to the lifetime expected credit losses.
The Company may assume that the credit risk on a financial instrument has not increased significantly since initialrecognition if the financial instrument is determined to have low credit risk at the reporting date and measure the lossallowance for that financial instrument at an amount equal to 12-month expected credit losses..
The Company shall recognize the amount of expected credit losses or reversal in profit or loss. For debt instrumentsheld at fair value through other comprehensive income, the Company shall recognize the amount of expected creditlosses or gains in profit or loss, and adjust other comprehensive income.
For note receivables, account receivables and asset contracts, whether a significant financing component is containedor not, the Company shall always measure the loss allowance at an amount equal to lifetime expected credit losses.
The impairment test shall be assessed individually for account receivables if there is evidence indicating that thereceivables have been impaired, and for others applicable to individual assessments to recognise the expected creditlosses and individual impairment.
For accounts receivable that do not have objective evidence of impairment or when individual financial assets cannotbe used to estimate expected credit losses at reasonable cost, the Company shall divide receivables based on the creditrisk characteristics into different portfolio and calculate expected credit loss based on portfolios.
The recognition of expected credit losses for the receivables in portfolio:
Items | Criteria for portfolio | Recognition method for expected credit losses |
Account receivables – Aging analysis method | Similar credit characteristics for similar aging | The Company shall, based on past events, current conditions and forecasts of future economic conditions, calculate expected credit losses using comparison table of accounts receivables aging analysis and lifetime expected credit loss ratio. |
Other receivables – Aging analysis method | Similar credit characteristics for similar aging | The Company shall, based on past events, current conditions and forecasts of future economic conditions, calculate expected credit losses using comparison table of other receivables aging analysis and lifetime expected credit loss ratio. |
Account receivables and other receivables - Aging analysis method for lifetime expected credit loss ratio:
Notes to the financial statements Page 14
Aging | Expected credit loss ratio for accounts receivable (%) | Expected credit loss ratio for other receivables (%) |
Within 1 year (inclusive) | ||
1-2 years (inclusive) | 5.00 | 5.00 |
2-3 years (inclusive) | 20.00 | 20.00 |
Over 3 years | 100.00 | 100.00 |
(10) Inventory
1. Inventory classification
Inventories include material in transit, raw material, low-valued consumables, finished goods, work in process,materials for consigned processing, etc.
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 theinventory impairment lossThe net realizable value of inventories (finished products, stock commodity, material, etc.) held for direct selling in thedaily business activity shall be calculated by deducting the estimated sale expense and relevant taxes from theestimated sale price of inventories; The net realizable value of inventories for further processing in the daily businessactivity shall be calculated by deducting the estimated cost of completion, estimated sale expense and relevant taxesfrom the estimated sale price of inventories; The net realizable value of inventories held for the execution of salescontracts or labor contracts shall be calculated on the ground of the contract price. If the Company holds moreinventories than the quantities subscribed in the sales contract, the net realizable value of the excessive part of theinventories shall be calculated on the ground of the general sales price.
The Company shall make provision for loss on decline in value of inventories on the ground of each item ofinventories at the year end. For inventories with large quantity and relatively low unit prices, the provision for loss ondecline in value of inventories shall be made on the ground of the categories of inventories. For the inventories relatedto the series of products manufactured and sold in the same area, and of which the final use or purpose is identical orsimilar thereto, and if it is difficult to measure them by separating them from other items, the provision for loss ondecline in value of inventories shall be made on a combination basis.
Unless clear evidence shows that the market price is exceptionally fluctuating, the net realizable value of inventory isbased on the market price at the balance sheet date.
The net realizable value of inventory at the year-end is based on the market price at the balance sheet date.
Notes to the financial statements Page 15
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.
(11) Assets hold for sales
The Company classifies non-current assets or disposal asset groups when the assets meet the following criterion intoholding categories for sale simultaneously:
(1) According to the practice of selling such assets or disposal asset groups in similar transactions, they can be soldimmediately under current conditions;
(2) The sale of assets is highly probable, as the company has already made a resolution on a sale plan and obtained acertain purchase commitment, and the transaction is expected to be completed within one year. The relevantregulations that the assets can be sold have been approved by relevant authorities or regulatory authorities of theCompany.
(12) 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 only when decisions aboutthe relevant activities require the unanimous consent of the parties sharing control. If the Company and other jointventure have joint control of the investee and have rights to the net assets of the investee, the investee is a joint ventureof the Company.
Significant influence is the power to participate in the financial and operating policy decisions of the investee but notcontrol or join control of those policies. If the Company could exert significant influence over the investee, the investeeis 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 is satisfied by paying cash,transfer of non-cash assets or assumption of liabilities and issue of equity securities, the initial investment cost of thelong-term equity investment shall be the absorbing party’s share of the carrying amount of the owner’s equity of theparty being absorbed in the consolidated financial statements of the ultimate controlling party at combination date.When an investor becomes capable of exercising control over an investee under common control due to additionalinvestment or other reasons, the initial investment cost shall be the absorbing party’s share of the carrying amount ofthe owner’s equity of the party being absorbed in the consolidated financial statements of the ultimate controlling partyat combination date. The difference between the initial investment cost and the carrying amount of the previously-held
Notes to the financial statements Page 16
equity investment, together with the additional investment cost for new shares at combination date, shall be adjusted tothe capital reserve. If the balance of capital reserve is not sufficient, 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 investmentshall be the acquisition cost at the acquisition date. When an investor becomes capable of exercising control over aninvestee due to additional investment or other reasons, the initial investment cost under the cost method shall be thecarrying amount of previously-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 cost whichis actually paid.
The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair valueof the equity securities issued.
If the exchange of non-monetary assets is commercial in nature and the fair values of both the assets received andsurrendered can be reliably measured, the fair value of the assets surrendered shall be used as the basis for determiningthe cost of the assets received, unless there is any exact evidence showing that the fair value of the assets received ismore reliable. Where any non-monetary assets transaction does not meet the conditions as prescribed above, thecarrying value and relevant payable taxes of the assets surrendered shall be the initial cost of the assets received.
The initial cost of a long-term equity investment obtained by debt restructuring shall be ascertained on the basis of fairvalues.
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, aninvesting enterprise shall, in accordance with the attributable share of the net profits or losses of the invested entity,recognize the investment profits or losses except the dividend declared but unpaid, which is included in the paymentwhen 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. Wherethe initial investment cost of a long-term equity investment exceeds tan investor’s interest in the fair values of aninvestee’s identifiable net assets at the acquisition date, no adjustment shall be made to the initial investment cost.Where the initial cost is less than the investor’s interest in the fair values of the investee’s identifiable net assets at theacquisition date, the difference shall be credited to profit or loss for the current period.
Notes to the financial statements Page 17
The Company shall recognize its share of the investee’s net profits or losses, as well as its share of the investee’s othercomprehensive income, as investment income or losses and other comprehensive income, and adjust the carryingamount of the investment accordingly. The carrying amount of the investment shall be reduced by the portion of anyprofit distributions or cash dividends declared by the investee that is attributable to the investor. The investor’s share ofthe investee’s owners’ equity changes, other than those arising from the investee’s net profit or loss, othercomprehensive income or profit distribution, and the carrying amount of the long-term equity investment shall beadjusted 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 consolidated financialstatements, the Company shall calculate its share based on the investee’s net profit, other comprehensive income andthe amount of other owners' equity attribute to the investee in the consolidated financial statements.
The unrealized profits or losses resulting from transactions between the investor and its associate or joint venture shallbe eliminated in proportion to the investor’s equity interest in the investee, based on which investment income or lossesshall be recognized. Any losses resulting from transactions between the investor and investee which are attributable toasset impairment shall be recognized in full. If the transaction of investment or sale of assets among the Company andassociate and joint venture and the assets is a business, it shall apply the treatment mentioned in Note 3 (5) “Theaccounting treatment for Business combination under/now under common control” and Note 3 (6) “Consolidation ofFinancial Statements”.
When the Company recognizes the losses of invested enterprise, it shall follow the following sequence: First of all,offset the book value of long term equity investment. If the book value of long-term equity is insufficient to dilute, theinvesting enterprise shall recognize the net losses of the invested enterprise until the book value of the long-term equityinvestment and other long-term rights and interests which substantially form the net investment made to the investedentity are reduced to zero. If the company still has the obligation to undertake extra losses per contract, and thenestimated liabilities shall be recognized into current profit and loss accordingly to the estimated obligation.
(3) Disposal of long-term equity investment
When disposing long-term equity investment, the difference between the proceeds actually received and the carryingamount shall be recognized in profit or loss for the current period.
When the previously-held equity investment is accounted for under the equity method, any other comprehensiveincome previously recognized shall be accounted for on the same basis as would have been required if the investee haddirectly disposed of the related assets or liabilities. Those owner's equity recognized other than the change of net profitsor loss, other comprehensive income, profit distribution of the invested entity shall be transferred proportionally into
Notes to the financial statements Page 18
profit or loss of current period, other comprehensive income arising from the re-measurement of defined benefit plan isexcluded.
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, the remaining equity investment shall be accounted for in accordancewith “Accounting Standard for Business Enterprises No. 22-Financial instruments: recognition and measurement”. Thedifference between the fair value and the carrying amount at the date of the loss of join control or significant influenceshall be charged to profit or loss for the current period. When the previously-held equity investment is accounted forunder the equity method, any other comprehensive income previously recognized shall be accounted for on the samebasis as would have been required if the investee had directly disposed of the related assets or liabilities for the currentperiod upon discontinuation of the equity method. Those owner's equity recognized other than the change of net profitsor loss, other comprehensive income, profit distribution of the invested entity shall be transferred into profit or loss ofcurrent period in full when the Company cease to adopt the equity method.
When the Company can no longer exercise control over an investee due to partial disposal of equity investment or dueto decrease of shareholding ratio because of additional investment by other investors, and with the retained interest,still has joint control of, or significant influence over, the investee, when preparing the individual financial statements,the investor shall change to the equity method and adjust the remaining equity investment as if the equity method hadbeen applied from the date of the first acquisition. If the investor cannot exercise joint control of or significantinfluence over the investee after partial disposal of equity investment, the remaining equity investment shall beaccounted for in accordance with “Accounting Standard for Business Enterprises No.22-Financial instruments:
Recognition and Measurement”, and the difference between the fair value and carrying amount at the date of the lossof control shall be charged to profit or loss for the current period.
When the equity investment disposed is acquired through business combination due to additional investment or otherreasons, in stand-alone financial statement, the remaining equity investment shall adopt cost method or equity method,any other comprehensive income and other owner’s interests previously recognized of the previously-held equityinvestment under the equity method shall be transferred proportionally. For those remaining equity investmentaccounted for in accordance with “Accounting Standard for Business Enterprises No.22-Financial instruments:
Recognition and Measurement” after disposal, other comprehensive income and other owner’s interests previouslyrecognized shall be transferred to profit or loss in full.
(13) Investment property
Investment property refers to real estate held for the purpose of earning rent or capital appreciation, or both, includingleased land use rights, land use rights held and prepared for transfer after appreciation, and leased buildings ( Buildingsthat are leased after completion of self-construction or development activities and buildings that are being used forrental in the future during construction or development).
Notes to the financial statements Page 19
The company uses the cost model to measure the existing investment property. For investment property measuredaccording to the cost model - the rental building adopts the same depreciation policy as the fixed assets of the company,and the land use right for rental is amortized according to the same amortization policy as the intangible assets.
(14) Fixed assets
1. Recognition of Fixed assets
The term "fixed assets" refers to the tangible assets held for the sake of producing commodities, rendering labor service,renting or business management and of which useful life is in excess of one fiscal year. No fixed asset may berecognized 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.
2. Fixed assets depreciation
Fixed assets are depreciated under the straight line method. The depreciation rate is determined according to thecategory of assets, the useful life and the expected residual rate. If the components of the fixed assets have differentuseful lives or provide the economic benefits in a different way, then different depreciation rate or method shall beapplied 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 that theownership of the leased assets will be acquired upon expiry of lease, or over the shorter of lease term and useful life ifit is not reasonably certain that the ownership of the leased assets will be acquired upon expiry of lease.
Details of classification, depreciation period, residual value rate and annual depreciation rate are as follows:
Category | Depreciation method | Depreciation Period | Residual Value Rate (%) | Depreciation Rate (%) |
Plants and Buildings | straight line method | 8-40 years | 0.00 | 2.50-12.50 |
Machinery | straight line method | 4-18 years | 3.00 | 5.39-24.25 |
Transportation and other equipment | straight line method | 5-18 years | 3.00 | 5.39-19.40 |
3. Recognition criteria for fixed asset leased in by financial leasing and its valuationWhere 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 ofthe 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; and
(4) The present value of the minimum lease payments on the lease beginning date amounts to substantially all of thefair value of the leased asset on the lease beginning date.
Notes to the financial statements Page 20
On the lease beginning date, the Company 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, recognize theamount of the minimum lease payments as the initial book value of long-term account payable, and treat the differencebetween the recorded amount of the leased asset and the long-term account payable as unrecognized financing charges.
(15) Construction in progress
The cost of fixed assets transferred from a construction in progress includes all the necessary expenses incurred forbringing the asset to the expected conditions for use. Construction in progress is transferred to fixed asset when it hasreached its working condition for its intended use. In case the final project accounts have not been completed orapproved, the asset shall be transferred to fixed assets at an estimated value by considering project budget, cost oractual cost of the project and etc., and the deprecation of the said fixed assets shall be provided in accordance with theCompany’s accounting policy since it has reached its working condition for its intended use. After the project accountshave been approved, the estimated values shall be adjusted based on the actual cost, but those provided deprecationshall not be adjusted.
(16) Borrowing costs
1. Principle of the recognition of capitalized borrowing costs
The borrowing costs shall include interest on borrowings, amortization of discounts or premiums on borrowings,ancillary expenses, and exchange balance on foreign currency borrowings.
Where the borrowing costs incurred to an enterprise can be directly attributable to the acquisition and construction orproduction of assets eligible for capitalization, it shall be capitalized and recorded into the costs of relevant assets.Other borrowing costs shall be recognized as expenses on the basis of the actual amount incurred, and shall berecorded into the current profits and losses.
Assets eligible for capitalization refer to the fixed assets, investment real estate, inventories and other assets, of whichthe acquisition and construction or production may take quite a long time to get ready for its intended use or for sale.
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 interestbearing debts paid for the acquisition and construction or production activities for preparing assets eligible forcapitalization;
(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 intendeduse or sale have already started.
2. The capitalization period of borrowing costs
Notes to the financial statements Page 21
The capitalization period shall refer to the period from the commencement to the cessation of capitalization of theborrowing costs, excluding the period of suspension of capitalization of the borrowing costs.
When the qualified asset under acquisition and construction or production is ready for the intended use or sale, thecapitalization of the borrowing costs shall be ceased.
Where each part of a qualified asset under acquisition and construction or production is completed separately and isready for use, the capitalization of the borrowing costs in relation to this part of asset shall be ceased.
Where each part of an asset under acquisition and construction or production is completed separately and is ready foruse or sale during the continuing construction of other parts, but it cannot be used or sold until the asset is entirelycompleted, the capitalization of the borrowing costs shall be ceased when the asset is completed entirely.
3. The suspension of capitalization of borrowing costs
Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the interruptionperiod lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended. If the interruption is anecessary step for making the qualified asset under acquisition and construction or production ready for the intendeduse or sale, the capitalization of the borrowing costs shall continue. The borrowing costs incurred during such periodshall be recognized as expenses, and shall be recorded into the profits and losses of the current period, till theacquisition and construction or production of the asset restarts.
4. Method of calculating the capitalization rate and capitalized amount of borrowing costsFor interest expense (minus the income of interests earned on the unused borrowing loans as a deposit in the bank orinvestment income earned on the loan as a temporary investment) and the ancillary expense incurred to a specificallyborrowed loan, those incurred before a qualified asset under acquisition, construction or production is ready for theintended use or sale shall be capitalized at the incurred amount when they are incurred, and shall be recorded into thecosts of the asset eligible for capitalization.
The Company shall calculate and determine the to-be-capitalized amount of interests on the general borrowing bymultiplying the weighted average asset disbursement of the part of the accumulative asset disbursements minus thegeneral borrowing by the capitalization rate of the general borrowing used. The capitalization rate shall be calculatedand determined in light of the weighted average interest rate of the general borrowing.
(17) 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 the expected
Notes to the financial statements Page 22
purpose. If the payment for an intangible asset is delayed beyond the normal credit conditions and it is of the financingnature, the cost of the intangible asset shall be determined on the basis of the present value of the purchase price.
For intangible assets obtained from debt restructuring as settlement of liabilities from debtors, initial recognition isbased on its fair value, and the difference between the debt restructured and the fair value of the intangible assets arerecognized in the current profit and loss.
For intangible assets obtained from non-monetary transactions with commercial substance, and the fair value of theassets obtained or surrendered can be reliably measured, the initial recognition of the asset obtained is based on the fairvalue of the asset surrendered, unless there is strong evidence that the fair value of the asset obtained is more reliable.For intangible assets obtained through non-monetary transactions which do not meet the above criteria, the initialrecognition is based on the book value of the assets surrendered and the relevant taxes payable. No gain or loss will berecognized.
(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 period whenthe intangible asset can bring economic benefits to the enterprise. If it is unable to estimate the beneficial period of theintangible asset, it shall be regarded as an intangible asset with uncertain service life and shall not be amortized.
2. Estimated useful lives of intangible assets with limited useful lives
Item | Estimated useful life | Criteria |
Land use right | 50 years | Land use right certificate |
The Company shall review the useful lives and amortization methods of intangible assets with limited useful lives ateach year end.
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 phaseThe expenditures for its internal research and development projects of an enterprise shall be classified into researchexpenditures and development expenditures.
Research phase refers to the phase of creative and planned investigation to acquire and study to acquire and understandnew scientific or technological knowledge.
Notes to the financial statements Page 23
Development phase refers to the phase during which the result of research phase or other knowledge is applied intocertain projects or designs for the manufacturing of new or substantially improved material, device and product.
(18) Impairment of long-term assetsFor long-term assets under the cost model such as long-term equity investments, Investment property, fixed assets,construction in progress, intangible assets with limited useful lives etc., the Company shall perform impairment tests atthe period end if there is clear indication of impairment. If the recoverable amounts of long-term assets are less thantheir 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. The recoverable amounts oflong-term assets are the higher of their fair values less costs to sell and the present values of the future cash flowsexpected to be derived from the assets. The Company shall estimate its recoverable amount on an individual basis.Where it is difficult to do so, it shall determine the recoverable amount of the group assets on the basis of the assetgroup to which the asset belongs. The term "group assets” refers to a minimum combination of assets by which thecash flows could be generated independently
The goodwill shall be subject to an impairment test at least at the end of each year.
When the Company makes an impairment test of assets, it shall, as of the purchasing day, apportion the carrying valueof the business reputation formed by merger of enterprises to the relevant asset groups by a reasonable method. Whereit is difficult to do so, it shall be apportioned to the relevant combinations of asset groups. When apportioning thecarrying value of the business reputation to the relevant asset groups or combinations of asset groups, it shall beapportioned on the basis of the proportion of the fair value of each asset group or combination of asset groups to thetotal fair value of the relevant asset groups or combinations of asset groups. Where it is difficult to measure the fairvalue reliably, it shall be apportioned on the basis of the proportion of the carrying value of each asset group orcombination of asset groups to the total carrying value of the relevant asset groups or combinations of asset groups.
