Bengang Steel Plates Co., Ltd.
FINANCIAL STATEMENTS
(From January to June 2019)
(Unaudited)
INDEX PAGES
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AND STATEMENT OF FINANCIAL 1-4 POSITION
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME AND STATEMENT 5-6 OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF CASH FLOWS
AND STATEMENT OF CASH FLOWS 7-8 CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY AND STATEMENT OF CHANGES IN
9-12 EQUITY
NOTES TO THE FINANCIAL STATEMENTS 1-98
BENGANG STEEL PLATES CO., LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2019
(Expressed in Renminbi unless otherwise indicated)
|||||
|-|-|-|-|
|.|Notes|Ending balance|Beginning balance|
|Current assets||||
|Cash at bank and on hand|5(1)|16,945,772,392.43|16,567,471,755.77|
|Settlement provisions||||
|Financial assets held for trading||||
|Financial assets at fair value through profit orloss||||
|Derivative financial assets||||
|Notes receivable|5(2)|4,518,016,226.76|3,580,145,843.38|
|Accounts receivable|5 (3)|614,718,839.21|639,482,481.45|
|Receivables financing||||
|Prepayments|5 (4)|1,314,464,404.93|1,321,537,514.78|
|Premium receivable||||
|Reinsurance accounts receivable||||
|Receivable deposit for reinsurance contract||||
|Other receivables|5 (5)|205,466,650.77|202,763,964.98|
|Including: Interest receivable||13,872,107.84|11,608,705.43|
|Dividend receivable||||
|Inventories|5 (6)|11,967,579,023.47|10,677,747,112.40|
|Non-current assets due within one year||||
|Other current assets|5 (7)|247,612,982.23|292,119,771.13|
|Total current assets||35,813,630,519.80|33,281,268,443.89|
|Non-current assets||||
|Available-for-sale financial assets|5 (8)||1,041,824,829.00|
|Held-to-maturity investment||||
|Long-term receivables||||
|Long-term equity investments|5 (9)|2,481,589.04|2,455,681.55|
|Other equity investment|5 (10)|1,041,824,829.00||
|Investment property||||
|Fixed assets|5 (11)|22,672,967,771.15|23,924,504,539.97|
|Construction in progress|5 (12)|1,374,410,959.70|836,594,457.82|
|Productive biological assets||||
|Oil and gas assets||||
|Intangible assets|5 (13)|274,783,708.74|278,062,441.04|
|Development expenditure||||
|Goodwill||||
|Long-term deferred expenses||||
|Deferred tax assets|5 (14)|175,524,513.32|191,452,547.21|
|Other non-current assets|5 (15)|68,303,165.35|76,341,975.35|
|Total non-current assets||25,610,296,536.30|26,351,236,471.94|
|Total assets||61,423,927,056.10|59,632,504,915.83|

 The notes to the financial statements attached form part of these financial statements.
Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 1
BENGANG STEEL PLATES CO., LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Continued)
As at 30 June 2019
(Expressed in Renminbi unless otherwise indicated)
|||||
|-|-|-|-|
|Liabilities and equities|Notes|Ending balance|Beginning balance|
|Current Liabilities||||
|Short-term loans|5 (16)|12,298,193,000.00|11,938,490,375.85|
|Financial liabilities at fair value through profit or loss||||
|Notes payable|5 (17)|11,650,282,357.86|10,013,192,014.02|
|Accounts payable|5 (18)|5,626,838,770.27|5,522,042,811.65|
|Advance from customers|5 (19)|3,345,451,646.56|3,331,854,098.42|
|Employee benefits payable|5 (20)|50,261,386.01|51,466,231.72|
|Current tax liabilities|5 (21)|62,888,848.55|515,752,369.68|
|Other payables|5 (22)|899,997,986.06|862,511,178.96|
|Including: Interest payables||9,343,905.54|9,658,681.99|
|Dividend payables||193,768,576.60||
|Non-current liabilities due within one year|5 (23)|1,036,582,163.28|350,965,576.32|
|Other current liabilities||||
|Total current liabilities||34,970,496,158.59|32,586,274,656.62|
|Non-current liabilities||||
|Long-term loans|5 (24)|6,213,054,564.15|7,083,640,094.16|
|Bonds payable||||
|Including: Preferred stock||||
|Perpetual bond||||
|Long-term payables|5 (25)|52,733,529.65|13,686,705.92|
|Estimated liabilities||||
|Deferred income|5 (26)|248,232,002.97|289,499,002.97|
|Deferred tax liabilities||||
|Other non-current liabilities||||
|Total non-current liabilities||6,514,020,096.77|7,386,825,803.05|
|Total liabilities||41,484,516,255.36|39,973,100,459.67|
|Shareholders' equity:||||
|Share capital|5 (27)|3,875,371,532.00|3,875,371,532.00|
|Other equity instruments||||
|Including: Preferred stock||||
|Perpetual bond||||
|Capital reserves|5 (28)|12,343,209,847.29|12,343,209,847.29|
|Less: treasury shares||||
|Other comprehensive income||||
|Special reserves|5 (29)|21,013,956.29|683,937.71|
|Surplus reserves|5 (30)|961,105,529.85|961,105,529.85|
|General risk reserve||||
|Undistributed profits|5 (31)|2,205,328,308.98|1,945,887,269.82|
|Total equity attributable to equity holders of the parentcompany||19,406,029,174.41|19,126,258,116.67|
|Non-controlling interests||533,381,626.33|533,146,339.49|
|Total shareholder's equity||19,939,410,800.74|19,659,404,456.16|
|Total of liabilities and owners’ equity||61,423,927,056.10|59,632,504,915.83|

 The notes to the financial statements attached form part of these financial statements.
