Bengang Steel Plates Co., Ltd.
FINANCIAL STATEMENTS
(From January to June 2018)
(Unaudited)
INDEX
PAGES
CONSOLIDATED STATEMENT OF FINANCIAL
1-4 POSITION AND STATEMENT OF FINANCIAL
POSITION
CONSOLIDATED STATEMENT OF
5-6 COMPREHENSIVE INCOME AND STATEMENT
OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF CASH FLOWS
7-8 AND STATEMENT OF CASH FLOWS
CONSOLIDATED STATEMENT OF CHANGES IN
9-12 EQUITY AND STATEMENT OF CHANGES IN
EQUITY
NOTES TO THE FINANCIAL STATEMENTS
BENGANG STEEL PLATES CO., LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2018
(Expressed in Renminbi unless otherwise indicated)
|||||
|-|-|-|-|
|Assets|Notes|Ending balance|Beginning balance|
|Current assets:||||
|Cash at bank and on hand|5(1)|18,570,241,607.21|17,037,713,410.49|
|Settlement provisions||||
|Capital lent||||
|Financial assets at fair value through profit or loss||||
|Derivative financial assets||||
|Notes receivable|5(2)|3,164,893,647.96|3,846,433,700.87|
|Accounts receivable|5(3)|707,889,986.34|728,597,926.39|
|Prepayments|5(4)|1,200,163,813.66|1,280,689,094.33|
|Premium receivable||||
|Reinsurance accounts receivable||||
|Receivable deposit for reinsurance contract||||
|Interests receivable|5(5)|3,503,285.16|18,448,520.50|
|Dividends receivable||||
|Other receivables|5(6)|271,090,946.12|290,376,985.34|
|Redemptory financial assets for sale||||
|Inventories|5(7)|12,893,804,549.47|11,209,898,096.16|
|Assets classified as held for sale||||
|Non-current assets due within one year||||
|Other current assets|5(8)|217,616,432.96|809,322,127.79|
|Total current assets||37,029,204,268.88|35,221,479,861.87|
|Non-current assets:||||
|Loan and advances issued||||
|Available-for-sale financial assets|5(9)|4,088,980.00|3,888,980.00|
|Held-to-maturity investment||||
|Long-term receivables||||
|Long-term equity investments|5(10)|2,726,009.03|2,726,009.03|
|Investment properties||||
|Fixed assets|5(11)|22,739,708,839.78|23,852,067,166.10|
|Construction in progress|5(12)|2,740,359,727.63|2,391,584,410.46|
|Construction materials|5(13)|2,925,581.89|4,558,919.60|
|Disposal of fixed assets||||
|Productive biological assets||||
|Oil and gas assets||||
|Intangible assets|5(14)|281,428,909.47|253,884,881.48|
|Development expenditure||||
|Goodwill||||
|Long-term deferred expenses||||
|Deferred tax assets|5(15)|194,939,124.19|200,618,461.36|
|Other non-current assets|5(16)|1,037,735,849.00|1,067,334,823.12|
|Total non-current assets||27,003,913,020.99|27,776,663,651.15|
|Total assets||64,033,117,289.87|62,998,143,513.02|

 The notes to the financial statements attached form part of these financial statements.
Legal Representative: Person in charge of accounting: Accounting Dept. Leader:
Financial Statements Page 1
BENGANG STEEL PLATES CO., LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Continued)
As at 30 June 2018
(Expressed in Renminbi unless otherwise indicated)
|||||
|-|-|-|-|
|Liabilities and equities|Notes|Ending balance|Beginning balance|
|Current Liabilities:||||
|Short-term loans|5(17)|21,784,802,700.00|21,999,103,900.00|
|Loan from central bank||||
|Absorbed deposit and interbank deposit||||
|Loan from other financial institutions||||
|Financial liabilities at fair value through profit or loss||||
|Advance from customers||||
|Notes payable|5(18)|8,484,599,696.58|11,494,589,827.27|
|Accounts payable|5(19)|4,250,873,101.95|3,897,668,513.77|
|Advance from customers|5(20)|3,389,201,256.80|3,308,567,598.05|
|Financial assets sold for repurchase||||
|Handling charges and commission payable||||
|Employee benefits payable|5(21)|42,706,379.03|43,722,537.58|
|Current tax liabilities|5(22)|72,085,163.43|87,807,128.50|
|Interests payable|5(23)|51,920,388.97|84,139,288.02|
|Dividends payable|5(24)|193,768,576.60||
|Other payables|5(25)|560,995,763.37|576,989,932.31|
|Reinsurance accounts payable||||
|Provision for insurance contract||||
|Receipt from vicariously traded securities||||
|Receipt from vicariously underwriting securities||||
|Liabilities held for sale||||
|Non-current liabilities due within one year|5(26)|1,040,765,614.98|3,811,540,590.84|
|Other current liabilities|5(27)|25,283,327.37|27,979,093.21|
|Total current liabilities||39,897,001,969.08|45,332,108,409.55|
|Non-current liabilities:||||
|Long-term loans|5(28)|4,406,999,573.88|2,444,185,630.28|
|Bonds payable||||
|Including: Preferred stock||||
|Perpetual bond||||
|Long-term payables||||
|Long-term employee benefits payable||||
|Special accounts payable||||
|Estimated liabilities||||
|Deferred income|5(29)|332,205,061.30|372,785,000.00|
|Deferred tax liabilities||||
|Other non-current liabilities||||
|Total non-current liabilities||4,739,204,635.18|2,816,970,630.28|
|Total liabilities||44,636,206,604.26|48,149,079,039.83|
|Shareholders’equity:||||
|Share capital|5(30)|3,875,371,532.00|3,136,000,000.00|
|Other equity instruments||||
|Including: Preferred stock||||
|Perpetual bond||||
|Capital reserves|5(31)|12,343,209,847.29|9,114,845,542.05|
|Less: treasury shares||||
|Other comprehensive income||||
|Special reserves|5(32)|15,965,124.92|475,046.75|
|Surplus reserves|5(33)|961,105,529.85|961,105,529.85|
|General risk reserve||||
|Undistributed profits|5(34)|1,666,346,021.34|1,103,162,610.35|
|Total equity attributable to equity holders of the parent||18,861,998,055.40|14,315,588,729.00|
|cNoomnp-caonnyt rolling interests||534,912,630.21|533,475,744.19|
|Total shareholder’s equity||19,396,910,685.61|14,849,064,473.19|
|Total liabilities and shareholder’s equity||64,033,117,289.87|62,998,143,513.02|

 The notes to the financial statements attached form part of these financial statements.
Legal Representative: Person in charge of accounting: Accounting Dept. Leader:
Financial Statements Page 2
BENGANG STEEL PLATES CO., LTD.
STATEMENT OF FINANCIAL POSITION
As at 30 June 2018
(Expressed in Renminbi unless otherwise indicated)
|||||
|-|-|-|-|
|Assets|Notes|Ending balance|Beginning balance|
|Current assets:||||
|Cash at bank and on hand||17,784,602,468.77|16,717,913,081.42|
|Financial assets at fair value through profit or loss||||
|Derivative financial assets||||
|Notes receivable||3,592,298,525.73|3,515,361,992.96|
|Accounts receivable|14(1)|441,694,805.16|482,181,593.45|
|Prepayments||1,200,163,813.66|1,280,354,579.87|
|Interests receivable||3,503,285.16|18,377,036.96|
|Dividends receivable||||
|Other receivables|14(2)|359,047,123.99|376,863,448.72|
|Inventories||10,890,539,001.27|9,228,860,225.75|
|Assets classified as held for sale||||
|Non-current assets due within one year||||
|Other current assets||183,648,538.95|682,211,823.73|
|Total current assets||34,455,497,562.69|32,302,123,782.86|
|Non-current assets:||||
|Available-for-sale financial assets||3,888,980.00|3,888,980.00|
|Held-to-maturity investment||||
|Long-term receivables||||
|Long-term equity investments|14(3)|2,016,281,902.16|1,756,981,902.16|
|Investment properties||||
|Fixed assets||20,682,878,459.91|21,621,369,452.27|
|Construction in progress||2,729,970,930.48|2,383,533,130.37|
|Construction materials||2,500,795.57|4,134,133.28|
|Disposal of fixed assets||||
|Productive biological assets||||
|Oil and gas assets||||
|Intangible assets||150,429,246.60|152,082,315.24|
|Development expenditure||||
|Goodwill||||
|Long-term deferred expenses||||
|Deferred tax assets||94,510,584.16|100,189,921.33|
|Other non-current assets||1,037,735,849.00|1,037,735,849.00|
|Total non-current assets||26,718,196,747.88|27,059,915,683.65|
|Total assets||61,173,694,310.57|59,362,039,466.51|

 The notes to the financial statements attached form part of these financial statements.
Legal Representative: Person in charge of accounting: Accounting Dept. Leader:
Financial Statements Page 3
BENGANG STEEL PLATES CO., LTD.
STATEMENT OF FINANCIAL POSITION (Continued)
As at 30 June 2018
(Expressed in Renminbi unless otherwise indicated)
|||||
|-|-|-|-|
|Liabilities and equities|Notes|Ending balance|Beginning balance|
|Current Liabilities:||||
|Short-term loans||20,221,393,300.00|20,499,694,500.00|
|Financial liabilities at fair value through profit or loss||||
|Advance from customers||||
|Notes payable||7,860,203,778.44|10,866,669,546.93|
|Accounts payable||5,337,269,401.91|4,184,763,509.38|
|Advance from customers||3,372,558,263.64|3,217,423,443.14|
|Employee benefits payable||42,355,769.94|42,380,713.02|
|Current tax liabilities||59,951,664.39|66,903,531.67|
|Interests payable||39,344,592.42|79,074,426.27|
|Dividends payable||193,768,576.60||
|Other payables||322,657,246.84|343,211,639.65|
|Liabilities held for sale||||
|Non-current liabilities due within one year||1,040,765,614.98|3,811,540,590.84|
|Other current liabilities||25,283,327.37|27,979,093.21|
|Total current liabilities||38,515,551,536.53|43,139,640,994.11|
|Non-current liabilities:||||
|Long-term loans||4,406,999,573.88|2,444,185,630.28|
|Bonds payable||||
|Including: Preferred stock||||
|Perpetual bond||||
|Long-term payables||||
|Long-term employee benefits payable||||
|Special accounts payable||||
|Estimated liabilities||||
|Deferred income||332,205,061.30|372,785,000.00|
|Deferred tax liabilities||||
|Other non-current liabilities||||
|Total non-current liabilities||4,739,204,635.18|2,816,970,630.28|
|Total liabilities||43,254,756,171.71|45,956,611,624.39|
|Shareholders’equity:||||
|Share capital||3,875,371,532.00|3,136,000,000.00|
|Other equity instruments||||
|Including: Preferred stock||||
|Perpetual bond||||
|Capital reserves||11,923,058,165.17|8,694,693,859.93|
|Less: treasury shares||||
|Other comprehensive income||||
|Special reserves||13,268,084.12|276,727.96|
|Surplus reserves||961,105,529.85|961,105,529.85|
|Undistributed profits||1,146,134,827.72|613,351,724.38|
|Total shareholder’s equity||17,918,938,138.86|13,405,427,842.12|
|Total liabilities and shareholder’s equity||61,173,694,310.57|59,362,039,466.51|

 The notes to the financial statements attached form part of these financial statements.
Legal Representative: Person in charge of accounting: Accounting Dept. Leader:
Financial Statements Page 4
BENGANG STEEL PLATES CO., LTD.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
From January to June 2018
(Expressed in Renminbi unless otherwise indicated)
January to June January to June
|||||
|-|-|-|-|
|Items|Notes|January to June2018|January to June2017|
|1. Total operating income||23,441,247,377.14|20,736,486,903.74|
|Including: Operating income|5(35)|23,441,247,377.14|20,736,486,903.74|
|Interest income||||
|Premium earned||||
|Income from handling charges and commission||||
|2. Total operating cost||22,717,986,325.30|20,109,129,759.95|
|Including: Operating cost|5(35)|20,804,207,420.98|18,690,665,966.11|
|Interest cost||||
|Expenditure for handling charges and commission||||
|Surrender value||||
|Net expenditure for compensation||||
|Net provision for insurance contract appropriated||||
|Bonus payment for policy||||
|Reinsurance premium||||
|Taxes and surcharges|5(36)|153,307,375.64|133,756,731.07|
|Selling and distribution expenses|5(37)|514,038,008.95|587,632,707.43|
|General and administrative expenses|5(38)|464,313,066.09|358,951,405.08|
|Financial expenses|5(39)|803,038,417.28|381,513,404.80|
|Asset impairment loss|5(40)|-20,917,963.64|-43,390,454.54|
|Add: Gains from the change in fair value ("-" for loss)||||
|Income on investment ("-" for loss)|5(41)|3,493,150.68|3,294,593.14|
|Including: Income from associates and joint ventures||||
|Exchange Income ("-" for loss)||||
|Gains from disposal of Asset ("-" for loss)|5(42)|825,580.63|3,015,294.00|
|Other income|5(43)|41,274,238.70|15,047,000.00|
|3. Operating profit ("-" for loss)||768,854,021.85|648,714,030.93|
|Add: Non-operating income|5(44)|2,138,397.80|2,952,194.58|
|Less: Non-operating expenses|5(45)|1,382,402.26|4,593,420.30|
|4. Total profit ("-" for total loss)||769,610,017.39|647,072,805.21|
|Less: Income tax expenses|5(46)|11,636,226.04|117,105,061.16|
|5. Net Profit ("-" for net loss)||757,973,791.35|529,967,744.05|
|1) Classified by going concern||||
|(1) Net profit from continuing operations||757,973,791.35|529,967,744.05|
|(2) Net profit from discontinuing operation||||
|2) Classified by ownership||||
|Non-controlling shareholders||1,021,803.76|6,332,090.48|
|Attributable to: Owners of parent company||756,951,987.59|523,635,653.57|
|6. Other comprehensive income after tax||||
|Other comprehensive income attributable to owners of parent company after tax||||
|1) Other comprehensive income unable to be reclassified into profit and loss afterwards||||
|(1) Change of net liabilities or net assets through remeasuring defined benefit plan||||
|(2) Share of other comprehensive income of investee not to be classified into profit orloss afterwards under equity method||||
|2) Other comprehensive income to be reclassified into profit and loss afterwards||||
|(1) Share of other comprehensive income of investee to be classified into profit orloss afterwards under equity method||||
|(2) Gains and losses on remeasuring available-for-sale financial assets||||
|(3) Gains and losses resulting from reclassification of held-to maturity investment tofinancial assets held-for sale||||
|(4) Effective portion of gains or losses from cash flow hedging||||
|(5) Gains and losses resulting from translating the foreign currencyfinancial statements||||
|(6) Other||||
|Other comprehensive income attributable to non-controlling shareholders after tax||||
|7. Total comprehensive income||757,973,791.35|529,967,744.05|
|Total comprehensive income attributable to owners of parent company||756,951,987.59|523,635,653.57|
|Total comprehensive income attributable to non-controlling shareholders||1,021,803.76|6,332,090.48|
|8. Earnings per share:||||
|1) Basic earnings per share (RMB)||0.195|0.167|
|2) Diluted earnings per share (RMB)||0.195|0.167|

 The notes to the financial statements attached form part of these financial statements.
Legal Representative: Person in charge of accounting: Accounting Dept. Leader:
Financial Statements Page 5
BENGANG STEEL PLATES CO., LTD.
STATEMENT OF COMPREHENSIVE INCOME
From January to June 2018
(Expressed in Renminbi unless otherwise indicated)
|||||
|-|-|-|-|
|Items|Notes|January to June 2018|January to June 2017|
|1. Operating income|14(4)|23,682,865,109.14|21,197,516,779.20|
|Less: Operating cost|14(4)|21,401,191,962.20|19,482,976,074.32|
|Taxes and surcharges||135,543,392.96|116,783,416.00|
|Selling and distribution expenses||265,554,867.46|373,519,186.39|
|General and administrative expenses||440,663,658.86|336,370,276.02|
|Financial expenses||774,523,490.60|350,175,885.42|
|Asset impairment loss||-20,917,963.64|-43,390,454.54|
|Add: Gains from the change in fair value ("-" for loss)||||
|Income on investment ("-" for loss)|14(5)|3,493,150.68|105,369,227.90|
|Including: Income from associates and joint ventures||||
|Gains from disposal of assets ("-" for loss)||825,580.63|3,015,294.00|
|Other income||41,274,238.70|15,047,000.00|
|2. Operating profit ("-" for loss)||731,898,670.71|704,513,917.49|
|Add: Non-operating income||1,714,748.66|2,214,787.86|
|Less: Non-operating expenses||1,382,402.26|4,593,420.30|
|3. Total profit ("-" for total loss)||732,231,017.11|702,135,285.05|
|Less: Income tax expenses||5,679,337.17|100,308,537.10|
|4. Net Profit ("-" for net loss)||726,551,679.94|601,826,747.95|
|(1) Net profit from continuing operations||726,551,679.94|601,826,747.95|
|(2) Net profit from discontinuing operation||||
|5. Other comprehensive income after tax||||
|1) Other comprehensive income unable to be reclassifiedinto profit and loss afterwards||||
|(1) Change of net liabilities or net assets throughremeasuring defined benefit plan||||
|(2) Share of other comprehensive income of investee notto be classified into profit or loss afterwards underequity method||||
|2) Other comprehensive income to be reclassified intoprofit and loss afterwards||||
|(1) Share of other comprehensive income of investee tobe classified into profit or loss afterwards under equitymethod||||
|(2) Gains and losses on remeasuring available-for-salefinancial assets||||
|(3) Gains and losses resulting from reclassification ofheld-to-maturity investment to financial assets held for||||
|s(4al)e E ffective portion of gains or losses from cash flowhedging||||
|(5)Gains and losses resulting from translating the foreigncurrency financial statements||||
|(6) Other||||
|6. Total comprehensive income||726,551,679.94|601,826,747.95|
|7. Earnings per share:||||
|1) Basic earnings per share (RMB)||||
|2) Diluted earnings per share (RMB)||||

The notes to the financial statements attached form part of these financial statements.
Legal Representative: Person in charge of accounting: Accounting Dept. Leader:
Financial Statements Page 6
BENGANG STEEL PLATES CO., LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
From January to June 2018
(Expressed in Renminbi unless otherwise indicated)
|||||
|-|-|-|-|
|Items|Notes|January to June 2018|January to June 2017|
|1.Cash flow from operating activities||||
|Cash received from sale of goods or rendering of services||15,984,735,085.76|14,489,666,407.59|
|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 other financial institutions||||
|Net increase of fund for buy-back business||||
|Tax rebate received||246,514,404.27|71,132,309.30|
|Other cash received relating to operating activities|5(47)|81,782,480.19|87,817,078.61|
|Subtotal of cash inflows from operating activities||16,313,031,970.22|14,648,615,795.50|
|Cash paid for goods and services||14,086,077,537.47|17,237,734,129.30|
|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||779,373,374.96|719,101,828.61|
|Cash paid for all types of taxes||406,064,168.90|390,701,219.38|
|Other cash paid relating to operating activities|5(47)|310,997,147.42|348,384,302.93|
|Subtotal of cash outflows from operating activities||15,582,512,228.75|18,695,921,480.22|
|Net cash flows from operating activities||730,519,741.47|-4,047,305,684.72|
|2. Cash flows from investing activities||||
|Cash received from return on investments||500,000,000.00|424,000,000.00|
|Cash received from distribution of dividends or profit||3,493,150.68|3,294,593.14|
|Net cash received from disposal of fixed assets, intangible assetsand other long-term assets||||
|Net cash received from disposal of subsidiary and other operatingunits||||
|Other cash paid relating to investing activities||||
|Subtotal of cash inflows from investing activities||503,493,150.68|427,294,593.14|
|Cash paid for acquisition of fixed assets, intangible assets andother long-term assets||680,441,782.39|702,058,422.96|
|Cash paid for acquisition of investments|||180,000,000.00|
|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||680,441,782.39|882,058,422.96|
|Net cash flows from investing activities||-176,948,631.71|-454,763,829.82|
|3. Cash flows from financing activities||||
|Proceeds from investment||3,965,799,988.19||
|Including: Proceeds from investment of non-controllingshareholders of subsidiary||||
|Proceeds from borrowings||9,721,396,957.08|10,419,164,500.00|
|Cash received from bond issuance||||
|Other proceeds relating to financing activities||||
|Subtotal of cash inflows from financing activities||13,687,196,945.27|10,419,164,500.00|
|Cash repayments of borrowings||14,683,452,081.71|6,099,082,442.74|
|Cash payments for distribution of dividends, profit or interestexpenses||661,538,139.82|565,025,996.70|
|Including: Cash paid to non-controlling shareholders as dividendand profit by subsidiaries||||
|Other cash payments relating to financing activities||||
|Subtotal of cash outflows from financing activities||15,344,990,221.53|6,664,108,439.44|
|Net cash flows from financing activities||-1,657,793,276.26|3,755,056,060.56|
|4. Effect of foreign exchange rate changes on cash and cashequivalents||105,015,610.23|-41,586,403.20|
|5. Net increase in cash and cash equivalents||-999,206,556.27|-788,599,857.18|
|Add: Cash and cash equivalents at the beginning of the period||17,037,713,410.49|12,273,574,488.67|
|6. Cash and cash equivalents at the ending of the period||16,038,506,854.22|11,484,974,631.49|

 The notes to the financial statements attached form part of these financial statements.
Legal Representative: Person in charge of accounting: Accounting Dept. Leader:
Financial Statements Page 7
BENGANG STEEL PLATES CO., LTD.
STATEMENT OF CASH FLOWS
From January to June 2018
(Expressed in Renminbi unless otherwise indicated)
|||||
|-|-|-|-|
|Items|Notes|January to June2018|January to June2017|
|1. Cash flow from operating activities||||
|Cash received from sale of goods or rendering of services||15,778,223,117.53|14,377,855,065.89|
|Tax rebate received||119,119,395.04|21,102,552.86|
|Other cash received relating to operating activities||76,026,838.22|80,547,620.06|
|Subtotal of cash inflows from operating activities||15,973,369,350.79|14,479,505,238.81|
|Cash paid for goods and services||13,721,886,325.25|17,094,207,253.57|
|Cash paid to and on behalf of employees||726,170,588.86|672,852,272.11|
|Cash paid for all types of taxes||341,018,028.32|330,314,831.68|
|Other cash paid relating to operating activities||222,352,157.09|244,216,504.53|
|Subtotal of cash outflows from operating activities||15,011,427,099.52|18,341,590,861.89|
|Net cash flows from operating activities||961,942,251.27|-3,862,085,623.08|
|2. Cash flows from investing activities||||
|Cash received from return on investments||500,000,000.00|424,000,000.00|
|Cash received from distribution of dividends or profit||3,493,150.68|105,353,447.08|
|Net cash received from disposal of fixed assets, intangible assets andother long-term assets||||
|Net cash received from disposal of subsidiary and other operatingunits||||
|Other cash received relating to investing activities||||
|Subtotal of cash inflows from investing activities||503,493,150.68|529,353,447.08|
|Cash paid for acquisition of fixed assets, intangible assets and otherlong-term assets||677,920,104.21|687,313,444.96|
|Cash paid for acquisition of investments||259,300,000.00|180,000,000.00|
|Net cash paid for acquisition of subsidiary & other operating unit||||
|Other cash paid relating to investing activities||||
|Subtotal of cash outflows paid for investing activities||937,220,104.21|867,313,444.96|
|Net cash flows from investing activities||-433,726,953.53|-337,959,997.88|
|3. Cash flows from financing activities||||
|Proceeds from investment||3,965,799,988.19||
|Cash received from borrowings||8,986,529,900.00|9,396,164,500.00|
|Other proceeds relating to financing activities||||
|Other cash received relating to financing activities||||
|Subtotal of cash inflows from financing activities||12,952,329,888.19|9,396,164,500.00|
|Cash repayments of borrowings||13,939,938,977.79|5,345,526,396.17|
|Cash payments for distribution of dividends, profit or interest||635,530,683.74|399,928,132.12|
|Other cash payments relating to financing activities||||
|Subtotal of cash outflows from financing activities||14,575,469,661.53|5,745,454,528.29|
|Net cash flows from financing activities||-1,623,139,773.34|3,650,709,971.71|
|4. Effect of foreign exchange rate changes on cash and cashequivalents||105,012,744.72|-41,635,090.04|
|5. Net increase in cash and cash equivalents||-989,911,730.88|-590,970,739.29|
|Add: Cash and cash equivalents at the beginning of the period||16,713,104,199.65|11,876,536,613.66|
|6. Ending balance of cash and cash equivalents||15,723,192,468.77|11,285,565,874.37|

The notes to the financial statements attached form part of these financial statements.