When making an impairment test on the relevant asset groups or combination of asset groups containing businessreputation, if any evidence shows that the impairment of asset groups or combinations of asset groups is possible, theCompany shall first make an impairment test on the asset groups or combinations of asset groups not containingbusiness reputation, calculate the recoverable amount, compare it with the relevant carrying value and recognize thecorresponding impairment loss. Then the Company shall make an impairment test of the asset groups or combinationsof asset groups containing business reputation, and compare the carrying value of these asset groups or combinationsof asset groups (including the carrying value of the business reputation apportioned thereto) with the recoverableamount. Where the recoverable amount of the relevant assets or combinations of the asset groups is lower than thecarrying value thereof, it shall recognize the impairment loss of the business reputation.
Impairment losses on long-term assets shall not be reversed in subsequent accounting periods once recognized.
Notes to the financial statements Page 24
(19) Long-term deferred expense
The long-term deferred expense refers to the expenses incurred but shall be borne by current and subsequentaccounting period, which is more than one year.
The long-term deferred expense shall be amortized over its beneficiary period evenly
(20) Employee benefits
1. Accounting treatment for short employee benefit
The Company shall recognized, in the accounting period in which an employee provides service, actually occurredshort-term employee benefits as a liability, with a corresponding charge to the profit or loss or cost of an asset for thecurrent period.
Payments made by an enterprise of social security contributions for employees, payments of housing funds, and unionrunning costs employee education costs provided in accordance with relevant requirements shall, in the accountingperiod in which employees provide services, be calculated according to prescribed bases and percentages indetermining the amount of employee benefits.
The employee benefits which are non-monetary benefits shall be measured at fair value if it could be measuredreliably.
2. Accounting treatment of post-employment benefits
The Company shall recognize, in the accounting period in which an employee provides service, pension fund andunemployment fund for employees as a liability according to the local government regulations. The amount shall becalculated according to local prescribed bases 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.
3.Accounting treatment of termination benefits
The Company shall recognize an employee benefits liability for termination benefits, with a corresponding charge tothe profit or loss for the current period, at the earlier of the following dates: when the Company cannot unilaterallywithdraw the offer of termination benefits because of an employment termination plan or a curtailment proposal; orwhen the Company recognizes costs or expenses related to a restructuring that involves the payment of terminationbenefits.
(21) Estimated liabilities
1. Recognition criteria of estimated liabilities
The obligation pertinent to a Contingency (litigation, guarantees, loss contract, restructuring) shall be recognized as anestimated liability when the following conditions are satisfied simultaneously:
(1) That obligation is a current obligation of the enterprise;
Notes to the financial statements Page 25
(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.
2. Measurement of estimated liabilities
The estimated debts shall be initially measured in accordance with the best estimate of the necessary expenses for theperformance of the current obligation.
To determine the best estimate, an enterprise shall take into full consideration of the risks, uncertainty, time value ofmoney, and other factors pertinent to the Contingencies. If the time value of money is of great significance, the bestestimate 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 equally likely tooccur, the best estimate shall be determined in accordance with the average estimate within the range, that is, theaverage 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 equally likely tooccur, 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 accordancewith 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 expected to becompensated by a third party, the compensation shall be separately recognized as an asset only when it is virtuallycertain that the reimbursement will be obtained. The amount recognized for the reimbursement shall not exceed thebook value of the estimated debts.
(22) Revenue
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; and retainedneither continuing managerial involvement which usually relates to the ownership nor exerts effective control overthe goods sold. The relevant amount of revenue can be measured reliably, the economic benefits related to thetransaction will flow into the enterprise; and the relevant costs incurred or to be incurred can be measured reliably.Revenue from the sale of goods may be recognized.
2.The specific criteria of revenue recognition and measurement
Notes to the financial statements Page 26
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 product salesrevenue is determinable, received or the certificate of the right to receive the amount has been obtained and therelevant 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 the Customsdeclaration and delivery has occurred under the contract, bill of lading has been obtained, amount of product salesrevenue is determinable, received or the certificate of the right to receive the amount has been obtained and therelevant economic benefits are likely to flow into the entity, and related costs can be measured reliably.
3.Recognition Criteria for the Revenue from alienating of Assets Use RightsWhen it is probable that economic benefits in relation to the transaction will flow into the enterprise; and the amountof revenues can be measured reliably. The Company shall ascertain the amount of revenues from the transfer ofAssets 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 theactual interest rate; or
(2) Royalty revenue shall be calculated based on the period and method of charging as stipulated in the relevantcontract or agreement.
(23) Government Subsidies
A government subsidy means the monetary or non-monetary assets obtained free of charge by the Company from thegovernment. Government subsidies consist of the government subsidies pertinent to assets and government subsidiespertinent to income.
The criteria and accounting treatment of government subsidies pertinent to assets.Government subsidies related to assets are government subsidies whose primary condition is that an entityqualifying for them should purchase, construct or otherwise acquire long-term assets.Recognition
Government subsidies related to assets shall be recognized by deducting the subsidies at the caring amount of
the assets or recognized as deferred income. Subsidies that recognized as deferred income shall be recognized in
profit or loss over the periods during the useful lives of the relevant assets.
Accounting treatment
Government subsidies related to assets shall be recognized by deducting the subsidies at the caring amount of
the assets or recognized as deferred income. Subsidies that recognized as deferred income shall be recognized in
profit or loss on a systematic basis over the periods during the useful lives of the relevant assets (Subsidies
related to daily activities should be recorded in Other Income. Subsidies that unrelated to daily activities should
be recorded in Non-operating Income).
The criteria and accounting treatment of government subsidies pertinent to income.
Notes to the financial statements Page 27
The government subsidy related to income refers to the government subsidy other than the government subsidyrelated to the asset.
RecognitionThe government subsidies related to incomes to compensate future expenses, shall be recognized as deferredincome and transferred to current profit or loss. Government subsidies to compensate expenses or losses alreadyincurred shall be recognized in current profit and loss.Accounting treatmentThe government subsidies related to incomes to compensate future expenses, shall be recognized as deferredincome and transferred to current profit or loss (Subsidies related to daily activities should be recorded in OtherIncome. Subsidies that unrelated to daily activities should be recorded in Non-operating Income) in the periodduring which the expenses compensation is recognized or deduct relevant cost or loss. Government subsidies tocompensate expenses or losses already incurred shall be recognized in current profit and loss (Subsidies relatedto daily activities should be recorded in Other Income. Subsidies unrelated to daily activities should be recordedin Non-operating Income) or deduct relevant cost or loss.
(24) Deferred tax assets and deferred tax liabilities
An enterprise shall recognize the deferred income tax assets arising from a deductible temporary difference to theextent of the amount of the taxable income which it is most likely to obtain and which can be deducted from thedeductible temporary difference.
As for any deductible loss or tax deduction that can be carried forward to the next year, the corresponding deferredincome tax assets shall be determined to the extent that the amount of future taxable income to be offset by thedeductible 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 recognition ofgoodwill; initial recognition of an asset or liability in a transaction or event that is not a business combination and atthe time of the transaction, affects neither accounting profit nor taxable profit (tax loss).
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 and thedeferred tax liabilities relate to income taxes levied by the same taxation authority on either:(i) the same taxable entity;or (ii) different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or torealize the assets and settle the liabilities simultaneously, in each future period in which significant amounts ofdeferred tax liabilities or assets are expected to be settled or recovered.
(25) Leases
Notes to the financial statements Page 28
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 thestraight-line method over each period of the lease term. The initial direct costs paid by the Company shall berecorded 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, theCompany shall deduct these expenses from the total rental expense and the remaining rental expense shall beallocated 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 usingthe straight-line method over each period of the whole lease term in which free lease period is included. The initialdirect costs paid by the Company shall be recorded into the profits and losses of the current period. The initial directcosts shall be capitalized if it is material, and be allocated to each period as per the basis for rental revenuerecognition.If the Company has shouldered any expense related to the lease which shall have been borne by the lessee, thecompany shall deduct these expenses from the total rental revenue and the remaining rental revenue shall be allocatedto 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 the presentvalue of the minimum lease payments on the lease beginning date as the initial book value, recognize the amount ofthe minimum lease payments as the initial book value of long-term account payable, and treat the balance betweenthe recorded amount of the leased asset and the long-term account payable as unrecognized financing charges.
The lessee shall adopt the effective interest rate method to calculate and recognize the financing charge in the currentperiod. The unrecognized financing charge shall be amortized to each period during the lease term. Initial direct costsincurred by the Company shall be recorded in the value 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 receivables plusunguaranteed residual value and the present value of the sum as unrealized financing income, and record rental asrevenue when received for each period in the futureInitial direct costs incurred by the Company related to the leased asset shall be recorded in the initial measurement ofthe finance lease receivables, and reduce the amount of revenue recognized during the lease term.
(26) Discontinuing operation
Notes to the financial statements Page 29
Discontinuing operation is a component that has been disposed or classified as held for sale by the Company, and canbe distinguished separately in operating and preparing financial statements when one of the following conditions ismet:
(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.
(27) Change of significant accounting policy and accounting estimate
1. Change of major accounting policy during this reporting period
(1) New Financial Instrument guidelines
Since January 1, 2019, the company has implemented the “Accounting Standards for Business Enterprises No. 22 –Recognition and Measurement of Financial Instruments”, “Accounting Standards for Business Enterprises No. 23 –Transfer of Financial Assets” and “Accounting Standards for Business Enterprises No. 24 - Hedge Accounting” and“Accounting Standards for Business Enterprises No. 37 - Financial Instruments Disclosure” (hereinafter referred toas "New Financial Instruments Guidelines") revised by the Ministry of Finance in 2017.
In terms of the classification and measurement of financial assets, the new financial instrument standard requiresfinancial assets to be classified as subsequently measured at amortised cost, fair value through other comprehensiveincome or fair value through profit or loss on the basis of both the entity’s business model for managing thefinancial assets and the contractual cash flow characteristics of the financial asset and eliminates the classificationof loans, receivables, held to maturity investments, and available for sale financial assets in the original financialinstruments. An investment in an equity instrument is generally classified as a financial asset at fair value throughprofit or loss. It also allows a non-tradable equity instrument investment to be designated as a financial asset at fairvalue through other comprehensive income. The designation is irrevocable and the accumulated fair value changespreviously recognised in other comprehensive income are not carried forward to profit or loss. In respect ofimpairment, the requirements of the new financial instrument standard for impairment are applied to financialassets measured at amortised cost, financial assets measured at fair value through other comprehensive income,lease receivables and financial guarantee contracts. The new financial instrument standard requires the use of anexpected credit loss model to confirm credit loss provisions to replace the original credit loss model. The newimpairment model adopts a three-stage model. According to the relevant item, whether the credit risk has increasedsignificantly since the initial recognition, the loss allowance is measured at an amount equal to 12-month expectedcredit losses or an amount equal to the lifetime expected credit losses. For receivables and long-term receivablesformed by transactions regulated by the income standard, as well as the receivables of finance leases formed bytransactions regulated by the “Accounting Standards for Business Enterprises No. 21 – Leases”, the Company shallmeasure the loss allowance at an amount equal to lifetime expected credit losses.
If the recognition and measurement of financial instruments before January 1, 2019 is inconsistent with therequirements of the new financial instruments, the company shall make retrospective adjustments in accordance
Notes to the financial statements Page 30
with the requirements of the new financial instruments guidelines. The company does not make adjustments when itinvolves inconsistency between the previous comparative financial statement data and the new financial instrumentguidelines. The difference between the original book value of the financial instrument and the new book value onthe date of the implementation of the new financial instrument's standard is included in retained earnings or othercomprehensive income as of January 1, 2019.
(2) The revision of the format for the issuance of the financial statements
Ministry of Finance issued “Notice of the Ministry of Finance on the revision of the format for the issuance of thefinancial statements of the general enterprise for the year 2019” (Cai Kuai 2019 No.6, hereinafter referred to as“Cai Kuai No. 6 Notice”) on 30 April 2019, which revised the format of financial statement for the generalenterprise. The major impact of the implementation of the above regulations are as follows:
The contents and reasons of accounting policy changes | The items affected and the amount |
(1) In Statement of Financial Position, “Notes receivable and accounts receivable” is separated into "Notes receivable" and "Accounts receivable"; The comparative data is adjusted accordingly. | “Notes receivable and accounts receivable” is separated into "Notes receivable" and "Accounts receivable", amount for current year is 4,518,016,226.76 and 614,718,839.21, amount for previous year is 3,580,145,843.38 and 639,482,481.45. “Notes receivable and accounts receivable” is separated into "Notes receivable" and "Accounts receivable", amount for current year is 4,296,253,321.51 and 402,397,751.85, amount for previous year is 3,356,020,598.89 and 409,553,059.27. |
(2) Adjust the “credit impairment loss” and “asset impairment loss” in the income statement to add the operating profit, and the loss is listed as “-”. | Adjust the “asset impairment loss” in the income statement to add the operating profit, amount for the current year is 0.00, amount for previous year is 20,917,963.64; Adjust the “credit impairment loss” in the income statement to add the operating profit, amount for the current year is 3,751,513.83. |
2. Change of accounting estimate during this reporting period
None.
4. Taxes
Major type of taxes and corresponding tax rates
Tax | Taxation Method | Tax Rate |
Value-added Tax(VAT) | The balance of output VAT calculated based on product sales and taxable services revenue in accordance with the tax laws after subtracting the deductible input VAT of the period | 6%,10%、16%(Jan to Mar in 2019) 6%, 9%, 13% (Apr to Jun in 2019) |
City maintenance and construction tax | Based on VAT and business tax actually paid | 7%, 5% |
Educational surcharges | Based on VAT and business tax actually paid | 3%, 2% |
Notes to the financial statements Page 31
Enterprise income tax | Based on taxable profit | 25% |
5. Notes to the consolidated financial statements
(1) Cash at bank and on hand
Items | Ending balance | Beginning balance |
Cash on hand | 5,346.25 | 4,839.95 |
Cash at bank | 11,788,917,223.26 | 11,752,543,782.02 |
Other monetary funds | 5,156,849,822.92 | 4,814,923,133.80 |
Total | 16,945,772,392.43 | 16,567,471,755.77 |
Total amount deposited abroad |
The details of restricted monetary funds resulted from guarantee or pledge or freeze accounts are as follows:
Items | Ending balance | Beginning balance |
Margin for bank acceptance bill | 4,538,099,822.92 | 3,794,647,133.80 |
Margin for letter of credit | 165,270,000.00 | 105,000,000.00 |
Time deposit or notice deposit for guarantee | 453,480,000.00 | 915,276,000.00 |
Total | 5,156,849,822.92 | 4,814,923,133.80 |
(2) Notes receivable
1.Notes receivable disclosed by category
Items | Ending balance | Beginning balance |
Bank acceptance bill | 4,361,187,029.40 | 3,540,317,759.10 |
Commercial acceptance bill | 156,829,197.36 | 39,828,084.28 |
Total | 4,518,016,226.76 | 3,580,145,843.38 |
2.The pledged acceptance bill at the end of the period
There is no pledged acceptance bill at the end of the period.
3.The amount of Notes receivable endorsed over but not yet matured at the year-end.
Items | Derecognized ending balance | Unrecognized ending balance |
Bank acceptance bill | 7,280,230,450.89 | |
Commercial acceptance bill | ||
Total | 7,280,230,450.89 |
4.No Notes receivable has been transferred into accounts receivable due to inability of drawer to meetacceptance bill at the year-end.
Notes to the financial statements Page 32
(3) Accounts receivable
1.Accounts receivable disclosed by category
Items | Ending balance | |||||||||||
Carrying amount | Provision for bad debts | Book value | ||||||||||
Amount | Percentage (%) | Amount | Bad debts ratio (%) | |||||||||
Accounts receivable tested for impairment individually | 47,762,337.18 | 6.02 | 47,762,337.18 | 100.00 | ||||||||
Accounts receivable tested for impairment by portfolio | 745,278,892.11 | 93.98 | 130,560,052.90 | 17.52 | 614,718,839.21 | |||||||
Total | 793,041,229.29 | 100.00 | 178,322,390.08 | 22.49 | 614,718,839.21 | |||||||
Items | Beginning balance | |||||||||||
Carrying amount | Provision for bad debts | Book value | ||||||||||
Amount | Percentage (%) | Amount | Bad debts ratio (%) | |||||||||
Accounts receivable tested for impairment individually | 47,762,337.18 | 5.82 | 47,762,337.18 | 100.00 | ||||||||
Accounts receivable tested for impairment by portfolio | 773,432,447.14 | 94.18 | 133,949,965.69 | 17.32 | 639,482,481.45 | |||||||
Total | 821,194,784.32 | 100.00 | 181,712,302.87 | 639,482,481.45 |
Accounts receivables individually significant and tested for impairment individually
Company | Ending balance | |||
Carrying amount | Provision for bad debts | Bad debts ratio (%) | Reason |
Benxi Nanfen Xinhe Metallurgical Furnace Material Co., Ltd | 47,762,337.18 | 47,762,337.18 | 100.00 | Halt operation |
Total | 47,762,337.18 | 47,762,337.18 |
Accounts receivables disclosed by aging
Items | Ending balance | ||
Carrying amount | Provision for bad debts | Bad debts ratio (%) | |
Within 1 year (inclusive) | 538,645,725.73 | ||
1-2 years (inclusive) | 56,752,847.90 | 2,837,642.39 | 5 |
2-3 years (inclusive) | 27,697,384.96 | 5,539,476.99 | 20 |
Over 3 years | 169,945,270.70 | 169,945,270.70 | 100 |
Notes to the financial statements Page 33
Items | Ending balance | ||
Carrying amount | Provision for bad debts | Bad debts ratio (%) | |
Total | 793,041,229.29 | 178,322,390.08 |
2.Information of provision, reversal or recovery of bad debts of current period.
The provision of bad debts of current period is RMB 3,389,912.79.
3.No accounts receivable has been written off this year.
4.Top five debtors at the year-end
Company | Ending balance | ||
Amount | Percentage of total Accounts receivable (%) | Provision for bad debts | |
The first | 296,599,328.97 | 37.40 | |
The second | 106,438,276.12 | 13.42 | |
The third | 62,482,368.63 | 7.88 | 6,792,099.51 |
The fourth | 47,762,337.18 | 6.02 | 47,762,337.18 |
The fifth | 41,687,479.04 | 5.26 | |
Total | 554,969,789.94 | 69.98 | 54,554,436.69 |
(4) Prepayments
1. Prepayments disclosed by aging
Aging | Ending balance | Beginning balance | ||
Amount | Percentage (%) | Amount | Percentage (%) | |
Within 1 year (inclusive) | 1,311,404,160.39 | 99.77 | 1,318,136,339.11 | 99.74 |
1-2 years (inclusive) | 2,226,256.90 | 0.17 | 2,494,489.34 | 0.19 |
2-3 years (inclusive) | 833,987.64 | 0.06 | 901,900.77 | 0.07 |
Over 3 years | 4,785.56 | 0.00 | ||
Total | 1,314,464,404.93 | 100.00 | 1,321,537,514.78 | 100.00 |
Notes: As of June 30, 2019, there were no outstanding prepayments of over 1 year.