LegalRepresentative： Chief Financial Officer: Chief Accountant
Financial Statements Page 2
BENGANG STEEL PLATES CO., LTD.
STATEMENT OF FINANCIAL POSITION
As at 30 June 2019
(Expressed in Renminbi unless otherwise indicated)
|||||
|-|-|-|-|
|Assets|Notes|Ending balance|Beginning balance|
|Current assets||||
|Cash at bank and on hand||14,845,582,986.81|15,536,305,375.00|
|Financial assets at fair value through profit or loss||||
|Notes receivable||4,296,253,321.51|3,356,020,598.89|
|Accounts receivable|13(1)|402,397,751.85|409,553,059.27|
|Receivables financing||||
|Prepayments||1,292,855,972.17|1,309,194,738.97|
|Other receivables|13(2)|228,691,383.89|235,037,391.46|
|Including: Interest receivable||12,222,112.07|9,815,280.04|
|Dividend receivable||||
|Inventories||10,420,332,375.72|8,681,362,081.72|
|Non-current assets due within one year||||
|Other current assets||194,348,087.50|193,989,096.20|
|Total current assets||31,680,461,879.45|29,721,462,341.51|
|Non-current assets||||
|Available-for-sale financial assets|||1,041,624,829.00|
|Held-to-maturity investment||||
|Long-term receivables||||
|Long-term equity investment|13(3)|2,016,281,902.16|2,016,281,902.16|
|Other equity investment||1,041,624,829.00||
|Investment property||||
|Fixed assets||20,954,291,845.88|22,035,187,328.57|
|Construction in progress||1,357,632,503.06|825,553,510.15|
|Productive biological assets||||
|Oil and gas assets||||
|Intangible assets||147,123,109.32|148,776,177.96|
|Development expenditure||||
|Goodwill||||
|Long-term deferred expenses||||
|Deferred tax assets||80,910,940.25|96,220,003.00|
|Other non-current assets||68,303,165.35|76,341,975.35|
|Total non-current assets||25,666,168,295.02|26,239,985,726.19|
|Total assets||57,346,630,174.47|55,961,448,067.70|

 The notes to the financial statements attached form part of these financial statements.
Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 3
BENGANG STEEL PLATES CO., LTD.
STATEMENT OF FINANCIAL POSITION (Continued)
As at 30 June 2019
(Expressed in Renminbi unless otherwise indicated)
|||||
|-|-|-|-|
|Liabilities and shareholders' equities|Notes|Ending balance|Beginning balance|
|Current liabilities||||
|Short-term loans||10,998,193,000.00|10,624,270,375.85|
|Financial liabilities at fair value through profit or loss||||
|Notes payable||9,985,911,079.49|9,213,748,427.22|
|Accounts payable||6,566,943,730.51|5,940,816,426.48|
|Advance from customers||3,042,304,493.12|3,189,143,565.45|
|Employee benefits payable||49,866,464.88|49,378,095.47|
|Current tax liabilities||47,720,744.95|507,003,883.57|
|Other payables||689,660,196.29|538,051,513.13|
|Including: Interest payables||7,250,794.60|7,341,833.33|
|Dividend payables||193,768,576.60||
|Liabilities held for sale||||
|Non-current liabilities due within one year||1,036,582,163.28|350,965,576.32|
|Other current liabilities||||
|Total current liabilities||32,417,181,872.52|30,413,377,863.49|
|Non-current liabilities||||
|Long term loans||6,213,054,564.15|7,083,640,094.16|
|Bonds payable||||
|Including: Preferred stock||||
|Perpetual bond||||
|Long-term payables||52,733,529.65|13,686,705.92|
|Estimated liabilities||||
|Deferred income||248,232,002.97|289,499,002.97|
|Deferred tax liabilities||||
|Other non-current liabilities||||
|Total non-current liabilities||6,514,020,096.77|7,386,825,803.05|
|Total liabilities||38,931,201,969.29|37,800,203,666.54|
|Shareholder’s equity:||||
|Share capital||3,875,371,532.00|3,875,371,532.00|
|Other equity instruments||||
|Including: Preferred stock||||
|Perpetual bond||||
|Capital reserves||11,923,058,165.17|11,923,058,165.17|
|Less: Treasury shares||||
|Other comprehensive income||||
|Special reserves||18,126,059.79|525,218.48|
|Surplus reserves||961,105,529.85|961,105,529.85|
|Undistributed Profits||1,637,766,918.37|1,401,183,955.66|
|Total shareholder's equity||18,415,428,205.18|18,161,244,401.16|
|Total liabilities and shareholder’s equity||57,346,630,174.47|55,961,448,067.70|

 The notes to the financial statements attached form part of these financial statements.
Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 4
BENGANG STEEL PLATES CO., LTD.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period Jan.-Jun. 2019
(Expressed in Renminbi unless otherwise indicated)
|||||
|-|-|-|-|
|Items|Notes|Jan.-Jun. 2019|Jan.-Jun. 2018|
|1. Total operating income||24,102,595,167.14|23,441,247,377.14|
|Including: Operating income|5(32)|24,102,595,167.14|23,441,247,377.14|
|Interest income||||
|Premium earned||||
|Income from handling charges and commission||||
|2. Total operating cost||23,621,825,282.23|22,738,904,288.94|
|Including: Operating cost|5(32)|22,067,612,729.65|20,804,207,420.98|
|Interest expense||||
|Expenditure for handling charges and commission||||
|Surrender value||||
|Net expenditure for compensation||||
|Net provision for insurance contract appropriated||||
|Bonus payment for policy||||
|Reinsurance premium||||
|Tax and surcharges|5(33)|114,125,362.97|153,307,375.64|
|Selling and distribution expenses|5(34)|574,445,199.14|514,038,008.95|
|General and administrative expenses|5(35)|446,767,811.77|461,842,424.56|
|Research and development expenses|5(36)|15,408,472.28|2,470,641.53|
|Financial expenses|5(37)|403,465,706.42|803,038,417.28|
|Including: Interest expense||586,490,262.69|575,001,615.20|
|Interest income||127,083,779.58|61,605,403.34|
|Add: Other income|5(38)|41,695,000.00|41,274,238.70|
|Income on investment(“-” for loss)|5(39)|25,907.49|3,493,150.68|
|Including: Income from associates and joint ventures||25,907.49||
|Gains from change of fair value (“-” for loss)||||
|Credit impairment loss (“-” for loss)|5(40)|3,751,513.83||
|Asset impairment loss (“-” for loss)|5(41)||20,917,963.64|
|Assets disposal gains(“-” for loss)|5(42)|2,418,704.34|825,580.63|
|3. Operational profit(“-” for loss)||528,661,010.57|768,854,021.85|
|Add: Non-operating income|5(43)|8,210,182.24|2,138,397.80|
|Less: Non-operating expenses|5(44)|57,974,322.05|1,382,402.26|
|4. Total profit (“-” for loss)||478,896,870.76|769,610,017.39|
|Less: Income tax expenses|5(45)|25,962,181.73|11,636,226.04|
|5. Net profit(“-” for loss)||452,934,689.03|757,973,791.35|
|1.Classification by continuing operating||||
|1.Net profit from continuing operation||452,934,689.03|757,973,791.35|
|2.Net profit from discontinued operation||||
|2.Classification by ownership||||
|1. Net profit attributable to the owners of parent company||453,209,615.76|756,951,987.59|
|2. Net profit attributable to non-controlling shareholders||-274,926.73|1,021,803.76|
|6.Other comprehensive income||||
|Other comprehensive income attributable to owners of the parent company aftertax||||
|1.Other comprehensive income items that will not be reclassified intogains/losses||||
|1)Re-measurement of defined benefit plans of changes in net debt ornet assets||||
|2)Other comprehensive income under the equity method cannot bereclassified into profit or loss||||
|2.Other comprehensive income that will be reclassified into profit or loss.||||
|1) Other comprehensive income under the equity method can be reclassifiedinto profit or loss||||
|2) Gains and losses from changes in fair value of available for sale financialassets||||
|3) Gains and losses from reclassification of held-to-maturity investments toavailable-for-sale financial assets||||
|4) The effective portion of cash flow hedges and losses||||
|5) Translation differences in foreign currency financial statements||||
|6) Others||||
|Other comprehensive income attributable to non-controllingshareholders’ equity after tax||||
|7. Total comprehensive income||452,934,689.03|757,973,791.35|
|Total comprehensive income attributable to the owner of the parent company||453,209,615.76|756,951,987.59|
|Total comprehensive income attributable to non-controlling shareholders||-274,926.73|1,021,803.76|
|8. Earnings per share||||
|1)Basic earnings per share||0.12|0 .2 0|
|2)Diluted earnings per share||0.12|0 .2 0|

The notes to the financial statements attached form part of these financial statements.
Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 5
BENGANG STEEL PLATES CO., LTD.