Legal Representative: Person in charge of accounting: Accounting Dept. Leader:
Financial Statements Page 8
BENGANG STEEL PLATES CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
From January to June 2018
(Expressed in Renminbi unless otherwise indicated)
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|January to June 2018|||||||||||||
||Owner’s equity attributable to parent company|||||||||||Non-controllinginterests|Total shareholder’sequity|
||Share capital|Other equity instruments|||Capital reserves|Less:treasuryshares|Othercomprehensiveincome|Specialreserves|Surplusreserves|Generalriskreserve|Undistributedprofits|||
|||Preferenceshares|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|||15,490,078.17|||563,183,410.99|1,436,886.02|4,547,846,212.42|
|1) Total comprehensive income|||||||||||756,951,987.59|1,021,803.76|757,973,791.35|
|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 equityinstruments||||||||||||||
|(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-incapital (or stock)||||||||||||||
|(2) Surplus reserves transferred into paid-incapital (or stock)||||||||||||||
|(3) Surplus reserves to recover loss||||||||||||||
|(4) Others||||||||||||||
|5) Special reserves||||||||15,490,078.17||||415,082.26|15,905,160.43|
|(1) Provision of special reserves||||||||22,983,003.78||||415,082.26|23,398,086.04|
|(2) Use of special reserves||||||||7,492,925.61|||||7,492,925.61|
|6) Others||||||||||||||
|4. Ending balance of current year|3,875,371,532.00||||12,343,209,847.29|||15,965,124.92|961,105,529.85||1,666,346,021.34|534,912,630.21|19,396,910,685.61|

The notes to the financial statements attached form part of these financial statements.
Legal Representative: Person in charge of accounting: Accounting Dept. Leader:
Financial Statements Page 9
BENGANG STEEL PLATES CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued)
From January to June 2018
(Expressed in Renminbi unless otherwise indicated)
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|January to June 2017|||||||||||||
||Owner’s equity attributable to parent company|||||||||||Non-controllinginterests|Total shareholder’sequity|
||Share capital|Other equity instruments|||Capital reserves|Less:treasuryshares|Othercomprehensiveincome|Specialreserves|Surplusreserves|Generalriskreserve|Undistributedprofits|||
|||Preferenceshares|Perpetual bond|Others||||||||||
|1. Ending balance of last year|3,136,000,000.00||||9,156,845,542.05|||372,721.86|961,105,529.85||-496,947,619.42|549,205,917.49|13,306,582,091.83|
|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||||9,156,845,542.05|||372,721.86|961,105,529.85||-496,947,619.42|549,205,917.49|13,306,582,091.83|
|3. Changes in current year (“-” for decrease)|||||-42,000,000.00|||102,324.89|||1,600,110,229.77|-15,730,173.30|1,542,482,381.36|
|1) Total comprehensive income|||||||||||1,600,110,229.77|9,280,477.96|1,609,390,707.73|
|2) Capital increase and decrease by shareholders||||||||||||9,000,000.00|9,000,000.00|
|(1) Common share invested by shareholders||||||||||||||
|(2) Capital input by the holder of other equityinstruments||||||||||||||
|(3) Share-based payment attributable to owners'equity||||||||||||||
|(4) Others||||||||||||9,000,000.00|9,000,000.00|
|3) Profit distribution||||||||||||-34,024,878.25|-34,024,878.25|
|(1) Appropriation to surplus reserves||||||||||||||
|(2) Appropriation to general risk reserve||||||||||||||
|(3) Profit distribution to shareholders||||||||||||-34,024,878.25|-34,024,878.25|
|(4) Others||||||||||||||
|4) Transfers within shareholders' equity||||||||||||||
|(1) Capital reserves transferred into paid-incapital (or stock)||||||||||||||
|(2) Surplus reserves transferred into paid-incapital (or stock)||||||||||||||
|(3) Surplus reserves to recover loss||||||||||||||
|(4) Others||||||||||||||
|5) Special reserves||||||||102,324.89||||14,226.99|116,551.88|
|(1) Provision of special reserves||||||||40,325,168.14||||14,226.99|40,339,395.13|
|(2) Use of special reserves||||||||40,222,843.25|||||40,222,843.25|
|6) Others|||||-42,000,000.00||||||||-42,000,000.00|
|4. Ending 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|

 The notes to the financial statements attached form part of these financial statements.
Legal Representative: Person in charge of accounting: Accounting Dept. Leader:
Financial Statements Page 10
BENGANG STEEL PLATES CO., LTD.
STATEMENT OF CHANGES IN EQUITY
From January to June 2018
(Expressed in Renminbi unless otherwise indicated)
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|January to June 2018|||||||||||
||Share capital|Other equity instruments|||Capital reserves|Less:treasuryshares|Othercomprehensive income|Specialreserves|Surplus reserves|Undistributed profits|Total shareholder’sequity|
|||Preferenceshares|Perpetualbond|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|||12,991,356.16||532,783,103.34|4,513,510,296.74|
|1) Total comprehensive income||||||||||726,551,679.94|726,551,679.94|
|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 owners' equity||||||||||||
|(4) Others||||||||||||
|3) Profit distribution||||||||||-193,768,576.60|-193,768,576.60|
|(1) Appropriation to 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) Others||||||||||||
|5) Special reserves||||||||12,991,356.16|||12,991,356.16|
|(1) Provision of special reserves||||||||20,342,777.03|||20,342,777.03|
|(2) Use of special reserves||||||||7,351,420.87|||7,351,420.87|
|6) Others||||||||||||
|4. Ending balance of current year|3,875,371,532.00||||11,923,058,165.17|||13,268,084.12|961,105,529.85|1,146,134,827.72|17,918,938,138.86|

 The notes to the financial statements attached form part of these financial statements.
Legal Representative: Person in charge of accounting: Accounting Dept. Leader:
Financial Statements Page 11
BENGANG STEEL PLATES CO., LTD.
STATEMENT OF CHANGES IN EQUITY (Continued)
From January to June 2018
(Expressed in Renminbi unless otherwise indicated)
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|January to June 2017|||||||||||
||Share capital|Other equity instruments|||Capital reserves|Less:treasuryshares|Othercomprehensiveincome|Specialreserves|Surplus reserves|Undistributed profits|Total shareholder’sequity|
|||Preferenceshares|Perpetualbond|Others||||||||
|1. Ending balance of last year|3,136,000,000.00||||8,694,693,859.93|||393,372.05|961,105,529.85|-1,684,456,000.89|11,107,736,760.94|
|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|||393,372.05|961,105,529.85|-1,684,456,000.89|11,107,736,760.94|
|3. Changes in current year (“-” for decrease)||||||||-162,636.16||677,743,710.71|677,581,074.55|
|1) Total comprehensive income||||||||||677,743,710.71|677,743,710.71|
|2) Capital increase and decrease by shareholders||||||||||||
|(1) Common share invested by shareholders||||||||||||
|(2) Capital input by the holder of other equityinstruments||||||||||||
|(3) Share-based payment attributable toshareholders' equity||||||||||||
|(4) Others||||||||||||
|3) Profit distribution||||||||||||
|(1) Appropriation of surplus reserves||||||||||||
|(2) Profit distribution to shareholders||||||||||||
|(3) Others||||||||||||
|4) Transfers within shareholders' equity||||||||||||
|(1) Capital reserves transferred into paid-incapital (or stock)||||||||||||
|(2) Surplus reserves transferred into paid-incapital (or stock)||||||||||||
|(3) Surplus reserves to recover loss||||||||||||
|(4) Others||||||||||||
|5) Special reserves||||||||-162,636.16|||-162,636.16|
|(1) Provision of special reserves||||||||34,079,630.37|||34,079,630.37|
|(2) Use of special reserves||||||||34,242,266.53|||34,242,266.53|
|6) Others||||||||||||
|4. Ending balance of current year|3,136,000,000.00||||8,694,693,859.93|||230,735.89|961,105,529.85|-1,006,712,290.18|11,785,317,835.49|

 The notes to the financial statements attached form part of these financial statements.
Legal Representative: Person in charge of accounting: Accounting Dept. Leader:
Financial Statements Page 12
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Bengang Steel Plates Co., Ltd.
Notes to the financial statements
From January to June 2018
(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. 57 by LiaoningPeople’s Government on 27 March 1997, was incorporated as a joint stock limited company through public share offer of domestic listed foreign currency denominated shares(B shares) in thePeople’s Republic of China(the “PRC”) on 27 June 1997 by Benxi Steel and Iron(Group) Co., Ltd.(“Bengang Group”), through reorganization of operations, assets and liabilities of its plants, namely, Steel Smelting Plant, Primary Rolling Plant and Continuous Hot Rolling Plant.
As approved by China Securities Regulatory Commission (hereinafter referred to as “the CSRC”), the Company issued 400,000,000 B-shares at HKD2.38 each in Shenzhen Stock Exchange on 10 June 1997. On 3 November 1997, the Company issued another 120,000,000 A-shares (Renminbi common Shares) at RMB5.40 each, and listed in Shenzhen Stock Exchange since 15 January 1998. The capital shares were totaled to 1,136,000,000 shares including 616,000,000 shares held by the promoter.
On 14 March 2006, according to the resolutions of theShareholders’Meeting regarding share equity relocation, the Share Equity Relocation Scheme, Response to Bengang Steel Plate Co., Ltd. about Share Equity Relocation issued by Liaoning Provincial Government State-owned Asset Administrative Committee, Bengang Group– the only holder of non-negotiable state-owned legal person shares paid the consideration to the current shareholders to obtain the current option for the 40,800,000 shares of the total 616,000,000 shares it was holding. Shareholding positions have been registered with China Securities Depository& Clearing Corporation Ltd. Shenzhen Office. However, the total amount of capital shares of Bengang Steel Plates Co., Ltd. was not changed through the share equity relocation action.
According to the approval document “Zheng-Jian-Gong-Si-Zi[2006] No. 126” by China Securities Regulatory Commission on 30 June 2006, the Company was approved to place 2 billion Renminbi common shares particularly to Bengang Group and the proceeds would be used to purchase the related assets of the Group. On the same day, Bengang Group received circular Zheng-Jian-Gong-Si-Zi[2006] No. 127 issued by China Securities Regulatory Committee, and were exempted for the liability of undertaking the purchase offer. The
Notes to the financial statements Page 1
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
liability was caused by subscribing of the 2 billion new shares and the total shareholding was thus increased to 2.5752 billion shares (accounting for82.12% of the total capital shares of the Company). On 28 August 2006, as approved by China Securities Depository& Clearing Corporation Ltd. Shenzhen Office, the registration and conditional placing procedures of the 2 billion new shares were completed. On 28 September 2006, the privately placed shares were approved by Shenzhen Stock Exchange to be placed in the stock market. The new shares were placed in the market with face value of RMB1.00 per share and the placing price was RMB 4.6733 per share.
On August 21, 2017, Bengang Steel acquired the “Security Regulatory Permission[2017] No. 1476” issued by the China Securities Regulatory Commission on August 11, 2017. The paper approved that the non-public issuance of Bengang Steel Plates should not exceed 739,371,354 shares. On February 12, 2018, the company completed the registration of this non-public offering of shares and restricted shares. On March 5, 2018, the company's non-public offering of new shares was listed, and the issue price was RMB 5.41 per share.
Up to 30 June 2018, the capital shares of Bengang Steel Plates Co., Ltd were amounted to 3,875,371,532 shares. The unified social credit code was 91210000242690243E. The registered address is 16th Renmin Road, Pingshan District, Benxi, Liaoning Province. The registered capital is RMB 3,875,371,532. The legal representative is Wang Shu.
The parent company of Bengang Steel Plates Co., Ltd is Benxi Steel and Iron (Group) Co., Ltd. and the actual controller is the State-owned Assets Supervision and Administration Commission of the State Council of Liaoning province.
Bengang Steel Plates Co., Ltd. belongs to ferrous metal smelting and rolling processing industry, and is mainly involved in producing and trading of ferrous metal products.
The financial statements have been approved for reporting by the board of directors of the Company on 27 August 2018.
(2) Consolidation Scope
As at 30 June 2018, subsidiaries included in theCompany’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.
Notes to the financial statements Page 2
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Bengang Steel Plate Liaoyang Orel Ball Co., Ltd.
Dalian Benruitong Automobile Material Technologies Co., Ltd.
Changchun Bengang Steel& Iron Sales Co., Ltd.
Harbin Bengang Economic and Trading Co., Ltd.
Nanjing Bengang Steel Material Sales 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 Puxiang Cool Rolling Steel Sheet Co., Ltd.
Benxi Bengang Steel Sales Co., Ltd
Shenyang Bengang Metallurgical Science and Technology Co., Ltd.
Chongqing Liaoben Steel& Iron Trading Co., Ltd.
Bengang Baojin (Shenyang)Automobile New Material Technology Co., Ltd.
Notes: For the details of the scope and changes of the consolidated financial statements of the current period, please refer to “VI. Changes in the scope of consolidation” and “VII. Interests in other entities” in this note.
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, application materials, interpretations (together hereinafter referred to as “Accounting Standards for Business Enterprises”) issued by 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 the next 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 by the Company according to the actual features of production or operation.)
(1) Statement of compliance with China Accounting Standards for Business Enterprises
Notes to the financial statements Page 3
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
The financial statements present truly and completely the financial position, operation results and cash flows of the Company 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
TheCompany’s functional currency is RMB.
(5) The accounting treatment for Business combination under/now under common control
Business consolidation under common control: The assets and liabilities that the Company acquired in a business combination shall be measured on the basis of their carrying amount ofaquiree’s assets, liabilities(as well as the goodwill arising from the business combination) in the consolidated financial statement of the ultimate controller on the combining date.
As for the balance between the carrying amount of the net assets obtained by the Company and the carrying amount of the consideration paid by it (or the total par value of the shares issued), capital reserve needs to be adjusted. If the capital reserve is not sufficient, any excess shall be adjusted against retained earnings.
Business combination involving entities now under common control: The Company shall, on the acquisition date, measure the assets given and liabilities incurred or assumed by an enterprise for a business combination in light of their fair values, and shall record the balances between them and their carrying amounts into the profits and losses at the current period.
The Company shall recognize the positive balance between 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 net assets it obtains from the acquiree into the profits and losses of the current period.
The intermediary costs and relevant management fee for the business combination now under same control paid by the acquirer, including the expenses for audit, assessment and legal services, shall be recorded into the profits and losses at the current period. The transaction
Notes to the financial statements Page 4
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
expenses for the issuance of equity securities for the business combination shall be recorded into the initial recognition amount of equity securities.
(6) Consolidation of Financial Statements
1. Scope of consolidation
The scope of consolidation of consolidated financial statements is determined based on control. All the subsidies (including separable sections of the investees controlled by the Company) have been consolidated into the scope of consolidation for this period ended.
2. Procedure of consolidation
The consolidated financial statements shall be presented by the parent based on the financial statements of the parent and its subsidiaries, and using other related information. When preparing consolidated financial statements, the parent shall consider the entire group as an accounting entity, adopt uniform accounting policies and apply the requirements of Accounting Standard for Business Enterprises related to recognition, measurement and presentation. The consolidated financial statements shall reflect the overall financial position, operating results and cash flows of the group.
The accounting policy and accounting period of the subsidiaries within the consolidation scope shall be in accordance with those of the Company. If not, it is necessary to make the adjustment according to theCompany’s accounting policies and accounting period when preparing the consolidated financial statements.
For subsidiaries through acquisition that are now under common control, the financial statements are adjusted according to fair value of identifiable net assets on the acquisition date.
For subsidiaries through acquisition that are under common control, the assets, liabilities (as well as the goodwill arising from purchasing the subsidiary by the ultimate controller) are adjusted according to book value of net assets in the financial statements of the ultimate controller.
Theowners’ interests, profit or loss, and comprehensive income of the subsidiary attributable to the non-controlling shareholders shall be presented separately in theshareholders’ equity of the consolidated balance sheet and under the item of net profit of the consolidated statement of comprehensive income and under the item of total comprehensive income.
Notes to the financial statements Page 5
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Where losses assumed by the minority exceed theminority’s interests in the beginning equity of a subsidiary, the excess shall be charged against theminority’s interests.
(1) Increase of new subsidiary and business
If the Company has a new subsidiary due to business combination under common control during a reporting period, it shall adjust the beginning balance in the consolidated statement of financial position when preparing consolidated statement of financial position. The revenue, expenses and profits of the subsidiaries from the acquisition date to the end of the reporting period are included in theCompany’s consolidated statement of comprehensive income. The cash flow of the subsidiaries from the acquisition date to the end of the reporting period is included in theCompany’s consolidated statement of cash flows. And meanwhile the Company shall adjust the relevant items of the comparative financial statements as if the reporting entity for the purpose of consolidation has been in existence since the date the ultimate controlling party first obtained control.
When the Company becomes capable of exercising control over an investee under common control due to additional investment or other reasons, Adjustment shall be made as if the reporting entity after the combination has been in existence since the date the ultimate controlling party first obtained control. The investment income recognized between date of previously obtaining equity investment and the date the acquiree and acquirer are under common control, which is later, and the combining date, other comprehensive income and other changes of net assets arising from the equity investment previously-held before obtaining the control the acquiree shall be adjusted against the prior 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 statement of financial position when preparing consolidated statement of financial position. The revenue, expenses and profits of the subsidiaries from the acquisition date to the end of the reporting period are included in the parentcompany’s consolidated statement of comprehensive income. The cash flow of the subsidiaries from the acquisition date to the end of the reporting period is included in theCompany’s consolidated statement of cash flows.
When the Company becomes capable of exercising control over an investee now under common control due to additional investment or other reasons, the acquirer shall remeasure its previously held equity interest in the acquiree to its fair value at the acquisition date. The difference between the fair value and the carrying amount shall be
Notes to the financial statements Page 6
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
recognized as investment income for the period when the acquisition takes place. When the previously-held equity investment is accounted for under the equity method, any other comprehensive income previously recognized in relation to theacquiree’s equity changes shall be transferred to profit or loss for the current period when the acquisition takes place. Other comprehensive income arising from remeasurement of defined benefit plan is excluded.
(2) Disposing subsidiary or business
1. General treatment
If the Company disposes a subsidiary during a reporting period, the revenue, expenses and profits of the subsidiary from the beginning of the reporting period to disposal date are included in theCompany’s consolidated statement of comprehensive income. The cash flow of the subsidiaries from the beginning of the reporting period to disposal date is included in theCompany’s consolidated statement of cash flows.
When the Company loses control over an investee due to partial disposal or other reasons, the acquirer shall remeasure 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 of share of net assets of the subsidiary calculated continuously from the acquisition date or the combination date based on the previous shareholding proportion and goodwill, shall be recognized as investment income for the period when the Company loses control over acquiree. When the previously-held equity investment is accounted for under the equity method, any other comprehensive income previously recognized in relation to theacquiree’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. Other comprehensive income arising from remeasurement of defined benefit plan is excluded. When the Company loses control over a subsidiary due to the increase of capital from other investors and thus the shareholding ratio of the Company declines, accounting treatment shall be in accordance with the above-mentioned principles
2. Disposing the subsidiary by multiple transactions
Where the Company loses control of a subsidiary in multiple transactions in which it disposes of its subsidiary in stages, in determining whether to account for the multiple transactions as a single transaction, the Company shall consider all of the terms and conditions of the transactions and their economic effects. One or more of the following
Notes to the financial statements Page 7
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
may 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 when considered together with other arrangements.
If each of the multiple transactions forms part of a bundled transaction which eventually results in loss of control of the subsidiary, these multiple transactions shall be accounted for as a single transaction. In the consolidated financial statements, the difference between the consideration received and the corresponding proportion of thesubsidiary’s net assets in each transaction prior to the loss of control shall be recognized in other comprehensive income and transferred to the profit or loss when the Company eventually loses control of the subsidiary.
If each of the multiple transactions which eventually results in loss of control of the subsidiary do not form part of a bundled transaction, apply the treatment of disposing partial long-term equity investments in a subsidiary without loss of control prior to the loss of control. After the loss of control, apply the treatment of disposing the subsidiary in common cases.
(3) Acquiring thesubsidiary’s equity interest held by non-controlling shareholders
Where the Company has acquired asubsidiary’s equity interest held by non-controlling shareholders, the difference between the increase in the cost of long-term investments as a result of acquisition of non-controlling interests and the share of net assets of the subsidiary calculated continuously from the acquisition date or the combination date based 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 be adjusted against retained earnings.
(4) Disposing partial long-term equity investments in a subsidiary without loss of
control
When 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 of the subsidiary calculated continuously from the acquisition date or the combination date related to the disposal of
Notes to the financial statements Page 8
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
the long-term equity investments shall be adjusted to the capital reserve (capital premium or share premium) in the consolidated financial statements. If the balance of the capital reserve is not sufficient, any excess shall be adjusted against 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 the unrestricted deposit. And the term “cash equivalents” refers to short-term (maturing within three months from acquisition) and highly liquid investments that are readily convertible to known amounts of cash and which are subject to 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. The balance of exchange arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate at the time of initial recognition or prior to the balance sheet date, except those arising from the raising of special foreign debt for the purchase or construction of capitalizable assets thus shall be capitalized according to the borrowing costs capitalization principle, shall be recorded into the profits and losses at the current period. The foreign currency non-monetary items measured at the historical cost shall still be translated at the spot exchange rate on the transaction date, of which the amount of functional currency shall not be changed. The foreign currency non-monetary items measured at the fair value shall still be translated at the spot exchange rate on the date of confirming the fair value and the balance of exchange arising from it shall be recorded into profits and losses at the current period of disposal or capital reserves.
2. Translation of foreign currency financial statements
The asset and liability items in the statement of financial position shall be translated at a spot exchange rate on the balance sheet date. Among the owner's equity items, except the ones as “undistributed profits”, others shall be translated at the spot exchange rate at the time when they are incurred. The income and expense items in the statement of comprehensive income shall be translated at the spot exchange rate of the transaction date.
Notes to the financial statements Page 9
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
When disposing an overseas business, the Company shall shift the balance, which is presented under the items of the owner's equities in the statement of financial position and arises from the translation of foreign currency financial statements related to this oversea business, into the disposal profits and losses of the current period. If the overseas business is disposed of partially, the Company shall calculate the balance arising from the translation of foreign currency statements of the part of disposal based on the disposal rate and shall shift them into the profits and losses of the current period.
(9) Financial instruments
Financial instruments include financial assets, financial liabilities and equity instruments.
1. Classification of financial instruments
The classification of financial assets and financial liabilities at initial recognition are as follows: financial assets or financial liabilities designated at fair value through current profit and loss, including: trading financial investment, held-to-maturity investment, loans and receivables, available-for-sale investment and other financial liabilities.