2. Top five prepaid companies at the year-end
Name of the company | Amount | Percentage (%) |
The First | 698,463,245.75 | 53.14 |
The Second | 98,729,978.44 | 7.51 |
The Third | 87,022,226.90 | 6.62 |
The Fourth | 79,143,421.14 | 6.02 |
The Fifth | 20,957,800.88 | 1.59 |
Total | 984,316,673.11 | 74.88 |
Notes to the financial statements Page 34
(5) Other receivables
Items | Ending balance | Beginning balance |
Interest receivables | 13,872,107.84 | 11,608,705.43 |
Dividend receivables | ||
Other receivables | 191,594,542.93 | 191,155,259.55 |
Total | 205,466,650.77 | 202,763,964.98 |
1.Interest receivable
(1) Interest receivable disclosed by category
Items | Ending balance | Beginning balance |
Deposit interest | 13,872,107.84 | 11,608,705.43 |
Total | 13,872,107.84 | 11,608,705.43 |
2.Other receivables
(1) Other receivables disclosed by category
Items | Ending balance | ||||
Carrying amount | Provision for bad debts | Book value | |||
Amount | Percentage (%) | Amount | Bad debts ratio (%) | ||
Other receivables tested for impairment by portfolio | 254,437,069.84 | 99.32 | 64,582,526.91 | 25.38 | 189,854,542.93 |
Other receivables tested for impairment individually | 1,740,000.00 | 0.68 | 1,740,000.00 | ||
Total | 256,177,069.84 | 100.00 | 64,582,526.91 | 25.21 | 191,594,542.93 |
Items | Beginning balance | ||||
Carrying amount | Provision for bad debts | Book value | |||
Amount | Percentage (%) | Amount | Bad debts ratio (%) |
Other receivables tested for impairment by portfolio | 254,359,387.50 | 99.32 | 64,944,127.95 | 25.53 | 189,415,259.55 |
Other receivables tested for impairment individually | 1,740,000.00 | 0.68 | 1,740,000.00 | ||
Total | 256,099,387.50 | 100.00 | 64,944,127.95 | 191,155,259.55 |
Other receivables disclosed by Aging
Items | Ending balance | ||
Carrying amount | Provision for bad debts | Bad debts ratio (%) | |
Within 1 year (inclusive) | 158,226,535.01 |
Notes to the financial statements Page 35
Items | Ending balance | ||
Carrying amount | Provision for bad debts | Bad debts ratio (%) | |
1-2 years (inclusive) | 4,278,962.95 | 213,948.15 | 5 |
2-3 years (inclusive) | 34,453,741.40 | 6,890,748.28 | 20 |
Over 3 years | 59,217,830.48 | 57,477,830.48 | 97 |
Total | 256,177,069.84 | 64,582,526.91 |
(2) Information of provision, reversal or recovery of bad debts of current period.The provision of bad debts of current period is RMB 361,601.04.
(3) No other receivables have been written off this year.
(4) Other receivables disclosed by nature
Nature | Ending balance | Beginning balance |
Accounts | 204,915,146.72 | 203,695,979.62 |
Margin and deposit | 2,286,886.27 | 2,238,972.26 |
Others | 48,975,036.85 | 50,164,435.62 |
Total | 256,177,069.84 | 256,099,387.50 |
(5) Top five debtors at the year-end
Company | Nature or content | Amount | Aging | Percentage of total other receivables (%) | Provision for bad debts |
The First | Accounts | 7,718,029.34 | within 1 year | 2.86 | |
The Second | Accounts | 4,807,446.56 | within 1 year | 1.78 | |
The Third | Accounts | 4,514,286.35 | 2-3 years | 1.67 | 2,138,916.66 |
The Fourth | Accounts | 4,341,257.18 | 2-3 years | 1.61 | 868,251.44 |
The Fifth | Accounts | 3,526,146.54 | within 1 year | 1.31 | |
Total | 24,907,165.97 | 9.23 | 3,007,168.10 |
(6) Inventories
1. Inventories disclosed by category
Items | Ending balance | Beginning balance | ||||
Carrying amount | Impairment | Book value | Carrying amount | Impairment | Book value | |
Raw material and main material | 6,468,803,309.62 | 26,986,533.69 | 6,441,816,775.93 | 5,509,216,101.37 | 26,986,533.69 | 5,482,229,567.68 |
Work in process and self-made semi-finished product | 1,402,852,181.92 | 1,402,852,181.92 | 1,365,365,191.33 | 29,012,489.61 | 1,336,352,701.72 | |
Finished products | 4,123,737,309.00 | 827,243.38 | 4,122,910,065.62 | 3,888,124,260.41 | 28,959,417.41 | 3,859,164,843.00 |
Notes to the financial statements Page 36
Items | Ending balance | Beginning balance | ||||
Carrying amount | Impairment | Book value | Carrying amount | Impairment | Book value |
Total | 11,995,392,800.54 | 27,813,777.07 | 11,967,579,023.47 | 10,762,705,553.11 | 84,958,440.71 | 10,677,747,112.40 |
2. Impairment of inventory
Category | Beginning balance | Increase | Decrease | Ending balance | ||
Provision | Others | Write-back or write-off | Others | |||
Raw material and main material | 26,986,533.69 | 26,986,533.69 | ||||
Work in process and self-made semi-finished product | 29,012,489.61 | 29,012,489.61 | ||||
Finished products | 28,959,417.41 | 28,132,174.03 | 827,243.38 | |||
Total | 84,958,440.71 | 57,144,663.64 | 27,813,777.07 |
(7) Other current assets
Items | Ending balance | Beginning balance |
Prepaid enterprise income tax | 184,668,751.64 | 189,634,393.98 |
VAT input tax | 62,944,230.59 | 102,485,377.15 |
Total | 247,612,982.23 | 292,119,771.13 |
Notes to the financial statements Page 37
(8) Available-for-sale financial assets
Items | Ending balance | Beginning balance | ||||
Carrying amount | Impairment | Book value | Carrying amount | Impairment | Book value |
Available-for-sale debt instruments | ||||||
Available-for-sale equity instruments | 1,056,239,522.00 | 14,414,693.00 | 1,041,824,829.00 | |||
Including: | ||||||
Measured at fair value | ||||||
Measured at cost | 1,056,239,522.00 | 14,414,693.00 | 1,041,824,829.00 | |||
Total | 1,056,239,522.00 | 14,414,693.00 | 1,041,824,829.00 |
Notes to the financial statements Page 38
(9) Long-term equity investment
Investees | Beginning Balance | Increase/decrease | Ending Balance | Amount Provision Total Impairment | Total Impairment Ending Balance | ||||||
Add Investment | Reduce Investment | Investment Gains and Losses Recognized under the Equity Method | Adjustment Comprehensive Income | Other Equity Changes | Declaration of Cash Dividends or Profit | Others | |||||
Joint Venture | |||||||||||
Zhejiang Bengang Jingrui Steel Processing Co., Ltd. | 2,455,681.55 | 25,907.49 | 2,481,589.04 | ||||||||
Subtotal | 2,455,681.55 | 25,907.49 | 2,481,589.04 | ||||||||
Total | 2,455,681.55 | 25,907.49 | 2,481,589.04 |
Notes to the financial statements Page 39
(10) Other equity investment
Items | Ending Balance | Beginning Balance |
Suzhou Bengang Industrial Co., Ltd. | 3,888,980.00 | |
Sinosteel Shanghai Steel Processing Co., Ltd. | 0.00 | |
Northeast Special Steel Group Co., Ltd. | 1,037,735,849.00 | |
Guangzhou Benpu Auto Board Sales Co., Ltd. | 200,000.00 | |
Total | 1,041,824,829.00 |
(11) Fixed assets
1. Details of fixed assets
Items | Buildings | Machinery | Transportation equipment and others | Total |
1.Total original value | ||||
(1) Beginning balance | 12,174,491,765.86 | 43,551,735,976.27 | 902,527,777.12 | 56,628,755,519.25 |
(2) Increase in current period | 7,596,518.16 | 7,596,518.16 | ||
Including: Purchase | ||||
Transferred from construction in progress | 7,596,518.16 | 7,596,518.16 | ||
Merging | ||||
Others | ||||
(3) Decrease in current period | 28,441,077.44 | 362,164,072.02 | 1,076,210.06 | 391,681,359.52 |
Including: Disposal | 28,441,077.44 | 362,164,072.02 | 1,076,210.06 | 391,681,359.52 |
Others | ||||
(4) Ending balance | 12,146,050,688.42 | 43,197,168,422.41 | 901,451,567.06 | 56,244,670,677.89 |
2.Total accumulated depreciation | ||||
(1) Beginning balance | 5,576,027,013.36 | 26,526,053,819.79 | 560,595,347.69 | 32,662,676,180.84 |
(2) Increase in current period | 188,520,413.30 | 932,455,392.69 | 78,888,442.73 | 1,199,864,248.72 |
Including: Provision | 188,520,413.30 | 932,455,392.69 | 78,888,442.73 | 1,199,864,248.72 |
Others | - | |||
(3) Decrease in current period | 20,923,664.12 | 303,852,548.23 | 7,296,035.40 | 332,072,247.75 |
Including: Disposal | 20,923,664.12 | 303,852,548.23 | 7,296,035.40 | 332,072,247.75 |
Others | ||||
(4) Ending balance | 5,743,623,762.54 | 27,154,656,664.25 | 632,187,755.02 | 33,530,468,181.81 |
3.Total impairment | ||||
(1) Beginning balance | 38,948,079.36 | 2,626,719.08 | 41,574,798.44 | |
(2) Increase in current period | ||||
Including: Provision | ||||
Others | ||||
(3) Decrease in current period | 340,073.51 | 340,073.51 | ||
Including: Disposal | 340,073.51 | 340,073.51 | ||
Others |
Notes to the financial statements Page 40
Items | Buildings | Machinery | Transportation equipment and others | Total |
(4) Ending balance | 38,608,005.85 | 2,626,719.08 | - | 41,234,724.93 |
4.Total net book value of Fixed assets | ||||
(1) Ending book value | 6,363,818,920.03 | 16,039,885,039.08 | 269,263,812.04 | 22,672,967,771.15 |
(2) Beginning book value | 6,559,516,673.14 | 17,023,055,437.40 | 341,932,429.43 | 23,924,504,539.97 |
2. Temporary idle fixed assets
Items | Original book value | Accumulated depreciation | Impairment | Book value |
Buildings | 201,165,792.22 | 118,513,395.96 | 35,014,689.33 | 47,637,706.93 |
Machinery | 1,224,688.89 | 1,149,022.46 | 75,666.43 | |
Total | 202,390,481.11 | 119,662,418.42 | 35,090,355.76 | 47,637,706.93 |
3. Fixed assets leased out by operating lease
Items | Book value |
Buildings | 9,460,723.71 |
Machinery | 85,459.55 |
Total | 9,546,183.26 |
4. Fixed assets without property rights certificates at the end of the period
Items | Book value | Reason |
Buildings | 1,016,286,114.63 | To be handled |
(12) Construction in progress
1. Construction in progress and Construction materials
Items | Ending balance | Beginning balance |
Construction in progress | 1,355,784,359.63 | 831,693,471.71 |
Project materials | 18,626,600.07 | 4,900,986.11 |
Total | 1,374,410,959.70 | 836,594,457.82 |
2. Details of construction in progress
Notes to the financial statements Page 41
Items | Ending balance | Beginning balance | |||||
Carrying amount | Total impairment | Total net book value of Fixed assets | Carrying amount | Total impairment | Total net book value of Fixed assets | ||
High Strength Cold Rolling Steel Renovation Project | 43,856,840.06 | 43,856,840.06 | |||||
The Third Cold Rolling Work Hot-Dip Galvanizing Production Line Project | 4,575,442.24 | 4,575,442.24 | |||||
The 360 Square Meter Sintering Machine | 48,115,730.79 | 48,115,730.79 | 39,870,921.39 | 39,870,921.39 | |||
Energy Control Center Project | 16,521,792.81 | 16,521,792.81 | 16,068,616.55 | 16,068,616.55 | |||
Renovation Project of Power Plant Three - Power Plant. | 77,265,082.68 | 77,265,082.68 | 67,436,716.24 | 67,436,716.24 | |||
Energy Saving And Environmental Protection Reconstruction Of No.1 Converter Project | 107,484,022.00 | 107,484,022.00 | 81,652,336.52 | 81,652,336.52 | |||
Modifying and Upgrading of No.2 Casting machine in Hot steel plant | 71,055,463.93 | 71,055,463.93 | 67,751,518.71 | 67,751,518.71 | |||
No. 5 blast furnace overhaul project (new No. 2 blast furnace) | 205,247,220.39 | 205,247,220.39 | 79,221,161.00 | 79,221,161.00 | |||
Power plant 4-5# coke oven dry quenching waste heat steam utilization project | 30,116,417.01 | 30,116,417.01 | 27,607,246.17 | 27,607,246.17 | |||
1700 hot rolling perfect transformation | 29,822,575.23 | 29,822,575.23 | 25,521,831.89 | 25,521,831.89 | |||
CCPP power generation project | 66,004,363.05 | 66,004,363.05 | 24,961,721.54 | 24,961,721.54 | |||
Coking plant gas deamination and sulfur ammonia maintenance project | 34,800,566.05 | 34,800,566.05 | 34,300,566.05 | 34,300,566.05 | |||
360 square meter sintering machine waste heat utilization | 50,994,694.50 | 50,994,694.50 | 44,777,158.00 | 44,777,158.00 | |||
5#-7# Oxygen Generator Nitrogen Increase Energy Saving Reconstruction | 28,911,871.30 | 28,911,871.30 | 21,715,145.18 | 21,715,145.18 | |||
Dry dedusting of No. 7 blast furnace and energy saving reform of TRT power generation | 27,673,848.07 | 27,673,848.07 | 22,973,276.80 | 22,973,276.80 | |||
No. 6 blast furnace environmental protection overhaul project | 39,093,141.87 | 39,093,141.87 | 22,895,777.14 | 22,895,777.14 | |||
Other | 474,245,287.65 | 474,245,287.65 | 254,939,478.53 | 254,939,478.53 | |||
Total | 1,355,784,359.63 | 1,355,784,359.63 | 831,693,471.71 | 831,693,471.71 |
Notes to the financial statements Page 42
3. Changes in important construction projects in the current period
Items | Budget(10 thousand) | Beginning balance | Increase in current period | Transferred to fixed asset in current period | Decreased by others in current period | Ending balance | Project cumulative investment accounted for the proportion of the budget (%) | Project progress (%) | Accumulated amount of interest capitalization | Including:Interest capitalization amount in current period | Interest capitalization rate in current period (%) | Sources of funds |
High Strength Cold Rolling Steel Renovation Project | 613,498.00 | 43,856,840.06 | 43,856,840.06 | 90% | 100% | 855,901,421.79 | Other | |||||
The Third Cold Rolling Work Hot-Dip Galvanizing Production Line Project | 86,918.00 | 4,575,442.24 | 4,575,442.24 | 72% | 100% | Other | ||||||
Energy-saving and environmental protection transformation of converter system and 180-ton dephosphorization converter project | 177,864.40 | 1,908,118.60 | 1,908,118.60 | 87% | 100% | 127,847,567.31 | Other | |||||
Renovation Project of Power Plant Three - Power Plant. | 59,399.00 | 67,436,716.24 | 9,828,366.44 | 77,265,082.68 | 80% | 90% | 34,827,795.34 | Other | ||||
Energy Saving and Environmental Protection Reconstruction Of No.1 Converter Project | 21,800.00 | 81,652,336.52 | 25,831,685.48 | 107,484,022.00 | 49% | 50% | 336,061.23 | 336,061.23 | 3.48% | Other | ||
Modifying and Upgrading of No.2 Casting machine in Hot steel plant | 10,090.00 | 67,751,518.71 | 3,303,945.22 | 71,055,463.93 | 70% | 80% | 40,530.19 | 40,530.19 | 3.48% | Other | ||
No. 5 blast furnace overhaul project (new No. 2 blast furnace) | 150,000.00 | 79,221,161.00 | 126,026,059.39 | 205,247,220.39 | 14% | 25% | 783,807.97 | 783,807.97 | 3.48% | Other | ||
Total | 1,119,569.40 | 296,061,732.47 | 215,330,457.43 | 511,392,189.90 | 1,019,737,183.83 | 1,160,399.39 |
Notes to the financial statements Page 43
4. Construction materials
Items | Ending balance | Beginning balance | ||||
Carrying amount | Impairment | Book value | Carrying amount | Impairment | Book value | |
Construction materials | 18,626,600.07 | 18,626,600.07 | 4,900,986.11 | 4,900,986.11 | ||
Total | 18,626,600.07 | 18,626,600.07 | 4,900,986.11 | 4,900,986.11 |
(13) Intangible assets
1. Details of intangible assets
Items | Land use right | Software | Total |
1.Total of original value | |||
(1)Beginning balance | 327,028,797.84 | 310,401.55 | 327,339,199.39 |
(2)Increase | |||
Including: Purchase | |||
Including: Internal R&D | |||
Including: Increase in Mergers | |||
Including: Others | |||
(3)Decrease | |||
Including: Disposal | |||
Including: Others | |||
(4)Ending balance | 327,028,797.84 | 310,401.55 | 327,339,199.39 |
2.Total of Accumulated Amortization | |||
(1)Beginning balance | 49,176,692.15 | 100,066.21 | 49,276,758.36 |
(2)Increase | 3,270,287.92 | 8,444.37 | 3,278,732.29 |
Including: Provision | 3,270,287.92 | 8,444.37 | 3,278,732.29 |
Including: Others | |||
(3)Decrease | |||
Including: Disposal | |||
Including: Others | |||
(4)Ending balance | 52,446,980.07 | 108,510.58 | 52,555,490.65 |
3.Total of Impairment | |||
(1)Beginning balance | |||
(2)Increase | |||
Including: Provision | |||
Including: Others | |||
(3)Decrease | |||
Including: Disposal | |||
Including: Others | |||
(4)Ending balance | |||
4.Total of Net value | |||
(1)Ending book value | 274,581,817.77 | 201,890.97 | 274,783,708.74 |
(2)Beginning book value | 277,852,105.69 | 210,335.35 | 278,062,441.04 |
Notes to the financial statements Page 44
2. Land use right without Certificate of Land use right at the end of the period.None.
(14) Deferred tax asset and deferred tax liability
1. Undedicated deferred tax asset
Items | Ending balance | Beginning balance | ||
Deductible temporary differences | Deferred tax asset | Deductible temporary differences | Deferred tax asset | |
Impairment | 323,453,331.07 | 80,863,332.77 | 384,689,582.05 | 96,172,395.52 |
Internal unrealized profit | 44,665,863.14 | 11,166,465.79 | 47,141,747.73 | 11,785,436.93 |
Differences of depreciation and amortization | 333,978,859.03 | 83,494,714.76 | 333,978,859.03 | 83,494,714.76 |
Total | 702,098,053.24 | 175,524,513.32 | 765,810,188.81 | 191,452,547.21 |
2. Unrecognized deferred tax assets
Items | Ending balance | Beginning balance |
Deductible temporary differences | 2,914,780.92 | 2,914,780.92 |
Deductible losses | 667,057,769.20 | 1,112,718,371.26 |
Total | 669,972,550.12 | 1,115,633,152.18 |
3. The deductible loss of unrecognized deferred tax assets due in the following period
Items | Ending balance | Beginning balance | Notes |
Year 2020 | 639,818,319.71 | 1,085,478,921.77 | |
Year 2021 | 11,436,302.83 | 11,436,302.83 | |
Year 2022 | 1,000,766.72 | 1,000,766.72 | |
Year 2023 | 14,802,379.94 | 14,802,379.94 | |
Year 2024 | |||
Total | 667,057,769.20 | 1,112,718,371.26 |
(15) Other non-current assets
Items | Ending balance | Beginning balance |
Prepaid of long-term assets | 68,303,165.35 | 76,341,975.35 |
Total | 68,303,165.35 | 76,341,975.35 |
Notes: The prepaid long-term assets at the end of the period are prepaid equipment and construction funds.