STATEMENT OF COMPREHENSIVE INCOME
For the period Jan.-Jun. 2019
(Expressed in Renminbi unless otherwise indicated)
|||||
|-|-|-|-|
|Items|Notes|Jan.-Jun. 2019|Jan.-Jun. 2018|
|1. Total operating income|13(4)|23,447,215,857.93|23,682,865,109.14|
|Less: Operating cost|13(4)|21,757,289,997.18|21,401,191,962.20|
|Tax and surcharges||84,467,404.41|135,543,392.96|
|Selling and distribution expenses||335,094,548.06|265,554,867.46|
|General and administrative expenses||419,337,998.35|438,193,017.33|
|Research and development expenses||15,408,472.28|2,470,641.53|
|Financial expenses||388,071,914.59|774,523,490.60|
|Including: Interest expense||558,095,343.66|543,682,390.97|
|Interest income||114,189,626.94|58,304,426.91|
|Add: Other income||41,695,000.00|41,274,238.70|
|Income on investment(“-” for loss)|13(5)||3,493,150.68|
|Including: Income from associates and jointventures||||
|Gains from change of fair value (“-” for loss)||||
|Credit impairment loss (“-” for loss)||3,751,513.83||
|Asset impairment loss (“-” for loss)|||20,917,963.64|
|Assets disposal gains(“-” for loss)||2,465,706.59|825,580.63|
|2. Operational profit(“-” for loss)||495,457,743.48|731,898,670.71|
|Add: Non-operating income||8,138,040.75|1,714,748.66|
|Less: Non-operating expenses||57,935,182.17|1,382,402.26|
|3. Total profit (“-” for loss)||445,660,602.06|732,231,017.11|
|Less: Income tax expenses||15,309,062.75|5,679,337.17|
|4. Net profit(“-” for loss)||430,351,539.31|726,551,679.94|
|1.Net profit from continuing operation||430,351,539.31|726,551,679.94|
|2.Net profit from discontinued operation||||
|5.Other comprehensive income||||
|1.Other comprehensive income items that will notbe reclassified into gains/losses||||
|1)Re-measurement of defined benefit plans ofchanges||||
|2)Other comprehensive income under the equitymethod cannot be reclassified into profit or loss||||
|2.Other comprehensive income that will bereclassified into profit or loss.||||
|1) Other comprehensive income under the equity methodcan be reclassified into profit or loss||||
|2) Gains and losses from changes in fair value of availablefor sale financial assets||||
|3) Gains and losses from reclassification of held-tomaturity investments to available-for-sale financial assets||||
|4) The effective portion of cash flow hedges and losses||||
|5) Translation differences in foreign currency financialstatements||||
|6) Others||||
|6. Total comprehensive income||430,351,539.31|726,551,679.94|
|7. Earnings per share||||
|1)Basic earnings per share||||
|2)Diluted earnings per share||||

The notes to the financial statements form part of these financial statements
Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 6
BENGANG STEEL PLATES CO., LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period Jan.-Jun. 2019
(Expressed in Renminbi unless otherwise indicated)
|||||
|-|-|-|-|
|Items|Notes|Jan.-Jun. 2019|Jan.-Jun. 2018|
|1.Cash flow from operating activities||||
|Cash received from sale of goods or rendering of services||16,357,053,782.81|15,984,735,085.76|
|Net increase of customers' deposit and interbank deposit||||
|Net increase of loan from central bank||||
|Net increase of loans from other financial institutions||||
|Cash received for premium of original insurance contract||||
|Net cash received for reinsurance business||||
|Net increase of deposit and investment of the insured||||
|Net increase of Financial assets at fair value through profit or loss||||
|Cash from receiving interest, handling charge and commission||||
|Net increase of loans from Borrowing funds||||
|Net increase of fund for buy-back business||||
|Tax rebate received||247,667,635.74|246,514,404.27|
|Other cash received relating to operating activities|5(46)|144,904,624.34|81,782,480.19|
|Subtotal of cash inflows from operating activities||16,749,626,042.89|16,313,031,970.22|
|Cash paid for goods and services||13,876,838,386.74|14,086,077,537.47|
|Net increase of customer's loan and advances||||
|Net increase of deposit in central bank and interbank deposit||||
|Cash for payment of compensation for original insurance contract||||
|Cash for payment of interest, handling charge and commission||||
|Cash for payment of policy bonus||||
|Cash paid to and on behalf of employees||987,603,117.25|779,373,374.96|
|Cash paid for all types of taxes||653,208,180.03|406,064,168.90|
|Other cash paid relating to operating activities|5(46)|247,189,353.20|310,997,147.42|
|Subtotal of cash outflows from operating activities||15,764,839,037.22|15,582,512,228.75|
|Net cash flows from operating activities||984,787,005.67|730,519,741.47|
|2. Cash flows from investing activities||||
|Cash received from return on investments|||500,000,000.00|
|Cash received from distribution of dividends or profit|||3,493,150.68|
|Net cash received from disposal of fixed assets, intangible assets andother long-term assets||||
|Net cash received from disposal of subsidiary and other operating units||||
|Other cash paid relating to investing activities||||
|Subtotal of cash inflows from investing activities|||503,493,150.68|
|Cash paid for acquisition of fixed assets, intangible assets and otherlong-term assets||545,199,197.41|680,441,782.39|
|Cash paid for acquisition of investments||||
|Net increase of mortgage loan||||
|Net cash received from subsidiary and other operating unit||||
|Other cash paid relating to investing activities||||
|Subtotal of cash outflows from investing activities||545,199,197.41|680,441,782.39|
|Net cash flows from investing activities||-545,199,197.41|-176,948,631.71|
|3. Cash flows from financing activities||||
|Proceeds from investment|||3,965,799,988.19|
|Including: Proceeds from investment of non-controlling shareholdersof subsidiary||||
|Proceeds from borrowings||5,828,037,190.72|9,721,396,957.08|
|Cash received from bond issuance||||
|Other proceeds relating to financing activities||||
|Subtotal of cash inflows from financing activities||5,828,037,190.72|13,687,196,945.27|
|Cash repayments of borrowings||5,653,303,509.62|14,683,452,081.71|
|Cash payments for distribution of dividends, profit or interest expenses||626,178,049.57|661,538,139.82|
|Including: Cash paid to non-controlling shareholders as dividend andprofit by subsidiaries||||
|Other cash payments relating to financing activities||||
|Subtotal of cash outflows from financing activities||6,279,481,559.19|15,344,990,221.53|
|Net cash flows from financing activities||-451,444,368.47|-1,657,793,276.26|
|4. Effect of foreign exchange rate changes on cash and cashequivalents||48,230,507.75|105,015,610.23|
|5. Net increase in cash and cash equivalents||36,373,947.54|-999,206,556.27|
|Add: Cash and cash equivalents at the beginning of the period||11,752,548,621.97|17,037,713,410.49|
|6. Cash and cash equivalents at the ending of the period||11,788,922,569.51|16,038,506,854.22|

The notes to the financial statements attached form part of these financial statements
Legal Representative: Chief Financial Officer: Chief Accountant:
BENGANG STEEL PLATES CO., LTD.