2. Recognition and measurement of financial instruments
(1) The financial assets (liabilities) at fair value through profit or loss
The financial assets (financial liabilities) at fair value through profit or loss are recognized initially at fair value (minus cash dividends declared but not received or bond interest matured but not drawn yet). The relevant transaction cost is recognized in current profit and loss when occurred.
The cash dividends or interest are recognized as investment income when the Company receives such financial assets. At the balance sheet date, the Company recognizes the fair value changes in current profit and loss.
The Company recognizes the difference between initial recognition and fair value of the financial assets as investment income when disposing the financial assets and at the same time adjusts the fair value changes in current profit and loss.
(2) Held-to-maturity investment
The Held-to-maturity investments are recognized initially at fair value (minus bond interest matured but not drawn yet) plus any related transaction cost.
The held-to-maturity investments are measured at amortized cost using the effective interest rate. The interest income is recognized as investment income. The effective interest will be
Notes to the financial statements Page 10
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
determined at the initial recognition and will not be changed in the holding period or within a shorter applicable period.
When disposing the held-to-maturity investment, the difference between the investing proceeds and the carrying value is recognized as investment income.
(3) Receivables
Receivables from selling products and rendering services or receivable of other company not including the receivables with quoted price in the active market(including: accounts receivable, other receivables, notes receivable, prepayments, long-term receivables) are measured at contract price; if the receivables is of financing nature, it shall be recognized at the present value initially.
When disposing the receivables, the difference between the proceeds and the carrying value is recognized in current profit and loss.
(4) Available-for-sale financial assets
Available-for-sale financial assets are initially recorded at the sum of fair values (deducting cash dividends that have been declared but not distributed and bond interests that have matured but not been drawn) and transaction costs when acquired.
The Company recognizes the interest or cash dividends as investment income. At each balance sheet date, available-for-sale financial assets are measured at fair value and the fair value changes are recognized in the capital reserve - other capital reserve.
The difference between the proceeds of the disposal and the carrying value shall be recognized as investment income. And the related fair value change in theshareholders’ equity shall be transferred out, and recorded as investment income.
(5) Other financial liabilities
For other financial liabilities, they are initially recognized at fair value plus any directly attributable transaction costs. After the initial recognition, the other financial liabilities are measured at amortized cost.
3. Determination 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 to the transferee, it shall stop recognizing the financial asset. If it retained nearly all of the risks and rewards related to the ownership of the financial asset, it shall not stop recognizing the financial asset.
Notes to the financial statements Page 11
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
To judge whether the transfer of a financial asset can satisfy the conditions as prescribed in these Standards for stopping the recognition of a financial asset, the Company shall follow the principle of the substance over form. Transfer of an entire financial asset can be divided into partial financial assets transfer and entire financial asset transfer. If the transfer of an entire financial asset satisfies the conditions for de-recognition, the difference between the amounts of the following 2 items shall be recorded in the profits and losses of the current period:
(1) The book value of the transferred financial asset; and
(2) The sum of consideration received from the transfer, and the accumulative amount of the changes of the fair value originally recorded in the owners' equities (in the event that the financial asset involved in the transfer is a financial asset Available-for-sale).
If the transfer of partial financial asset satisfies the conditions to derecognize, the entire book value of the transferred financial asset shall, between the portion whose recognition has been stopped and the portion whose recognition has not been stopped(under such circumstance, the service asset retained shall be deemed as a portion of financial asset whose recognition has not been stopped), be apportioned according to their respective relative fair value, and the difference between the amounts of the following 2 items shall be included into the profits and losses of the current period :
(1) The book value of the portion whose recognition has been stopped; and
(2) The sum of consideration of the portion whose recognition has been stopped, and the portion of the accumulative amount of the changes in the fair value originally recorded in the owner's equities which is corresponding to the portion whose recognition has been stopped (in the event 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 to stop the recognition, it shall continue to be recognized as financial assets and the consideration received shall be recognized as financial liabilities.
4. Recognition of termination of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability be terminated in all or partly.
Where the Company (debtor) enters into an agreement with a creditor so as to substitute the existing financial liabilities by way of any new financial liability, and if the contractual stipulations regarding the new financial liability is substantially different from that regarding
Notes to the financial statements Page 12
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
the existing financial liability, it shall terminate the recognition of the existing financial liability, and shall at the same time recognize the new financial liability.
Where the Company makes substantial revisions to some or all of the contractual stipulations of the existing financial liability, it shall terminated the recognition of the existing financial liability or part of it, and at the same time recognize the financial liability after revising the contractual stipulations as a new financial liability.
Where the recognition of a financial liability is totally or partially terminated, the enterprise concerned shall include into the profits and losses of the current period the gap between the carrying amount which has been terminated from recognition and the considerations it has paid (including the 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 carrying amount of the whole financial liabilities in light of the comparatively fair value of the part that continues to be recognized and the part whose recognition has already been terminated. The gap between the carrying amount which is distributed to the part whose recognition has terminated and the considerations it has paid (including the noncash assets it has transferred out and the new financial liabilities it has assumed) shall be recorded into the profits and losses of the current period.
5. Determination of the fair value
The fair values of the financial assets or financial liabilities measured at fair value shall be determined by reference to the quoted prices in the active market.
6. Impairment provision of the financial assets (not including accounts receivables)
The Company shall carry out impairment review for the financial assets at the balance sheet date except for the financial assets at fair value through profit or loss. Where there is any objective evidence proving that such financial asset has been impaired, an impairment provision shall be made.
(1) Impairment of available-for-sale financial assets
An impairment provision shall be made where the fair value of the held-to-maturity financial assets drops significantly at the balance sheet date or the trend of decrease is expected not to be temporary after taking various factors into consideration. The accumulative losses arising from the decrease of the fair value of theowners’ equity which was directly included shall be transferred out and recorded as impairment loss.
Notes to the financial statements Page 13
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Where any available-for-sale debt instruments is recognized as having suffered from any impairment loss, if there is any objective evidence proving that the value of the said debt instruments has been restored, and it is objectively related to the events that occur after such loss is recognized, the impairment-related losses as originally recognized shall be reversed and be recorded into the profits and losses of the current period.
Impairment losses incurred by investment transactions of available-for-sale equity instruments shall not be reversed through profits and losses.
The criteria for “serious” level of the decrease of fair value of available-for-sale financial instruments are as follows: the decrease of fair value for the equity investment with the active transaction in a market of good liquidity is normally50%.
The “non-temporary” measure of the fair value decrease of the Company's investment in available-for-sale equity instruments is: the available-for-sale equity instruments that held over one year (including one year) due to material abnormal events or less than their initial investment costs indicates that it is impaired.
(2) Impairment of held-to-maturity investment
The impairment of the held-to-maturity investment can be measured at reference to the measurement of the impairment of accounts receivables.
(10) Receivables
1. The recognition and provision for bad debts for the individually significant
receivables
The recognition standard of bad debts provision for the individually significant receivables: Individually significant receivables refer to accounts receivable over RMB 10 million or other receivables over RMB 5 million.
The provision for bad debts for the individually significant receivables:
The impairment test shall be assessed individually for each individually significant receivable. If the there is evidence indicating the receivables have been impaired, the difference between the present value of the future cash flows and the book value of receivables shall be recognized as bad debts provision and shall be recorded into the profits and losses at the current period.
2. The recognition and provision for bad debts for the receivables in portfolio
Notes to the financial statements Page 14
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Criteria for Recognition of Portfolio
Portfolio Insignificant amount of receivables and unadjusted individual receivables
Recognition and provision for bad debts for portfolio
Portfolio 1: Aging analysis method
Aging analysis method for bad debts provision:
Bad debts ratio for accounts Bad debts ratio for other
Aging
receivable(%) 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
3. Insignificant individual amounts of accounts receivable that recognize bad debts
individually:
(1) Reasons for individual recognition and provision of bad debts. Receivables that are not individually significant but are impaired after a single test.
(2) Method of bad debts recognition and provision
The impairment loss is recognized and the provision for bad debts is made based on the difference between the present value of the estimated future cash flow and the book value
(11) Inventories
1. Inventory classification
Inventories include material in transit, raw material, low-valued consumables, work in process, finished goods, 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 the inventories impairment loss
The net realizable value of inventories (finished products, stock commodity, material, etc.) held for direct selling in the daily business activity shall be calculated by deducting the estimated sale expense and relevant taxes from the estimated sale price of inventories.
Notes to the financial statements Page 15
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
The net realizable value of inventories for further processing in the daily business activity shall be calculated by deducting the estimated cost of completion, estimated sale expense and relevant taxes from the estimated sale price of inventories.
The net realizable value of inventories held for the execution of sales contracts or labor contracts shall be calculated on the ground of the contract price. If an enterprise holds more inventories than the quantities subscribed in the sales contract, the net realizable value of the excessive part of the inventories 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 of inventories at the year end. For inventories with large quantity and relatively low unit prices, the provision for loss on decline in value of inventories shall be made on the ground of the categories of inventories. For the inventories related to the series of products manufactured and sold in the same area, and of which the final use or purpose is identical or similar thereto, and if it is difficult to measure them by separating them from other items, the provision for loss on decline 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 is based 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.
4. Inventory system
The Company uses perpetual inventory system.
5. Amortization of low-valued consumables and packing materials
(1) Low-valued consumables shall be amortized in full amount on issuance.
(2) Packing materials shall be amortized in full amount on issuance
(12) Long-term equity investment
1. Criteria of join control and significant influence
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
Significant influence is the power to participate in the financial and operating policy decisions of the investee but not control or join control of those policies. If the Company
Notes to the financial statements Page 16
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
could exert significant influence over the investee, the investee is the associate of the Company.
2. The initial cost of long-term equity investment from business acquisition
(1) Long-term equity investment from business acquisition
For a business combination involving enterprises 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 the long-term equity investment shall be the absorbingparty’s share of the carrying amount of theowner’s equity of the party 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 additional investment or other reasons, the initial investment cost shall be the absorbingparty’s share of the carrying amount of theowner’s equity of the party being absorbed in the consolidated financial statements of the ultimate controlling party at combination date.
The difference between the initial investment cost and the carrying amount of the previously-held equity investment, together with the additional investment cost for new shares at combination date, shall be adjusted to the capital reserve. If the balance of capital reserve is not sufficient, any excess shall be adjusted to retained earnings.
When an investor becomes capable of exercising control over an investee now under common control due to additional investment or other reasons, the investor shall change to the cost method and use the carrying amount of the cost method and use the carrying amount of the previously-held equity investment, together with the additional investment cost, as the initial investment cost under the cost method.
(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 which is actually paid.
The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair value of the equity securities issued.
The initial cost of a long-term equity investment of an investor shall be the value stipulated in the investment contract or agreement (minus cash dividend or profit declared but not paid)
Notes to the financial statements Page 17
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
except the unfair value stipulated in the contract or agreement.
If the exchange of non-monetary assets is commercial in nature and the fair values of both the assets received and surrendered can be reliably measured, the fair value of the assets surrendered shall be used as the basis for determining the cost of the assets received, unless there is any exact evidence showing that the fair value of the assets received is more reliable. Where any non-monetary assets transaction does not meet the conditions as prescribed above, the carrying 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 fair values.
3. Subsequent measurement and profit or loss recognition
(1) Cost method
The Company adopts cost method for the long term investment in subsidiary company. Under the cost method, an investing enterprise shall, in accordance with the attributable share of the net profits or losses of the invested entity, recognize the investment profits or losses except the dividend declared but unpaid, which is included in the payment when acquiring the investment.
(2) Equity method
A long-term equity investment in an associate or a joint venture shall be accounted for using the equity method. Where the initial investment cost of a long-term equity investment exceeds taninvestor’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 theinvestor’s interest in the fair values of theinvestee’s identifiable net assets at the acquisition date, the difference shall be credited to profit or loss for the current period, and the cost of the long-term equity investment shall be adjusted accordingly.
The Company shall recognize its share of theinvestee’s net profits or losses, as well as its share of theinvestee’s other comprehensive income, as investment income or losses and other comprehensive income, and adjust the carrying amount of the investment accordingly. The carrying amount of the investment shall be reduced by the portion of any profit distributions or cash dividends declared by the investee that is attributable to the investor. Theinvestor’s share of theinvestee’sowners’ equity changes, other than those arising from theinvestee’s net profit or loss, other comprehensive income or profit distribution, and the
Notes to the financial statements Page 18
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
carrying amount of the long-term equity investment shall be adjusted accordingly.
The investor shall recognize its share of theinvestee’s net profits or losses after making appropriate adjustments based on the fair values of theinvestee’s identifiable net assets at the acquisition date.
The unrealized profits or losses resulting from transactions between the investor and its associate or joint venture shall be eliminated in proportion to theinvestor’s equity interest in the investee, based on which investment income or losses shall be recognized. Any losses resulting from transactions between the investor and investee which are attributable to asset impairment shall be recognized in full.
If the transaction of investment or sale of assets among the Company and associate and joint venture and the assets is a business, it shall apply the treatment mentioned in Note 2(5) “The accounting treatment for Business combination under/now under common control” and Note 2(6) “Consolidation of Financial 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, the investing enterprise shall recognize the net losses of the invested enterprise until the book value of the long-term equity investment and other long-term rights and interests which substantially form the net investment made to the invested entity are reduced to zero. If the company still has the obligation to undertake extra losses per contract, and then estimated liabilities shall be recognized into current profit and loss accordingly to the estimated obligation.
(3) Disposal of long-term equity investment
On disposal of a long-term equity investment, the difference between the proceeds actually received and the carrying amount 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 comprehensive income previously recognized shall be accounted for on the same basis as would have been required if the investee had directly disposed of the related assets or liabilities.
Those owner's equity recognized other than the change of net profits or loss, other comprehensive income, profit distribution of the invested entity shall be transferred proportionally into profit or loss of current period, other comprehensive income arising
Notes to the financial statements Page 19
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
from the remeasurement of defined benefit plan is excluded.
When an investor can no longer exercise joint control of or significant influence over an investee due to partial disposal of equity investment or other reasons, the remaining equity investment shall be accounted for in accordance with “Accounting Standard for Business Enterprises No. 22-Financial instruments: recognition and measurement”. The difference between the fair value and the carrying amount at the date of the loss of join control or significant influence shall be charged to profit or loss for the current period. When the previously-held equity investment is accounted for under the equity method, any other comprehensive income previously recognized shall be accounted for on the same basis as would have been required if the investee had directly disposed of the related assets or liabilities for the current period upon discontinuation of the equity method.
Those owner's equity recognized other than the change of net profits or loss, other comprehensive income, profit distribution of the invested entity shall be transferred into profit or loss of current 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 other reasons, 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 had been applied from the date of the first acquisition. If the investor cannot exercise joint control of or significant influence over the investee after partial disposal of equity investment, the remaining equity investment shall be accounted 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 loss of 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 other reasons, in stand-alone financial statement, the remaining equity investment shall adopt cost method or equity method, any other comprehensive income and otherowner’s interests previously recognized of the previously-held equity investment under the equity method shall be transferred proportionally.
For those remaining equity investments accounted for in accordance with “Accounting Standard for Business Enterprises No.22-Financial instruments: Recognition and Measurement” after disposal, other comprehensive income and otherowner’s interests
Notes to the financial statements Page 20
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
previously recognized shall be transferred to profit or loss in full.
(13) Fixed assets
1. Recognition of Fixed assets
The term "fixed assets" refers to the tangible assets that simultaneously possess the features as follows:
(1) They are held for the sake of producing commodities, rendering labor service, renting or business management; and
(2) Their useful life is in excess of one fiscal year.
No fixed asset may be recognized unless it simultaneously meets the conditions as follows:
(1) The economic benefits pertinent to the fixed asset are likely to flow into the enterprise; and
(2) The cost of the fixed asset can be measured reliably.
2. Fixed assets depreciation
Fixed assets are depreciated under the straight-line method. The depreciation rate is determined according to the category of assets, the useful life and the expected residual rate. If the components of the fixed assets have different useful lives or provide the economic benefits in a different way, then different depreciation rate or method shall be applied and the depreciation of the components shall be calculated separately.
Fixed assets acquired under financial leasing is depreciated over the useful life if it is reasonably certain that the ownership of the leased assets will be acquired upon expiry of lease, or over the shorter of lease term and useful life if it 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:
Depreciation Residual Value Rate Depreciation Rate
Classification
Period (%) (%)
Plants and Buildings 8-40 years 0.00 2.50-12.50 Machinery 4-18 years 3.00 5.39-24.25 Transportation and other equipment 5-18 years 3.00 5.39-19.40 3. Recognition criteria for fixed asset leased in by financial leasing and its valuation
Where a lease satisfies one or more of the following criteria, it shall be recognized as a financial leasing:
Notes to the financial statements Page 21
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
(1) The ownership of the leased asset is transferred to the lessee when the term of lease expires;
(2) The lessee has the option to buy the leased asset at a price which is expected to be far lower than the fair value of the leased asset at the date when the option becomes exercisable; (3) The lease term covers the major part of the use life of the leased asset; and
(4) The present value of the minimum lease payments on the lease beginning date amounts to substantially all of the fair value of the leased asset on the lease beginning date.
On the lease beginning date, the Company shall record the lower one of the fair value of the leased asset and the present value of the minimum lease payments on the lease beginning date as the initial book value, recognize the amount of the minimum lease payments as the initial book value of long-term account payable, and treat the difference between the recorded amount of the leased asset and the long-term account payable as unrecognized financing charges.
(14) Construction in progress
The cost of fixed assets transferred from a construction in progress includes all the necessary expenses incurred for bringing the asset to the expected conditions for use. Construction in progress is transferred to fixed asset when it has reached its working condition for its intended use. In case the final project accounts have not been completed or approved, the asset shall be transferred to fixed assets at an estimated value by considering project budget, cost or actual 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 accounts have been approved, the estimated values shall be adjusted based on the actual cost, but those provided deprecation shall not be adjusted.
(15) Borrowing cost
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 or production of assets eligible for capitalization, it shall be capitalized and recorded into the costs of relevant assets. Other borrowing costs shall be
Notes to the financial statements Page 22
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
recognized as expenses on the basis of the actual amount incurred, and shall be recorded into the current profits and losses.
The term "assets eligible for capitalization" shall refer to the fixed assets, investment real estate, inventories and other assets, of which the 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 interest bearing debts paid for the acquisition and construction or production activities for preparing assets eligible for capitalization;
(2) The borrowing costs has already incurred; and
(3) The acquisition and construction or production activities which are necessary to prepare the asset for its intended use or sale have already started.
2. The capitalization period of borrowing costs
The capitalization period shall refer to the period from the commencement to the cessation of capitalization of the borrowing 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, the capitalization of the borrowing costs shall be ceased.
Where each part of a qualified asset under acquisition and construction or production is completed separately and is ready 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 for use or sale during the continuing construction of other parts, but it cannot be used or sold until the asset is entirely completed, 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 interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended. If the interruption is a necessary step for making the
Notes to the financial statements Page 23
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
qualified asset under acquisition and construction or production ready for the intended use or sale, the capitalization of the borrowing costs shall continue. The borrowing costs incurred during such period shall be recognized as expenses, and shall be recorded into the profits and losses of the current period, till the acquisition and construction or production of the asset restarts.
4. Method of calculating the capitalization rate and capitalized amount of borrowing costs
For interest expense (minus the income of interests earned on the unused borrowing loans as a deposit in the bank or investment income earned on the loan as a temporary investment) and the ancillary expense incurred to a specifically borrowed loan, those incurred before a qualified asset under acquisition, construction or production is ready for the intended use or sale shall be capitalized at the incurred amount when they are incurred, and shall be recorded into the costs of the asset eligible for capitalization.
The Company shall calculate and determine the to-be-capitalized amount of interests on the general borrowing by multiplying the weighted average asset disbursement of the part of the accumulative asset disbursements minus the general borrowing by the capitalization rate of the general borrowing used. The capitalization rate shall be calculated and determined in light of the weighted average interest rate of the general borrowing.
Where there is any discount or premium, the amount of discounts or premiums that shall be amortized during each accounting period shall be determined by the effective interest rate method, and an adjustment shall be made to the amount of interests in each period.
(16) 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 necessary disbursements which may be directly attributable to bringing the intangible asset to the conditions for the expected purpose. If the payment for an intangible asset is delayed beyond the normal credit conditions and it is of the financing nature, 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 is based on its fair value, and the difference between the debt restructured and the fair value of the intangible assets are recognized in the current profit and loss.
Notes to the financial statements Page 24
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
For intangible assets obtained from non-monetary transactions with commercial substance, and the fair value of the assets obtained or surrendered can be reliably measured, the initial recognition of the asset obtained is based on the fair value 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 initial recognition is based on the book value of the assets surrendered and the relevant taxes payable. No gain or loss will be recognized.
(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 when the intangible asset can bring economic benefits to the enterprise. If it is unable to estimate the beneficial period of the intangible 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 at each year end.
Per review, the useful lives and amortization methods of intangible assets with limited useful lives at each year-end is the same with that of last year.
3. Determination of intangible assets with uncertain useful lives
As at the balance sheet date, the Company has no intangible assets with uncertain useful lives.
4. Classification criteria for internal research phase and development phase
The expenditures for its internal research and development projects of an enterprise shall be classified into research expenditures and development expenditures.
Research phase refers to the phase of creative and planned investigation to acquire and study to acquire and understand new scientific or technological knowledge.
Notes to the financial statements Page 25
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Development phase refers to the phase during which the result of research phase or other knowledge is applied into certain projects or designs for the manufacturing of new or substantially improved material, device and product.
(17) Impairment of long-term assets
For long-term assets under the cost model such as fixed assets, construction in progress, intangible assets etc., the Company shall perform impairment tests at the period end if there is clear indication of impairment.
If the recoverable amounts of long-term assets are less than their carrying amounts, the carrying amounts of the assets shall be written down to their recoverable amounts. The write-downs are recognized as impairment losses and charged to current profit and loss. The recoverable amounts of long-term assets are the higher of their fair values less costs to sell and the present values of the future cash flows expected 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 asset group to which the asset belongs. The term "group assets” refers to a minimum combination of assets by which the cash 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 value of the business reputation formed by merger of enterprises to the relevant asset groups by a reasonable method. Where it is difficult to do so, it shall be apportioned to the relevant combinations of asset groups.
When apportioning the carrying value of the business reputation to the relevant asset groups or combinations of asset groups, it shall be apportioned on the basis of the proportion of the fair value of each asset group or combination of asset groups to the total fair value of the relevant asset groups or combinations of asset groups. Where it is difficult to measure the fair value reliably, it shall be apportioned on the basis of the proportion of the carrying value of each asset group or combination 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 business reputation, if any evidence shows that the impairment of asset groups or combinations of asset groups is possible, the Company shall first make an impairment test on the asset groups or combinations of asset groups not containing business reputation, calculate the recoverable amount, compare it with the relevant carrying value and recognize the
Notes to the financial statements Page 26
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
corresponding impairment loss. Then the Company shall make an impairment test of the asset groups or combinations of asset groups containing business reputation, and compare the carrying value of these asset groups or combinations of asset groups (including the carrying value of the business reputation apportioned thereto) with the recoverable amount. Where the recoverable amount of the relevant assets or combinations of the asset groups is lower than the carrying 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.
(18) Long-term deferred expense
The long-term deferred expense refers to the expenses incurred but shall be borne by current and subsequent accounting period, which is more than one year. The long-term deferred expense shall be amortized over its beneficiary period evenly.
(19) Employee benefits
1. Accounting treatment for short employee benefit
The Company shall recognize, in the accounting period in which an employee provides service, actually occurred short-term employee benefits as a liability, with a corresponding charge to the profit or loss or cost of an asset for the current period.