(16) Short-term loans
1. Classification of short-term loans
Items | Ending balance | Beginning balance |
Pledge loans | 48,262,375.85 |
Notes to the financial statements Page 45
Items | Ending balance | Beginning balance |
Guaranteed loans | 12,078,193,000.00 | 10,361,008,000.00 |
Credit loans | 220,000,000.00 | 1,529,220,000.00 |
Total | 12,298,193,000.00 | 11,938,490,375.85 |
2. Overdue short-term loans
(17) Notes payables
Items | Ending balance | Beginning balance |
Bank acceptance bill | 9,317,222,357.86 | 8,738,192,014.02 |
Domestic letter of credit | 2,333,060,000.00 | 1,275,000,000.00 |
Total | 11,650,282,357.86 | 10,013,192,014.02 |
Notes: There are no outstanding notes payable at the end of this period.
(18) Accounts payable
1. Accounts payable disclosed by category
Items | Ending balance | Beginning balance |
Accounts payable for goods | 4,432,010,176.48 | 4,483,900,163.08 |
Accounts payable for labor | 29,371,271.02 | 30,829,506.69 |
Accounts payable for project and equipment | 509,540,291.98 | 424,097,390.68 |
Repair expense | 652,340,212.43 | 579,971,383.23 |
Others | 3,576,818.36 | 3,244,367.97 |
Total | 5,626,838,770.27 | 5,522,042,811.65 |
2. Significant accounts payable aging over one year
Items | Ending balance | Reason |
Liaoning Shenjiao International Trade Co.,Ltd | 72,839,065.27 | Not yet settled |
MCC Southern Engineering Technology Co., Ltd. | 51,119,440.77 | Not yet settled |
Hangzhou Tianshen Materials Co., Ltd. | 20,145,902.65 | Not yet settled |
MCC Jiao Nai Engineering Technology Co., Ltd. | 19,379,163.99 | Not yet settled |
MCC Jiao Nai (Dalian) Engineering Technology Co., Ltd. | 17,415,300.00 | Not yet settled |
Shenyang Railway Construction Bridge and Tunnel Engineering Co., Ltd. | 14,200,000.00 | Not yet settled |
Jixi Huasheng Fengyuan Coal Preparation Co., Ltd. | 6,485,138.18 | Not yet settled |
Total | 201,584,010.86 |
Notes to the financial statements Page 46
(19) Advance from customers
1. Advance from customers disclosed by category
Items | Ending balance | Beginning balance |
Advance for goods | 3,345,451,646.56 | 3,331,854,098.42 |
Total | 3,345,451,646.56 | 3,331,854,098.42 |
2. Significant advance from customers aging over one year.
None
(20) Employee benefits payable
1. Employee benefits payable
Items | Beginning balance | Increase | Decrease | Ending balance |
(1) Short-term employee benefits | 47,824,468.42 | 916,510,872.23 | 916,669,401.25 | 47,665,939.40 |
(2) Post-employment benefits - defined contribution plans | 174,373.43 | 128,070,045.18 | 128,069,809.64 | 174,608.97 |
(3) Termination benefits | 3,467,389.87 | 1,046,552.23 | 2,420,837.64 | |
(4) Other benefits due within one year | ||||
Total | 51,466,231.72 | 1,044,580,917.41 | 1,045,785,763.12 | 50,261,386.01 |
2. Short-term employee benefits
Items | Beginning balance | Increase | Decrease | Ending balance |
(1) Salary, bonus, allowance and subsidy | 38,282,721.78 | 684,822,157.27 | 685,422,131.12 | 37,682,747.93 |
(2) Employee welfare | 47,016,070.43 | 47,016,070.43 | ||
(3) Social Insurance | 652,400.36 | 71,083,855.14 | 71,083,855.14 | 652,400.36 |
Including: Medical insurance | 1,598.15 | 53,654,171.68 | 53,654,171.68 | 1,598.15 |
Work injury insurance | 650,802.21 | 17,416,640.12 | 17,416,640.12 | 650,802.21 |
Maternity insurance | 13,043.34 | 13,043.34 | ||
(4) Housing | 6,854,689.00 | 52,823,804.00 | 52,887,301.00 | 6,791,192.00 |
(5) Union funds and staff education fee | 2,034,657.28 | 60,764,985.39 | 60,260,043.56 | 2,539,599.11 |
(6) Short-term compensated absences | ||||
(7) Short-term profit - sharing scheme |
Notes to the financial statements Page 47
Items | Beginning balance | Increase | Decrease | Ending balance |
Total | 47,824,468.42 | 916,510,872.23 | 916,669,401.25 | 47,665,939.40 |
3. Defined contribution plans
Items | Beginning balance | Increase | Decrease | Ending balance |
Basic pension fund | 68,338.82 | 124,734,324.48 | 124,734,498.12 | 68,165.18 |
Unemployment insurance | 106,034.61 | 3,335,720.70 | 3,335,311.52 | 106,443.79 |
Total | 174,373.43 | 128,070,045.18 | 128,069,809.64 | 174,608.97 |
(21) Current tax liabilities
Items | Ending balance | Beginning balance |
Value-added tax | 35,376,964.97 | 442,980,368.02 |
Corporate income tax | 4,317,717.53 | 2,769,293.58 |
City maintenance and construction tax | 9,587,112.00 | 32,813,368.49 |
House property tax | 3,506,456.37 | 3,004,878.95 |
Educational surcharges | 4,137,761.43 | 23,450,632.11 |
Environmental tax | 381,305.56 | 7,340,495.80 |
Others | 5,581,530.69 | 3,393,332.73 |
Total | 62,888,848.55 | 515,752,369.68 |
(22) Other payables
Items | Ending balance | Beginning balance |
Interest payables | 9,343,905.54 | 9,658,681.99 |
Dividends payables | 193,768,576.60 | |
Other payables | 696,885,503.92 | 852,852,496.97 |
Total | 899,997,986.06 | 862,511,178.96 |
1. Interest Payable
Items | Ending balance | Beginning Balance |
Loan interests | 9,343,905.54 | 9,658,681.99 |
Total | 9,343,905.54 | 9,658,681.99 |
2. Dividends payables
Items | Ending balance | Beginning Balance |
Common dividend | 193,768,576.60 | |
Preferred shares divided into equity instruments/Sustainable Debt Dividend | ||
Including: Tool 1 | ||
Tool 2 |
Notes to the financial statements Page 48
Items | Ending balance | Beginning Balance |
Total | 193,768,576.60 |
3. Other payables
(1)Other payables disclosed by nature
Items | Ending balance | Beginning Balance |
Deposit | 6,756,148.49 | 6,876,696.99 |
Margin | 131,820,736.18 | 129,911,043.84 |
Accounts | 395,056,845.92 | 568,285,473.68 |
Others | 163,251,773.33 | 147,779,282.46 |
Total | 696,885,503.92 | 852,852,496.97 |
(2)Significant other payables ageing over one year
Name | Ending balance | Reason |
Benxi Steel & Iron (Group) Co., Ltd. | 101,874,612.92 | Not yet settled |
(23) Non-current liabilities due within one year
Items | Ending balance | Beginning balance |
Long-term loans due within one year | 1,036,582,163.28 | 350,965,576.32 |
Bond payables due within one year | ||
Total | 1,036,582,163.28 | 350,965,576.32 |
(24) Long-term loans
Categories | Ending balance | Beginning balance |
Pledged loans | ||
Mortgage loan | ||
Guaranteed loans | 3,195,042,608.56 | 3,931,317,094.16 |
Credit loans | 3,018,011,955.59 | 3,152,323,000.00 |
Total | 6,213,054,564.15 | 7,083,640,094.16 |
(25) Long-term payables
Items | Ending balance | Beginning balance |
Long-term payables | 52,733,529.65 | 13,686,705.92 |
Special payables | ||
Total | 52,733,529.65 | 13,686,705.92 |
1. Long-term payables
Items | Ending balance | Beginning balance |
Financing lease payments | 52,733,529.65 | 13,686,705.92 |
Total | 52,733,529.65 | 13,686,705.92 |
Notes to the financial statements Page 49
(26) Deferred income
Items | Beginning balance | Increase | Decrease | Ending balance | Reason |
Government subsidy | 289,499,002.97 | 428,000.00 | 41,695,000.00 | 248,232,002.97 | |
Total | 289,499,002.97 | 428,000.00 | 41,695,000.00 | 248,232,002.97 |
Notes to the financial statements Page 50
Projects of government subsidies:
Items | Beginning balance | Increase | Transfer to non-operating income | Other decrease | Ending balance | Related to assets or income |
MES Project Special Fund | 1,720,000.00 | 860,000.00 | 860,000.00 | Related to assets | ||
Industrial Enterprise Energy Management Center Construction Demonstration Project | 6,960,000.00 | 1,160,000.00 | 5,800,000.00 | Related to assets | ||
Environment Pollution Renovation Project | 3,620,000.00 | 1,810,000.00 | 1,810,000.00 | Related to assets | ||
Environment Renovation Project and Regional Basin Environment Protection Project | 340,000.00 | 170,000.00 | 170,000.00 | Related to assets | ||
Cold Rolling Steel High Strength Renovation Project | 200,000,000.00 | 25,000,000.00 | 175,000,000.00 | Related to assets | ||
Automobile High-class Electrolytic Zinc Steel Plate Production Line Project | 16,416,000.00 | 4,104,000.00 | 12,312,000.00 | Related to assets | ||
Sintering Machine Residue Heat Usage and Desulfurization Project | 4,204,000.00 | 2,102,000.00 | 2,102,000.00 | Related to assets | ||
7 130t Boilers Flue Gas Desulfurization Renovation Project of Power Plant | 19,200,000.00 | 2,400,000.00 | 16,800,000.00 | Related to assets | ||
Overseas Advanced Technology Introduction Special Fund | 6,884,000.00 | 1,442,000.00 | 5,442,000.00 | Related to assets | ||
Automobile Steel Sheet Engineering Laboratory Project | 1,000,000.00 | 1,000,000.00 | Related to assets | |||
Third-generation High Strength Steels for Automobile R&D Project | 2,900,000.00 | 2,900,000.00 | Related to assets | |||
The 360 Cubic Meter Sintering Machine Flue Gas Desulfurization Renovation Project of Blast Furnace Plant | 200,000.00 | 100,000.00 | 100,000.00 | Related to assets | ||
Environment Protection Project Special Fund | 1,160,000.00 | 580,000.00 | 580,000.00 | Related to assets | ||
Advanced Treatment of Carbon Fiber Wastewater Project of Coke Plant Dongfeng Area | 9,500,000.00 | 9,500,000.00 | Related to assets | |||
Desulfurization and Denitration Projects for Coal-fired Boiler of Power Plant High-pressure Workshop | 4,800,000.00 | 300,000.00 | 4,500,000.00 | Related to assets | ||
Power Plant No 3 workshop Heat and Power Cogeneration Renovation Project | 8,000,000.00 | 1,000,000.00 | 7,000,000.00 | Related to assets | ||
Sintering Machine Energy Saving and Environmental Protection Project of Blast Furnace Plant | 2,320,000.00 | 580,000.00 | 1,740,000.00 | Related to assets | ||
Air Quality Automatic Monitoring System | 175,000.00 | 35,000.00 | 140,000.00 | Related to assets |
Notes to the financial statements Page 51
Items | Beginning balance | Increase | Transfer to non-operating income | Other decrease | Ending balance | Related to assets or income |
Liaoning Grand Craftsman Subsidy and Skill Master Workstation Grant | 100,002.97 | 240,000.00 | 340,002.97 | Related to income | ||
Support fund for the project of high-strength pipeline steel under low temperature and high pressure service conditions | 188,000.00 | 52,000.00 | 136,000.00 | Related to income | ||
Total | 289,499,002.97 | 428,000.00 | 41,695,000.00 | 248,232,002.97 |
Notes to the financial statements Page 52
(27) Share capital
Items | Beginning balance | Increase/decrease (+ , - ) | Ending balance | ||||
Issuing of new share | Bonus shares | Transferred from reserves | Others | Subtotal | |||
Capital shares | 3,875,371,532.00 | 3,875,371,532.00 |
(28) Capital reserves
Items | Beginning balance | Increase | Decrease | Ending balance |
Capital premium over par value | 12,227,292,378.47 | 12,227,292,378.47 | ||
Other capital reserves | 115,917,468.82 | 115,917,468.82 | ||
Total | 12,343,209,847.29 | 12,343,209,847.29 |
(29) Special Reserves
Items | Beginning balance | Increase | Decrease | Ending balance |
Safety production cost | 683,937.71 | 25,542,658.45 | 5,212,639.87 | 21,013,956.29 |
Total | 683,937.71 | 25,542,658.45 | 5,212,639.87 | 21,013,956.29 |
(30) Surplus Reserves
Items | Beginning balance | Increase | Decrease | Ending balance |
Statutory surplus reserves | 961,105,529.85 | 961,105,529.85 | ||
Total | 961,105,529.85 | 961,105,529.85 |
(31) Undistributed Profits
Items | Current period | Previous period |
Before adjustments: undistributed profits at last year-end | 1,945,887,269.82 | 1,103,162,610.35 |
Adjustments of the beginning distributed profits (increase + / decease -) | ||
After adjustments: undistributed profit at this year-beginning | 1,945,887,269.82 | 1,103,162,610.35 |
Add: undistributed profit belonging to parent company | 453,209,615.76 | 756,951,987.59 |
Less: Statutory surplus reserves |
Notes to the financial statements Page 53
Items | Current period | Previous period |
Discretionary reserves | ||
General risk reserves | ||
Common shares dividend payable | 193,768,576.60 | 193,768,576.60 |
Common shares dividend transferred to paid-in capital | ||
Ending balance of undistributed profits | 2,205,328,308.98 | 1,666,346,021.34 |
(32) Operating income and operating cost
Items | Current period | Previous period | ||
Revenue | Cost | Revenue | Cost | |
Principal business | 22,581,458,005.55 | 20,807,089,888.18 | 21,302,037,073.89 | 19,140,922,165.53 |
Other business | 1,521,137,161.59 | 1,260,522,841.47 | 2,139,210,303.25 | 1,663,285,255.45 |
Total | 24,102,595,167.14 | 22,067,612,729.65 | 23,441,247,377.14 | 20,804,207,420.98 |
(33) Tax and surcharges
Items | Current period | Previous period |
City maintenance and construction tax | 27,561,420.89 | 48,666,138.65 |
Educational surcharge | 19,877,089.62 | 34,952,935.92 |
Housing property tax | 38,778,891.04 | 36,610,915.20 |
Land use right tax | 6,538,299.88 | 3,421,519.74 |
Stamp duty and others | 14,961,858.43 | 15,742,454.27 |
Environmental tax | 6,387,222.58 | 13,896,524.30 |
others | 20,580.53 | 16,887.56 |
Total | 114,125,362.97 | 153,307,375.64 |
(34) Selling and distribution expenses
Notes to the financial statements Page 54
Items | Current period | Previous period |
Freight | 456,217,341.94 | 393,290,897.61 |
Port surcharges | 52,405,847.32 | 56,907,191.59 |
Import and export agency fee | 34,174,633.61 | 35,649,297.75 |
Salary and benefits | 13,553,533.82 | 11,993,852.41 |
Others | 13,751,821.86 | 12,721,174.90 |
Package fee | 4,342,020.59 | 3,475,594.69 |
Total | 574,445,199.14 | 514,038,008.95 |
(35) General and administrative expenses
Items | Current period | Previous period |
Salary and benefits | 122,383,642.39 | 116,352,823.92 |
Repair expense | 142,464,599.50 | 174,107,156.65 |
Land use right fee | 27,345,714.30 | 27,345,714.30 |
Others | 62,667,766.52 | 57,134,166.31 |
Depreciation | 24,216,703.47 | 26,164,322.31 |
Social insurance fee | 23,532,872.66 | 23,452,571.91 |
Heating fee | 22,391,441.18 | 20,783,413.87 |
Water resources fee | 11,993,951.74 | 6,546,763.90 |
Housing fund | 4,737,351.00 | 4,445,529.00 |
Amortization | 2,970,897.50 | 2,982,926.09 |
Entertainment fee | 1,070,316.75 | 1,527,871.52 |
Rental fee | 643,214.78 | 543,240.66 |
Shipping fee | 349,339.98 | 455,924.12 |
Total | 446,767,811.77 | 461,842,424.56 |
(36) Research and development expenses
Notes to the financial statements Page 55
Items | Current period | Previous period |
Depreciation, materials and compensation, etc. | 15,408,472.28 | 2,470,641.53 |
Total | 15,408,472.28 | 2,470,641.53 |
(37) Financial expenses
Items | Current period | Previous period |
Interest expenditure | 586,490,262.69 | 575,001,615.20 |
Less: Interest income | 127,083,779.58 | 61,605,403.34 |
Exchange loss | -71,095,752.13 | 286,291,324.68 |
Others | 15,154,975.44 | 3,350,880.74 |
Total | 403,465,706.42 | 803,038,417.28 |
Notes:The financial expenses of this period were 403 million yuan, a decrease of 400 million yuanfrom the previous period of 803 million yuan, a decrease of 49.76%, mainly due to the increase inexchange income and interest income during the period.