Financial Statements Page 7
STATEMENT OF CASH FLOWS
For the period Jan.-Jun. 2019
(Expressed in Renminbi unless otherwise indicated)
|||||
|-|-|-|-|
|Items|Notes|Jan.-Jun. 2019|Jan.-Jun. 2018|
|1. Cash flow from operating activities||||
|Cash received from sale of goods or rendering ofservices||15,970,406,775.11|15,778,223,117.53|
|Tax rebate received||219,614,786.86|119,119,395.04|
|Other cash received relating to operating activities||140,536,583.70|76,026,838.22|
|Subtotal of cash inflows from operating activities||16,330,558,145.67|15,973,369,350.79|
|Cash paid for goods and services||13,842,821,616.84|13,721,886,325.25|
|Cash paid to and on behalf of employees||928,568,022.64|726,170,588.86|
|Cash paid for all types of taxes||576,260,568.31|341,018,028.32|
|Other cash paid relating to operating activities||165,446,890.35|222,352,157.09|
|Subtotal of cash outflows from operating activities||15,513,097,098.14|15,011,427,099.52|
|Net cash flows from operating activities||817,461,047.53|961,942,251.27|
|2. Cash flows from investing activities||||
|Cash received from return on investments|||500,000,000.00|
|Cash received from distribution of dividends or profit|||3,493,150.68|
|Net cash received from disposal of fixed assets,intangible assets and other long-term assets||||
|Net cash received from disposal of subsidiary andother operating units||||
|Other cash received relating to investing activities||||
|Subtotal of cash inflows from investing activities|||503,493,150.68|
|Cash paid for acquisition of fixed assets, intangibleassets and other long-term assets||539,451,276.57|677,920,104.21|
|Cash paid for acquisition of investments|||259,300,000.00|
|Net cash paid for acquisition of subsidiary and otheroperating unit||||
|Other cash paid relating to investing activities||||
|Subtotal of cash outflows paid for investing activities||539,451,276.57|937,220,104.21|
|Net cash flows from investing activities||-539,451,276.57|-433,726,953.53|
|3. Cash flows from financing activities||||
|Proceeds from investment|||3,965,799,988.19|
|Cash received from borrowings||4,902,327,190.72|8,986,529,900.00|
|Cash received from bond issuance||||
|Other cash received relating to financing activities||||
|Subtotal of cash inflows from financing activities||4,902,327,190.72|12,952,329,888.19|
|Cash repayments of borrowings||4,713,373,509.62|13,939,938,977.79|
|Cash payments for distribution of dividends, profit orinterest||589,497,122.29|635,530,683.74|
|Other cash payments relating to financing activities||||
|Subtotal of cash outflows from financing activities||5,302,870,631.91|14,575,469,661.53|
|Net cash flows from financing activities||-400,543,441.19|-1,623,139,773.34|
|4. Effect of foreign exchange rate changes on cashand cash equivalents||48,222,621.42|105,012,744.72|
|5. Net increase in cash and cash equivalents||-74,311,048.81|-989,911,730.88|
|Add: Cash and cash equivalents at the beginning ofthe period||10,807,824,843.20|16,713,104,199.65|
|6. Ending balance of cash and cash equivalents||10,733,513,794.39|15,723,192,468.77|

 The notes to the financial statements form part of these financial statements
Legal Representative: Chief Financial Officer: Chief Accountant
Financial Statements Page 8
BENGANG STEEL PLATES CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period Jan.-Jun. 2019
(Expressed in Renminbi unless otherwise indicated)
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Items|Jan.-Jun. 2019|||||||||||||
||Owner's equity attributable to parent company|||||||||||Non-controllinginterest|Total of owner'sequity|
||Share capital|Other equity instruments|||Capital reserves|Less:Treasuryshares|Othercomprehensive income|Specialreserves|Surplus reserves|Generalriskreserve|Undistributedprofit|||
|||Preferenceshares|Perpetualbond|Others||||||||||
|1. Ending balance of last year|3,875,371,532.00||||12,343,209,847.29|||683,937.71|961,105,529.85||1,945,887,269.82|533,146,339.49|19,659,404,456.16|
|Add: Change of accounting policies||||||||||||||
|Correction of errors for last period||||||||||||||
|Business consolidation under common control||||||||||||||
|Others||||||||||||||
|2. Beginning balance of current year|3,875,371,532.00||||12,343,209,847.29|||683,937.71|961,105,529.85||1,945,887,269.82|533,146,339.49|19,659,404,456.16|