Payments made by an enterprise of social security contributions for employees, payments of housing funds, and union running costs employee education costs provided in accordance with relevant requirements shall, in the accounting period in which employees provide services, be calculated according to prescribed bases and percentages in determining the amount of employee benefits.
The employee benefits which are non-monetary benefits shall be measured at fair value if it could be measured reliably.
2. Accounting treatment of post-employment benefits
The Company shall recognize, in the accounting period in which an employee provides service, pension fund and unemployment fund for employees as a liability according to the local government regulations. The amount shall be calculated according to local prescribed bases and percentages in determining the amount of employee benefits, with a corresponding charge to the profit or loss or cost of an asset for the current period.
In addition to the basic endowment insurance, the company has also established an
Notes to the financial statements Page 27
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
enterprise annuity payment system (supplementary pension insurance)/enterprise annuity plan based on the relevant policies of the national enterprise annuity system. The Company pays the local social insurance institution's payment/annuity plan according to a certain percentage of the total wages of the employees, and the corresponding expenses are included in the current profit and loss or related asset costs.
3. Accounting treatment of termination benefits
The Company which provides termination benefits to employees shall recognize an employee benefits liability for termination benefits, with a corresponding charge to the profit or loss for the current period, at the earlier of the following dates:
(1) When the Company cannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or a curtailment proposal
(2) When the Company recognizes costs or expenses related to a restructuring that involves the payment of termination benefits
(20) Estimated liabilities
1. Recognition Criteria of estimated liabilities
The obligation pertinent to a Contingency (litigation, guarantees, loss contract, restructuring) shall be recognized as an estimated liability when the following conditions are satisfied simultaneously:
(1) That obligation is a current obligation of the enterprise;
(2) It is likely to cause any economic benefit to flow out of the enterprise as a result of performance of the obligation; and
(3) The amount of the obligation can be measured in a reliable way.
2. Measurement of estimated liabilities
The estimated debts shall be initially measured in accordance with the best estimate of the necessary expenses for the performance of the current obligation.
To determine the best estimate, an enterprise shall take into full consideration of the risks, uncertainty, time value of money, and other factors pertinent to the Contingencies. If the time value of money is of great significance, the best estimate shall be determined after discounting the relevant future outflow of cash.
The best estimate shall be conducted in accordance with the following situations, respectively:
Notes to the financial statements Page 28
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
If there is a continuous range for the necessary expenses and if all the outcomes within this range are equally likely to occur, the best estimate shall be determined in accordance with the average estimate within the range, that is, the average of the upper and lower limit.
If there is not a sequent range for the necessary expenses and if the outcomes within this range are not equally likely to occur, the best estimate shall be determined as follows:
(1) If the Contingencies concern a single item, it shall be determined in the light of the most likely outcome.
(2) If the Contingencies concern two or more items, the best estimate shall be calculated and determined in accordance with all possible outcomes and the relevant probabilities.
When all or some of the expenses necessary for the liquidation of an estimated debts of an enterprise is expected to be compensated by a third party, the compensation shall be separately recognized as an asset only when it is virtually certain that the reimbursement will be obtained. The amount recognized for the reimbursement shall not exceed the book value of the estimated debts.
(21) 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 retained neither continuing managerial involvement which usually relates to the ownership nor exerts effective control over the goods sold. The relevant amount of revenue can be measured reliably, the economic benefits related to the transaction will flow into the enterprise; 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
The amount of sale of goods is recognized according to the contract or agreement terms.
The Company mainly sells steel and other products. Domestic sales revenue is recognized when the following conditions are met: The Company has delivered the products to buyer under the contract, amount of product sales revenue is determinable, received or the certificate of the right to receive the amount has been obtained and the relevant economic benefits are likely to flow into the entity, and related costs can be measured reliably.
Export sales revenue is recognized when the following conditions are met: the Company has undertaken the Customs declaration and delivery has occurred under the contract, bill of lading has been obtained, amount of product sales revenue is determinable, received or the
Notes to the financial statements Page 29
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
certificate of the right to receive the amount has been obtained and the relevant 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 Rights
When it is probable that economic benefits in relation to the transaction will flow into the enterprise; and the amount of revenues can be measured reliably. The Company shall ascertain the amount of revenues from the transfer of Assets Use Right based on the following circumstances respectively:
(1) Interest income shall be calculated based on the duration of which the Company's cash is used by others and the actual interest rate; or
(2) Royalty revenue shall be calculated based on the period and method of charging as stipulated in the relevant contract or agreement.
(22) Government subsidies
1. Types of government subsidies
A government subsidy means the monetary or non-monetary assets obtained free of charge by the Company from the government. Government subsidies consist of the government subsidies pertinent to assets and government subsidies pertinent to income.
Government subsidies related to assets are government subsidies whose primary condition is that an entity qualifying for them should purchase, construct or otherwise acquire long-term assets. Government subsidies related to incomes refer to the government subsidies beside government subsidies pertinent to assets.
The specific condition of government subsidies related to assets for the Company is that, government subsidies qualifying for the Company should purchase, construct or otherwise acquire long-term assets.
Government subsidies related to incomes refer to the government subsidies beside government subsidies pertinent to assets.
For the government documents that do not clearly stipulate the subsidy object, the company's judgment on the government subsidy is related to the assets or related to the income: whether it is used for the purchase or construction or other forms of long-term assets.
2. Recognition
The recognition time of the company's government-related subsidies is: when the actual receipt of government subsidies is received, and from the long-term asset is ready for use, the
deferred income will be transferred to profit and loss of that period according to the expected
Notes to the financial statements Page 30
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
life of the long-term assets.
The recognition time of the company's government subsidies related to income is: the actual receipt of government subsidies, used to compensate enterprises
If the relevant expenses or losses during the subsequent period of the industry are included in the current non-operating income during the period in which the relevant expenses are recognized;
If it is used to compensate the related expenses or losses that have occurred in the enterprise, it will be directly included in the current non-operating income when it is acquired.
3. 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 figured into Other Income. Subsidies that unrelated to daily activities should be figured into Non-operating Income).
The government subsidies related to incomes to compensate future expenses, shall be recognized as deferred income and transferred to current profit or loss (Subsidies related to daily activities should be figured into Other Income. Subsidies that unrelated to daily activities should be figured into Non-operating Income) in the period during which the expenses compensation is recognized, or deduct relevant cost or loss. Government subsidies to compensate expenses or losses already incurred shall be recognized in current profit and loss (Subsidies related to daily activities should be figured into Other Income. Subsidies that unrelated to daily activities should be figured into Non-operating Income) or deduct relevant cost or loss.
(23) Deferred tax assets and deferred tax liabilities
An enterprise shall recognize the deferred income tax liabilities arising from a deductible temporary difference to the extent of the amount of the taxable income which it is most likely to obtain and which can be deducted from the deductible temporary difference.
As for any deductible loss or tax deduction that can be carried forward to the next year, the corresponding deferred income tax assets shall be determined to the extent that the amount of future taxable income to be offset by the deductible loss or tax deduction to be likely obtained.
Notes to the financial statements Page 31
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
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 of goodwill; initial recognition of an asset or liability in a transaction or event that is not a business combination and at the 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 legally enforceable right to set off current tax assets against current tax liabilities; and(b) the deferred tax assets and the deferred 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 to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. (24) Leases
1. Accounting treatment of operating lease
(1) The rents paid for operating leases shall be recorded in the profits and losses of the current period by using the straight-line method over each period of the lease term. The initial direct costs paid by the Company shall be recorded into the profits and losses of the current period
If the lessor has shouldered any expense related to the lease which shall have been borne by the Company, the Company shall deduct these expenses from the total rental expense and the remaining rental expense shall be allocated to each period during the lease term
(2) The rents collected from operating leases shall be recorded in the profits and losses of the current period by using the straight-line method over each period of the whole lease term in which free lease period is included. The initial direct costs paid by the Company shall be recorded into the profits and losses of the current period. The initial direct costs shall be capitalized if it is material, and be allocated to each period as per the basis for rental revenue recognition.
If the Company has shouldered any expense related to the lease which shall have been borne by the lessee, the company shall deduct these expenses from the total rental revenue and the remaining rental revenue shall be allocated to each period during the lease term.
Notes to the financial statements Page 32
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
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 present value of the minimum lease payments on the lease beginning date as the initial book value, recognize the amount of the minimum lease payments as the initial book value of long-term account payable, and treat the balance between the 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 current period. The unrecognized financing charge shall be amortized to each period during the lease term. Initial direct costs incurred 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 plus unguaranteed residual value and the present value of the sum as unrealized financing income, and record rental as revenue when received for each period in the future.
Initial direct costs incurred by the Company related to the leased asset shall be recorded in the initial measurement of the finance lease receivables, and reduce the amount of revenue recognized during the lease term.
(25) Discontinuing operation
Discontinuing operation is a component that has been disposed or classified as held for sale by the Company, and can be distinguished separately in operating and preparing financial statements when one of the following conditions is met:
(1) The component stands for an independent main business or a major business area;
(2) The component is a part of disposal plan of an independent main business or a major business area;
(3) The component is a subsidiary which is acquired only for sale again.
(26) Significant accounting policies and change of accounting estimate
1. Significant changes in accounting policies.
Thecompany’s accounting policies have not changed during the reporting period.
2. Significant changes in accounting estimates
Notes to the financial statements Page 33
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Thecompany’s accounting estimates have not changed during the reporting period.
4. Taxes
(1) Major type of taxes and corresponding tax rates
Tax Taxation Method Tax Rate
The balance of output VAT calculated based on product
sales and taxable services revenue in accordance with16%,10%,6 Value-added Tax (VAT) the tax laws after subtracting the deductible input VAT
of the period %
City maintenance and construction 7%,5%
Based on VAT and business tax actually paid
tax
Based on VAT and business tax actually paid
Educational surcharges 3%,2%
Based on taxable profit
Enterprise income tax 25%
(2) Others
According to the "Notice on Adjusting the VAT Rate" issued by the Ministry of Finance and the State Administration of Taxation (Cai Shui[2018] No. 32), the company has adjusted the17% and11% VAT rates to16% and10% since May 1, 2018.
5. Notes to the consolidated financial statements
(1) Cast at bank and on hand
Items Ending balance Beginning balance
Cash on hand 20,372.11 20,871.51 Cash at bank 16,038,486,482.11 12,317,555,907.42 Other monetary funds 2,531,734,752.99 4,720,136,631.56 Total 18,570,241,607.21 17,037,713,410.49 Including: Funds that are 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 1,463,123,892.06 3,147,582,187.96 Fixed deposits or Notice deposits for guaranty 1,068,610,860.93 1,572,554,443.60 Total 2,531,734,752.99 4,720,136,631.56 (2) Notes receivable
1. Notes receivable disclosed by category
Items Ending balance Beginning balance
Notes to the financial statements Page 34
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Bank acceptance bill 3,004,534,752.04 3,622,042,309.91 Commercial acceptance bill 160,358,895.92 224,391,390.96 Total 3,164,893,647.96 3,846,433,700.87 2. The pledged acceptance at the year-end
Items The pledged acceptance bill at the year-end
Bank acceptance bill 1,801,103,300.17 Total 1,801,103,300.17 3. The amount of Notes receivable endorsed over but no yet matured at the
year-end.
Items Derecognized ending balance Underecognized ending balance Bank acceptance bill 11,045,298,083.12
Commercial acceptance bill 103,741,236.92 Total 11,045,298,083.12 103,741,236.92 4. No Notes receivable has been transferred into accounts receivable due to inability
of drawer to meet acceptance bill at the year-end.
(3) Accounts receivable
1. Accounts receivable disclosed by category
Ending balance
Carrying amount Provision for bad debts
Bad
Items
Percentage debts Book value
Amount Amount
(%) ratio
(%)
Individually significant and
47,762,337.18 5.04 47,762,337.18 100.00
tested for impairment
individually
Accounts receivable tested for
900,339,070.86 94.96 192,449,084.52 21.38 707,889,986.34 impairment by portfolio
Other insignificant items but
tested for impairment
individually
Total 948,101,408.04 100.00 240,211,421.70 707,889,986.34 Beginning balance
Items
Carrying amount Provision for bad debts Book value
Notes to the financial statements Page 35
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Bad
Percentage debts
Amount Amount
(%) ratio
(%)
Individually significant and
tested for impairment 47,762,337.18 4.86 47,762,337.18 100.00
individually
Accounts receivable tested
934,445,274.36 95.14 205,847,347.97 22.03 728,597,926.39 for impairment by portfolio
Other insignificant items but
tested for impairment
individually
Total 982,207,611.54 100.00 253,609,685.15 728,597,926.39 Individually significant and tested for impairment individually
Ending balance
Accounts receivable Accounts Provision for Accounts
Reason
receivable bad debts receivable
Benxi Nanfen Xinhe
47,762,337.18 47,762,337.18 100.00% Stop production
Metallurgical Co., Ltd.
Total 47,762,337.18 47,762,337.18
Accounts receivables tested for impairment by portfolio using the method of Aging analysis: Ending balance
Items
Carrying amount Provision for bad debts Bad debts ratio(%)
Within 1 year (inclusive) 606,575,905.21
1-2 years (inclusive) 32,499,752.60 1,624,987.63 5.00 2-3 years (inclusive) 88,049,145.20 17,609,829.04 20.00 Over 3 years 173,214,267.85 173,214,267.85 100.00 Total 900,339,070.86 192,449,084.52
2. Information of provision, reversal or recovery of bad debts of current period.
The provision of bad debts of current period is RMB 13,398,263.45.
3. No accounts receivable has been written off this year.
4. Top five debtors at the year-end
Company Ending balance
Notes to the financial statements Page 36
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Percentage of
Provision for bad Amount total accounts
debts
receivable(%)
No.1. 298,586,735.80 31.49
No.2 86,329,597.52 9.11 6,513,105.93 No.3. 47,762,337.18 5.04 47,762,337.18 No.4. 46,980,327.61 4.96 22,754,881.58 No.5. 34,624,704.64 3.65 8,840,761.28 Total 514,283,702.75 54.24 85,871,085.97 (4) Prepayments
1. Prepayments disclosed by aging
Ending balance Beginning balance
Aging
Amount Percentage(%) Amount Percentage(%) Within 1 year 1,179,625,676.28 98.29 1,259,327,577.20 98.33 1-2 years 12,847,731.88 1.07 13,457,173.07 1.05 2-3 years 1,535,096.44 0.13 1,669,541.26 0.13 Over 3 years 6,155,309.06 0.51 6,234,802.80 0.49 Total 1,200,163,813.66 100.00 1,280,689,094.33 100.00 Notes: Significant prepayment with aging over 1 year is paid for commodity in advance, and the settlement terms agreed in the contract are not due.
2. Top five prepaid companies at the year-end
Name of the company Amount Percentage(%) No.1 707,225,626.32 58.93 No.2
178,742,709.55 14.89 No.3 127,417,058.31 10.62 No.4 37,291,000.00 3.11 No.5 24,882,543.25 2.07 Total 1,075,558,937.43 89.62 (5) Interest receivable
1. Interest receivable disclosed by category
Items Ending balance Beginning balance
3,503,285.16 18,448,520.50 Interest on deposit
3,503,285.16 18,448,520.50 Total
(6) Other receivables
Notes to the financial statements Page 37
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
1. Other receivables disclosed by category:
Ending balance
Carrying amount Provision for bad debts
Bad
Items
Percentage debts Book value
Amount Amount
(%) ratio
(%)
Individually significant
and tested for impairment
individually
Accounts receivable
tested for impairment by 339,279,331.51 99.49 69,928,385.39 20.61 269,350,946.12
portfolio
Other insignificant items
but tested for impairment 1,740,000.00 0.51 1,740,000.00
individually
Total 341,019,331.51 100 69,928,385.39 271,090,946.12
Beginning balance
Carrying amount Provision for bad debts
Bad
Items
Percentage debts Book value
Amount Amount
(%) ratio
(%)
Individually significant and
tested for impairment
individually
Accounts receivable tested for
359,690,439.99 99.52 71,053,454.65 19.75 288,636,985.34 impairment by portfolio
Other insignificant items but
tested for impairment 1,740,000.00 0.48 1,740,000.00 individually
Total 361,430,439.99 100.00 71,053,454.65 290,376,985.34 Other receivables tested for impairment by portfolio using the method of Aging analysis:
Ending balance
Items
Other receivables Provision for bad debts Bad debts ratio(%)
Within 1 year(inclusive)
250,287,509.96
1-2 years(inclusive)
8,603,549.60 430,177.48 5.00 2-3 years(inclusive)
13,612,580.05 2,722,516.01 20.00 Over 3 years
66,775,691.90 66,775,691.90 100.00 Total
339,279,331.51 69,928,385.39
Notes to the financial statements Page 38
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Other receivables individually insignificant but tested for impairment individually
Items Carrying amount Provision for bad debts Bad debts ratio(%) Reason
Sinking Fund of
Japanese yen from
Finance Bureau of
Benxi 1,740,000.00 Sinking fund Total 1,740,000.00
Notes: The Sinking Fund of Japanese yen from Finance Bureau of Benxi is the margin for JPY loans of which the aging is over 3 years and no bad debts provision has been made for it.
2. Information of provision, reversal or recovery of bad debts of current period.
The provision of bad debts of current period is RMB1,125,069.26
3. No other receivables have been written off this year.
4. Other receivables disclosed by nature
Nature Ending balance Beginning balance
Accounts 324,237,613.93 345,146,993.73 Margin and deposit 3,746,111.37 3,045,619.00 Others 13,035,606.21 13,237,827.26 Total 341,019,331.51 361,430,439.99 5. Top five debtors at the year-end
Percentage of Provision Company Nature or content Amount Aging total other for bad
receivables debts
Within 1
No.1 Accounts 17,464,021.64 year17,455,404.12, 5.12 8,617.52 over 3 years8,617.52
Within 1 year
No.2 Accounts 16,083,670.47 12,553,032.8, 1-2 4.72 176,531.88 years 3,530,637.67
No.3 Accounts 12,626,479.38 1-3 years 3.70 2,462,178.25 No.4 Accounts 9,188,976.40 Within 1 year 2.69
No.5 Others 5,922,247.07 Within 1 year 1.74
Total 61,285,394.96 -- 17.97 2,647,327.65
Notes to the financial statements Page 39
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
(7) Inventories
1. Inventories disclosed by category
Ending balance Beginning balance
Items
Carrying amount Impairment Book value Carrying amount Impairment Book value Raw material and main
5,768,189,545.16 4,894,918.76 5,763,294,626.40 5,612,450,076.70 4,894,918.76 5,607,555,157.94 material
Work in process and
self-made semi-finished 2,021,513,151.82 20,668,681.48 2,000,844,470.34 1,689,682,178.82 23,431,222.63 1,666,250,956.19 product
Finished products 5,154,722,855.66 25,057,402.93 5,129,665,452.73 3,964,781,474.74 28,689,492.71 3,936,091,982.03 Total 12,944,425,552.64 50,621,003.17 12,893,804,549.47 11,266,913,730.26 57,015,634.10 11,209,898,096.16 Notes: No inventories are used as mortgage or guarantee at the year-end.
2. Impairment of inventory
Increase in current period Decrease in current period
Items Beginning balance Ending balance Provision Others Write-back or write-off Others
Raw material and main
4,894,918.76 4,894,918.76 material
Work in process and
self-made 23,431,222.63 20,668,681.48 23,431,222.63 20,668,681.48 semi-finished product
Finished products 28,689,492.71 25,057,402.93 28,689,492.71 25,057,402.93 Total 57,015,634.10 45,726,084.41 52,120,715.34 50,621,003.17 Notes to the financial statements Page 40
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
(8) Other current assets
Items Ending balance Beginning balance Prepaid enterprise income tax 182,228,953.96 182,938,934.20 Input tax to be deducted 35,387,479.00 120,383,193.59 Bank Short-Term Financial Products 506,000,000.00 Total 217,616,432.96 809,322,127.79 (9) Available-for-sale financial assets
1. Details of available-for-sale financial assets
Ending balance Beginning balance
Items
Carrying amount Impairment Book value Carrying amount Impairment Book value Available-for-sale debt
instruments
Available-for-sale equity
18,503,673.00 14,414,693.00 4,088,980.00 18,303,673.00 14,414,693.00 3,888,980.00 instruments
Including: Measured at fair
value
Measured at cost 18,503,673.00 14,414,693.00 4,088,980.00 18,303,673.00 14,414,693.00 3,888,980.00 Total 18,503,673.00 14,414,693.00 4,088,980.00 18,303,673.00 14,414,693.00 3,888,980.00 Notes to the financial statements Page 41
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
2. Available-for-sale financial assets measured at cost
Carrying amount Total impairment Cash Percentage of dividend Company
Ending Beginning Ending share in the of the invested in Beginning Balance Increase Decrease Increase Decrease
Balance Balance Balance firm(%) current period Guangzhou Ben
Pu auto plate sales
200,000.00 200,000.00 10.00 Co., Ltd.
Suzhou Bengang
3,888,980.00 3,888,980.00 20.10 Industrial Co., Ltd.
China Steel
Shanghai Steel
14,414,693.00 14,414,693.00 14,414,693.00 14,414,693.00 15.00 Processing Co.,
Ltd.
Total
18,303,673.00 200,000.00 18,503,673.00 14,414,693.00 14,414,693.00
(10) Long-term investment
Increase or decrease
Ending Investment Adjustment of
Company Beginning Declaration of Ending balance of Add Reduce income or loss other Other equity Provision for
invested in balance cash dividends Others balance provision for investment investment under equity comprehensive changes impairment
or profit impairment method income
1. Joint venture
2. Associated enterprise
Notes to the financial statements Page 42
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
ZhejiangBengang
Elite Steel
2,726,009.03 2,726,009.03 Processing Co.,
Ltd.