(38) Other income
Items | Current period | Previous period | Related to assets or income |
MES Project Special Fund | 860,000.00 | 860,000.00 | Assets |
Industrial Enterprise Energy Management Center Construction Demonstration Project | 1,160,000.00 | 1,160,000.00 | Assets |
Environment Pollution Renovation Project | 1,810,000.00 | 1,810,000.00 | Assets |
Environment Renovation Project and Regional Basin Environment Protection Project | 170,000.00 | 170,000.00 | Assets |
Cold Rolling Steel High Strength Renovation Project | 25,000,000.00 | 25,000,000.00 | Assets |
Automobile High-class Electrolytic Zinc Steel Plate Production Line Project | 4,104,000.00 | 4,104,000.00 | Assets |
Sintering Machine Residue Heat Usage and Desulfurization Project | 2,102,000.00 | 2,102,000.00 | Assets |
7 130t Boilers Flue Gas Desulfurization Renovation Project of Power Plant | 2,400,000.00 | 2,400,000.00 | Assets |
Treatment and Salt Extraction Project of Desulfurization Waste Liquid of Coke Plant | 50,000.00 | Assets | |
Overseas R&D Team Introduction Special Fund | 1,442,000.00 | 1,442,000.00 | Assets |
Notes to the financial statements Page 56
Items | Current period | Previous period | Related to assets or income |
The 360 Cubic Meter Sintering Machine Flue Gas Desulfurization Renovation Project of Blast Furnace Plant | 100,000.00 | 100,000.00 | Assets |
Environment Protection Project Special Fund | 580,000.00 | 580,000.00 | Assets |
Bengang Power plant high pressure workshop coal burning boiler desulfurization and denitrification items | Assets | ||
Bengang Power plant high pressure workshop coal burning boiler desulfurization and denitrification items | 300,000.00 | 300,000.00 | Assets |
Power Plant No 3 workshop Heat and Power Cogeneration Renovation Project | 1,000,000.00 | Assets | |
Iron and steel plant sintering machine energy saving and environmental protection project | 580,000.00 | 580,000.00 | Assets |
Air quality automatic monitoring system | 35,000.00 | 35,000.00 | Assets |
Xihu source resource management committee compensation | 414,300.00 | Income | |
Liaoning Grand Craftsman Subsidy and Skill Master Workstation Grant | 166,938.70 | Income | |
Support fund for the project of high-strength pipeline steel under low temperature and high pressure service conditions | 52,000.00 | Income | |
Total | 41,695,000.00 | 41,274,238.70 |
(39) Income on investment
Items | Current period | Previous period | |
Income on disposal of long-term equity investment by equity method | 25,907.49 | ||
Income on bank short-term financial products | 3,493,150.68 | ||
Total | 25,907.49 | 3,493,150.68 |
(40) Credit impairment loss
Items | Current period | Previous period |
Account receivable bad debt loss | 3,389,912.79 | |
Other account receivable bad debt loss | 361,601.04 | |
Long-term account receivable bad debt loss |
Notes to the financial statements Page 57
Total | 3,751,513.83 |
(41) Asset impairment loss
Items | Current period | Previous period | ||
Bad debt loss | 14,523,332.71 | |||
Inventory impairment loss | 6,394,630.93 | |||
Total | 20,917,963.64 |
(42) Assets disposal gains
Items | Current period | Previous period | The amount recognized in non-recurring profit |
Disposal gains or losses arising from disposal of fixed assets not classified for sale | 2,418,704.34 | 825,580.63 | 2,418,704.34 |
Total | 2,418,704.34 | 825,580.63 | 2,418,704.34 |
(43) Non-operating income
Items | Current period | Previous period | The amount recognized in non-recurring profit |
Debt restructuring gain | 50,640.00 | 945,892.23 | 50,640.00 |
Non-current assets scrapped gains | 7,955,444.40 | 7,955,444.40 | |
Others | 204,097.84 | 1,192,505.57 | 204,097.84 |
Total | 8,210,182.24 | 2,138,397.80 | 8,210,182.24 |
(44) Non-operating expense
Items | Current period | Previous period | The amount recognized in non-recurring profit |
Non-current assets scrapped loss | 57,974,322.05 | 1,382,402.26 | 57,974,322.05 |
Total | 57,974,322.05 | 1,382,402.26 | 57,974,322.05 |
(45) Income tax expense
1. Income tax expense
Items | Current period | Previous period |
Income tax payable for the current year | 9,415,176.70 | 5,956,888.87 |
Notes to the financial statements Page 58
Adjustment of deferred income tax | 16,547,005.03 | 5,679,337.17 |
Total | 25,962,181.73 | 11,636,226.04 |
2. Accounting profit and income tax expense adjustment process
Items | Current period |
Total profit | 478,870,963.27 |
Income tax expense calculate according to the official or applicable tax rate | 119,717,740.82 |
Effect of different tax rates applied by subsidiaries | |
Effect of adjustment of the income tax expense of prior period | |
Effect of non-taxable income | |
Effect of undeductible costs, expenses or losses | |
Effect of use of deductible losses of unrecognized deferred tax asset of prior period | -93,755,559.09 |
Effect of deductible temporary differences or deductible losses of unrecognized deferred tax asset of current period | |
Income tax expenses | 25,962,181.73 |
(46) Notes of statement of cash flows
1. Cash received related to other operating activities
Items | Current period | Previous period |
Withdraw of current accounts, advance for another | 17,151,876.47 | 19,218,434.76 |
Interest income | 127,083,779.58 | 61,605,403.34 |
Special subsidy income | 428,000.00 | 694,300.00 |
Non-operating income | 117,870.10 | 162,619.82 |
Others | 123,098.19 | 101,722.27 |
Total | 144,904,624.34 | 81,782,480.19 |
2. Cash paid related to other operating activities
Items | Current period | Previous period |
Current accounts, advance for another | 221,234,925.29 | 285,018,187.10 |
Sales expenses | 4,449,939.39 | 4,646,000.62 |
Administrative expenses | 17,883,394.86 | 18,078,644.22 |
Bank charges | 3,255,172.22 | 2,896,060.69 |
Others | 365,921.44 | 358,254.79 |
Notes to the financial statements Page 59
Items | Current period | Previous period |
Total | 247,189,353.20 | 310,997,147.42 |
(47) Supplementary details of statement of cash flows
1. Supplementary details for statement of cash flows
Items | Current period | Previous period |
1. A reconciliation of net profit to cash flows from operating activities: | ||
Net profit | 452,934,689.03 | 757,973,791.35 |
Add: Credit impairment loss | 3,751,513.83 | |
Asset impairment loss | -20,917,963.64 | |
Depreciation of fixed assets and so on | 1,199,864,248.72 | 1,144,984,195.00 |
Amortization of right use asset | ||
Amortization of intangible assets | 3,278,732.29 | 3,239,455.09 |
Long-term deferred expenses | ||
Losses proceeds from disposal of PPE, intangible assets and other long-term assets (Earnings marked“-”) | 57,974,322.05 | 556,821.63 |
Scrapped losses from fixed assets (Earnings marked“-”) | ||
Change in fair value loss (Earnings marked“-”) | ||
Financial expenses (Earnings marked“-”) | 403,465,706.42 | 803,038,417.28 |
Investment losses (Earnings marked“-”) | -3,493,150.68 | |
Deferred tax assets reduction (Addition marked“-”) | 15,928,033.89 | 5,679,337.17 |
Deferred tax liabilities increased (Reduction marked“-”) | ||
Reduction of inventory (Addition marked“-”) | -1,289,831,911.07 | -1,683,906,453.31 |
Operating receivable items reduction (Addition marked“-”) | -908,736,317.08 | 817,004,548.19 |
Operating payable items increase (Less marked"-") | 1,046,157,987.59 | -1,093,639,256.61 |
Other | ||
Net cash flows generated from operating activities | 984,787,005.67 | 730,519,741.47 |
2. Payments of investing and financing activities not involving cash: | - | -- |
Liabilities transferred to capital | ||
Convertible bonds due within one year | ||
Fixed assets financed by leasing | ||
3. The net increase in cash and cash equivalents: | -- | -- |
Ending balance of cash | 11,788,922,569.51 | 16,038,506,854.22 |
Less: Beginning balance of cash | 11,752,548,621.97 | 17,037,713,410.49 |
Notes to the financial statements Page 60
Items | Current period | Previous period |
Add: Ending balance of cash equivalents | ||
Less: Opening balance of cash equivalents | ||
The net increase in cash and cash equivalents | 36,373,947.54 | -999,206,556.27 |
2. The structure of cash and cash equivalents
Items | Ending balance | Beginning balance |
1. Cash | 11,788,922,569.51 | 11,752,548,621.97 |
Including: Cash on hand | 5,346.25 | 4,839.95 |
Bank deposits available on demand | 11,788,917,223.26 | 11,752,543,782.02 |
Other monetary funds available on demand | ||
Central bank deposits available on demand | ||
Balances with other financial institutions | ||
Loans to other financial institutions | ||
2. Cash equivalents | ||
Including: Investment of securities due within 3 months | ||
3. Ending balance of cash and cash equivalents | 11,788,922,569.51 | 11,752,548,621.97 |
Including: Cash and cash equivalents limited to use by the parent company of other subsidiary in the group |
(48) Assets of which ownership or right to use are restricted
Items | Ending balance | Reason |
Cash at bank and on hand | 5,156,849,822.92 | Deposit for notes and letter of credit |
Total | 5,156,849,822.92 |
(49) Foreign currency monetary items
Items | Ending balance in foreign currency | Exchange rate at the end of the period | Ending balance translated to RMB |
Cash at bank and on hand | 582,105,770.06 | ||
Including: USD | 83,505,239.72 | 6.8747 | 574,073,471.50 |
EUR | 936,843.39 | 7.8170 | 7,323,304.78 |
HKD | 805,949.50 | 0.8797 | 708,993.78 |
Short-term loans | 1,306,193,000.00 | ||
Including: USD | 190,000,000.00 | 6.8747 | 1,306,193,000.00 |
Notes to the financial statements Page 61
Items | Ending balance in foreign currency | Exchange rate at the end of the period | Ending balance translated to RMB |
Non-current liabilities due within one year | 1,036,582,163.28 | ||
Including: USD | 145,000,000.00 | 6.8747 | 996,831,500.00 |
EUR | 4,895,952.88 | 7.8170 | 38,271,663.66 |
JPY | 23,176,000.00 | 0.0638 | 1,478,999.62 |
Long-term loans | 1,648,495,389.11 | ||
Including: USD | 168,600,000.00 | 6.8747 | 1,159,074,420.00 |
EUR | 61,285,400.00 | 7.8170 | 479,067,971.80 |
JPY | 162,232,000.00 | 0.0638 | 10,352,997.31 |
6. Equity in other entities
(1) Equity in subsidiaries
1. Constitution of enterprise group
Name of the subsidiaries | Principal place of business | Registered address | Notes of business | Shareholding ratio | Acquiring method | |
Direct | Indirect |
Xiamen Bengang Steel & Iron Sales Co., Ltd. | Xiamen | Xiamen | Sales | 100.00 | Business combination under common control | |
Wuxi Bengang Steel & Iron Sales Co., Ltd. | Wuxi | Wuxi | Sales | 100.00 | Business combination under common control | |
Tianjin Bengang Steel & Iron Trading Co., Ltd. | Tianjin | Tianjin | Sales | 100.00 | Business combination under common control | |
Nanjing Bengang Materials Sales Co., Ltd. | Nanjing | Nanjing | Sales | 100.00 | Business combination under common control | |
Yantai Bengang Steel & Iron Sales Co., Ltd. | Yantai | Yantai | Sales | 100.00 | Business combination under common control | |
Harbin Bengang Economic and Trading Co., Ltd. | Harbin | Harbin | Sales | 100.00 | Business combination under common control | |
Changchun Bengang Steel & Iron Sales Co., Ltd. | Changchun | Changchun | Sales | 100.00 | Business combination under common control |
Notes to the financial statements Page 62
Name of the subsidiaries | Principal place of business | Registered address | Notes of business | Shareholding ratio | Acquiring method | |
Direct | Indirect |
Guangzhou Bengang Steel & Iron Trading Co., Ltd. | Guangzhou | Guangzhou | Sales | 100.00 | Establishment | |
Shanghai Bengang Metallurgy Science and Technology Co., Ltd. | Shanghai | Shanghai | Sales | 100.00 | Establishment | |
Bengang Steel Plates Liaoyang Pellet Co., Ltd. | Liaoyang | Liaoyang | Manufacturing | 100.00 | Establishment | |
Dalian Benruitong Automobile Material Technology Co., Ltd. | Dalian | Dalian | Manufacturing | 65.00 | Establishment | |
Bengang Posco Cold-rolled Sheet Co., Ltd. | Benxi | Benxi | Manufacturing | 75.00 | Business combination under common control | |
Benxi Bengang Steel Sales Co., Ltd | Benxi | Benxi | Sales | 100.00 | Establishment | |
Shenyang Bengang Metallurgical Science and Technology Co., Ltd. | Shenyang | Shenyang | Sales | 100.00 | Establishment | |
Chongqing Liaoben Steel & Iron Trading Co., Ltd. | Chongqing | Chongqing | Sales | 100.00 | Establishment | |
Bengang Baojin (Shenyang) auto new material technology Co., Ltd. | Shenyang | Shenyang | Manufacturing | 85.00 | Business combination under common control |
2. Significant but not wholly-owned subsidiaries
Name of the subsidiaries | Proportion of non-controlling interests (%) | Profits and losses attributing to non-controlling shareholders | Dividend declared to distribute to non-controlling shareholders | Ending balance of non-controlling interests |
Bengang Posco Cold-rolled Sheet Co., Ltd. | 25.00% | 1,926,183.65 | 502,422,724.15 |
3. Financial information of significant but not wholly-owned subsidiaries
Name of the subsidiaries | Ending balance | |||||
Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities |
Bengang Posco Cold-rolled Sheet | 4,223,695,815.76 | 1,544,857,225.81 | 5,768,553,041.57 | 3,758,862,144.98 | 3,758,862,144.98 |
Notes to the financial statements Page 63
Name of the subsidiaries | Ending balance |
Co., Ltd. |
Beginning balance | ||||||
Name of the subsidiaries | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities |
Bengang Posco Cold-rolled Sheet Co., Ltd. | 2,986,224,229.42 | 1,692,675,158.81 | 4,678,899,388.23 | 2,678,954,080.56 | 2,678,954,080.56 |
Name of the subsidiaries | Current period | |||
Operating income | Net profit | Total comprehensive income | Net cash flows from operating activities | |
Bengang Posco Cold-rolled Sheet Co., Ltd. | 3,720,975,482.91 | 7,704,734.61 | 7,704,734.61 | 1,318,506,299.45 |
Name of the subsidiaries | Previous period | |||
Operating income | Net profit | Total comprehensive income | Net cash flows from operating activities | |
Bengang Posco Cold-rolled Sheet Co., Ltd. | 3,971,529,847.27 | 5,511,711.19 | 5,511,711.19 | 686,401,003.83 |
(2) Equity in joint venture or associates
1. Summary of financial information of unimportant joint ventures and associates
Ending balance/Current period | Beginning balance/Previous period | |
Joint ventures: | ||
Total book value of investment: | 2,481,589.04 | 2,455,681.55 |
The total amount of the following items calculated according to the shareholding ratio | ||
—Net profit | 25,907.49 | 171,488.75 |
—Other comprehensive income | ||
—Total comprehensive income | 25,907.49 | 171,488.75 |
Notes to the financial statements Page 64
7. Risks associated with financial instruments
(1) Credit risk
Credit risk refers to a financial loss to a party due to failure to discharge an obligation by thecounterparties. The Company is exposed to credit risk arising from customers’ failure todischarge an obligation in sales on credit. In order to minimize the credit risk, themanagement of the Company is responsible for determination of credit limits, creditapprovals and other monitoring procedures to ensure that follow-up actions are taken torecover overdue debts.
In addition, the Company strictly approves the line of credit, and only sells on credit toimportant customers for newly-developed products. In the monitoring of credit risk ofcustomers, the Company sorts customers into groups by their credit characteristics. Thosecustomers which are rated as “high risk” will be put in the restricted client list. The Companycan only sell to these customers on credit with additional approval; otherwise the Companymust ask for a corresponding deposit in advance.
(2) Market risk
Market risk of financial instruments refers to fluctuations of fair value or future cash flowsdue to market price changes, 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 ratechanges. The Company’s exposure to currency risk is primarily arising from variable-ratebank balances and variable-rate borrowings. Currently, the Company does not have a specificpolicy to manage its interest rate risk. The management will carefully choose financingmethods, and combine fixed interest rate with variable interest rate, short-term obligationswith long-term obligations. By using effective interest rate risk management methods, theCompany closely monitors interest rate risk and will consider interest-rate swaps to acquirean expected structure of interest rates shall the need arise.
Although these measures may not ensure that the Company completely avoids the risk ofpaying at a risk higher than market risk, or that the cash flow risk relevant to interest incomefluctuations is completely eliminated, in the opinion of the management, these measurescould achieve a reasonable balance among these risks.
2. Currency risk
Currency risk refers to fluctuations of fair value or future cash flows due to exchange ratechanges. The Company has been constantly working on the adjustment of the organizational
Notes to the financial statements Page 65
framework of risk management and optimization of debt structures to lower the currencyrisk.
The currency risk facing the Company originates from the assets and liabilities measured byUS dollars, Euro, Hongkong dollars and Japanese Yen. The ending balance of the assets andliabilities after converted in RMB is shown as below:
(In 10 Thousand Yuan)
Items | Ending balance | ||||
USD | Euro | HKD | Japanese Yen | Total | |
Assets | 57,407.35 | 732.33 | 70.90 | 58,210.58 | |
Liabilities | 346,209.89 | 51,733.96 | 1,183.20 | 399,127.06 | |
Total | 403,617.24 | 52,466.29 | 70.90 | 1,183.20 | 457,337.63 |
The table below shows the sensitivity analysis of RMB vs other currencies when RMBdeprecated or appreciated by 5% over other currencies under the assumption that othervariables remain the same. 5% is the sensitivity rate used by the management for internalreport of currency risk and it represents the estimation of the management over the possiblechange of foreign currency. Sensitivity analysis only includes the monetary items measuredby foreign currency unpaid and will be adjusted at the year-end by 5%. The positive figuresreflect the increase of profit by 5% and the negative figures indicate the reduction of profit.
(In 10 Thousand Yuan)
Items | Ending balance | ||||
Impact on USD | Impact on Euro | Impact on HKD | Impact on Japanese Yen | Total | |
Appreciation by 5% | -14,440.13 | -2,550.08 | 3.54 | -59.16 | -17,045.82 |
Depreciation by 5% | 14,440.13 | 2,550.08 | -3.54 | 59.16 | 17,045.82 |
(3) Liquidity risk
Liquidity risk refers to the risk of shortage of funds which occurs in fulfilling the obligationof settlement in a manner of delivering cash or other financial assets. The Company’s policyis to maintain sufficient cash to meet maturing obligations. Liquidity risk is centralizedcontrolled by the Company’s finance department. Through the monitoring of unrestrictedcash and cash equivalents, bank acceptance bills due in short time and the continuesforecasting of cash flow in the next 12 months, the finance department ensures that theCompany has sufficient cash to meet obligations in all predicted reasonable circumstances.
Notes to the financial statements Page 66
The following table details the Company’s mature date of residual contract value ofunderivative financial liabilities to repay according to the contract terms. The table has beendrawn up based on the undiscounted cash flows of financial liabilities based on the earliestdate on which the Company can be required to pay. The table includes both interest andprincipal cash flows.
(In 10 Thousand Yuan)
Items | Ending balance | ||||
Within 1 year | 1-2 years | 2-5 years | Over 5 years | Total | |
Trade and other payables | 1,797,686.94 | 31,109.67 | 135.72 | 94.60 | 1,829,026.93 |
Loans and interests | 1,333,477.52 | 430,629.37 | 77,769.29 | 112,906.80 | 1,954,782.98 |
Total | 3,131,164.46 | 461,739.04 | 77,905.01 | 113,001.40 | 3,783,809.91 |
(In 10 Thousand Yuan)
Items | Beginning balance | ||||
Within 1 year | 1-2 years | 2-5 years | Over 5 years | Total | |
Trade and other payables | 1,638,885.92 | 67.12 | 130.65 | 71.79 | 1,639,155.48 |
Loans and interests | 1,229,911.46 | 224,083.41 | 371,055.41 | 113,225.19 | 1,938,275.47 |
Total | 2,868,797.38 | 224,150.53 | 371,186.06 | 113,296.98 | 3,577,430.95 |
8. Related party transactions
(1) Details of parent company
(In 100 Million Yuan)
Name of parent company | Place of Registry | Notes of Business | Registered capital | Share proportion (%) | Voting rights (%) |
Benxi Steel (Group) Co., Ltd. | Benxi | Manufacturing | 62.92 | 61.43 | 61.43 |
Note:
The parent company of Benxi Steel (Group) Co., Ltd is Bengang Group Co., Ltd.