|3. Changes in current year (“-” for decrease)||||||||20,330,018.58|||259,441,039.16|235,286.84|280,006,344.58|
|1) Total comprehensive income|||||||||||453,209,615.76|-274,926.73|452,934,689.03|
|2) Capital increase and decrease by shareholders||||||||||||||
|(1) Common share invested by shareholders||||||||||||||
|(2) Capital input by the holder of other 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) Net changes of defined contribution planstransferred into Retained Earnings||||||||||||||
|(5) Other comprehensive income transferred intoRetained Earnings||||||||||||||
|(6) Others||||||||||||||
|5) Special reserves||||||||20,330,018.58||||510,213.57|20,840,232.15|
|(1) Provision of special reserves||||||||25,542,658.45||||510,213.57|26,052,872.02|
|(2) Use of special reserves||||||||5,212,639.87|||||5,212,639.87|
|6) Others||||||||||||||
|4. Ending balance of current year|3,875,371,532.00||||12,343,209,847.29|||21,013,956.29|961,105,529.85||2,205,328,308.98|533,381,626.33|19,939,410,800.74|

 The notes to the financial statements attached form part of these financial statement
Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 9
BENGANG STEEL PLATES CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued)
For the period Jan.-Jun. 2019
(Expressed in Renminbi unless otherwise indicated)
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Items|Jan.-Jun. 2018|||||||||||||
||Owner's equity attributable to parent company|||||||||||Non-controllinginterest|Total shareholder'sequity|
||Share capital|Other equity instruments|||Capital reserves|Less:Treasuryshares|Othercomprehensiveincome|Specialreserves|Surplus reserves|Generalriskreserve|Undistributedprofit|||
|||Preferenceshares|Perpetualbond|Others||||||||||
|1. Ending balance of last year|3,136,000,000.00||||9,114,845,542.05|||475,046.75|961,105,529.85||1,103,162,610.35|533,475,744.19|14,849,064,473.19|
|Add: Change of accounting policies||||||||||||||
|Correction of errors for last period||||||||||||||
|Business consolidation under common control||||||||||||||
|Others||||||||||||||
|2. Beginning balance of current year|3,136,000,000.00||||9,114,845,542.05|||475,046.75|961,105,529.85||1,103,162,610.35|533,475,744.19|14,849,064,473.19|
|3. Changes in current year (“-” for decrease)|739,371,532.00||||3,228,364,305.24|||208,890.96|||842,724,659.47|-329,404.70|4,810,339,982.97|
|1) Total comprehensive income|||||||||||1,036,493,236.07|-315,177.71|1,036,178,058.36|
|2) Capital increase and decrease by shareholders|739,371,532.00||||3,228,364,305.24||||||||3,967,735,837.24|
|(1) Common share invested by shareholders|739,371,532.00||||3,228,364,305.24||||||||3,967,735,837.24|
|(2) Capital input by the holder of other equityinstruments||||||||||||||
|(3) Share-based payment attributable to shareholders'equity||||||||||||||
|(4) Others||||||||||||||
|3) Profit distribution|||||||||||-193,768,576.60||-193,768,576.60|
|(1) Appropriation to surplus reserves||||||||||||||
|(2) Appropriation to general risk reserves||||||||||||||
|(3) Profit distribution to shareholders|||||||||||-193,768,576.60||-193,768,576.60|
|(4) Others||||||||||||||
|4) Transfers within shareholders' equity||||||||||||||
|(1) Capital reserves transferred into paid-in capital (orstock)||||||||||||||
|(2) Surplus reserves transferred into paid-in capital (orstock)||||||||||||||
|(3) Surplus reserves to recover loss||||||||||||||
|(4) Net changes of defined contribution planstransferred into Retained Earnings||||||||||||||
|(5) Other comprehensive income transferred intoRetained Earnings||||||||||||||
|(6) Others||||||||||||||
|5) Special reserves||||||||208,890.96||||-14,226.99|194,663.97|
|(1) Provision of special reserves||||||||46,823,964.39|||||46,823,964.39|
|(2) Use of special reserves||||||||46,615,073.43||||14,226.99|46,629,300.42|
|6) Others||||||||||||||
|4. Ending balance of current year|3,875,371,532.00||||12,343,209,847.29|||683,937.71|961,105,529.85||1,945,887,269.82|533,146,339.49|19,659,404,456.16|

 The notes to the financial statements attached form part of these financial statement
Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 10
BENGANG STEEL PLATES CO., LTD.