Subtotal 2,726,009.03 2,726,009.03 Total 2,726,009.03 2,726,009.03 (11) Fixed assets
1. Details of fixed assets
Items Buildings Machinery Transportation equipment Total 1. Total original value
Beginning balance 12,311,587,761.99 41,626,541,563.48 902,411,923.49 54,840,541,248.96 Increase
637,829.46 33,999,698.90 180,000.00 34,817,528.36 in current period
Including: Purchase
Transferred from
637,829.46 33,999,698.90 180,000.00 34,817,528.36 construction in progress
Merging
Others
Decrease in current period 4,500,116.36 18,821,400.78 23,321,517.14 Including: Disposal
4,500,116.36 18,821,400.78 23,321,517.14 Others
Ending balance 12,307,725,475.09 41,641,719,861.60 902,591,923.49 54,852,037,260.18 2.Total accumulated depreciation
Beginning balance 5,276,168,794.08 25,159,715,530.00 541,830,618.28 30,977,714,942.36 Increase 163,421,339.99 973,734,423.39 7,828,431.62 1,144,984,195.00 Notes to the financial statements Page 43
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Items Buildings Machinery Transportation equipment Total in current period
Including: Provision
163,421,339.99 973,734,423.39 7,828,431.62 1,144,984,195.00 Others
Decrease in current period 4,285,981.20 16,843,876.26 21,129,857.46 Including: Disposal
4,285,981.20 16,843,876.26 21,129,857.46 Others
Ending balance 5,435,304,152.87 26,116,606,077.13 549,659,049.90 32,101,569,279.90 3. Total impairment
Beginning balance 8,208,087.85 2,551,052.65 10,759,140.50 Increase
in current period
Including: Provision
Others
Decrease in current period
Including: Disposal
Others
Ending balance 8,208,087.85 2,551,052.65 10,759,140.50 4. Total net book value of Fixed assets
Ending book value 6,864,213,234.37 15,522,562,731.82 352,932,873.59 22,739,708,839.78 Beginning book value 7,027,210,880.06 16,464,274,980.83 360,581,305.21 23,852,067,166.10 2. Fixed assets leased out by operating lease
Items Book value
Notes to the financial statements Page 44
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Items Book value
Buildings 22,879,743.91 Machinery
4,504,638.67 Total
27,384,382.58 3. Fixed assets without property rights certificates at the year-end
Items Book value Reason
Plants and Buildings 1,135,305,101.78 To be handled in batches
(12) Construction in progress
1. Details of construction in progress
Ending balance Beginning balance
Items Impairm
Carrying amount
Impairment
Book value Carrying amount
ent
Book value High Strength Cold Rolling Steel
1,248,815,568.07 1,248,815,568.07 1,187,165,940.86 1,187,165,940.86 Renovation Project
The Third Cold Rolling Work Hot-Dip
614,011,518.07 614,011,518.07 611,760,000.00 611,760,000.00 Galvanizing Production Line Project
Energy Saving And Environmental
Protection Reconstruction Of The
172,038,373.79 172,038,373.79 170,359,741.31 170,359,741.31 Converter System And 180 Ton
Dephophorization Converter Project
Modification of ultra-thin pickling line 32,745,791.58 32,745,791.58 32,745,791.58 32,745,791.58 Information System Engineering 34,970,271.44 34,970,271.44 32,708,961.76 32,708,961.76 Upgrading of hot blast stove and other 32,592,428.11 32,592,428.11 27,289,578.22 27,289,578.22 Notes to the financial statements Page 45
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Ending balance Beginning balance
Items Impairm
Carrying amount
Impairment
Book value Carrying amount
ent
Book value systems in ironworks
The 360 Square Meter Sintering
59,021,874.99 59,021,874.99 26,592,065.27 26,592,065.27 Machine
Manufacturing Department Energy
20,289,005.83 20,289,005.83 20,289,005.83 20,289,005.83 Control Center
Energy Control Center 15,976,501.70 15,976,501.70 8,617,499.91 8,617,499.91 Other Projects 509,898,394.05 509,898,394.05 274,055,825.72 274,055,825.72 Total 2,740,359,727.63 2,740,359,727.63 2,391,584,410.46 2,391,584,410.46 Notes to the financial statements Page 46
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
2. The change of major construction in progress
Budget (In 10 Increase Other
Items Beginning balance Transfer to FA Ending balance Thousand Yuan)
Amount decrease
High Strength Cold Rolling
613,498.00 1,187,165,940.86 61,649,627.21 1,248,815,568.07 Steel Renovation Project
The Third Cold Rolling
Work Hot-Dip Galvanizing 86,918.00 611,760,000.00 2,251,518.07 614,011,518.07 Production Line Project
Energy Saving And
Environmental Protection
Reconstruction Of The
177,864.40 170,359,741.31 1,678,632.48 172,038,373.79 Converter System And 180
Ton Dephophorization
Converter Project
Modification of ultra-thin
5,219.00 32,745,791.58 32,745,791.58 pickling line
Information System
3,687.00 32,708,961.76 2,261,309.68 34,970,271.44 Engineering
Upgrading of hot blast stove
and other systems in 18,535.14 27,289,578.22 5,302,849.89 32,592,428.11 ironworks
The 360 Square Meter
128,403.20 26,592,065.27 32,429,809.72 59,021,874.99 Sintering Machine
Manufacturing Department
2,600.00 20,289,005.83 20,289,005.83 Energy Control Center
Energy Control Center 29,450.00 8,617,499.91 7,359,001.79 15,976,501.70 Other Projects 274,055,825.72 270,660,096.69 34,817,528.36 509,898,394.05 Total 2,391,584,410.46 383,592,845.53 34,817,528.36 2,740,359,727.63 Notes to the financial statements Page 47
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Continued
Including:
Input of Accumulated amount of
Items Progress capitalized interest Capitalization rate Source of fund Budget capitalized interest
of current period
High Strength Cold Rolling
85% 98% 906,733,767.70 50,832,345.91 3.48 self-raised funds and Loan Steel Renovation Project
The Third Cold Rolling Work
Hot-Dip Galvanizing 72% 90% self-raised funds Production Line Project
Energy Saving And
Environmental Protection
Reconstruction Of The
87% 96% 127,847,567.31 self-raised funds and Loan Converter System And 180
Ton Dephophorization
Converter Project
Modification of ultra-thin
63% 70% self-raised funds pickling line
Information System
89% 90% 2,190,983.43 489,297.87 3.48 self-raised funds and Loan Engineering
Upgrading of hot blast stove
and other systems in 64% 85% self-raised funds ironworks
The 360 Square Meter
5% 98% 68,627,433.26 self-raised funds and Loan Sintering Machine
Manufacturing Department
78% 80% self-raised funds Energy Control Center
Energy Control Center 98% 98% 45,372,134.03 self-raised funds and Loan Notes to the financial statements Page 48
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Including:
Input of Accumulated amount of
Items Progress capitalized interest Capitalization rate Source of fund Budget capitalized interest
of current period
Other projects self-raised funds Total 1,150,771,885.73 51,321,643.78
Notes to the financial statements Page 49
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
(13) Construction material
Items Beginning balance Ending balance
Special equipment 2,925,581.89 4,558,919.60 Total
2,925,581.89 4,558,919.60 (14) Intangible assets
1. Details of intangible assets
Items Land use right Office software Total
1.Total of original value
Beginning balance 296,245,314.76 409,458.15 296,654,772.91 Increase 30,783,483.08 30,783,483.08 Including: Purchase 30,783,483.08 30,783,483.08 Decrease
Including: Disposal
Ending balance 327,028,797.84 409,458.15 327,438,255.99 2. Total of Accumulated
Amortization
Beginning balance 42,688,601.63 81,289.80 42,769,891.43 Increase 3,219,446.92 20,008.17 3,239,455.09 Including: Provision 3,219,446.92 20,008.17 3,239,455.09 Decrease
Including: Disposal
Ending balance 45,908,048.55 101,297.97 46,009,346.52 4. Total of Impairment
Beginning balance
Increase
Including: Provision
Decrease
Including: Disposal
Ending balance
5. Total of Net value
Ending book value 281,120,749.29 308,160.19 281,428,909.48 Beginning book value 253,556,713.13 328,168.35 253,884,881.48 (15) Deferred tax assets and deferred tax liability
1. Undeducted deferred tax asset
Ending balance Beginning balance
Deductible Deductible
Items Deferred tax Deferred tax
temporary temporary
asset asset
differences differences
Notes to the financial statements Page 50
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Asset impairment provision 373,970,223.70 93,492,555.93 403,885,112.30 100,971,278.09 No profit from internal
71,807,414.00 17,951,853.50 64,609,874.03 16,152,468.51 transactions
Differences of depreciation and
333,978,859.03 83,494,714.76 333,978,859.03 83,494,714.76 amortization
Total 779,756,496.73 194,939,124.19 802,473,845.36 200,618,461.36 2. Unrecognized deferred tax assets
Item Ending balance Beginning balance
Deductible temporary differences 2,722,439.35 2,967,495.10 Deductible losses 1,377,226,268.38 2,105,332,277.56 Total 1,379,948,707.73 2,108,299,772.66 3. The deductible loss of unrecognized deferred tax assets due in the following period:
Year Ending balance Beginning balance Notes
2018 4,904,050.21
2019
2020 1,365,805,145.49 2,086,284,665.11
2021 12,562,922.76 12,562,922.76
2022 1,580,639.48 1,580,639.48
2023
Total 1,379,948,707.73 2,105,332,277.56
(16) Other non-current assets
Item Ending balance Beginning balance
Prepaid long-term assets 1,037,735,849.00 1,067,334,823.12 Total 1,037,735,849.00 1,067,334,823.12 Note: Prepaid long-term assets at the end of the period of an amount of RMB 1,037,735,849.00
was used to pay the investment of Northeast Special Steel Group Co., Ltd.
(17) Short-term loans
Items Ending balance Beginning balance
Guaranteed loans 825,000,000.00 1,470,000,000.00 Credit loans
Mortgage loans 15,413,162,700.00 11,529,063,300.00 Pledge loans 5,546,640,000.00 9,000,040,600.00 Total 21,784,802,700.00 21,999,103,900.00
(18) Notes payable
Notes to the financial statements Page 51
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Items Ending balance Beginning balance
Bank acceptance bill 5,286,291,966.46 8,782,045,779.95
Commercial acceptance bill
1,798,307,730.12 1,812,544,047.32
Domestic letter of credit
1,400,000,000.00 900,000,000.00
Total 8,484,599,696.58 11,494,589,827.27
(19) Accounts payable
1. Accounts payable disclosed by category:
Item Ending balance Beginning balance
Accounts payable for goods 3,390,784,690.68 3,116,873,305.58 Accounts payable for labor 4,563,306.49 4,467,697.76 Accounts payable for project and equipment 260,141,728.27 254,691,333.73 Accounts payable for repair 592,745,474.27 519,035,208.21 Others 2,637,902.24 2,600,968.49 Total 4,250,873,101.95 3,897,668,513.77 2. Significant accounts payable aging over one year:
Items Ending balance Reason
BHP Billiton Trading Company 29,311,486.15 Not yet settled
China Metallurgical Southern Engineering Technology
17,030,034.24 Not yet settled
Co., Ltd.
Jixi Huasheng Feng Yuan Coal Preparation Co., Ltd. 26,485,138.18 Not yet settled
Hangzhou Tian Shen materials Co., Ltd.. 20,145,902.64 Not yet settled
Total 92,972,561.21
(20) Advance from customers
1. Advance from customers disclosed by category
Items Ending balance Beginning balance
Advance for goods
3,389,201,256.80 3,308,567,598.05 Total
3,389,201,256.80 3,308,567,598.05 2. There is no significant advance from customers aging over one year.
None
(21) Employee benefits payable
1. Employee benefits payable
Beginning
Items Increase Decrease Ending balance
balance
Notes to the financial statements Page 52
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Beginning
Items Increase Decrease Ending balance
balance
Short-term employee
39,492,800.76 943,263,601.67 943,135,390.76 39,621,011.67 benefits
Post-employment benefits -
58,897.24 47,540,582.84 47,540,326.12 59,153.96 defined contribution plans
4,170,839.58 1,144,626.18 3,026,213.40 Termination benefits
43,722,537.58 990,804,184.51 991,820,343.06 42,706,379.03 Total
2. Short-term employee benefits
Beginning Ending
Items Increase Decrease
balance balance
(1) Salary, bonus, allowance and
29,509,509.38 641,081,645.94 641,141,079.43 29,450,075.89 subsidy
(2) Employee welfare 403,019.22 45,026,921.33 45,026,921.33 403,019.22 (3) Social Insurance 663,146.90 192,937,976.71 192,926,811.12 674,312.49 Including: Medical insurance 44,401,255.18 44,401,255.18
Work injury
663,146.90 16,468,829.44 16,468,829.44 663,146.90 insurance
Maternity insurance 11,511.84 11,511.84 0.00 (4) Housing 6,850,655.00 50,579,409.00 50,575,375.00 6,854,689.00 (5) Union funds and staff
2,066,470.26 12,732,865.04 12,560,420.23 2,238,915.07 education fee
(6) Short-term compensated
absences
(7) Short-term profit - sharing
scheme
(8) Others 904,783.65 904,783.65
39,492,800.76 943,263,601.67 943,135,390.76 39,621,011.67 Total
3. Defined contribution plans
Beginning Ending
Items Increase Decrease
balance balance
57,445.11 44,401,255.18 44,401,255.18 57,445.11 Basic pension fund
1,452.13 3,139,327.66 3,139,070.94 1,708.85 Unemployment insurance
58,897.24 47,540,582.84 47,540,326.12 59,153.96 Total
(22) Current tax liabilities
Items Ending balance Beginning balance
Value-added Tax (VAT) 37,172,905.08 44,433,347.78
Notes to the financial statements Page 53
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Items Ending balance Beginning balance
Enterprise income tax 4,233,500.49 12,706,288.46 City maintenance and construction tax 10,340,536.48 13,007,637.50 Housing property tax 3,013,016.57 2,990,847.04 Educational surcharges 7,400,127.44 9,382,026.01 Others 9,925,077.37 5,286,981.71 Total 72,085,163.43 87,807,128.50 (23) Interests payable
Items Ending balance Beginning balance
70,109,821.13
Corporate bond interest
51,920,388.97 14,029,466.89
Loan interests
51,920,388.97 84,139,288.02
Total
(24) Dividends payable
Items Ending balance Beginning balance
193,768,576.60
Common stock dividends
193,768,576.60
Total
(25) Other payables
1. Other payables disclosed by nature
Items Ending balance Beginning balance
Deposit 2,429,895.77 2,475,771.82 Margin 163,854,042.94 145,686,888.01 Accounts 323,615,754.77 349,363,687.04 Others 71,096,069.89 79,463,585.44 Total
560,995,763.37 576,989,932.31 2. Significant other payables ageing over one year
Name Ending balance Reason
Benxi Steel& Iron (Group) Co., Ltd. 86,805,543.86 Not yet settled
Total
86,805,543.86
(26) Non-current liabilities due within one year
1. Breakdown of Non-current liabilities due within one year
Item Ending balance Beginning balance
Notes to the financial statements Page 54
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Long-term loans due within one year
1,040,765,614.98 2,311,995,410.89
Long-term payables due within one year
1,499,545,179.95
Total
1,040,765,614.98 3,811,540,590.84
2. Long-term loans due within one year
Items Ending balance Beginning balance
Guaranteed loans
1,040,765,614.98
2,280,404,670.89
Credit loans 31,590,740.00
Total
1,040,765,614.98
2,311,995,410.89
(27) Other current liabilities
Items Ending balance Beginning balance
Pending VAT 25,283,327.37 27,979,093.21
Total 25,283,327.37 27,979,093.21
(28) Long-term loans
Categories Ending balance Beginning balance
3,186,004,295.10 2,267,263,140.28
Guarantee the loan
1,220,995,278.78 176,922,490.00
Credit loan
4,406,999,573.88 2,444,185,630.28
Total
(29) Deferred income
Items Ending balance Increase Decrease Beginning balance Government Subsidies 372,785,000.00 694,300.00 41,274,238.70 332,205,061.30 Total 372,785,000.00 694,300.00 41,274,238.70 332,205,061.30
Notes to the financial statements Page 55
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Other
Items Beginning balance Increase Transfer to non-operating income Ending balance Related to assets or income decrease
MES PROJECT SPECIAL FUND 3,440,000.00 860,000.00 2,580,000.00 Assets Industrial Enterprise Energy Management Center Assets 9,280,000.00 1,160,000.00 8,120,000.00
Construction Demonstration Project
Environment Pollution Renovation Project 7,240,000.00 1,810,000.00 5,430,000.00 Assets Environment Renovation Project and Regional Assets 680,000.00 170,000.00 510,000.00
Basin Environment Protection Project
High Strength Cold Rolling Steel Renovation Assets 250,000,000.00 25,000,000.00 225,000,000.00
Project
Automobile High-class Electrolytic Zinc Steel Assets 24,624,000.00 4,104,000.00 20,520,000.00
Plate Production Line Project
Sintering Machine Residue Heat Usage and Assets 8,408,000.00 2,102,000.00 6,306,000.00
Desulfurization Project
7 130t Boilers Flue Gas Desulfurization Assets 24,000,000.00 2,400,000.00 21,600,000.00
Renovation Project of Power Plant
Treatment and Salt Extraction Project of Assets 100,000.00 50,000.00 50,000.00
Desulfurization Waste Liquid of Coke Plant
Overseas Advanced Technology Introduction Assets 9,768,000.00 1,442,000.00 8,326,000.00
Special Fund
Automobile Steel Sheet Engineering Laboratory Assets 1,000,000.00 1,000,000.00
Project
Third-generation High Strength Steels for Assets 2,900,000.00 2,900,000.00
AutomobileR&D Project
The 360 Cubic Meter Sintering Machine Flue Assets Gas Desulfurization Renovation Project of Blast 400,000.00 100,000.00 300,000.00
Furnace Plant
Notes to the financial statements Page 56
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Other
Items Beginning balance Increase Transfer to non-operating income Ending balance Related to assets or income decrease
Environment Protection Project Special Fund 2,320,000.00 580,000.00 1,740,000.00 Assets Advance Treatment of Carbon Fiber Waste Water
9,500,000.00 9,500,000.00 Assets Project of Plates Coke Plant Dongfeng Workshop
Coal-fired Boiler Desulfuration and Denitration
Project of Bengang Power Plant High Pressure 5,400,000.00 300,000.00 5,100,000.00 Assets Workshop
Cogeneration Transformation Project of Power
10,000,000.00 10,000,000.00 Assets Plant the Third Workshop
Sintering Machine Energy Conservation and
Environment Protection Project of Iron Making 3,480,000.00 580,000.00 2,900,000.00 Assets Plant
Air Quality Automatic Monitoring System 245,000.00 35,000.00 210,000.00 Assets Compensation from Xihu Resource Management
414,300.00 414,300.00 0.00 Profit Committee
Liaoning craftsman subsidy and skill master
280,000.00 166,938.70 113,061.30 Profit workstation subsidy
Total 372,785,000.00 694,300.00 41,274,238.70 332,205,061.30
Notes to the financial statements Page 57
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
(30) Share capital
Ending
Increase/decrease(+, -)
Beginning balance
Items
balance Issuing of Bonus Transferred from Other Subtota
new share shares reserves s l
Capital 3,136,000,00 739,371,532.0 739,371,53 3,875,371,5 shares 0.00 0 2.00 32.00 (31) Capital reserves
Items Beginning balance Increase Decrease Ending balance
Capital premium over par value 8,998,928,073.23 3,228,364,305.24 12,227,292,378.47 Other capital reserves 115,917,468.82 115,917,468.82 Total 9,114,845,542.05 3,228,364,305.24 12,343,209,847.29 (32) Special reserves
Items Beginning balance Increase Decrease Ending balance Safety production cost 475,046.75 22,983,003.78 7,492,925.61 15,965,124.92 Total 475,046.75 22,983,003.78 7,492,925.61 15,965,124.92 (33) Surplus reserves
Items Beginning balance Increase Decrease Ending balance
Statutory surplus
961,105,529.85 961,105,529.85 reserves
Total 961,105,529.85 961,105,529.85 (34) Undistributed profits
Item
Amount Distribution rate
Before adjustments: undistributed profits at last year-end 1,103,162,610.35 -496,969,242.61 Adjustments of the beginning distributed profits(increase
+ / decease -)
After adjustments: undistributed profit at this
1,103,162,610.35 -496,969,242.61 year-beginning
Add: undistributed profit belonging to parent company 756,951,987.59 523,635,653.57 Less: Statutory surplus reserves
Discretionary reserves
General risk reserves
Notes to the financial statements Page 58
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Common shares dividend payable 193,768,576.60
Common shares dividend transferred to paid-in capital
Ending balance of undistributed profits 1,666,346,021.34 26,666,410.96 (35) Operating income and operating cost
January to June 2018 January to June 2017
Item
Revenue Cost Revenue Cost
Principal
21,302,037,073.89 19,140,922,165.53 19,476,278,905.41 17,638,682,335.86 business
Other
2,139,210,303.25 1,663,285,255.45 1,260,207,998.33 1,051,983,630.25 business
23,441,247,377.14 20,804,207,420.98 20,736,486,903.74 18,690,665,966.11 Total
(36) Tax and surcharges
Items January to June 2018 January to June 2017
Housing property tax
36,610,915.20 37,046,142.33 City maintenance and
48,666,138.65 46,713,364.91 construction tax
Educational surcharges
34,952,935.92 33,504,830.35 Land use right
6,486,432.24 3,155,810.05 Others 12,694,429.33 13,336,583.43 Environmental Tax 13,896,524.30
Total
153,307,375.64 133,756,731.07 Notes:
The business activities of the occurrence of property tax, land use tax, vehicle and vessel use tax, stamp tax from May 1, 2017 is reclassified from “General and administrative expenses” to “Tax and surcharges”. The tax occurred before May 1, 2017 shall not be adjusted. Comparative data stays unadjusted.
(37) Selling and distribution expenses
Items January to June 2018 January to June 2017
Freight
393,290,897.61 428,678,322.48 Port surcharges
56,907,191.59 86,681,806.22 Agency fee
35,649,297.75 38,969,368.55 Salary and benefits
11,993,852.41 10,794,773.70 Others
12,721,174.90 19,399,396.68 Package fee
3,475,594.69 3,109,039.80
Notes to the financial statements Page 59
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Total
514,038,008.95 587,632,707.43 Notes:
Selling and distribution expenses of the current period was RMB 587,632,707.43, increased RMB 157,571,644.29 compared to last period which was RMB 430,061,063.14, at the rate of36.64%. The reason of the increase is the increase of external freight expenses.
(38) General and administrative expenses
Items January to June 2018 January to June 2017
Salary and benefits
116,352,823.92 94,209,841.05 Accounts payable for repair
174,107,156.65 80,215,426.18 Pollution discharge fee
25,709,122.00 Land use right fee
27,345,714.30 27,345,714.30 Others
59,604,807.84 56,552,255.19 Depreciation
26,164,322.31 25,945,531.46 Social security expense
23,452,571.91 21,716,785.13 Heating fee
20,783,413.87 11,677,556.25 Water resources fee
6,546,763.90 5,596,700.00 Housing fund
4,445,529.00 4,614,199.60 Amortization of intangible assets
2,982,926.09 2,982,306.37 Entertainment expense
1,527,871.52 1,535,128.96 Lease expense
543,240.66 572,987.24 Freight
455,924.12 277,851.35 Total
464,313,066.09 358,951,405.08 (39) Financial expenses
Category January to June 2018 January to June 2017
Interest cost
575,001,615.20 434,308,806.10 Less: Interest income
61,605,403.34 36,772,069.07 Exchange loss
286,291,324.68 -23,234,309.69 Others
3,350,880.74 7,210,977.46 Total
803,038,417.28 381,513,404.80 Notes:
Financial expenses of the current period were RMB 803,038,417.28, increased by RMB 421,525,012.48, at the rate of110.49% compared to the previous period. The reason of the increase is because of the increase of exchange loss.