The ultimate controlling party of the Company is the State-owned Assets Supervision andAdministration Commission of Liaoning Province.
(2) Details of the subsidiaries
For details of subsidiaries of the Company please refer to Note 6 “Equity in other entities”.
Notes to the financial statements Page 67
(3) Details of other related parties
Name of Other related parties | Relationship |
Bengang Group International Economic and Trading Co., Ltd. | Both belong to Bengang Group Co., Ltd. |
Bengang Cold-rolled Stainless Steel Dandong Co., Ltd. | Same parent company |
Benxi Beiying Steel & Iron (Group) Co., Ltd. | Both belong to Bengang Group Co., Ltd. |
Bengang Electronics and Gas Co., Ltd. | Both belong to Benxi Steel and Iron (Group) Co., Ltd. |
Benxi Steel & Iron (Group) Real-estate Development Co., Ltd. | Same parent company |
Benxi Steel & Iron (Group) Steel & Iron Process and Logistics Co., Ltd. | Same parent company |
Benxi Steel & Iron (Group) Machinery Manufacture Co., Ltd. | Same parent company |
Benxi Steel & Iron (Group) Construction Co., Ltd. | Same parent company |
Benxi Steel & Iron (Group) Mining Co., Ltd. | Same parent company |
Benxi Steel & Iron (Group) Thermal Power Development Co., Ltd. | Same parent company |
Benxi Steel & Iron (Group) Designing Institute | Same parent company |
Benxi Steel & Iron (Group) Industrial Development Co., Ltd. | Same parent company |
Benxi Steel & Iron (Group) Information and Automatic Tech Co., Ltd. | Same parent company |
Benxi Steel & Iron (Group) Construction | Same parent company |
Notes to the financial statements Page 68
Name of Other related parties | Relationship |
and Repairing Co., Ltd. | |
Benxi Steel & Iron (Group) Metallurgy Residues Co., Ltd. | Same parent company |
Benxi Iron and Steel (Group) Engineering Construction Supervision Co., Ltd. | Same parent company |
Benxi Steel & Iron (Group) Zhengtai Construction Materials Co., Ltd. | Same parent company |
Benxi High-tech Drilling Tools Manufacture Co., Ltd. | Both belong to Bengang Group Co., Ltd. |
Benxi New Career Development Co., Ltd. | Same parent company |
Dalian Boluole Steel Tube Co., Ltd. | Both belong to Benxi Steel and Iron (Group) Co., Ltd. |
Guangzhou Free Trade Zone Bengang Sales Co., Ltd. | Both belong to Benxi Steel and Iron (Group) Co., Ltd. |
Benxi Steel & Iron (Group) General Hospital | Both belong to Benxi Steel and Iron (Group) Co., Ltd. |
Liaoning Bengang Steel & Iron Trading Co., Ltd. | Same parent company |
Liaoning Hengtai Heavy Machinery Co., Ltd. | Same parent company |
Liaoning Hengtong Metallurgical Equipment Manufacture Co., Ltd. | Same parent company |
Liaoning Metallurgy Technician College | Same parent company |
Liaoning Metallurgy Vocational Technical College | Same parent company |
Suzhou Bengang Industrial Co., Ltd. | Shareholding company |
Benxi Steel & Iron (Group) Medical Services Department; | Related party that the parent company has significant influence on it |
Bengang Group Finance Co., Ltd. | Both belong to Bengang Group Co., Ltd. |
Notes to the financial statements Page 69
Name of Other related parties | Relationship |
Liaoning Hengyi Financial Leasing Co., Ltd. | Both belong to Bengang Group Co., Ltd. |
(4) Related Party Transactions
1. Related party transactions of purchasing goods and services
Company as the purchaser
(In 10 Thousand Yuan)
Name | The content of related party transactions | Current period | Previous period |
Benxi Steel & Iron (Group) Co., Ltd. | Repair expense | 14,299.69 | 19,767.05 |
Benxi Steel & Iron (Group) Co., Ltd. | Land lease fee | 2,734.57 | 2,734.57 |
Bengang Cold-rolled Stainless Steel Dandong Co., Ltd. | Products | 82.25 | 64.19 |
Benxi Steel & Iron (Group) Mining Co., Ltd. | Labor cost | 391.41 | 386.75 |
Benxi Steel & Iron (Group) Mining Co., Ltd. | Raw material and supplementary material | 215,655.53 | 203,816.33 |
Benxi Steel & Iron (Group) Mining Co., Ltd. | Freight | 85.36 | - |
Benxi Steel & Iron (Group) Metallurgy Residues Co., Ltd. | Raw material and supplementary material | 11,056.03 | 12,852.84 |
Benxi Steel & Iron (Group) Steel & Iron Process and Logistics Co., Ltd. | Processing fee | 84.61 | 87.67 |
Benxi Steel & Iron (Group) Real-estate Development Co., Ltd. | Raw materials | 3,418.04 | 3,627.99 |
Benxi Steel & Iron (Group) Machinery Manufacture Co., Ltd. | Spare parts | 3,341.85 | 4,600.29 |
Benxi Steel & Iron (Group) Machinery Manufacture Co., Ltd. | Repair services | 370.37 | 495.18 |
Benxi Steel & Iron (Group) Construction Co., Ltd. | Spare parts | 424.68 | 191.80 |
Benxi Steel & Iron (Group) Construction Co., Ltd. | Project fee | 7,123.75 | 2,028.95 |
Benxi Steel & Iron (Group) Construction Co., Ltd. | Repair services | 7,085.65 | 11,481.87 |
Benxi Steel & Iron (Group) Construction Co., Ltd. | Raw material and supplementary material | 332.06 | 109.40 |
Notes to the financial statements Page 70
Name | The content of related party transactions | Current period | Previous period |
Benxi Steel & Iron (Group) Construction Co., Ltd. | Freight | 152.48 | 131.35 |
Benxi Steel & Iron (Group) Industrial Development Co., Ltd. | Spare parts | 2,896.02 | 2,808.40 |
Benxi Steel & Iron (Group) Industrial Development Co., Ltd. | Raw material and supplementary material | 6,106.81 | 6,730.62 |
Benxi Steel & Iron (Group) Industrial Development Co., Ltd. | Repair services | 940.92 | 1,829.45 |
Benxi Steel & Iron (Group) Industrial Development Co., Ltd. | Freight | 349.19 | 101.81 |
Benxi Steel & Iron (Group) Industrial Development Co., Ltd. | Project fee | 15.80 | 91.68 |
Benxi Steel & Iron (Group) Construction and Repairing Co., Ltd. | Raw material & supplementary materials & spare parts | 88.60 | 326.39 |
Benxi Steel & Iron (Group) Construction and Repairing Co., Ltd. | Project fee | 453.18 | 1,175.38 |
Benxi Steel & Iron (Group) Construction and Repairing Co., Ltd. | Repair expense | 5,520.77 | 8,327.40 |
Bengang Electronics and Gas Co., Ltd. | Raw material and supplementary material | 5,873.36 | 6,411.95 |
Bengang Electronics and Gas Co., Ltd. | Repair services | 252.09 | 1,862.90 |
Benxi High-tech Drilling Tools Manufacture Co., Ltd. | Spare parts | 4.47 | 31.12 |
Benxi New Career Development Co., Ltd. | Labor protection fee | 47.20 | 44.20 |
Benxi New Career Development Co., Ltd. | Raw material and supplementary material and food | 48.42 | - |
Liaoning Metallurgy Technician College | Spare parts | 699.54 | 317.07 |
Bengang Group International Economic and Trading Co., Ltd. | Agency fee | 3,417.46 | 3,564.93 |
Bengang Group International Economic and Trading Co., Ltd. | Port surcharges | 5,240.58 | 5,690.72 |
Benxi Steel & Iron (Group) Information and Automatic Tech Co., Ltd. | Spare parts | 226.21 | 933.25 |
Notes to the financial statements Page 71
Name | The content of related party transactions | Current period | Previous period |
Benxi Steel & Iron (Group) Information and Automatic Tech Co., Ltd. | Project fee | 2,191.45 | 2,335.89 |
Benxi Steel & Iron (Group) Thermal Power Development Co., Ltd. | Heating costs | 27.20 | 37.73 |
Benxi Steel & Iron (Group) Thermal Power Development Co., Ltd. | Raw material and supplementary material | 2.84 | |
Benxi Steel & Iron (Group) Designing Institute | Design fees | 29.24 | 231.58 |
Benxi Beiying Steel & Iron (Group) Co., Ltd. | Raw material and supplementary material | 591,426.43 | 566,834.95 |
Benxi Beiying Steel & Iron (Group) Co., Ltd. | Energy & Power | 31,906.75 | 38,865.84 |
Benxi Beiying Steel & Iron (Group) Co., Ltd. | Freight | 234.47 | 303.15 |
Benxi Beiying Steel & Iron (Group) Co., Ltd. | Labor cost | 4,250.18 | 3,931.44 |
Benxi Beiying Steel & Iron (Group) Co., Ltd. | Spare parts | 758.28 | 1,064.59 |
Liaoning Hengtong Metallurgical Equipment Manufacture Co., Ltd. | Raw material and spare parts | 4,493.46 | 5,398.61 |
Liaoning Hengtai Heavy Machinery Co., Ltd. | Raw material and spare parts | 171.84 | 124.87 |
Liaoning Hengtai Heavy Machinery Co., Ltd. | Repair and labor cost | 1,133.13 | 1,477.37 |
Bengang Group Co., Ltd. | House renting fee | 37.61 | |
Bengang Group Co., Ltd. | Property management fee | 31.07 | |
Total | 935,481.84 | 923,260.58 |
Company as the seller
(In 10 Thousand Yuan)
Name | The content of related party transactions | Current period | Previous period |
Bengang Electronics and Gas Co., Ltd. | Energy & Power | 50.42 | 51.90 |
Benxi Beiying Steel & Iron (Group) Co., Ltd. | Raw material & supplementary materials & | 60,230.78 | 116,469.29 |
Notes to the financial statements Page 72
Name | The content of related party transactions | Current period | Previous period |
spare parts | |||
Benxi Beiying Steel & Iron (Group) Co., Ltd. | Products | 792.19 | 1,230.13 |
Benxi Beiying Steel & Iron (Group) Co., Ltd. | Energy & Power | 7,565.39 | 5,706.89 |
Benxi Steel & Iron (Group) Real-estate Development Co., Ltd. | Energy & Power | 6.20 | 6.94 |
Benxi Steel & Iron (Group) Steel & Iron Process and Logistics Co., Ltd. | Energy & Power | 27.47 | 37.52 |
Benxi Steel & Iron (Group) Machinery Manufacture Co., Ltd. | Products | 995.77 | 973.31 |
Benxi Steel & Iron (Group) Machinery Manufacture Co., Ltd. | Energy & Power | 716.43 | 943.21 |
Benxi Steel & Iron (Group) Machinery Manufacture Co., Ltd. | Raw material & supplementary materials & spare parts | 605.66 | 113.58 |
Benxi Steel & Iron (Group) Construction Co., Ltd. | Energy & Power | 19.45 | 94.13 |
Benxi Steel & Iron (Group) Construction Co., Ltd. | Raw material & supplementary materials & spare parts | 108.13 | 71.24 |
Benxi Steel & Iron (Group) Mining Co., Ltd. | Energy & Power | 34,182.02 | 35,940.67 |
Benxi Steel & Iron (Group) Mining Co., Ltd. | Raw material & supplementary materials & spare parts | 3,156.26 | 2,831.52 |
Benxi Steel & Iron (Group) Mining Co., Ltd. | Freight revenue | 487.08 | 402.48 |
Benxi Steel & Iron (Group) Thermal Power Development Co., Ltd. | Energy & Power | 2,289.99 | 2,374.96 |
Benxi Steel & Iron (Group) Thermal Power Development Co., Ltd. | Raw material & supplementary materials & | 994.94 | 801.85 |
Notes to the financial statements Page 73
Name | The content of related party transactions | Current period | Previous period |
spare parts | |||
Benxi Steel & Iron (Group) Thermal Power Development Co., Ltd. | Freight revenue | 8.58 | |
Benxi Steel & Iron (Group) Industrial Development Co., Ltd. | Energy & Power | 407.66 | 388.54 |
Benxi Steel & Iron (Group) Industrial Development Co., Ltd. | Products | 12.46 | 11.32 |
Benxi Steel & Iron (Group) Industrial Development Co., Ltd. | Raw material & supplementary materials & spare parts | 717.36 | 1,251.78 |
Benxi Steel & Iron (Group) Information and Automatic Tech Co., Ltd. | Energy & Power | 7.68 | 9.01 |
Benxi Steel & Iron (Group) Construction and Repairing Co., Ltd. | Energy & Power | 79.48 | 83.99 |
Benxi Steel & Iron (Group) Construction and Repairing Co., Ltd. | Raw material & supplementary materials & spare parts | 248.68 | 12.26 |
Benxi Steel & Iron (Group) Metallurgy Residues Co., Ltd. | Energy & Power | 302.41 | 260.48 |
Benxi Steel & Iron (Group) Metallurgy Residues Co., Ltd. | Raw material & supplementary materials & spare parts | 9,363.79 | 9,045.64 |
Benxi Steel & Iron (Group) Metallurgy Residues Co., Ltd. | Freight revenue | 711.36 | |
Benxi Steel & Iron (Group) Co., Ltd. | Energy & Power | 147.07 | 702.65 |
Benxi Steel & Iron (Group) Co., Ltd. | Raw material & supplementary materials & | 156.10 | 270.51 |
Notes to the financial statements Page 74
Name | The content of related party transactions | Current period | Previous period |
spare parts | |||
Benxi New Career Development Co., Ltd. | Energy & Power | 15.13 | 18.10 |
Dalian Boluole Steel Tube Co., Ltd. | Products | 188.32 | 175.76 |
Benxi Steel & Iron (Group) General Hospital | Energy & Power | 3.09 | 3.42 |
Benxi Steel & Iron (Group) Zhengtai Construction Materials Co., Ltd. | Energy & Power | 0.27 | - |
Liaoning Hengtong Metallurgical Equipment Manufacture Co., Ltd. | Raw material & supplementary materials & spare parts | 832.61 | 1,305.43 |
Bengang Cold-rolled Stainless Steel Dandong Co., Ltd. | Raw material & supplementary materials & spare parts | 24.14 | |
Suzhou Bengang Industrial Co., Ltd. | Products | 16,362.43 | 17,052.85 |
Bengang Group Finance Co., Ltd. | Energy & Power | 0.69 | 0.70 |
Bengang Group Co., Ltd. | Energy & Power | 7.79 | 9.47 |
Total | 141,105.34 | 199,371.47 |
2. Lease information of related parties
Company as the lessor
Lessee | Lease capital category | Lease income of current period | Lease income of previous period |
Benxi Steel & Iron (Group) Steel & Iron Process and Logistics Co., Ltd. | Warehouse and machinery | 250,000.00 | 250,000.00 |
Benxi Steel & Iron (Group) Machinery Manufacture Co., Ltd. | Plants and machinery | 245,000.00 | 245,000.00 |
Company as the lessee
Lessor | Lease capital category | Lease charges of current period | Lease charges of previous period |
Notes to the financial statements Page 75
Benxi Steel & Iron (Group) Co., Ltd | 2300 Hot rolling product line | 123,426,656.64 | 120,000,000.00 |
Benxi Steel & Iron (Group) Co., Ltd | Land use right | 27,345,714.30 | 27,345,714.30 |
Benxi Beiying Steel & Iron (Group) Co., Ltd. | 1780 Hot rolling product line | 59,013,278.16 | 64,929,604.02 |
Financial lease matters:
During the reporting period, the company leased machinery and equipment from LiaoningHengyi Finance Leasing Co., Ltd. in the form of financial leases. As of the end of the reportingperiod, the long-term accounts payable amounted to RMB 52,733,529.65.
Notes to lease from or to related parties:
1. The Company leases land from Bengang Group Co., Ltd., with a monthly rent of 0.594 yuanper square meter. The leased land is 7,669,068.17 square meters and the annual rent is54,665.10 thousand yuan.
2. For the 2300mm hot rolling product line leased from the Group to the Company, leaseperiod lasts from 1 January 2018 to 31 December 2020. Lease charges are negotiatedbetween the lessor and the lessee based on the original cost, depreciation, and nationaltaxation of the product line, with consideration of conditions of production and equipmentperformance.
3. For the 1780 hot rolling product line leased from Benxi Beiying Steel & Iron (Group) Co.,Ltd. to the Company. “Notice on Bengang Steel Plates Co., Ltd. signing a renewal agreementwith Benxi Steel (group) Co., Ltd” were adopted on the sixth meeting of the seventh board ofdirectors, it stipulated that the company leased the 1780 hot rolling product line from BenxiBeiying Steel & Iron (Group) Co., Ltd., lease period lasts from 1 January 2017 to 31December 2019. Lease charges are negotiated between the lessor and the lessee based on theoriginal cost, depreciation, and national taxation of the product line, with consideration ofconditions of production and equipment performance. The annual rent shall not exceed RMB150,000,000.00.
Notes to the financial statements Page 76
3. Information of Guarantee among related parties
(1) Company as the guarantor
No.