STATEMENT OF CHANGES IN EQUITY
For the period Jan.-Jun. 2019
(Expressed in Renminbi unless otherwise indicated)
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Items|Jan.-Jun. 2019|||||||||||
||Share capital|Other equity instruments|||Capital reserves|Less:Treasuryshares|Othercomprehensiveincome|Specialreserves|Surplus reserves|Undistributedprofits|Total shareholder’sequity|
|||Preferenceshares|Perpetualbond|Others||||||||
|1. Ending balance of last year|3,875,371,532.00||||11,923,058,165.17|||525,218.48|961,105,529.85|1,401,183,955.66|18,161,244,401.16|
|Add: Change of accounting policies||||||||||||
|Correction of errors for last period||||||||||||
|Others||||||||||||
|2. Beginning balance of current year|3,875,371,532.00||||11,923,058,165.17|||525,218.48|961,105,529.85|1,401,183,955.66|18,161,244,401.16|
|3. Changes in current year (“-” for decrease)||||||||17,600,841.31||236,582,962.71|254,183,804.02|
|1) Total comprehensive income||||||||||430,351,539.31|430,351,539.31|
|2) Capital increase and decrease byshareholders||||||||||||
|(1) Common share invested byshareholders||||||||||||
|(2) Capital input by the holder of otherequity instruments||||||||||||
|(3) Share-based payment attributable toshareholders' equity||||||||||||
|(4) Others||||||||||||
|3) Profit distribution||||||||||-193,768,576.60|-193,768,576.60|
|(1) Appropriation of surplus reserves||||||||||||
|(2) Profit distribution to shareholders||||||||||-193,768,576.60|-193,768,576.60|
|(3) Others||||||||||||
|4) Transfers within shareholders' equity||||||||||||
|(1) Capital reserves transferred intopaid-in capital (or stock)||||||||||||
|(2) Surplus reserves transferred intopaid-in capital (or stock)||||||||||||
|(3) Surplus reserves to recover loss||||||||||||
|(4) Net changes of defined contributionplans transferred into Retained Earnings||||||||||||
|(5) Other comprehensive incometransferred into Retained Earnings||||||||||||
|(6) Others||||||||||||
|5) Special reserves||||||||17,600,841.31|||17,600,841.31|
|(1) Provision of special reserves||||||||22,722,987.71|||22,722,987.71|
|(2) Use of special reserves||||||||5,122,146.40|||5,122,146.40|
|6) Others||||||||||||
|4. Ending balance of current year|3,875,371,532.00||||11,923,058,165.17|||18,126,059.79|961,105,529.85|1,637,766,918.37|18,415,428,205.18|

 The notes to the financial statements attached form part of these financial statements
Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 11
BENGANG STEEL PLATES CO., LTD.
STATEMENT OF CHANGES IN EQUITY (Continued)
For the period Jan.-Jun. 2019
(Expressed in Renminbi unless otherwise indicated)
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Items|Jan.-Jun. 2018|||||||||||
||Share capital|Other equity instruments|||Capital reserves|Less:Treasuryshares|Othercomprehensiveincome|Specialreserves|Surplus reserves|Undistributedprofits|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|||248,490.52||787,832,231.28|4,755,816,559.04|
|1) Total comprehensive income||||||||||981,600,807.88|981,600,807.88|
|2) Capital increase and decrease byshareholders|739,371,532.00||||3,228,364,305.24||||||3,967,735,837.24|
|(1) Common share invested byshareholders|739,371,532.00||||3,228,364,305.24||||||3,967,735,837.24|
|(2) Capital input by the holder of otherequity instruments||||||||||||
|(3) Share-based payment attributable toshareholders' equity||||||||||||
|(4) Others||||||||||||
|3) Profit distribution||||||||||-193,768,576.60|-193,768,576.60|
|(1) Appropriation of surplus reserves||||||||||||
|(2) Profit distribution to shareholders||||||||||-193,768,576.60|-193,768,576.60|
|(3) Others||||||||||||
|4) Transfers within shareholders' equity||||||||||||
|(1) Capital reserves transferred intopaid-in capital (or stock)||||||||||||
|(2) Surplus reserves transferred intopaid-in capital (or stock)||||||||||||
|(3) Surplus reserves to recover loss||||||||||||
|(4) Net changes of defined contributionplans transferred into Retained Earnings||||||||||||
|(5) Other comprehensive incometransferred into Retained Earnings||||||||||||
|(5) Others||||||||||||
|5) Special reserves||||||||248,490.52|||248,490.52|
|(1) Provision of special reserves||||||||40,685,554.06|||40,685,554.06|
|(2) Use of special reserves||||||||40,437,063.54|||40,437,063.54|
|6) Others||||||||||||
|4. Ending balance of current year|3,875,371,532.00||||11,923,058,165.17|||525,218.48|961,105,529.85|1,401,183,955.66|18,161,244,401.16|

 The notes to the financial statements attached form part of these financial statements
Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 12
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Bengang Steel Plates Co., Ltd.
Notes to the financial statements
For the period from Jan. to Jun. 2019
(Expressed in Renminbi unless otherwise indicated)
1. Basic Information of the Company
(1) Company profile
Bengang Steel Plates Co., Ltd. (hereinafter referred to as “the Company”), as approved in Liao-Zheng (1997) No. 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 RMB 5.40 each, and listed in Shenzhen Stock Exchange since 15 January 1998. The capital shares were totaled to 1,136,000,000 shares.
On 14 March 2006, according to the resolutions of 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 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 placing price was RMB4.6733 per share.