(40) Asset impairment loss
Items January to June 2018 January to June 2017
Notes to the financial statements Page 60
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Items January to June 2018 January to June 2017 Loss for bad debts
-14,523,332.71 -6,653,848.89 Impairment of inventories
-6,394,630.93 -36,736,605.65 Impairment of available-for-sale assets
Impairment of Fixed assets
Total
-20,917,963.64 -43,390,454.54 (41) Income on investment
Items January to June 2018 January to June 2017 Equity method Income
Income on disposal of long-term equity investment
Income on the changes of financial assets fair value
Income on the disposal of financial assets where the fair value
changed
Income on held-to-maturity investment
Income on available-for-sale financial assets
Investment on disposal of available-for-sale financial assets
Income from bank short-term financial products
3,493,150.68 3,294,593.14 Total
3,493,150.68 3,294,593.14 (42) Gains on disposal of assets
January to
Items January to June 2017 The amount recognized in non-operating profit June 2018
Disposal gains
or losses of
fixed assets
825,580.63 3,015,294.00 825,580.63 not held for
sale
825,580.63 3,015,294.00 825,580.63 Total
(43) Other income
Related
January to January to
Items to assets
June 2018 June 2017
or income
MES PROJECT SPECIAL FUND 860,000.00 860,000.00 Assets
Second Batch of National Cleaned Manufacturing
400,000.00
Assets
Demonstration Project Fund
Industrial Enterprise Energy Management Center
1,160,000.00
Assets
Construction Demonstration Project
Notes to the financial statements Page 61
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Related
January to January to
Items to assets
June 2018 June 2017
or income
Environment Pollution Renovation Project 1,810,000.00 2,617,000.00 Assets
Environment Renovation Project and Regional Basin
170,000.00 250,000.00
Assets
Environment Protection Project
Energy-saving Technological Reform Fiscal Reward
1,477,000.00
Assets
Project
High Strength Cold Rolling Steel Renovation Project 25,000,000.00 Assets
Automobile High-class Electrolytic Zinc Steel Plate
4,104,000.00 4,104,000.00
Assets
Production Line Project
Sintering Machine Residue Heat Usage and
2,102,000.00 2,102,000.00
Assets
Desulfurization Project
Wastewater Treatment Plant Renovation Project 750,000.00 Assets
7 130t Boilers Flue Gas Desulfurization Renovation
2,400,000.00 Assets
Project of Power Plant
Treatment and Salt Extraction Project of Desulfurization
50,000.00 50,000.00 Assets
Waste Liquid of Coke Plant
Overseas Advanced Technology Introduction Special
1,442,000.00 442,000.00 Income
Fund
The 360 Cubic Meter Sintering Machine Flue Gas
Assets
Desulfurization Renovation Project of Blast Furnace 100,000.00 100,000.00
Plant
Environment Protection Project Special Fund 580,000.00 580,000.00 Assets
Desulphurization and Denitrification of Coal-Fired
300,000.00 Assets
Boilers in High Pressure Workshop of Power Plant
Energy Saving and Environmental Protection of Sintering
580,000.00 580,000.00
Assets
Plant in Ironworks
Air quality automatic monitoring system 35,000.00 35,000.00 Assets
Compensation from Xihu Resource Management
414,300.00 700,000.00 Income
Committee
Liaoning craftsman subsidy and skill master workstation
166,938.70 Income
subsidy
Total 41,274,238.70 15,047,000.00
(44) Non-operating income
January to June January to June The amount recognized in
Items
2018 2017 non-recurring profit and loss
Debt restructuring gain 945,892.23 822,116.45 945,892.23
Others 1,192,505.57 2,130,078.13 1,192,505.57
2,138,397.80 2,952,194.58 2,138,397.80
Total
(45) Non-operating expenses
January to June January to June The amount recognized in
Items
2018 2017 non-recurring profit and loss
Non-current assets
1,382,402.26 4,593,420.30 1,382,402.26
disposal loss
Including: Fixed assets
1,382,402.26 4,593,420.30 1,382,402.26
Notes to the financial statements Page 62
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
disposal loss
Fines and overdue
payment
Others
1,382,402.26 4,593,420.30 1,382,402.26
Total
(46) Income tax expense
1. Income tax expense
Items January to June 2018 January to June 2017
Income tax payable for the current year
5,956,888.87 16,796,524.06 Deferred income tax expense
5,679,337.17 100,308,537.10 Total
11,636,226.04 117,105,061.16 2. Accounting profit and income tax expense adjustment process
Item January to June 2018
Total profit
769,610,017.39 Income tax expense calculate according to the official or
192,402,504.35 applicable tax rate
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 undeductable costs, expenses or losses
Effect of use of deductible losses of unrecognized deferred tax
180,766,278.31 asset of prior period
Effect of deductible temporary differences or deductible losses
of unrecognized deferred tax asset of current period
Income tax expense 11,636,226.04 (47) Notes of statement of cash flows
1. Cash received related to other operating activities
Items January to June 2018 January to June 2017
Withdraw of current accounts, advance for another 19,218,434.76 49,988,918.77 Interest income
61,605,403.34 36,772,069.07 Special subsidy income
694,300.00 700,000.00 Non-operating income
162,619.82 350,490.77 Others
101,722.27 5,600.00
Notes to the financial statements Page 63
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Items January to June 2018 January to June 2017
Total
81,782,480.19 87,817,078.61 2. Cash paid related to other operating activities
Item January to June 2018 January to June 2017
Current accounts, advance for another 285,018,187.10 317,981,786.61 General and administrative expenses 4,646,000.62 4,534,010.56 Selling and distribution expenses 18,078,644.22 18,370,234.96 Bank charges 2,896,060.69 7,210,977.46 Others 358,254.79 287,293.34 Total 310,997,147.42 348,384,302.93 (48) Supplementary details of statement of cash flows
1. Supplementary details of statement of cash flows
January to June January to June
Items
2018 2017
1. A reconciliation of net profit to cash flows from operating
activities:
Net profit 757,973,791.35 529,967,744.05 Add: Asset impairment losses -20,917,963.64 -43,390,454.54 Depreciation of fixed assets and so on 1,144,984,195.00 935,125,024.26 Amortization of intangible assets 3,239,455.09 2,982,306.37 Amortization of long-term prepayment
Losses proceeds from disposal of PPE, intangible assets and other
556,821.63 1,578,126.30 long-term assets (Earningsmarked“－”)
Scrapped losses from fixed assets
Fair value losses (Earningsmarked“－”)
Financial expenses (Earningsmarked“－”) 803,038,417.28 381,513,404.80 Investment losses (Earningsmarked“－”) -3,493,150.68 -3,294,593.14 Deferred tax assets reduction (Additionmarked“－”) 5,679,337.17 100,308,537.11 Deferred tax liabilities increased (Reductionmarked“－”)
Reduction of inventory (Additionmarked“－”) -1,683,906,453.31 -52,529,908.92 Operating receivable items reduction (Additionmarked“－”) 817,004,548.19 40,403,360.62 Operating payable items increase (Lessmarked"－") -1,093,639,256.61 -5,939,969,231.63 Others
Net cash flows generated from operating activities 730,519,741.47 -4,047,305,684.72 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
Notes to the financial statements Page 64
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
January to June January to June
Items
2018 2017
3. The net increase in cash and cash equivalents:
Ending balance of the monetary funds 16,038,506,854.22 11,484,974,631.49 Less: Beginning balance of the monetary funds 17,037,713,410.49 12,273,574,488.67 Add: Ending balance of cash equivalents
Less: Opening balance of cash equivalents
The net increase in cash and cash equivalents -999,206,556.27 -788,599,857.18 2. The structure of cash and cash equivalents
Items Ending balance Beginning balance
1. Cash 16,038,506,854.22 17,037,713,410.49 Including: Cash on hand
20,372.11 20,871.51 Bank deposits available on demand
16,038,486,482.11 17,037,692,538.98 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 16,038,506,854.22 17,037,713,410.49 Including: Cash and cash equivalents limited to use by the parent
company of other subsidiary in the group
(49) Assets of which ownership or right to use are restricted
Items Ending balance Reason
Monetary assets 2,531,734,752.99
Deposit for notes and L/C
Notes receivable
1,801,103,300.17
Pledged for acceptance bill and bank loan Total
4,332,838,053.16
(50) Foreign currency monetary items
Ending balance in Exchange rate at the Ending balance
Item
foreign currency year-end translated to RMB
Cash at bank and on hand 3,521,674,538.56 Including: HKD 1,009,179.92 0.8431 850,839.59 USD
433,576,750.11 6.6166 2,868,803,924.78 EUR
85,214,634.28 7.6515 652,019,774.19
Notes to the financial statements Page 65
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Ending balance in Exchange rate at the Ending balance
Item
foreign currency year-end translated to RMB
Short-term loans 6,369,393,300.00 Including: USD
865,500,000.00 6.6166 5,726,667,300.00 Including: EUR
84,000,000.00 7.6515 642,726,000.00 Non-current liabilities due
1,005,866,915.68 within one year
Including: USD
148,000,000.00 6.6166 979,256,800.00 Including: EUR
3,296,330.56 7.6515 25,221,873.28 JPY
23,176,000.00 0.0599 1,388,242.40 Long-term loans 1,498,631,297.21 Including: USD
128,300,000.00 6.6166 848,909,780.00 EUR
83,372,078.26 7.6515 637,921,456.81 JPY
196,996,000.00 0.0599 11,800,060.40 6. Change of the consolidation scope
There is no change in the consolidation scope.
7. Equity in other entities
(1) Constitution of enterprise group
Name of the Registered Notes of Shareholding Acquiring Principal place of business
subsidiaries address business ratio method
Direct Indirect
Business consolida Xiamen Bengang Steel& tion
Xiamen Xiamen Sales 100.00
Iron Sales Co., Ltd. under
common control
Business consolida Wuxi Bengang Steel& Iron tion
Wuxi Wuxi Sales 100.00
Sales Co., Ltd. under
common control
Tianjin Bengang Steel& Business Tianjin Tianjin Sales 100.00
Iron Trading Co., Ltd. consolida
Notes to the financial statements Page 66
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Name of the Registered Notes of Shareholding Acquiring Principal place of business
subsidiaries address business ratio method
Direct Indirect
tion
under
common control
Business consolida Nanjing Bengang Steel tion
Nanjing Nanjing Sales 100.00
Material Sales Ltd. under
common control
Business consolida Yantai Bengang Steel& tion
Yantai Yantai Sales 100.00
Iron Sales Co., Ltd. under
common control
Business consolida Harbin Bengang Economic tion
Harbin Harbin Sales 100.00
and Trading Co., Ltd. under
common control
Business consolida Changchun Bengang Steel tion
Changchun Changchun Sales 100.00
& Iron Sales Co., Ltd. under
common control
Guangzhou Bengang Steel Establish Guangzhou Guangzhou Sales 100.00
& Iron Trading Co., Ltd. ment
Shanghai Bengang
Establish Metallurgy Science and Shanghai Shanghai Sales 100.00
ment
Technology Co., Ltd.
Bengang Steel Plate
Manufacturi Establish Liaoyang Orel Ball Co., Liaoyang Liaoyang 100.00
ng ment
Ltd.
Dalian Benruitong
Manufacturi Establish Automobile Material Dalian Dalian 65.00
ng ment
Technologies Co., Ltd.
Bengang Puxiang Cool Business Manufacturi
Rolling Steel Sheet Co., Benxi Benxi 75.00 consolida ng
Ltd. tion
Notes to the financial statements Page 67
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Name of the Registered Notes of Shareholding Acquiring Principal place of business
subsidiaries address business ratio method
Direct Indirect
under
common control
Benxi Bengang Steel Sales Establish Benxi Benxi Sales 100.00
Co., Ltd ment
Shenyang Bengang
Establish Metallurgical Science and Shenyang Shenyang Sales 100.00
ment
Technology Co., Ltd.
Chongqing Liaoben Steel Establish Chongqing Chongqing Sales 100.00
& Iron Trading Co., Ltd. ment
Business consolida Bengang Baojin
tion
(Shenyang) Automobile Shenyang Shenyang Sales 85.00
under
New Material Co., Ltd
common control
(2) Significant not wholly-owned subsidiaries
Dividend
Profits and losses Ending
Proportion of declared to
Name of the attributing to balance of
non-controlling distribute to
subsidiaries non-controlling non-controlling interests(%) non-controlling
shareholders interests
shareholders
Bengang Puxiang Cool
Rolling Steel Sheet Co., 25.00 1,377,927.80 499,584,045.29 Ltd.
Dalian Benruitong
Automobile Material 35.00 -312,957.88 26,375,164.18 Technologies Co., Ltd.
(3) The main financial information of significant not wholly owned subsidiary
Ending balance
Non-cu
Name of the
Current Non-current Current rrent Total
subsidiaries Total Assets
assets assets Liabilities liabiliti liabilities
es
Bengang Puxiang
Cool Rolling Steel 3,280,879,837.58 1,849,476,058.98 5,130,355,896.56 3,132,019,715.41 3,132,019,715.41 Sheet Co., Ltd.
Dalian Benruitong 130,501,245.20 150,077,740.12 280,578,985.32 205,221,373.39 205,221,373.39
Notes to the financial statements Page 68
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Name of the Ending balance
Autsoumbosbidiliea ries
Material
Technologies Co.,
Ltd.
Beginning balance
Non-cu
Subsidiaries
Current Non-current Current rrent Total
Name Total Assets
assets assets Liabilities liabiliti liabilities
es
Bengang Puxiang
Cool Rolling Steel 2,386,618,039.83 2,003,972,503.03 4,390,590,542.86 2,399,426,402.00 2,399,426,402.00 Sheet Co., Ltd.
Dalian Benruitong
Automobile
Material 169,295,050.97 153,808,054.26 323,103,105.23 246,851,327.92 246,851,327.92 Technologies Co.,
Ltd.
January to June 2018
Name of the Total Net cash flows
subsidiaries Operating income Net Profit comprehensive from operating
income activities
Bengang Puxiang
Cool Rolling Steel 3,971,529,847.27 5,511,711.19 5,511,711.19 686,401,003.83 Sheet Co., Ltd.
Dalian Benruitong
Automobile
Material 99,283,350.57 -894,165.38 -894,165.38 12,596,859.61 Technologies Co.,
Ltd.
January to June 2017
Name of the Total Net cash flows
subsidiaries Operating income Net Profit comprehensive from operating
income activities
Bengang Puxiang
Cool Rolling Steel 3,953,643,069.30 28,005,452.68 28,005,452.68 -44,864,088.81 Sheet Co., Ltd.
Dalian Benruitong 84,612,504.06 -1,936,593.41 -1,936,593.41 16,421,759.65
Notes to the financial statements Page 69
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Automobile
Material
Technologies Co.,
Ltd.
8. 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 the counterparties. The Company is exposed to credit risk arising fromcustomers’ failure to discharge an obligation in sales on credit. In order to minimize the credit risk, the management of the Company is responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up actions are taken to recover overdue debts.
In addition, the Company strictly approves the line of credit, and only sells on credit to important customers for newly-developed products. In the monitoring of credit risk of customers, the Company sorts customers into groups by their credit characteristics. Those customers which are rated as “high risk” will be put in the restricted client list. The Company can only sell to these customers on credit with additional approval; otherwise the Company must ask for a corresponding deposit in advance.
(2) Market risk
Market risk of financial instruments refers to fluctuations of fair value or future cash flows due to market 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 rate changes. TheCompany’s exposure to currency risk is primarily arising from variable-rate bank balances and variable-rate borrowings. Currently, the Company does not have a specific policy to manage its interest rate risk. The management will carefully choose financing methods, and combine fixed interest rate with variable interest rate, short-term obligations with long-term obligations. By using effective interest rate risk management methods, the Company closely monitors interest rate risk and will consider interest-rate swaps to acquire an expected structure of interest rates shall the need arise.
Although these measures may not ensures that the Company completely avoids the risk of paying at a risk higher than market risk, or that the cash flow risk relevant to interest income fluctuations is completely eliminated, in the opinion of the management, these measures could 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 rate changes.
Notes to the financial statements Page 70
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
The Company has been constantly working on the adjustment of the organizational framework of risk management and optimization of debt structures to lower the currency risk.
The currency risk facing the Company originates from the assets and liabilities measured by US dollars, Euro, Hong Kong dollars and Japanese Yen. The ending balance of the assets and liabilities after converted in RMB is shown as below:
(In 10 Thousand Yuan) Ending balance
Items Hong Kong Total
USD EUR Japanese Yen
Dollars
Assets 286,880.39 65,201.98 85.08 352,167.45 liabilities 755,483.39 130,586.93 63,930.97 950,001.29 Total 1,042,363.78 195,788.91 85.08 63,930.97 1,302,168.74 The table below shows the sensitivity analysis of RMB vs. other currencies when RMB deprecated or appreciated by5% over other currencies under the assumption that other variables remain the same.5% is the sensitivity rate used by the management for internal report of currency risk and it represents the estimation of the management over the possible change of foreign currency. Sensitivity analysis only includes the monetary items measured by foreign currency unpaid and will be adjusted at the year-end by5%. The positive figures reflect the increase of profit by5% and the negative figures indicate the reduction of profit.
(In 10 Thousand Yuan) At end of the period
Items Impact on Impact on Impact on Total
Impact on USD
Euro HKD Japanese Yen
Appreciation by
-23,430.15 -3,269.25 4.25 -3,196.55 -29,891.695%
Depreciation by
23,430.15 3,269.25 -4.25 3,196.55 29,891.695%
(3) Liquidity risk
Liquidity risk refers to the risk of shortage of funds which occurs in fulfilling the obligation of settlement in a manner of delivering cash or other financial assets. TheCompany’s policy is to maintain sufficient cash to meet maturing obligations. Liquidity risk is centralized controlled by theCompany’s finance department. Through the monitoring of unrestricted cash and cash equivalents, bank acceptance bills due in short time and the continues forecasting of cash flow in the next 12 months, the finance department ensures that the Company has sufficient cash to meet obligations in all predicted reasonable circumstances.
The following table details theCompany’s mature date of residual contract value of underivative financial liabilities to repay according to the contract terms. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the
Notes to the financial statements Page 71
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Company can be required to pay. The table includes both interest and principal cash flows.
(In 10 Thousand Yuan) Ending balance
Items Within 1 1-2 Over 5
2-5 years Total
year years years
1,365,694.9 Trade and Other payables 1,365,435.62 54.28 124.74 80.27
1 5,956.8 219,975.8 214,628.4 2,723,256.7 Loans and interests 2,282,695.66
0 8 5 9 Non-current liabilities due within one
year
6,011.0 220,100.6 214,708.7 4,088,951.7 Total 3,648,131.27
8 2 2 0 Beginning balance
Items Over 5
Within 1 year 1-2 years 2-5 years Total
years
Trade and Other payables 1,618,161.06 73.68 159.73 97.25 1,618,491.72 Loans and interests 2,470,640.43 31,954.06 81,123.04 165,472.33 2,749,189.86 Non-current liabilities due within one year 149,954.52 149,954.52 Total 4,238,756.01 32,027.74 81,282.77 165,569.58 4,517,636.10 9. Related party transactions
(1) Details of parent company
(In 100 Million Yuan) Name of
parent Place of Notes of Registered Share proportion Voting rights
compan Registry Business capital (%) (%)
y
Benxi
Steel&
Iron Benxi Manufacturing 62.92 59.91 59.91 (Group)
Co., Ltd.
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 and Administration Commission of Liaoning Province.
(2) Details of the subsidiaries
For details of subsidiaries of the Company please refer to Note 7 “Equity in other entities”.
Notes to the financial statements Page 72
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
(3) Details of other related parties
Name of Other related parties Relationship
Bengang Group International Economic and Trading Co.,
Both belong to Bengang Group Co., Ltd.
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.,
Same parent company
Ltd.
Benxi Steel& Iron(Group) Steel& Iron Process and
Same parent company
Logistics Co., Ltd.
Benxi Steel& Iron(Group) Machinery Manufacture Co.,
Same parent company
Ltd.
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
Same parent company
Co., Ltd.
Benxi Steel& Iron(Group) Designing Institute Same parent company
Benxi Steel& Iron(Group) Industrial Development Co.,
Same parent company
Ltd.
Benxi Steel& Iron(Group) Information and Automatic
Same parent company
Tech Co., Ltd.
Benxi Steel& Iron(Group) Construction and Repairing
Same parent company
Co., Ltd.
Benxi Steel& Iron(Group) Metallurgy Residues Co., Ltd. Same parent company
Benxi Steel& Iron(Group)Plant Construction Supervisor
Same parent company
Co., Ltd.
Benxi Steel& Iron(Group) Zhengtai Construction
Same parent company
Materials Co., Ltd.
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
Same parent company
Co., Ltd.
Liaoning Metallurgy Technician College Same parent company
Liaoning Metallurgy Career Technical College Same parent company
Suzhou Bengang Industrial Co., Ltd. Shareholding company
Notes to the financial statements Page 73
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Name of Other related parties Relationship
Benxi Steel& Iron(Group) Medical Department Both belong to Benxi Steel and Iron(Group) Co., Ltd. Bengang Group Finance Co., Ltd. Both belong to Bengang Group Co., Ltd.
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)
The content of related January to January to June
Name
party transactions June 2018 2017
Benxi Steel& Iron (Group) Co., Ltd. Repair expense 19,767.05 12,781.87 Benxi Steel& Iron (Group) Co., Ltd. Land lease fee 2,734.57 2,734.57 Bengang Cold-rolled Stainless Steel Dandong
Products 64.19 17.50 Co., Ltd.
Benxi Steel& Iron (Group) Mining Co., Ltd. Labor cost 386.75 253.76 Raw material and
Benxi Steel& Iron (Group) Mining Co., Ltd. 203,816.33 217,638.69 supplementary material
Benxi Steel& Iron (Group) Mining Co., Ltd. Freight 3.18 Benxi Steel& Iron (Group) Metallurgy Raw material and
12,852.84 12,820.08 Residues Co., Ltd. supplementary material
Benxi Steel& Iron (Group) Steel& Iron
Processing fee 87.67 76.12 Process and Logistics Co., Ltd.
Benxi Steel& Iron (Group) Real-estate
Raw materials 3,627.99 5,006.75 Development Co., Ltd.
Benxi Steel& Iron (Group) Machinery
Spare parts 4,600.29 5,522.36 Manufacture Co., Ltd.
Benxi Steel& Iron (Group) Machinery
Repair services 495.18 368.87 Manufacture Co., Ltd.
Benxi Steel& Iron (Group) Construction Co.,
Spare parts 191.80 734.34 Ltd.
Benxi Steel& Iron (Group) Construction Co.,
Project fee 2,028.95 12,940.60 Ltd.
Benxi Steel& Iron (Group) Construction Co.,
Repair services 11,481.87 3,237.98 Ltd.
Benxi Steel& Iron (Group) Construction Co., Raw material and
109.40 464.78 Ltd. supplementary material
Benxi Steel& Iron (Group) Construction Co.,
Freight 131.35 155.04 Ltd.
Benxi Steel& Iron (Group) Industrial
Spare parts 2,808.40 8,905.66 Development Co., Ltd.
Benxi Steel& Iron (Group) Industrial Raw material and
6,730.62 10,672.66 Development Co., Ltd. supplementary material
Notes to the financial statements Page 74
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
The content of related January to January to June
Name
party transactions June 2018 2017
Benxi Steel& Iron (Group) Industrial
Repair services 1,829.45 1,117.99 Development Co., Ltd.
Benxi Steel& Iron (Group) Industrial
Freight 101.81 137.06 Development Co., Ltd.
Benxi Steel& Iron (Group) Industrial
Project fee 91.68 139.82 Development Co., Ltd.
Raw material&
Benxi Steel& Iron (Group) Construction and
supplementary materials 326.39 139.66 Repairing Co., Ltd.
& spare parts
Benxi Steel& Iron (Group) Construction and
Project fee 1,175.38 2,870.64 Repairing Co., Ltd.
Benxi Steel& Iron (Group) Construction and
Repair expense 8,327.40 2,130.99 Repairing Co., Ltd.
Raw material and
Bengang Electronics and Gas Co., Ltd. 6,411.95 8,426.07 supplementary material
Bengang Electronics and Gas Co., Ltd. Project fee 0.00 41.94 Bengang Electronics and Gas Co., Ltd. Repair services 1,862.90 692.18 Benxi High-tech Drilling Tools Manufacture
Spare parts 31.12 39.31 Co., Ltd.
Benxi New Career Development Co., Ltd. Labor protection fee 44.20 29.45 Liaoning Metallurgy Technician College Spare parts 317.07 1,319.31 Liaoning Metallurgy Technician College Spare parts 603.74 230.33 Bengang Group International Economic and
Agency fee 3,564.93 3,685.68 Trading Co., Ltd.
Bengang Group International Economic and
Port surcharges 5,690.72 7,751.15 Trading Co., Ltd.
Benxi Steel& Iron (Group) Information and
Spare parts 933.25 693.23 Automatic Tech Co., Ltd.
Benxi Steel& Iron (Group) Information and
Repair services 2,335.89 305.94 Automatic Tech Co., Ltd.
Benxi Steel& Iron (Group) Thermal Power
Heating costs 37.73 168.60 Development Co., Ltd.