(2) Company as the warrantee
Guarantee of loans:
Warrantor | Amount of guarantee | Starting date of Guarantee | Ending date of Guarantee | Has the guarantee been fulfilled |
Bengang Group Co., Ltd. and Benxi Steel & Iron (Group) Co., Ltd. | ?200,000,000.00 | 2018/9/7 | 2019/9/5 | No |
Bengang Group Co., Ltd. and Benxi Steel & Iron (Group) Co., Ltd. | ?150,000,000.00 | 2018/10/17 | 2019/10/16 | No |
Bengang Group Co., Ltd. and Benxi Steel & Iron (Group) Co., Ltd. | ?200,000,000.00 | 2018/10/12 | 2019/10/10 | No |
Bengang Group Co., Ltd. and Benxi Steel & Iron (Group) Co., Ltd. | ?90,000,000.00 | 2016/3/30 | 2025/3/20 | No |
Bengang Group Co., Ltd. and Benxi Steel & Iron (Group) Co., Ltd. | ?610,000,000.00 | 2017/2/27 | 2025/2/20 | No |
Bengang Group Co., Ltd. and Benxi Steel & Iron (Group) Co., Ltd. | ?200,000,000.00 | 2018/11/9 | 2019/11/7 | No |
Bengang Group Co., Ltd. and Benxi Steel & Iron (Group) Co., Ltd. | ?200,000,000.00 | 2018/11/14 | 2019/11/13 | No |
Bengang Group Co., Ltd. and Benxi Steel & Iron (Group) Co., Ltd. | ?200,000,000.00 | 2019/6/13 | 2020/6/9 | No |
Bengang Group Co., Ltd. and Benxi Steel & Iron (Group) Co., Ltd. | ?200,000,000.00 | 2019/6/17 | 2020/6/17 | No |
Bengang Group Co., Ltd. and Benxi Steel & Iron (Group) Co., Ltd. | ?100,000,000.00 | 2019/1/24 | 2020/1/23 | No |
Notes to the financial statements Page 77
Warrantor | Amount of guarantee | Starting date of Guarantee | Ending date of Guarantee | Has the guarantee been fulfilled |
Bengang Group Co., Ltd. and Benxi Steel & Iron (Group) Co., Ltd. | ?178,000,000.00 | 2018/12/13 | 2019/12/12 | No |
Bengang Group Co., Ltd. | ?300,000,000.00 | 2018/11/15 | 2019/11/14 | No |
Bengang Group Co., Ltd. | ?140,000,000.00 | 2019/1/25 | 2020/1/25 | No |
Bengang Group Co., Ltd. | ?900,000,000.00 | 2018/11/28 | 2019/11/27 | No |
Bengang Group Co., Ltd. | ?100,000,000.00 | 2015/6/25 | 2021/9/21 | No |
Bengang Group Co., Ltd. | ?340,000,000.00 | 2019/3/29 | 2020/3/27 | No |
Bengang Group Co., Ltd. | ?520,000,000.00 | 2019/1/8 | 2019/12/14 | No |
Bengang Group Co., Ltd. | ?480,000,000.00 | 2019/1/28 | 2020/1/27 | No |
Bengang Group Co., Ltd. | ?310,000,000.00 | 2019/5/14 | 2020/5/13 | No |
Bengang Group Co., Ltd. | ?720,000,000.00 | 2019/5/14 | 2020/5/13 | No |
Bengang Group Co., Ltd. | ?24,000,000.00 | 2015/12/9 | 2022/3/21 | No |
Bengang Group Co., Ltd. | ?36,450,000.00 | 2016/12/27 | 2020/6/21 | No |
Bengang Group Co., Ltd. | ?87,280,000.00 | 2018/3/26 | 2024/6/21 | No |
Bengang Group Co., Ltd. | ?59,570,000.00 | 2017/11/15 | 2021/12/21 | No |
Bengang Group Co., Ltd. | ?622,600,000.00 | 2017/12/15 | 2024/8/20 | No |
Bengang Group Co., Ltd. | ?390,000,000.00 | 2018/11/29 | 2019/11/28 | No |
Bengang Group Co., Ltd. | ?150,000,000.00 | 2018/7/13 | 2019/7/13 | No |
Bengang Group Co., Ltd. | ?150,000,000.00 | 2018/7/13 | 2019/7/13 | No |
Bengang Group Co., Ltd. | ?100,000,000.00 | 2018/7/2 | 2019/7/1 | No |
Benxi Steel & Iron (Group) Co., Ltd. | ?147,000,000.00 | 2018/12/19 | 2019/12/19 | No |
Benxi Steel & Iron (Group) Co., Ltd. | ?330,000,000.00 | 2019/1/18 | 2020/1/18 | No |
Benxi Steel & Iron (Group) Co., Ltd. | ?340,000,000.00 | 2019/1/25 | 2020/1/25 | No |
Benxi Steel & Iron (Group) Co., Ltd. | ?224,000,000.00 | 2019/3/25 | 2020/3/25 | No |
Benxi Steel & Iron (Group) Co., Ltd. | ?300,000,000.00 | 2018/12/14 | 2019/12/14 | No |
Benxi Steel & Iron (Group) Co., Ltd. | ?373,000,000.00 | 2018/12/13 | 2019/12/13 | No |
Notes to the financial statements Page 78
Warrantor | Amount of guarantee | Starting date of Guarantee | Ending date of Guarantee | Has the guarantee been fulfilled |
Benxi Steel & Iron (Group) Co., Ltd. | ?480,000,000.00 | 2018/12/13 | 2019/12/13 | No |
Benxi Steel & Iron (Group) Co., Ltd. | ?500,000,000.00 | 2018/12/13 | 2019/12/13 | No |
Bengang Group Co., Ltd. | EUR 1,813,075.20 | 2015/6/25 | 2019/8/31 | No |
Bengang Group Co., Ltd. | EUR 2,311,613.67 | 2015/6/25 | 2019/10/31 | No |
Bengang Group Co., Ltd. | EUR 1,948,053.95 | 2015/6/25 | 2020/4/30 | No |
Bengang Group Co., Ltd. | EUR 483,803.97 | 2015/6/25 | 2025/6/30 | No |
Bengang Group Co., Ltd. | EUR 13,834,496.03 | 2015/6/25 | 2025/6/30 | No |
Bengang Group Co., Ltd. | EUR 609,296.41 | 2015/6/25 | 2025/8/31 | No |
Bengang Group Co., Ltd. | EUR 11,990,585.71 | 2015/6/25 | 2025/8/31 | No |
Bengang Group Co., Ltd. | EUR 233,211.78 | 2015/6/25 | 2025/9/30 | No |
Bengang Group Co., Ltd. | EUR 719,075.68 | 2015/6/25 | 2025/10/31 | No |
Bengang Group Co., Ltd. | EUR 9,901,243.51 | 2015/6/25 | 2025/10/31 | No |
Bengang Group Co., Ltd. | EUR 6,162.48 | 2015/6/25 | 2026/4/30 | No |
Bengang Group Co., Ltd. | EUR 557,460.75 | 2015/6/25 | 2026/4/30 | No |
Bengang Group Co., Ltd. | EUR 597,187.50 | 2015/8/20 | 2019/9/30 | No |
Bengang Group Co., Ltd. | EUR 7,967,631.00 | 2015/8/20 | 2025/9/30 | No |
Bengang Group Co., Ltd. | EUR 642,082.50 | 2015/12/28 | 2019/7/30 | No |
Bengang Group Co., Ltd. | EUR 239,173.64 | 2015/12/28 | 2019/8/31 | No |
Bengang Group Co., Ltd. | EUR 44,356.22 | 2015/12/28 | 2019/10/31 | No |
Bengang Group Co., Ltd. | EUR 696,676.50 | 2015/12/28 | 2020/4/30 | No |
Bengang Group Co., Ltd. | EUR 424,686.42 | 2015/12/28 | 2025/6/30 | No |
Bengang Group Co., Ltd. | EUR 253,120.00 | 2015/12/28 | 2025/8/31 | No |
Bengang Group Co., Ltd. | EUR 4,579,846.88 | 2015/12/28 | 2025/10/31 | No |
Bengang Group Co., Ltd. | EUR 4,069.11 | 2015/12/28 | 2026/4/30 | No |
Bengang Group Co., Ltd. | EUR 6,798,868.28 | 2015/12/28 | 2026/4/30 | No |
Bengang Group Co., Ltd. | EUR 410,699.25 | 2016/6/27 | 2020/4/30 | No |
Notes to the financial statements Page 79
Warrantor | Amount of guarantee | Starting date of Guarantee | Ending date of Guarantee | Has the guarantee been fulfilled |
Bengang Group Co., Ltd. | EUR 3,727,122.75 | 2016/6/27 | 2020/4/30 | No |
Bengang Group Co., Ltd. | EUR 36,617.16 | 2016/12/14 | 2020/4/30 | No |
Bengang Group Co., Ltd. | EUR 2,833,183.48 | 2016/12/14 | 2026/4/30 | No |
Bengang Group Co., Ltd. | EUR 21,690.00 | 2017/6/30 | 2025/10/31 | No |
Bengang Group Co., Ltd. | EUR 1,091,628.91 | 2017/6/30 | 2025/10/31 | No |
Bengang Group Co., Ltd. and Benxi Beiying Steel & Iron (Group) Co., Ltd. | US$20,000,000.00 | 2018/5/8 | 2020/5/7 | No |
Bengang Group Co., Ltd. and Benxi Beiying Steel & Iron (Group) Co., Ltd. | US$80,000,000.00 | 2018/5/2 | 2020/5/21 | No |
Bengang Group Co., Ltd. and Benxi Beiying Steel & Iron (Group) Co., Ltd. | US$45,000,000.00 | 2018/7/3 | 2020/7/2 | No |
Bengang Group Co., Ltd. and Benxi Beiying Steel & Iron (Group) Co., Ltd. | US$45,000,000.00 | 2018/8/17 | 2020/8/7 | No |
Bengang Group Co., Ltd. and Benxi Beiying Steel & Iron (Group) Co., Ltd. | US$100,000,000.00 | 2018/8/29 | 2020/8/28 | No |
Benxi Steel & Iron (Group) Co., Ltd. | US$90,000,000.00 | 2019/3/29 | 2020/3/29 | No |
Benxi Steel & Iron (Group) Co., Ltd. | US$100,000,000.00 | 2019/1/24 | 2020/1/24 | No |
Benxi Steel & Iron (Group) Co., Ltd. | JPY185,408,000.00 | 1997/10/10 | 2027/9/10 | No |
4. Other related party transactions
(1) Loan from and deposits in Bengang Group Finance Co., Ltd.
Notes to the financial statements Page 80
(In 10 Thousand Yuan)
Item | Beginning balance | Increase | Decrease | Ending balance | Notes |
Deposits | 975,193.08 | 6,857,385.39 | 6,793,699.59 | 1,038,878.89 |
1. The interests of deposits in Bengang Group Finance Co., Ltd. is RMB 94,469.5thousand from January to June in 2019. As at 30 June 2019, the interest receivable fromBengang Group Finance Co., Ltd. is RMB 13,872.1 thousand.
2. As at 30 June 2019, the restricted deposits in Bengang Group Finance Co., Ltd. isRMB 1,489,439.90 thousand.
3. From January to June in 2019, the company and its subsidiaries did not borrow moneyfrom financial companies.
4. Bengang Group Finance Co., Ltd. granted the company an unsecured credit line ofRMB 2.5 billion from January to June in 2019. As at 30 June 2019, the amount ofacceptance bill opened by Bengang Group Finance Co., Ltd. was RMB 2.15 billion, andthe amount of the acceptance bill that had been opened and unpaid by Bengang GroupFinance Co., Ltd. is RMB 1.632 billion, 1.509 billion of which is 100% deposit andremaining 0.123 billion exposure.
5. From January to June in 2019, the Company did not apply for bill discounting to thefinance company.
(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 balance |
Entrusted loan through Bengang Group Finance Co., Ltd. | 1,422.00 | 0.00 | 1,422.00 | 0.00 |
Capital lending | 7,770.00 | 2,140.00 | 1,400.00 | 8,770.00 |
Total | 9,192.00 | 2,140.00 | 2,822.00 | 8,770.00 |
Details of outstanding loans as at 30 June 2019:
Related parties | Lease form | Lease amount | Start date | Due date |
Benxi Steel and Iron (Group) Co., Ltd. | Entrusted loan | 32,700,000.00 | 2018/10/25 | 2019/10/25 |
Benxi Steel and Iron (Group) Co., Ltd. | Money lending | 20,000,000.00 | 2018/12/5 | 2019/12//5 |
Benxi Steel and Iron (Group) Co., Ltd. | Money lending | 10,000,000.00 | 2019/1/18 | 2020/1/18 |
Benxi Steel and Iron (Group) Co., Ltd. | Money lending | 14,000,000.00 | 2019/6/14 | 2020/6/14 |
Benxi Steel and Iron (Group) Co., Ltd. | Money lending | 11,000,000.00 | 2018/7/5 | 2019/7/5 |
Notes to the financial statements Page 81
Related parties | Lease form | Lease amount | Start date | Due date |
Total | 87,700,000.00 |
Notes: The interest accrued is RMB 2,028,394.55 during the current period, and as at 30June 2019, the company has no interest that has not been paid.
(5) Receivables and payables of the related parties
1. Receivables of the Company
(in 10 thousand yuan)
Items Name | Name | Ending Balance | Beginning Balance | ||
Carrying amount | Provision for bad debts | Carrying amount | Provision for bad debts | ||
Accounts receivable | |||||
Benxi Beiying Steel & Iron (Group) Co., Ltd. | 967.76 | 1,206.26 | |||
Bengang Electronics and Gas Co., Ltd. | 401.11 | 112.76 | 408.26 | 112.76 | |
Benxi Steel & Iron (Group) Machinery Manufacture Co., Ltd. | 52.68 | ||||
Benxi Steel & Iron (Group) Industrial Development Co., Ltd. | 85.48 | ||||
Benxi Steel & Iron (Group) Thermal Power Development Co., Ltd. | 803.58 | 937.22 | |||
Bengang Cold-rolled Stainless Steel Dandong Co., Ltd. | 106.16 | 19.31 | 155.04 | 19.31 | |
Liaoning Hengtong Metallurgical Equipment | 37.10 |
Notes to the financial statements Page 82
Items Name | Name | Ending Balance | Beginning Balance | ||
Carrying amount | Provision for bad debts | Carrying amount | Provision for bad debts | ||
Manufacture Co., Ltd. | |||||
Bengang Group International Economic and Trading Co., Ltd. | 10.10 | 12,906.30 | |||
Benxi Steel & Iron (Group) Metallurgy Residues Co., Ltd. | 113.22 | ||||
Total: | 2,463.97 | 132.08 | 15,726.31 | 132.08 |
Prepayments | |||||
Benxi Beiying Steel & Iron (Group) Co., Ltd. | 628,463.25 | 71,312.43 | |||
Benxi Steel & Iron (Group) Machinery Manufacture Co., Ltd. | 2,174.38 | ||||
Bengang Cold-rolled Stainless Steel Dandong Co., Ltd. | 120.12 | 4.73 | |||
Total: | 630,757.75 | 71,317.16 |
Other receivables | |||||
Benxi Steel & Iron (Group) Real-estate Development Co., Ltd. | 255.40 | 72.45 | 261.61 | 72.45 | |
Liaoning Metallurgy Technician College | 3.94 | - | 5.80 | - | |
Benxi Steel & Iron (Group) Machinery Manufacture Co., Ltd. | 136.62 | - | 259.26 | - | |
Benxi Steel & Iron (Group) | 451.43 | - | 449.20 | - |
Notes to the financial statements Page 83
Items Name | Name | Ending Balance | Beginning Balance | ||
Carrying amount | Provision for bad debts | Carrying amount | Provision for bad debts | ||
Construction Co., Ltd. | |||||
Bengang Group International Economic and Trading Co., Ltd. | 480.74 | - | 622.45 | - | |
Benxi Steel & Iron (Group) Industrial Development Co., Ltd. | 223.55 | - | 181.50 | - | |
Benxi Steel & Iron (Group) Zhengtai Construction Materials Co., Ltd. | 20.11 | 19.32 | 20.41 | 19.32 | |
Benxi Steel & Iron (Group) Medical Co., Ltd. | 95.51 | 73.32 | 93.95 | 73.32 | |
Total: | 1,667.31 | 165.09 | 1,894.19 | 165.09 |
2. Payables of the Company
(in 10 thousand yuan)
Items | Name | Ending balance | Beginning balance |
Notes payable | |||
Benxi Steel & Iron (Group) Industrial Development Co., Ltd. | 0.00 | 190.51 | |
Benxi Steel & Iron (Group) Machinery Manufacture Co., Ltd. | 100.82 | 22.44 | |
Benxi Iron and Steel (Group) Mining Co., Ltd. | 124,323.34 | 98,047.94 | |
Benxi Beiying Steel & Iron (Group) Co., Ltd. | 516,313.71 | 470,958.00 | |
Benxi Steel & Iron (Group) Metallurgy Residues Co., Ltd. | 3,000.00 | 0.00 | |
Benxi Steel & Iron (Group) Real-estate Development Co., Ltd. | 0.00 | 291.70 | |
Total | 643,737.87 | 569,510.58 | |
Accounts payable |
Notes to the financial statements Page 84
Items | Name | Ending balance | Beginning balance |
Bengang Electronics and Gas Co., Ltd. | 507.18 | 2,038.30 | |
Benxi Steel & Iron (Group) Real-estate Development Co., Ltd. | 282.90 | 318.45 | |
Bengang Group International Economic and Trading Co., Ltd. | 20,040.23 | 151,974.50 | |
Benxi Steel & Iron (Group) Machinery Manufacture Co., Ltd. | 2,560.48 | 3,239.73 | |
Benxi Steel & Iron (Group) Construction Co., Ltd. | 7,609.90 | 9,288.02 | |
Benxi Steel & Iron (Group) Mining Co., Ltd. | 25,294.53 | 46,435.71 | |
Benxi Steel & Iron (Group) Industrial Development Co., Ltd. | 9,528.57 | 7,543.14 | |
Benxi New Career Development Co., Ltd. | 4.40 | 356.98 | |
Benxi Steel & Iron (Group) Construction and Repairing Co., Ltd. | 11,268.41 | 10,736.73 | |
Benxi Steel & Iron (Group) Metallurgy Residues Co., Ltd. | 1,245.42 | 1,473.85 | |
Benxi Steel & Iron (Group) Medical and Health department | 2.04 | 2.04 | |
Benxi Steel & Iron (Group) Information and Automatic Tech Co., Ltd. | 3,634.35 | 4,578.45 | |
Benxi High-tech Drilling Tools Manufacture Co., Ltd. | 281.78 | 10.80 | |
Liaoning Metallurgical Technician College | 280.76 | 1,033.31 | |
Benxi Steel & Iron (Group) Thermal Power Development Co., Ltd. | 38.31 | 20.97 | |
Benxi Steel & Iron (Group) Zhengtai Construction Materials Co., Ltd. | 0.00 | 0.24 | |
Liaoning Hengtong Metallurgical Equipment Manufacture Co., Ltd. | 1,644.37 | 529.45 | |
Liaoning Metallurgy Vocational Technical College | 341.92 | 531.92 | |
Bengang Cold-rolled Stainless Steel Dandong Co., Ltd. | 325.89 | 454.96 | |
Liaoning Hengtai Heavy Machinery Co., Ltd. | 2,454.64 | 2,991.38 | |
Benxi Iron and Steel (Group) Engineering Construction Supervision Co., Ltd. | 0.00 | 123.00 | |
Total: | 87,346.09 | 243,681.91 | |
Advance from customers | |||
Benxi Steel & Iron (Group) Machinery Manufacture Co., Ltd. | 738.29 | 0.00 | |
Benxi Steel & Iron (Group) Industrial Development Co., Ltd. | 948.76 | 35.80 | |
Benxi Steel & Iron (Group) Metallurgy Residues Co., Ltd. | 583.00 | 0.00 | |
Benxi Steel & Iron (Group) Steel & Iron Process and Logistics Co., Ltd. | 741.11 | 6,069.05 | |
Dalian Boluole Steel Tube Co., Ltd. | 221.80 | 66.42 |
Notes to the financial statements Page 85
Items | Name | Ending balance | Beginning balance |
Liaoning Bengang Steel & Iron Trading Co., Ltd. | 0.00 | 50.02 | |
Liaoning Hengtong Metallurgical Equipment Manufacture Co., Ltd. | 940.85 | 12.91 | |
Bengang Group International Economic and Trading Co., Ltd. | 758.37 | 786.55 | |
Suzhou Bengang Industrial Co., Ltd. | 3,737.35 | 571.81 | |
Total: | 8,669.53 | 7,592.55 | |
Other payables | |||
Benxi Steel & Iron (Group) Real-estate Development Co., Ltd. | 143.82 | 143.59 | |
Bengang Group International Economic and Trading Co., Ltd. | 3243.65 | 4948.15 | |
Benxi Steel & Iron (Group) Machinery Manufacture Co., Ltd. | 64.57 | 75.09 | |
Benxi Steel & Iron (Group) Construction Co., Ltd. | 346.21 | 590.19 | |
Benxi Steel & Iron (Group) Industrial Development Co., Ltd. | 85.16 | 49.15 | |
Benxi New Career Development Co., Ltd. | 89.77 | 97.07 | |
Benxi Steel & Iron (Group) Metallurgy Residues Co., Ltd. | 29.00 | 50.15 | |
Benxi Steel & Iron (Group) Co., Ltd. | 10187.46 | 21832.88 | |
Benxi Steel & Iron (Group) Thermal Power Development Co., Ltd. | 299.13 | 307.73 | |
Guangzhou Free Trade Zone Bengang Sales Co., Ltd. | 267.44 | 267.44 | |
Liaoning Metallurgical Vocational and Technical College | 181.67 | 0.3 | |
Bengang Group Finance Co., Ltd. | 0 | 2.12 | |
Liaoning Metallurgy Technician College | 28.95 | 36.33 | |
Benxi Beiying Steel & Iron (Group) Co., Ltd. | 1,404.05 | 1,824.27 | |
Total: | 16,370.88 | 30,224.46 | |
Long-term payables | |||
Liaoning Hengyi Financial Leasing Co., Ltd. | 5,273.35 | 1,368.67 | |
Total: | 5,273.35 | 1,368.67 |
Notes to the financial statements Page 86
9. Government subsidy
(1) Government subsidy related to assets