Benxi Steel& Iron (Group) Designing Institute Design fees 231.58 235.90 Raw material and
Benxi Beiying Steel& Iron (Group) Co., Ltd. 566,834.95 472,729.42 supplementary material
Benxi Beiying Steel& Iron (Group) Co., Ltd. Energy& Power 38,865.84 50,184.08 Benxi Beiying Steel& Iron (Group) Co., Ltd. Freight 303.15 889.48 Benxi Beiying Steel& Iron (Group) Co., Ltd. Labor cost 3,931.44 5,563.01 Benxi Beiying Steel& Iron (Group) Co., Ltd. Spare parts 1,064.59 1,844.21 Liaoning Hengtong Metallurgical Equipment Raw material and spare
5,398.61 10,661.54 Manufacture Co., Ltd. parts
Notes to the financial statements Page 75
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
The content of related January to January to June
Name
party transactions June 2018 2017
Raw material and spare
Liaoning Hengtai Heavy Machinery Co., Ltd. 124.87 3,873.44 parts
Liaoning Hengtai Heavy Machinery Co., Ltd. Repair and labor cost 1,477.37 636.47 Bengang Group Co., Ltd. Property management fee 31.07 31.07 Total 923,864.33 870,902.78 Company as the seller (In 10 Thousand Yuan)
The content of related January to January to June
Name
party transactions June 2018 2017
Bengang Electronics and Gas Co., Ltd. Energy& Power 51.90 49.63 Raw material&
Benxi Beiying Steel& Iron (Group) Co., Ltd. supplementary materials 116,469.29 34,778.43& spare parts
Benxi Beiying Steel& Iron (Group) Co., Ltd. Products 1,230.13 497.33 Benxi Beiying Steel& Iron (Group) Co., Ltd. Energy& Power 5,706.89 14,389.31 Benxi Steel& Iron (Group) Real-estate
Energy& Power 6.94 13.76 Development Co., Ltd.
Benxi Steel& Iron (Group) Steel& Iron
Energy& Power 37.52 50.30 Process and Logistics Co., Ltd.
Benxi Steel& Iron (Group) Machinery
Products 973.31 462.07 Manufacture Co., Ltd.
Benxi Steel& Iron (Group) Machinery
Energy& Power 943.21 791.36 Manufacture Co., Ltd.
Raw material&
Benxi Steel& Iron (Group) Machinery
supplementary materials 113.58 51.41 Manufacture Co., Ltd.
& spare parts
Benxi Steel& Iron (Group) Construction Co.,
Energy& Power 94.13 214.45 Ltd.
Raw material&
Benxi Steel& Iron (Group) Construction Co.,
supplementary materials 71.24 138.41 Ltd.
& spare parts
Benxi Steel& Iron (Group) Mining Co., Ltd. Energy& Power 35,940.67 45,858.21 Raw material&
Benxi Steel& Iron (Group) Mining Co., Ltd. supplementary materials 2,831.52 646.77& spare parts
Benxi Steel& Iron (Group) Mining Co., Ltd. Products 402.48 407.23 Benxi Steel& Iron (Group) Thermal Power
Energy& Power 2,374.96 1,452.38 Development Co., Ltd.
Benxi Steel& Iron (Group) Thermal Power Raw material&
801.85 68.57 Development Co., Ltd. supplementary materials
Notes to the financial statements Page 76
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
The content of related January to January to June
Name
party transactions June 2018 2017
& spare parts
Benxi Steel& Iron (Group) Thermal Power
Products 8.58 9.67 Development Co., Ltd.
Benxi Steel& Iron (Group) Industrial
Energy& Power 388.54 405.31 Development Co., Ltd.
Benxi Steel& Iron (Group) Industrial
Products 11.32 12.69 Development Co., Ltd.
Raw material&
Benxi Steel& Iron (Group) Industrial
supplementary materials 1,251.78 2,759.53 Development Co., Ltd.
& spare parts
Benxi Steel& Iron (Group) Information and
Energy& Power 9.01 8.30 Automatic Tech Co., Ltd.
Benxi Steel& Iron (Group) Construction and
Energy& Power 83.99 77.22 Repairing Co., Ltd.
Raw material&
Benxi Steel& Iron (Group) Construction and
supplementary materials 12.26 9.84 Repairing Co., Ltd.
& spare parts
Benxi Steel& Iron (Group) Metallurgy
Energy& Power 260.48 130.04 Residues Co., Ltd.
Raw material&
Benxi Steel& Iron (Group) Metallurgy
supplementary materials 9,045.64 4,358.02 Residues Co., Ltd.
& spare parts
Benxi Steel& Iron (Group) Metallurgy
Products 711.36 0.31 Residues Co., Ltd.
Benxi Steel& Iron (Group) Metallurgy
Products 0.00 712.63 Residues Co., Ltd.
Benxi Steel& Iron (Group) Co., Ltd. Energy& Power 702.65 614.52 Raw material&
Benxi Steel& Iron (Group) Co., Ltd. supplementary materials 270.51 321.55& spare parts
Benxi New Career Development Co., Ltd. Energy& Power 18.10 18.60 Benxi Steel& Iron (Group) General Hospital Products 175.76 223.79 Benxi Steel& Iron (Group) Zhengtai
Products 0.00 46.04 Construction Materials Co., Ltd.
Liaoning Hengtong Metallurgical Equipment
Energy& Power 3.42 5.17 Manufacture Co., Ltd.
Liaoning Hengtong Metallurgical Equipment
Energy& Power 0.00 899.19 Manufacture Co., Ltd.
Raw material&
Liaoning Hengtong Metallurgical Equipment
supplementary materials 1,305.43 879.76 Manufacture Co., Ltd.
& spare parts
Notes to the financial statements Page 77
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
The content of related January to January to June
Name
party transactions June 2018 2017
Suzhou Bengang Industrial Co., Ltd. Products 17,052.85 13,623.10 Bengang Group Finance Co., Ltd. Energy& Power 0.70 0.75 Bengang Group Co., Ltd. Energy& Power 9.47 7.63 Total 199,371.47 124,993.26 2. Lease information of related parties
Company as the lessor: (in Yuan)
The lease income The lease income Lessee Lease capital category confirmed in this confirmed in last year year
Benxi Steel& Iron (Group) Steel& Iron Warehouse and
250,000.00 250,000.00 Process and Logistics Co., Ltd. machinery
Benxi Steel& Iron (Group) Machinery
Plants and machinery 245,000.00 244,805.87 Manufacture Co., Ltd.
Company as the lessee:
Lessor Lease capital Lease charges of the Lease charges of the Nature
category current period previous period
Benxi Steel& Iron 2300 Hot rolling
120,000,000.00 120,000,000.00 1
(Group) Co., Ltd. product line
Benxi Steel& Iron
Land use right 27,345,714.30 27,345,714.30 2
(Group) Co., Ltd.
Benxi Beiying Steel
1780 Hot rolling
& Iron (Group) Co., 64,929,604.02 77,816,940.06 3
product line
Ltd.
Notes:
1. The Company leases 2300 hot rolling product line from the Group. Lease period lasts from 1 January 2018 to 31 December 2020. Lease charges are negotiated between the lessor and the lessee based on the original cost, depreciation, and national taxation of the product line, with consideration of conditions of production and equipment performance.
2. The Company leases land use right from the Group. Lease period lasts from 15 April 2009. The leasing fee is determined by the area of the land which is 7,669,068.17 square meters. Average price is RMB 0.594 per Square meter per month; hence annual rent is RMB 54.69 million.
3. The Company leases 1780 hot rolling product line from Benxi Beiying Steel& Iron (Group) Co., Ltd. “Notice on Bengang Steel Plates Co., Ltd. signing a renewal agreement
Notes to the financial statements Page 78
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
with Benxi Steel (group) Co., Ltd” was adopted on the sixth meeting of the seventh Board of Directors on 30 March 2017, it stipulated that the company leased the 1780 hot rolling product line from Benxi Beiying Steel& Iron (Group) Co., Ltd., lease period lasts from 1 January 2017 to 31 December 2019. Lease charges are negotiated between the lessor and the lessee based on the original cost, depreciation, and national taxation of the product line, with consideration of conditions of production and equipment performance. The annual rent shall not exceed RMB 150,000,000.00.
3. Information of Guarantee among related parties
Company as the warrantee
(1) Guarantee of bank loans (in Yuan) Has the
Amount of guarantee Starting date Ending date of
Warrantor guarantee
in original currency of Guarantee Guarantee
been fulfilled Benxi Steel& Iron (Group) Co., Ltd. RMB270,000,000.00 2018-1-23 2019-1-22 No
Benxi Steel& Iron (Group) Co., Ltd. RMB60,000,000.00 2018-2-1 2019-1-31 No
Benxi Steel& Iron (Group) Co., Ltd. RMB74,000,000.00 2018-5-25 2019-5-24 No
Benxi Steel& Iron (Group) Co., Ltd. RMB150,000,000.00 2018-5-18 2019-5-17 No
Benxi Steel& Iron (Group) Co., Ltd. RMB340,000,000.00 2018-2-11 2019-2-10 No
Benxi Steel& Iron (Group) Co., Ltd. RMB200,000,000.00 2018-6-13 2019-6-12 No
Benxi Steel& Iron (Group) Co., Ltd. RMB200,000,000.00 2018-6-12 2019-6-11 No
Benxi Steel& Iron (Group) Co., Ltd. RMB100,000,000.00 2018-1-25 2019-1-23 No
Bengang Group Co., Ltd. RMB150,000,000.00 2017-7-12 2018-7-12 No
Bengang Group Co., Ltd. RMB150,000,000.00 2017-7-12 2018-7-12 No
Bengang Group Co., Ltd. RMB87,280,000.00 2018-3-26 2024-6-21 No
Bengang Group Co., Ltd. RMB140,000,000.00 2018-1-19 2019-1-19 No
Bengang Group Co., Ltd. RMB83,000,000.00 2018-1-19 2018-12-28 No
Bengang Group Co., Ltd. RMB490,000,000.00 2017-8-28 2018-8-23 No
Benxi Steel& Iron (Group) Co., Ltd. RMB100,000,000.00 2018-1-4 2018-12-12 No
Benxi Steel& Iron (Group) Co., Ltd.
RMB200,000,000.00 2017-9-6 2018-9-5 No
and Bengang Group Co., Ltd.
Benxi Steel& Iron (Group) Co., Ltd.
RMB150,000,000.00 2017-10-23 2018-10-16 No
and Bengang Group Co., Ltd.
Benxi Steel& Iron (Group) Co., Ltd.
RMB200,000,000.00 2017-10-16 2018-10-14 No
and Bengang Group Co., Ltd.
Benxi Steel& Iron (Group) Co., Ltd.
RMB200,000,000.00 2017-11-13 2018-11-8 No
and Bengang Group Co., Ltd.
Notes to the financial statements Page 79
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Has the
Amount of guarantee Starting date Ending date of
Warrantor guarantee
in original currency of Guarantee Guarantee
been fulfilled Benxi Steel& Iron (Group) Co., Ltd.
RMB200,000,000.00 2017-11-15 2018-11-13 No
and Bengang Group Co., Ltd.
Benxi Steel& Iron (Group) Co., Ltd.
RMB78,000,000.00 2017-12-15 2018-12-12 No
and Bengang Group Co., Ltd.
Bengang Group Co., Ltd. RMB160,000,000.00 2018-5-24 2019-5-24 No
Bengang Group Co., Ltd. RMB200,000,000.00 2018-4-28 2018-10-27 No
Bengang Group Co., Ltd. RMB200,000,000.00 2018-5-25 2018-11-24 No
Bengang Group Co., Ltd. RMB310,000,000.00 2018-3-28 2019-3-27 No
Bengang Group Co., Ltd. RMB720,000,000.00 2018-4-2 2019-4-1 No
Bengang Group Co., Ltd. RMB480,000,000.00 2018-1-22 2019-1-21 No
Bengang Group Co., Ltd. RMB135,000,000.00 2018-1-17 2018-12-28 No
Bengang Group Co., Ltd. RMB2,500,000,000.00 2018-3-9 2019-3-9 No
Bengang Group Co., Ltd. RMB300,000,000.00 2017-9-27 2018-9-26 No
Bengang Group Co., Ltd. RMB1,000,000,000.00 2017-11-16 2018-11-15 No
Bengang Group Co., Ltd. RMB1,190,000,000.00 2017-11-20 2018-11-19 No
Bengang Group Co., Ltd. RMB110,000,000.00 2017-9-29 2018-9-28 No
Bengang Group Co., Ltd. RMB110,000,000.00 2017-9-29 2018-9-27 No
Benxi Steel& Iron (Group) Co., Ltd. USD 90,000,000.00 2018-5-22 2019-5-21 No
Benxi Steel& Iron (Group) Co., Ltd. USD 150,000,000.00 2018-5-18 2019-5-17 No
Benxi Steel& Iron (Group) Co., Ltd. USD 103,000,000.00 2018-5-18 2019-5-17 No
Benxi Steel& Iron (Group) Co., Ltd. USD 100,000,000.00 2018-2-24 2019-2-23 No
Benxi Steel& Iron (Group) Co., Ltd. USD 22,500,000.00 2017-12-26 2018-12-25 No
Bengang Group Co., Ltd. EUR 42,000,000.00 2017-8-24 2018-8-19 No
Bengang Group Co., Ltd. EUR 42,000,000.00 2017-8-24 2018-8-19 No
Benxi Steel& Iron (Group) Co., Ltd.
RMB100,000,000.00 2017-10-24 2018-10-18 No
and Bengang Group Co., Ltd.
Bengang Group Co., Ltd. RMB100,000,000.00 2017-10-12 2018-7-3 No
Bengang Group Co., Ltd. RMB340,000,000.00 2017-8-29 2018-8-24 No
Bengang Group Co., Ltd. RMB220,000,000.00 2017-10-13 2018-10-13 No
Bengang Group Co., Ltd. USD 100,000,000.00 2016-8-30 2018-8-28 No
Bengang Group Co., Ltd. USD 48,000,000.00 2016-7-14 2018-7-12 No
Bengang Group Co., Ltd. USD 80,000,000.00 2018-5-2 2020-5-21 No
Bengang Group Co., Ltd. USD 20,000,000.00 2018-5-8 2020-5-7 No
Bengang Group Co., Ltd. EUR 233,211.77 2015-6-25 2025-9-30 No
Bengang Group Co., Ltd. EUR 7,967,631.00 2015-8-20 2025-9-30 No
Bengang Group Co., Ltd. EUR 597,187.50 2015-8-20 2019-9-30 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 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
Notes to the financial statements Page 80
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Has the
Amount of guarantee Starting date Ending date of
Warrantor guarantee
in original currency of Guarantee Guarantee
been fulfilled Bengang Group Co., Ltd. EUR 1,948,053.95 2015-6-25 2020-4-30 No
Bengang Group Co., Ltd. EUR 696,676.50 2015-12-28 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 424,686.41 2015-12-28 2025-6-30 No
Bengang Group Co., Ltd. EUR 960,631.08 2015-6-25 2019-6-30 No
Bengang Group Co., Ltd. EUR 687,534.21 2015-12-28 2019-6-30 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 4,579,846.88 2015-12-28 2025-10-31 No
Bengang Group Co., Ltd. EUR 2,311,613.67 2015-6-25 2019-10-31 No
Bengang Group Co., Ltd. EUR 44,356.22 2015-12-28 2019-10-31 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 253,120.00 2015-12-28 2025-8-31 No
Bengang Group Co., Ltd. EUR 1,813,049.60 2015-6-25 2019-8-31 No
Bengang Group Co., Ltd. EUR 239,173.64 2015-12-28 2019-8-31 No
Bengang Group Co., Ltd. EUR 642,082.50 2015-12-28 2019-7-30 No
Bengang Group Co., Ltd. EUR 410,699.25 2016-6-27 2020-4-30 No
Bengang Group Co., Ltd. EUR 3,727,122.75 2016-6-27 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 36,617.16 2016-12-14 2020-4-30 No
Benxi Steel& Iron (Group) Co., Ltd. JPY 208,584,000.00 1997-10-10 2027-9-10 No
Benxi Steel& Iron (Group) Co., Ltd.
RMB100,000,000.00 2016-3-30 2025-3-20 No
and Bengang Group Co., Ltd.
Bengang Group Co., Ltd. RMB100,000,000.00 2016-3-31 2018-3-31 No
Bengang Group Co., Ltd. RMB16,280,000.00 2015-3-26 2019-3-21 No
Bengang Group Co., Ltd. RMB100,000,000.00 2015-6-25 2021-9-21 No
Bengang Group Co., Ltd. RMB24,000,000.00 2015-12-9 2022-3-21 No
Bengang Group Co., Ltd. RMB36,450,000.00 2016-12-27 2020-6-21 No
Benxi Steel& Iron (Group) Co., Ltd.
RMB700,000,000.00 2017-2-27 2025-2-20 No
and Bengang Group Co., Ltd.
Bengang Group Co., Ltd. RMB59,570,000.00 2017-11-15 2021-12-21 No
Bengang Group Co., Ltd. RMB622,600,000.00 2017-12-15 2024-8-20 No
Bengang Group Co., Ltd. EUR 21,690.00 2017-6-30 2019-9-30 No
Bengang Group Co., Ltd. EUR 1,091,628.91 2017-6-30 2019-9-30 No
Bengang Group Co., Ltd. EUR 33,315.97 2015-6-25 2025-9-30 No
Bengang Group Co., Ltd. EUR 1,138,233.00 2015-8-20 2025-9-30 No
Bengang Group Co., Ltd. EUR 597,187.50 2015-8-20 2019-9-30 No
Bengang Group Co., Ltd. EUR 75,149.76 2015-6-25 2026-4-30 No
Notes to the financial statements Page 81
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Has the
Amount of guarantee Starting date Ending date of
Warrantor guarantee
in original currency of Guarantee Guarantee
been fulfilled Bengang Group Co., Ltd. EUR 907,058.32 2015-12-28 2026-4-30 No
Bengang Group Co., Ltd. EUR 1,298,702.63 2015-6-25 2020-4-30 No
Bengang Group Co., Ltd. EUR 464,451.00 2015-12-28 2020-4-30 No
Bengang Group Co., Ltd. EUR 74,431.38 2015-6-25 2025-6-30 No
Bengang Group Co., Ltd. EUR 2,128,384.00 2015-6-25 2025-6-30 No
Bengang Group Co., Ltd. EUR 65,336.37 2015-12-28 2025-6-30 No
Bengang Group Co., Ltd. EUR 1,921,262.14 2015-6-25 2019-6-30 No
Bengang Group Co., Ltd. EUR 1,375,068.40 2015-12-28 2019-6-30 No
Bengang Group Co., Ltd. EUR 1,517,188.46 2015-6-25 2025-10-31 No
Bengang Group Co., Ltd. EUR 654,263.84 2015-12-28 2025-10-31 No
Bengang Group Co., Ltd. EUR 2,311,613.66 2015-6-25 2019-10-31 No
Bengang Group Co., Ltd. EUR 44,356.25 2015-12-28 2019-10-31 No
Bengang Group Co., Ltd. EUR 1,799,983.16 2015-6-25 2025-8-31 No
Bengang Group Co., Ltd. EUR 36,160.00 2015-12-28 2025-8-31 No
Bengang Group Co., Ltd. EUR 1,813,049.60 2015-6-25 2019-8-31 No
Bengang Group Co., Ltd. EUR 239,173.63 2015-12-28 2019-8-31 No
Bengang Group Co., Ltd. EUR 642,082.50 2015-12-28 2019-7-30 No
Bengang Group Co., Ltd. EUR 273,799.50 2016-6-27 2020-4-30 No
Bengang Group Co., Ltd. EUR 496,949.70 2016-6-27 2020-4-30 No
Bengang Group Co., Ltd. EUR 377,757.80 2016-12-14 2026-4-30 No
Bengang Group Co., Ltd. EUR 24,411.42 2016-12-14 2020-4-30 No
Bengang Group Co., Ltd. RMB42,860,000.00 2015-3-26 2019-3-21 No
Bengang Group Co., Ltd. RMB35,700,000.00 2016-12-27 2020-6-21 No
Bengang Group Co., Ltd. EUR 21,690.00 2017-6-30 2019-9-30 No
Bengang Group Co., Ltd. EUR 155,946.98 2017-6-30 2019-9-30 No
Benxi Steel& Iron (Group) Co., Ltd. JPY 23,176,000.00 1997-10-10 2027-9-10 No
4. Other related party transactions
(1) Loan from and deposits in Bengang Group Finance Co., Ltd. (In 10 Thousand Yuan)
Items Beginning balance Increase Decrease Ending balance Notes
Deposits
895,092.14 8,124,747.92 8,170,013.95 849,826.11
The interests of deposits in Bengang Group Finance Co., Ltd. is RMB 12,943.20 thousand from January to June in 2018.As at 30 June 2018, interest due from Bengang Group Finance Co., Ltd is RMB 892.60 thousand. From January to June 2018, the deposit interest income of the Company in Bengang Group Finance Co., Ltd. (hereinafter referred to as "finance company") was 51.184 million yuan. From January to June 2018, the amount of acceptance drafts issued by the financial company was 6.306 billion yuan, and the amount of acceptance drafts drawn by the financial company as at 30 June 2018
Notes to the financial statements Page 82
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
was 1.689 billion yuan.
(2) Loans from and deposits in Benxi Steel and Iron (Group) Co., Ltd.
(In 10 Thousand Yuan)
Beginning
Items Increase Decrease Ending balance balance
Entrusted loans through Bengang
9,940.94 1,422.00 3,322.00 8,040.94 Group Finance Co., Ltd.
The details of borrowing balance by 30 June 2018 are as follows: (in Yuan)
Name Lease form Loan amount Start date Due date
Benxi Steel& Entrusted loan through Bengang
14,220,000.00 2018-2-8 2019-2-8
Iron(Group) Co., Ltd. Group Finance Co., Ltd.
Benxi Steel& Entrusted loan through Bengang
11,369,400.00 2017-10-25 2018-10-25 Iron(Group) Co., Ltd. Group Finance Co., Ltd.
Benxi Steel& Entrusted loan through Bengang
32,700,000.00 2017-11-10 2018-11-10 Iron(Group) Co., Ltd. Group Finance Co., Ltd.
Benxi Steel& Entrusted loan through Bengang
22,120,000.00 2018-2-8 2019-2-8
Iron(Group) Co., Ltd. Group Finance Co., Ltd.
Total 80,409,400.00
The interest accrued is RMB 2,313,129.8, and as at 30 June 2018, the interest payable is RMB 250,796.57.
(5) Receivables and payables of the related parties
1. Receivables of the Company
Ending balance Beginning balance
Items Provision Provision Name Carrying Carrying
Name for bad for bad
amount amount
debts debts
Accounts receivable
Benxi Beiying Steel& Iron (Group) Co., Ltd. 209.31 701.26
Bengang Electronics and Gas Co., Ltd. 269.04 70.51 317.53 70.51 Benxi Steel& Iron (Group) Machinery
4698.03 2275.49 6224.21 2275.49 Manufacture Co., Ltd.
Benxi Steel& Iron (Group) Industrial
3462.47 884.08 4108.83 884.08 Development Co., Ltd.
Benxi New Career Development Co., Ltd. 311.87 486.25 632.98 486.25 Benxi Steel& Iron (Group) Thermal Power
240.43 273.52
Development Co., Ltd.
Bengang Cold-rolled Stainless Steel Dandong
136.08 4.11 163.42 4.11 Co., Ltd.
Liaoning Hengtong Metallurgical Equipment 890.78 1022.42
Notes to the financial statements Page 83
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Ending balance Beginning balance
Items Provision Provision Name Carrying Carrying
Name for bad for bad
amount amount
debts debts
Manufacture Co., Ltd.
Bengang Group International Economic and
1935.33 4142.04
Trading Co., Ltd.