Category | Amount | Item listed on the balance sheet | Amount recognized in the profit and loss or offset related costs or expenses | Item recognized in the profit and loss or offset related costs or expenses | ||
Current Period | Previous Period | |||||
MES Project Special Fund | 860,000.00 | Deferred Income | 860,000.00 | 860,000.00 | Other Income | |
Industrial Enterprise Energy Management Center Construction Demonstration Project | 5,800,000.00 | Deferred Income | 1,160,000.00 | 1,160,000.00 | Other Income | |
Environment Pollution Renovation Project | 1,810,000.00 | Deferred Income | 1,810,000.00 | 1,810,000.00 | Other Income | |
Environment Renovation Project and Regional Basin Environment Protection Project | 170,000.00 | Deferred Income | 170,000.00 | 170,000.00 | Other Income | |
High Strength Cold Rolling Steel Renovation Project | 175,000,000.00 | Deferred Income | 25,000,000.00 | 25,000,000.00 | Other Income | |
Automobile High-class Electrolytic Zinc Steel Plate Production Line Project | 12,312,000.00 | Deferred Income | 4,104,000.00 | 4,104,000.00 | Other Income | |
Sintering Machine Residue Heat Usage and Desulfurization Project | 2,102,000.00 | Deferred Income | 2,102,000.00 | 2,102,000.00 | Other Income | |
7 130t Boilers Flue Gas Desulfurization Renovation Project of Power Plant | 16,800,000.00 | Deferred Income | 2,400,000.00 | 2,400,000.00 | Other Income | |
Treatment and Salt Extraction Project of Desulfurization Waste Liquid of Coke Plant | Deferred Income | 50,000.00 | Other Income | |||
Overseas Advanced Technology Introduction Special Fund | 5,442,000.00 | Deferred Income | 1,442,000.00 | 1,442,000.00 | Other Income | |
Bengang Group Co., Ltd. Automotive Board | 1,000,000.00 | Deferred Income | Other Income |
Notes to the financial statements Page 87
Category | Amount | Item listed on the balance sheet | Amount recognized in the profit and loss or offset related costs or expenses | Item recognized in the profit and loss or offset related costs or expenses | |
Engineering Laboratory Construction Project Fund | |||||
R&D for the Third Generation of High-strength Steel for Automobile | 2,900,000.00 | Deferred Income | Other Income | ||
The 360 Cubic Meter Sintering Machine Flue Gas Desulfurization Renovation Project of Blast Furnace Plant | 100,000.00 | Deferred Income | 100,000.00 | 100,000.00 | Other Income |
Environment Protection Project Special Fund | 580,000.00 | Deferred Income | 580,000.00 | 580,000.00 | Other Income |
Advanced Treatment of Carbon Fiber Wastewater Project of Coke Plant Dongfeng Area | 9,500,000.00 | Deferred Income | Other Income | ||
Desulfurization and Denitration Projects for Coal-fired Boiler of Power Plant High-pressure Workshop | 4,500,000.00 | Deferred Income | 300,000.00 | 300,000.00 | Other Income |
Power Plant No 3 workshop Heat and Power Cogeneration Renovation Project | 7,000,000.00 | Deferred Income | 1,000,000.00 | Other Income | |
Sintering Machine Energy Saving and Environmental Protection Project of Blast Furnace Plant | 1,740,000.00 | Deferred Income | 580,000.00 | 580,000.00 | Other Income |
Air Quality Automatic Monitoring System | 140,000.00 | Deferred Income | 35,000.00 | 35,000.00 | Other Income |
Notes to the financial statements Page 88
(2) Government subsidy related to income
Category | Amount | Amount recognized in the profit and loss or offset related costs or expenses | Item recognized in the profit and loss or offset related costs or expenses | |
Current Period | Previous Period | |||
Xihu Resource Management Committee Compensation | 414,300.00 | Other Income | ||
Liaoning artisan subsidies and skills master workstation subsidies | 340,002.97 | 166,938.70 | Other Income | |
High-strength pipeline steel support under low temperature and high-pressure service conditions | 136,000.00 | 52,000.00 | Other Income |
10. Commitments and Contingencies
(1) Commitments
1. Lease contracts in progress or to be performed and their financial impacts
(1) For the land leased from the Company to the Group, price is RMB 0.594 per Squaremeter per month, and the area of the land is 7,669,068.17 square meters; hence annualrent is RMB 54,665.10 thousand.
(2) For the 2300mm hot rolling product line leased from the Group to the Company, leaseperiod lasts from 1 January 2018 to 31 December 2020. Lease charges are negotiatedbetween the lessor and the lessee based on the original cost, depreciation, and nationaltaxation of the product line, with consideration of conditions of production andequipment performance.
(3) For the 1780 hot rolling product line leased from Benxi Beiying Steel & Iron (Group)Co., Ltd. to the Company. “Notice on Bengang Steel Plates Co., Ltd. signing a renewalagreement with Benxi Steel (group) Co., Ltd” were adopted on the sixth meeting of theseventh board of directors, it stipulated that the company leased the 1780 hot rollingproduct line from Benxi Beiying Steel & Iron (Group) Co., Ltd., lease period lasts from 1January 2017 to 31 December 2019. Lease charges are negotiated between the lessor andthe lessee based on the original cost, depreciation, and national taxation of the productline, with consideration of conditions of production and equipment performance. Theannual rent shall not exceed RMB 150,000,000.00.
Notes to the financial statements Page 89
2. Irrevocable letter of credit
As at June 30, 2019, the amount of irrevocable letter of credit that was not fulfilled is
RMB 2.333 billion.
(2) Contingencies
At the balance sheet date, no significant contingencies need to be disclosed.
11. Subsequent events
(1) Profit distribution after the reporting period
Proposed profit or dividend | On April 17, 2019, the resolution of the 24th meeting of the 7th Board of Directors passed the 2018 dividend distribution plan. Based on the total share capital of the company's 2018 annual profit distribution equity registration date, a cash dividend of 0.5 yuan (including tax) will be distributed to every 10 shares of all registered shareholders. The cash dividend is 193,768,576.60 yuan. The above profit distribution plan has been reviewed and approved by the shareholders meeting and was distributed on July 12, 2019. |
12. Other significant events
(1) Segment information
Since the Company’s main product is steel with other products accounting for only a smallproportion, and the main production base is located in Liaoning area, segmented reporting isnot applicable.
(2) Other material issues that will influence investors’ decisions
1. Financing Lease
For prioritizing the capital structure and exploring financing channel, the Company signed the“Financial lease cooperation framework” with Liaoning Hengyi Financial Leasing Co., Ltd.with the amount of financial lease not exceeding RMB 5 billion per year. The Company obtainsthe fund through sales and lease back financial lease with interest rate not above the benchmarkinterest rate of loan over the same period published by the People’s bank of China and the
Notes to the financial statements Page 90
interest rate will be adjusted with the changes of benchmark interest rate of loan published bythe People’s bank of China over the lease term. The lease security ratio is not higher than 30%of the lease principal amount. The term of financial lease shall not exceed 12 years.
2. Shares pledged by the Controlling Shareholders
As at 30 June 2019, within the total shares held by the controlling shareholder Benxi Steel &Iron (Group) Co., Ltd., 1,652,095,133 shares are pledged and 45,000,000.00 shares are frozen.
13. Notes to the financial statements of parent company
(1) Accounts receivable
1. Accounts receivable disclosed by category
Items | Ending balance | ||||
Carrying amount | Provision for bad debts | Book value | |||
Amount | Percentage (%) | Amount | Bad debts ratio (%) | ||
Accounts receivable tested for impairment individually | 47,762,337.18 | 8.26 | 47,762,337.18 | 100.00 | |
Accounts receivable tested for impairment by portfolio | 530,605,966.90 | 91.74 | 128,208,215.05 | 24.16 | 402,397,751.85 |
Total | 578,368,304.08 | 100.00 | 175,970,552.23 | 402,397,751.85 |
Items | Beginning balance | |||||
Carrying amount | Provision for bad debts | Book value | ||||
Amount | Percentage (%) | Amount | Bad debts ratio (%) | |||
Accounts receivable tested for impairment individually | 47,762,337.18 | 8.11 | 47,762,337.18 | 100.00 | ||
Accounts receivable tested for impairment by portfolio | 541,151,187.11 | 91.89 | 131,598,127.84 | 24.32 | 409,553,059.27 | |
Total | 588,913,524.29 | 100.00 | 179,360,465.02 | 409,553,059.27 |
Receivables individually significant and tested for impairment individually
Notes to the financial statements Page 91
Items | Ending balance | |||
Accounts receivable | Provision for bad debts | Bad debts ratio(%) | Reason | |
Benxi Nanfen Xinhe Metallurgical Co., Ltd. | 47,762,337.18 | 47,762,337.18 | 100.00 | Halt operation |
Total | 47,762,337.18 | 47,762,337.18 |
Accounts receivable disclosed by aging
Items | Ending balance | ||
Carrying amount | Provision for bad debts | Bad debts ratio (%) | |
Within 1 year (inclusive) | 326,326,994.80 | ||
1-2 years (inclusive) | 56,750,367.45 | 2,837,518.37 | 5 |
2-3 years (inclusive) | 27,697,384.96 | 5,539,476.99 | 20 |
Over 3 years | 167,593,556.87 | 167,593,556.87 | 100 |
Total | 578,368,304.08 | 175,970,552.23 |
2. Information of provision, reversal or recovery of bad debts of current period.The provision of bad debts of current period is RMB 3,389,912.79.
3. No accounts receivable has been written off this year.
4. Top five debtors at the year-end
Company | Ending balance | ||
Amount | Percentage of total accounts receivable (%) | Provision for bad debts | |
No.1 | 206,877,478.40 | 35.77 | |
No.2 | 62,482,368.63 | 10.80 | 6,792,099.51 |
No.3 | 47,762,337.18 | 8.26 | 47,762,337.18 |
No.4 | 41,687,479.04 | 7.21 | |
No.5 | 10,140,717.39 | 1.75 | 1,150,024.13 |
Total | 368,950,380.64 | 63.79 | 55,704,460.82 |
(2) Other receivables
Items | Ending balance | Beginning balance |
Notes to the financial statements Page 92
Interest receivables | 12,222,112.07 | 9,815,280.04 |
Dividend receivables | ||
Other receivables | 216,469,271.82 | 225,222,111.42 |
Total | 228,691,383.89 | 235,037,391.46 |
1.Interest receivable
(1) Interest receivable disclosed by category
Items | Ending balance | Beginning balance |
Deposit interest | 12,222,112.07 | 9,815,280.04 |
Total | 12,222,112.07 | 9,815,280.04 |
1. Other receivables disclosed by category
Items | Ending balance | |||||
Carrying amount | Provision for bad debts | Book value | ||||
Amount | Percentage (%) | Amount | Bad debts ratio (%) | |||
Other receivables tested for impairment by portfolio | 278,939,285.62 | 99.4 | 64,210,013.80 | 23.02 | 214,729,271.82 | |
Other receivables tested for impairment individually | 1,740,000.00 | 0.6 | 1,740,000.00 | |||
Total | 280,679,285.62 | 100 | 64,210,013.80 | 216,469,271.82 |
Items | Beginning balance | ||||
Carrying amount | Provision for bad debts | Book value | |||
Amount | Percentage (%) | Amount | Bad debts ratio (%) | ||
Other receivables tested for impairment by portfolio | 288,053,726.26 | 99.4 | 64,571,614.84 | 22.42 | 223,482,111.42 |
Other receivables tested for impairment individually | 1,740,000.00 | 0.6 | 1,740,000.00 | ||
Total | 289,793,726.26 | 100 | 64,571,614.84 | 225,222,111.42 |
Other receivables disclosed by Aging
Notes to the financial statements Page 93
Items | Ending balance | ||
Carrying amount | Provision for bad debts | Bad debts ratio (%) | |
Within 1 year (inclusive) | 175,866,828.59 | ||
1-2 years (inclusive) | 3,202,196.37 | 160,109.82 | 5 |
2-3 years (inclusive) | 44,775,445.85 | 8,955,089.17 | 20 |
Over 3 years | 56,834,814.81 | 55,094,814.81 | 97 |
Total | 280,679,285.62 | 64,210,013.80 |
2. Information of provision, reversal or recovery of bad debts of current period.Reversal of bad debts for other receivables in current period is RMB 361,601.04.
3. No other receivables have been written off this year.
4. Other receivables disclosed by Nature
Nature | Ending balance | Beginning balance |
Current Accounts | 269,737,685.54 | 278,547,233.77 |
Others | 10,941,600.08 | 11,246,492.49 |
Total | 280,679,285.62 | 289,793,726.26 |
5. Top five debtors at the year-end
Company | Notes or content | Amount | Aging | Percentage of total other receivables (%) | Provision for bad debts |
No.1 | Accounts | 66,559,873.88 | Within 1 year | 23.71 | |
No.2 | Accounts | 14,664,372.10 | 2-3 years | 5.22 | 2,932,874.42 |
No.3 | Accounts | 7,718,029.34 | Within 1 year | 2.75 | |
No.4 | Accounts | 5,302,064.54 | 2-3 years | 1.89 | |
No.5 | Accounts | 4,341,257.18 | Within 1 year | 1.55 | 868,251.44 |
Total | 98,585,597.04 | 35.12 | 3,801,125.86 |
(3) Long-term equity investment
Items | Ending balance | Beginning balance | ||||
Carrying amount | Impairment | Book value | Carrying amount | Impairment | Book value |
Notes to the financial statements Page 94
Subsidiaries | 2,016,281,902.16 | 2,016,281,902.16 | 2,016,281,902.16 | 2,016,281,902.16 | ||
Joint ventures | ||||||
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 | Ending balance | Impairment of current period | Ending balance of impairment |
Guangzhou Bengang Steel & Iron Trading Co., Ltd. | 30,000,000.00 | 30,000,000.00 | ||||
Shanghai Bengang Metallurgy Science and Technology Co., Ltd. | 30,000,000.00 | 30,000,000.00 | ||||
Bengang Steel Plates Liaoyang Pellet Co., Ltd. | 529,899,801.38 | 529,899,801.38 | ||||
Dalian Benruitong Automobile Material Technology Co., Ltd. | 65,000,000.00 | 65,000,000.00 | ||||
Bengang Posco Cold-rolled Sheet Co., Ltd. | 1,019,781,571.10 | 1,019,781,571.10 | ||||
Changchun Bengang Steel & Iron Sales Co., Ltd. | 28,144,875.36 | 28,144,875.36 | ||||
Harbin Bengang Economic and Trading Co., Ltd. | 29,923,398.23 | 29,923,398.23 | ||||
Nanjing Bengang Materials Sales Co., Ltd. | 2,081,400.65 | 2,081,400.65 | ||||
Wuxi Bengang Steel & Iron Sales Co., Ltd. | 29,936,718.57 | 29,936,718.57 | ||||
Xiamen Bengang Steel & Iron Sales Co., Ltd. | 1,095,711.66 | 1,095,711.66 | ||||
Yantai Bengang Steel & Iron Sales Co., Ltd. | 49,100,329.41 | 49,100,329.41 | ||||
Tianjin Bengang Steel & Iron Trading Co., Ltd. | 60,318,095.80 | 60,318,095.80 | ||||
Benxi Bengang Steel Sales Co., Ltd | 5,000,000.00 | 5,000,000.00 | ||||
Shenyang Bengang Metallurgical Science and Technology Co., Ltd. | 30,000,000.00 | 30,000,000.00 | ||||
Chongqing Liaoben Steel & Iron Trade Co., Ltd. | 30,000,000.00 | 30,000,000.00 | ||||
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 |
Notes to the financial statements Page 95
(4) Operating income and operating cost
Items | Current period | Previous period | ||
Revenue | Cost | Revenue | Cost | |
Principal business | 21,327,519,597.49 | 19,894,713,843.28 | 21,543,654,805.89 | 19,737,906,706.75 |
Other business | 2,119,696,260.44 | 1,862,576,153.90 | 2,139,210,303.25 | 1,663,285,255.45 |
Total | 23,447,215,857.93 | 21,757,289,997.18 | 23,682,865,109.14 | 21,401,191,962.20 |
(5) Income on investment
Items | Current period | Previous period |
Income from long-term equity investment (cost method) | ||
Income from bank short-term financial products | 3,493,150.68 | |
Total | 3,493,150.68 |
14. Supplementary information
(1) Details of non-recurring profit and loss
Items | Amount | Notes |
Profit or loss from disposal of non-current assets | -49,987,558.33 | |
Government subsidy attributable to profit and loss of current period (except such government subsidy closely related to the company's normal business operation, meeting the regulation of national policy and enjoyed constantly in certain quota or quantity according to a certain standard) | 41,695,000.00 | |
Profit or loss from investment or assets entrusted to others | ||
Profit or loss from debt restructuring | 50,640.00 | |
Net profit or loss of subsidiary from the beginning to consolidation date gained from consolidation under same control | ||
Other non-operating revenue and expenditure other than above items | 172,778.52 | |
Impact of income tax | 55,854.63 | |
Impact of minority interests | 3,799.93 | |
Total | -8,128,794.37 |
(2) Net asset yield and earnings per share
Profit in the Reporting Period | Weighted average net assets yield | Earnings per share (Yuan) | |
Basic EPS | Diluted EPS | ||
Net profit attributable to ordinary shareholders | 2.35% | 0.12 | 0.12 |
Net profit attributable to ordinary shareholders after deducting non-recurring profit and loss | 2.50% | 0.12 | 0.12 |
Notes to the financial statements Page 96
Bengang Steel Plates Co., Ltd.
(Seal)28 August 2019