Subtotal 12,153.34 3,720.43 17,586.21 3,720.43 Prepayments
Benxi Beiying Steel& Iron(Group) Co., Ltd. 70,722.56 66,415.14
Benxi Steel& Iron(Group) Machinery
991.50 967.60
Manufacture Co., Ltd.
Bengang Cold-rolled Stainless Steel Dandong
4.00 4.73
Co., Ltd.
Subtotal 71,718.06 67,387.47
Other receivables
Benxi Steel& Iron (Group) Real-estate
244.41 95.18 248.21 95.18 Development Co., Ltd.
Liaoning Metallurgy Technician College 13.24 15.63 15.63 15.63 Benxi Steel& Iron (Group) Machinery
1,262.65 246.22 1,489.04 246.22 Manufacture Co., Ltd.
Benxi Steel& Iron (Group) Construction Co.,
84.8 84.8 84.8 84.8 Ltd.
Bengang Group International Economic and
1,746.40 0.86 2,001.40 0.86 Trading Co., Ltd.
Benxi Steel& Iron (Group) Industrial
52.87 43.58 52.22 43.58 Development Co., Ltd.
Benxi Steel& Iron (Group) Zhengtai
19.9 19.34 19.9 19.34 Construction Materials Co., Ltd.
Benxi Steel& Iron (Group) Medical Services
77.47 67.48 91.36 67.48 Department;
Subtotal 3,501.73 573.08 4,002.55 573.08 2. Payables of the Company
Items Name Ending balance Beginning balance Notes payable
Benxi Steel& Iron (Group) Industrial Development Co., Ltd. 345.42 7,099.55 Benxi Steel& Iron (Group) Machinery Manufacture Co., Ltd. 27.28 4,778.56 Bengang Electronics and Gas Co., Ltd. 26.11 904.35 Benxi Steel& Iron (Group) Construction and Repairing Co., Ltd. 0 274.74 Liaoning Metallurgy Technician College 15.07 1,298.88
Notes to the financial statements Page 84
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Items Name Ending balance Beginning balance Benxi Steel& Iron (Group) Mining Co., Ltd. 144,244.03 188,559.94 Benxi Steel& Iron (Group) Construction Co., Ltd. 48.1 153.09 Benxi Steel& Iron (Group) Information and Automatic Tech Co., Ltd. 189.74 Benxi Beiying Steel& Iron (Group) Co., Ltd. 458,503.42 444,936.18 Liaoning Hengtong Metallurgical Equipment Manufacture Co., Ltd. 3,778.76 Liaoning Metallurgy Vocational Technical College 252.36 86.79 Liaoning Hengtai Heavy Machinery Co., Ltd. 37.13 Benxi Steel& Iron (Group) Metallurgy Residues Co., Ltd. 38.56 Benxi High-tech Drilling Tools Manufacture Co., Ltd. 90.04 132.73 Benxi Steel& Iron (Group) Real-estate Development Co., Ltd. 607.62 540.44 Subtotal 604,159.43 652,809.45 Accounts payable
Bengang Electronics and Gas Co., Ltd. 1,140.07 1,308.22 Benxi Steel& Iron (Group) Real-estate Development Co., Ltd. 255.86 295.9 Bengang Group International Economic and Trading Co., Ltd. 33,823.00 26,957.04 Benxi Steel& Iron (Group) Machinery Manufacture Co., Ltd. 15,000.44 15,233.51 Benxi Steel& Iron (Group) Construction Co., Ltd. 6,049.12 6,143.11 Benxi Steel& Iron (Group) Mining Co., Ltd. 26,792.14 31,618.85 Benxi Steel& Iron (Group) Industrial Development Co., Ltd. 7,712.03 8,885.85 Benxi New Career Development Co., Ltd. 787.69 898.94 Benxi Steel& Iron (Group) Construction and Repairing Co., Ltd. 7,799.44 6,420.88 Benxi Steel& Iron (Group) Metallurgy Residues Co., Ltd. 5,723.39 4,589.73 Benxi Steel& Iron (Group) Medical Services Department; 2.09 2.04 Benxi Steel& Iron (Group) Information and Automatic Tech Co., Ltd. 3,574.97 4,086.15 Benxi High-tech Drilling Tools Manufacture Co., Ltd. 11.31 11.07 Liaoning Metallurgy Technician College 505.58 768.35 Benxi Steel& Iron (Group) Thermal Power Development Co., Ltd. 16.67 15.13 Benxi Steel& Iron (Group) Zhengtai Construction Materials Co., Ltd. 37.96 37.44 Liaoning Hengtong Metallurgical Equipment Manufacture Co., Ltd. 1,009.90 1,025.60 Liaoning Metallurgy Vocational Technical College 203.32 232.56 Bengang Cold-rolled Stainless Steel Dandong Co., Ltd. 108.02 105.41 Liaoning Hengtai Heavy Machinery Co., Ltd. 2,734.58 2,670.49 Subtotal 113,287.57 111,306.26 Advance from customers
Benxi Steel& Iron (Group) Machinery Manufacture Co., Ltd. 228.67 232.22 Benxi Steel& Iron (Group) Industrial Development Co., Ltd. 48.78 59.15 Benxi Steel& Iron (Group) Metallurgy Residues Co., Ltd. 134.27 285.07 Benxi Steel& Iron (Group) Steel& Iron Process and Logistics Co., Ltd. 740.99 754.21 Dalian Boluole Steel Tube Co., Ltd. 9.41 38.11
Notes to the financial statements Page 85
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Items Name Ending balance Beginning balance Liaoning Bengang Steel& Iron Trading Co., Ltd. 5,804.14 Liaoning Hengtong Metallurgical Equipment Manufacture Co., Ltd. 132.74 160.95 Suzhou Bengang Industrial Co., Ltd. 3,406.79 2,957.84 Subtotal 4,701.66 10,291.71 Other payables
Benxi Steel& Iron (Group) Real-estate Development Co., Ltd. 118.44 143.59 Bengang Group International Economic and Trading Co., Ltd. 3,757.89 3,925.10 Benxi Steel& Iron (Group) Machinery Manufacture Co., Ltd. 1.41 Benxi Steel& Iron (Group) Construction Co., Ltd. 355.61 417.15 Benxi Steel& Iron (Group) Industrial Development Co., Ltd. 100.17 98.07 Benxi New Career Development Co., Ltd. 101.47 109.64 Benxi Steel& Iron (Group) Metallurgy Residues Co., Ltd. 50 50 Benxi Steel& Iron (Group) Information and Automatic Tech Co., Ltd. 10.54 10.7 Benxi Steel& Iron (Group) Steel& Iron Process and Logistics Co., Ltd. 317.74 331.87 Benxi Steel& Iron (Group) Co., Ltd. 8,680.55 7,107.05 Benxi Steel& Iron (Group) Thermal Power Development Co., Ltd. 448.61 369.53 Guangzhou Free Trade Zone Bengang Sales Co., Ltd. 324.68 267.44 Benxi Steel& Iron (Group) Benxi Steel& Iron (Group) 72.52 71 Liaoning Hengyi Financial Leasing Co., Ltd. 62.45 0.36 Liaoning Metallurgy Vocational Technical College 0.3 0.3 Subtotal 14,400.97 12,903.22 10. Government subsidy
(1) Government subsidy related to assets
Amount recognized
Category Amount Item listed on the balance sheet in the profit of
current period
High Strength Cold
Rolling Steel 250,000,000.00 Deferred income 25,000,000.00 Renovation Project
Automobile High-class
Electrolytic Zinc Steel
41,040,000.00 Deferred income 4,104,000.00 Plate Production Line
Project
Environment Pollution
26,170,000.00 Deferred income 1,810,000.00 Renovation Project
7 130t Boilers Flue Gas
Desulfurization
24,000,000.00 Deferred income 2,400,000.00 Renovation Project of
Power Plant
Sintering Machine
Residue Heat Usage and 21,020,000.00 Deferred income 2,102,000.00 Desulfurization Project
Overseas Advanced
Technology
14,420,000.00 Deferred income 1,442,000.00 Introduction Special
Fund
Notes to the financial statements Page 86
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Amount recognized
Category Amount Item listed on the balance sheet in the profit of
current period
Industrial Enterprise
Energy Management
11,600,000.00 Deferred income 1,160,000.00 Center Construction
Demonstration Project
Power Plant No 3
workshop Heat and
10,000,000.00 Deferred income
Power Cogeneration
Renovation Project
Advanced Treatment of
Carbon Fiber
Wastewater Project of 9,500,000.00 Deferred income
Coke Plant Dongfeng
Area
MES Project Special
8,600,000.00 Deferred income 860,000.00 Fund
Desulfurization and
Denitration Projects for
Coal-fired Boiler of
6,000,000.00 Deferred income 300,000.00 Power Plant
High-pressure
Workshop
Sintering Machine
Energy Saving and
Environmental 5,800,000.00 Deferred income 580,000.00 Protection Project of
Blast Furnace Plant
Environment Protection
5,800,000.00 Deferred income 580,000.00 Project Special Fund
Third-generation High
Strength Steels for
2,900,000.00 Deferred income
Automobile R&D
Project
Environment
Renovation Project and
Regional Basin 2,400,000.00 Deferred income 170,000.00 Environment Protection
Project
The 360 Cubic Meter
Sintering Machine Flue
Gas Desulfurization 1,000,000.00 Deferred income 100,000.00 Renovation Project of
Blast Furnace Plant
Automobile Steel Sheet
Engineering Laboratory 1,000,000.00 Deferred income
Project
Treatment and Salt
Extraction Project of
500,000.00 Deferred income 50,000.00 Desulfurization Waste
Liquid of Coke Plant
Air Quality Automatic
350,000.00 Deferred income 35,000.00 Monitoring System
(2) Government subsidy related to income
Amount recognized Category Amount Item listed on the balance sheet in the profit of
current period
Compensation from Xihu
Resource Management 414,300.00 Other income 414,300.00 Committee
Notes to the financial statements Page 87
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Amount recognized Category Amount Item listed on the balance sheet in the profit of
current period
Liaoning craftsman
subsidy and skill master 280,000.00 Other income 280,000.00 workstation subsidy
11. Commitments and Contingencies
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 Square meter per month, and the area of the land is 7,669,068.17 square meters; hence annual rent is RMB 54,691.4 thousand.
(2) For the 2300 hot rolling product line leased from the Group to the Company, lease period lasts from 1 January 2018 to 31 December 2020. Lease charges are negotiated between the lessor and the lessee based on the original cost, depreciation, and national taxation of the product line, with consideration of conditions of production and equipment 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 renewal agreement with Benxi Steel (group) Co., Ltd” was adopted on the sixth meeting of the seventh Board of Directors on 30 March 2017, it stipulated that the company leased the 1780 hot rolling product line from Benxi Beiying Steel& Iron (Group) Co., Ltd., lease period lasts from 1 January 2017 to 31 December 2019. Lease charges are negotiated between the lessor and the lessee based on the original cost, depreciation, and national taxation of the product line, with consideration of conditions of production and equipment performance. The annual rent shall not exceed RMB 150,000,000.00.
2. Contingencies
At the balance sheet date, no significant contingencies need to be disclosed.
12. Subsequent events
(1) Dividend distribution
At the fifteenth meeting of the seventh Board of Directors on April 18, 2018, based on the existing 3,875,371,532.00 shares, the Company planned to distribute cash dividends RMB0.5 per 10 shares (including tax) to shareholders. The Company planned to distribute RMB193,768,576.60 dividends for ordinary shares. The dividend distribution scheme was approved by the Annual General Meeting of Shareholders in 2017, which was held in May 24, 2018. On July 11, 2018, the Board of Directors of the Company issued Announcement of
Notes to the financial statements Page 88
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Dividend Distribution for Year 2017. The registration date of A shares is July 17, 2018, the ex-dividend date is July 18, 2018; the registration date of B shares is July 20, 2018, the ex-dividend date is July 18, 2018. As of the announcement date of this report, dividend distribution for year 2018 is over.
13. Other significant events
(1) Segment information
Since theCompany’s main product is steel with other products accounting for only a small proportion, and the main production base is located in Liaoning area, segmented reporting is not applicable.
(2) Other significant events which affect theinvestors’ decision making
1. On 5 February 2015, the Company publicly issued a three-year corporate bond worth RMB 1.5 billion with interest rate at5.17%. The Company delisted the bond in accordance with statutory procedures in 1 February 2018 and completed the payment in 5 February 2018.
2. On 27 December 2016, the Company's first Provisional General Meeting of Shareholders in 2016 considered and adopted the "Proposal on the Company's non-public offering of A shares (December 2016 revised version) ". On 16 December 2017, the Company's first Provisional General Meeting of Shareholders in 2017 considered and adopted the "Proposal on the extension of term of validity of non-public offering of stocks shareholders meeting resolution". The proposed issue of stocks to specific targets would raise 4 billion yuan. The main purposes of the fund raised by the Company are cold-rolled high-strength steel transformation project, hot-dip galvanizing production line project of the third cold rolling mill, and repayment of bank loans. As of 8 Februry 2018, the Company actually issued 739,371,532 shares of RMB common stock to investors in private, with a par value of 1 yuan per share and an issue price of 5.41 yuan per share, raising a total of 3,999,999,988.12 yuan. After deducting all the issuing fees, the Company's net funds raised was RMB 3,967,735,837.24 yuan. Availability of the above-mentioned fund was verified by BDO China Shu Lun Pan Certified Public Accountants LLP and issued the Capital Verification Report (PCPAR (2018) No. ZB10054). The Company has adopted a special account storage system for the fund.
3. As at 30 June 2018, the controlling shareholder Benxi Steel& Iron (Group) Co., Ltd. held
a total number of 1,523,095,133 shares pledged, and a total number of 45,000,000.00 shares
frozon.
Notes to the financial statements Page 89
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
14. Notes to the financial statement of parent company
(1) Accounts receivable
1. Accounts receivable disclosed by category
Ending balance
Carrying amount Provision for bad debts
Items
Percenta Bad debts ratio Book value
Amount Amount
ge(%) (%)
Individually significant and
tested for impairment 47,762,337.18 7.03 47,762,337.18 100.00
individually
Accounts receivable tested
631,735,005.27 92.97 190,040,200.11 30.08 441,694,805.16 for impairment by portfolio
Other insignificant items
but tested for impairment
individually
Total 679,497,342.45 100.00 237,802,537.29 441,694,805.16 Beginning balance
Carrying amount Provision for bad debts
Items
Percenta Bad debts ratio Book value
Amount Amount
ge(%) (%)
Individually significant and
tested for impairment 47,762,337.18 6.51 47,762,337.18 100
individually
Accounts receivable tested
685,620,057.01 93.49 203,438,463.56 29.67 482,181,593.45 for impairment by portfolio
Other insignificant items
but tested for impairment
individually
Total 733,382,394.19 100 251,200,800.74 482,181,593.45 Individually significant and tested for impairment individually
Ending balance
Items
Carrying amount Provision for bad debts Bad debts ratio(%) Reason
Benxi Nanfen Xinhe stop
47,762,337.18 47,762,337.18 100.00
Metallurgical Co., Ltd. production Total 47,762,337.18 47,762,337.18
Accounts receivables tested for impairment by portfolio:
Ending balance
Items
Carrying amount Provision for bad debts Bad debts ratio(%)
Notes to the financial statements Page 90
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Ending balance
Items
Carrying amount Provision for bad debts Bad debts ratio(%) Within 1 year(inclusive) 341,466,965.43
1-2 years(inclusive) 31,356,340.60 1,567,817.03 5.00 2-3 years(inclusive) 88,049,145.20 17,609,829.04 20.00 Over 3 years 170,862,554.04 170,862,554.04 100.00 Total 631,735,005.27 190,040,200.11
2. Information of provision, reversal or recovery of bad debts of current period.
The provision of bad debts of current period is RMB 13,398,263.45.
3. No accounts receivable has been written off this year.
4. Top five debtors at the year-end
Ending balance
Company Percentage of total Provision for bad Amount
accounts receivable(%) debts
No.1 179,688,274.41 26.44
No.2 86,329,597.52 12.70 6,513,105.93 No.3 47,762,337.18 7.03 47,762,337.18 No.4 46,980,327.61 6.91 22754881.58 No.5 34,624,704.64 5.10 8,840,761.28 Total 395,385,241.36 58.19 85,871,085.97 (2) Other receivables
1. Other receivables disclosed by category:
Ending balance
Carrying amount Provision for bad debts
Bad
Items
Percentage debts Book value Amount Amount
(%) ratio
(%)
Individually significant and
tested for impairment
individually
Accounts receivable tested
423,551,471.68 99.59 66,244,347.69 15.64 357,307,123.99 for impairment by portfolio
Other insignificant items but
tested for impairment 1,740,000.00 0.41 1,740,000.00 individually
Notes to the financial statements Page 91
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Total 425,291,471.68 100.00 66,244,347.69 359,047,123.99 Beginning balance
Carrying amount Provision for bad debts
Bad
Items
Percentage debts Book value
Amount Amount
(%) ratio
(%)
Individually significant and
tested for impairment
individually
Accounts receivable tested for
442,492,865.67 99.61 67,369,416.95 15.22 375,123,448.72 impairment by portfolio
Other insignificant items but
tested for impairment 1,740,000.00 0.39 1,740,000.00 individually
Total 444,232,865.67 100.00 67,369,416.95 376,863,448.72 Other receivables tested for impairment by portfolio using the method of Aging analysis:
Ending balance
Items
Other receivables Provision for bad debts Bad debts ratio(%) Within 1 year(inclusive) 215,735,192.31
1-2 years(inclusive) 8,601,980.20 430,099.01 5.00 2-3 years(inclusive) 136,122,500.50 2,722,450.01 20.00 Over 3 years 63,091,798.67 63,091,798.67 100.00 Total 423,551,471.68 66,244,347.69
Other receivables individually insignificant but tested for impairment individually
Items Carrying amount Provision for bad debts Bad debts ratio(%) Reason
Sinking Fund of
Japanese yen from
Finance Bureau of
Benxi 1,740,000.00 Sinking fund Total 1,740,000.00
Notes: The Sinking Fund of Japanese yen from Finance Bureau of Benxi is the margin for JPY loans of which the aging is over 3 years and no bad debts provision has been made for it.
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 1,125,069.26.
Notes to the financial statements Page 92
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
3. No other receivables have been written off this year.
4. Other receivables disclosed by nature
Nature Ending balance Beginning balance
Accounts 416,486,206.68 435,666,187.53 Export tax rebate 7,065,265.00 8,566,678.14 Others 423,551,471.68 444,232,865.67 Total 416,486,206.68 435,666,187.53 5. Top five debtors at the year-end:
Percentage of Provision Notes or
for Company Amount Aging total other
content
bad debts receivables
Within 1 year RMB
No. 1 Accounts 16,083,670.47 12,553,032.8; within 1-2 3.78 176,531.88 years RMB 3,530,637.67
No. 2 Accounts 12,626,479.38 Within 1-3 years 2.97 2,462,178.25 No. 3 Accounts 9,188,976.40 Within 1 year 2.16
No. 4 Accounts 5,922,247.07 Within 1 years 1.39
No. 5 Accounts 4,341,257.18 Over 3 years 1.02 4,341,257.18 Total 48,162,630.50 11.32 6,979,967.31 (3) Long-term equity investment
Ending balance Beginning balance
Items Carrying Carrying
Impairment
Book value
Impairment
Book value amount amount
Subsidiaries 2,016,281,902.16 2,016,281,902.16 1,756,981,902.16 1,756,981,902.16 Total 2,016,281,902.16 2,016,281,902.16 1,756,981,902.16 1,756,981,902.16 Details of investment in subsidiaries
Impair
Ending Beginning ment of
Name of entity
Increase Decrease Ending balance balance of balance current
impairment period
Guangzhou Bengang
Steel& Iron Trading 1,000,000.00 29,000,000.00 30,000,000.00
Co., Ltd.
Notes to the financial statements Page 93
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Impair
Ending Beginning ment of
Name of entity
Increase Decrease Ending balance balance of balance current
impairment period
Shanghai Bengang
Metallurgy Science
19,200,000.00 10,800,000.00 30,000,000.00
and Technology Co.,
Ltd.
Bengang Steel Plate
Liaoyang Orel Ball 529,899,801.38 529,899,801.38
Co., Ltd.
Dalian Benruitong
Automobile Material
65,000,000.00 65,000,000.00
Technologies Co.,
Ltd.
Bengang Puxiang
Cool Rolling Steel 1,019,781,571.10 1,019,781,571.10
Sheet Co., Ltd.
Changchun Bengang
Steel& Iron Sales -1,355,124.64 29,500,000.00 28,144,875.36
Co., Ltd.
Harbin Bengang
Economic and 423,398.23 29,500,000.00 29,923,398.23
Trading Co., Ltd.
Nanjing Bengang
Steel Material Sales 2,081,400.65 2,081,400.65
Ltd.
Wuxi Bengang Steel
936,718.57 29,000,000.00 29,936,718.57
& Iron Sales Co., Ltd.
Xiamen Bengang
Steel& Iron Sales 1,095,711.66 1,095,711.66
Co., Ltd.
Yantai Bengang Steel
19,600,329.41 29,500,000.00 49,100,329.41
& Iron Sales Co., Ltd.
Tianjin Bengang
Steel& Iron Trading 33,318,095.80 27,000,000.00 60,318,095.80
Co., Ltd.
Benxi Bengang Steel 5,000,000.00 25,000,000.00 30,000,000.00
Notes to the financial statements Page 94
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Impair
Ending Beginning ment of
Name of entity
Increase Decrease Ending balance balance of balance current
impairment period
Sales Co., Ltd
Shenyang Bengang
Metallurgical Science
5,000,000.00 25,000,000.00 30,000,000.00
and Technology Co.,
Ltd.
Chongqing Liaobeng
Steel& Iron Trading 5,000,000.00 25,000,000.00 30,000,000.00
Co., Ltd.
Bengang Baojin
(Shenyang)
51,000,000.00 51,000,000.00
Automobile New
Material Co, Ltd.
Total 1,756,981,902.16 259,300,000.00 2,016,281,902.16
(4) Operating income and operating cost
January to June 2018 January to June 2017
Item
Revenue Cost Revenue Cost
21,543,654,805.89 19,737,906,706.75 19,350,686,493.45 17,842,348,026.16 Principal business
2,139,210,303.25 1,663,285,255.45 1,846,830,285.75 1,640,628,048.16 Other business
23,682,865,109.14 21,401,191,962.20 21,197,516,779.20 19,482,976,074.32 Total
(5) Income on investment
January to June January to June
Items
2018 2017
102,074,634.76 Income from long-term equity investment(cost method)
3,493,150.68 3,294,593.14 Income from bank short-term financial products
3,493,150.68 105,369,227.90 Total
15. Supplementary information
(1) Details of non-recurring profit and loss
Items Amount Notes
Notes to the financial statements Page 95
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Items Amount Notes
Profit or loss from disposal of non-current assets -556,821.63
Details of government subsidies recorded into current profits and
loss(except such government subsidy closely related to thecompany’s
normal businessoperation,，meeting the regulation of national policy and 41,274,238.70
enjoyed constantly in certain quota or quantity according to a certain
standard)
Profit or loss from investment or assets entrusted to others
Profit or loss from debt restructuring 945,892.23
Other non-operating revenue and expenditure other than above items 1,192,505.57
Impact of income tax -10,713,953.72
Impact of minority interests - 112,829.54
Total 32,029,031.62
(2) Net asset yield and earnings per share
Weighted average Earnings per share (Yuan)
Profit in the Reporting Period
net assets yield(%) Basic EPS Diluted EPS
Net profit attributable to ordinary
4.56 0.195 0.195
shareholders
Net profit attributable to ordinary
shareholders after deducting 4.37 0.187 0.187
non-recurring profit and loss
Bengang Steel Plates Co., Ltd. 27 August 2018
Notes to the financial statements Page 96