Notes to the financial statements Page 1
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Approved by the China Securities Regulatory Commission[2017] No. 1476, Bengang Steel Plate Co., Ltd. privately placed no more than 739,371,534 RMB ordinary shares (A shares) to no more than 10 issuers. The non-public offering was completed on 9 February 2018, and 739,371,532 shares were actually issued. The placing price was RMB5.41 per share.
As at 30 June 2019, the capital shares were totaled to 3,875,371,532 shares.
TheCompany’s uniform social credit code: 91210000242690243E.
TheCompany’s registered address: 16th Renmin Road, Pingshan District, Benxi, Liaoning Province.
TheCompany’s legal representative: Gao Lie.
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. Consolidation scope
The financial statements have been approved for reporting by the board of directors of the Company on 28 August 2019.
(2) Consolidation scope
As at 30 June 2019, 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.
Bengang Steel Plates Liaoyang Pellet Co., Ltd.
Dalian Benruitong Automobile Material Technology Co., Ltd.
Changchun Bengang Steel& Iron Sales Co., Ltd.
Harbin Bengang Economic and Trading Co., Ltd.
Nanjing Bengang Materials Sales Co., Ltd.
Wuxi Bengang Steel& Iron Sales Co., Ltd.
Xiamen Bengang Steel& Iron Sales Co., Ltd.
Yantai Bengang Steel& Iron Sales Co., Ltd.
Tianjin Bengang Steel& Iron Trading Co., Ltd.
Bengang Posco Cold-rolled Sheet Co., Ltd.
Benxi Bengang Steel Sales Co., Ltd
Shenyang Bengang Metallurgical Science and Technology Co., Ltd.
Chongqing Liaoben Steel& Iron Trading Co., Ltd.
Notes to the financial statements Page 2
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Bengang Baojin (Shenyang) Automobile New Material Technology Co., Ltd.
For details of consolidation scope and change of the consolidation scope for the period, please refer to Note 6 “Equity in other entities”.
2. Basis of preparation
(1) Basis of preparation
The financial statements have been prepared on the going concern basis of actual trading and events in accordance with “Accounting Standards for Business Enterprises– Basic Standard” and relevant specific standards, 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
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/not under common control
Business combination 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
Notes to the financial statements Page 3
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
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 not 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 fees for the business combination 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 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.
Notes to the financial statements Page 4
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
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. 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) Increasing new subsidiaries and businesses
If the Company has a new subsidiary due to business combination under common control during the reporting period, it shall adjust the beginning balance in the consolidated statement of financial position when preparing 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 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.
Notes to the financial statements Page 5
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
(2) Disposing subsidiaries or businesses
1. General treatment
If the Company disposes a subsidiary during the reporting period, the revenue, expenses and profits of the 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 re-measure the remaining equity interests in the acquiree to its fair value at the acquisition date. The difference, between sums of consideration received for disposal equity shares and fair value of the remaining shares, and sums 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 re-measurement 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 subsidiaries 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 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.
Notes to the financial statements Page 6
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
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 thesubsidiaries’ 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 portion of equity investments in subsidiaries without lossing 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 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.
2. Translation of foreign currency financial statements
Notes to the financial statements Page 7
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the 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 income statement shall be translated using an exchange rate that is determined in a systematic and reasonable manner and approximates the spot exchange rate on the transaction date.
When disposing an overseas business, the Company shall shift the balance, which is presented under the 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 Company shall classify financial assets on the basis of both theentity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset as: financial assets measured at amortised cost, financial assets measured at fair value through other comprehensive income (debt instrument) and financial assets measured at fair value through profit or loss at initial measurement.
A financial asset shall be measured at amortised cost if both of the following conditions are met. The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A financial asset shall be measured at fair value through other comprehensive income if both of the following conditions are met. The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Other financial assets other than these are classified as financial assets measured at fair value through profit or loss. The Company may make an election at initial recognition for non-trading equity instrument investments whether it is designated as a financial asset (equity instrument) that is measured at fair value through other comprehensive income. The Company shall classify financial liabilities as financial liabilities measured at amortised cost and financial liabilities measured at fair value through profit or loss at initial measurement.
Notes to the financial statements Page 8
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
The Company may, at initial recognition, designate a financial liability as measured at fair value through profit or loss because either:
(a) it eliminates or significantly reduces an accounting mismatch;
(b) a group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to theentity’s key management personnel; (c) the financial liability contains embedded derivatives that need to be separated.
2. Recognition and measurement of financial instruments
(1) Financial assets measured at amortised cost
Financial assets measured at amortized cost include notes receivables, accounts receivables, other receivables, long-term receivables, debt investments, etc. At initial recognition, the Company shall measure a financial asset at its fair value plus or minus transaction costs that are directly attributable to the acquisition or issue of the financial asset. The Company shall measure account receivables at their transaction price if the account receivables do not contain a significant financing component and accounts receivables that the company has decided not to consider for a financing component of no more than one year.
Interests calculated by using the effective interest method during the holding period shall be recognized in profit or loss.
When recovering or disposing the receivables, the difference between the price obtained and the carrying value shall be recognized in current profit or loss.
(2) Financial assets measured at fair value through other comprehensive income (debt instruments)
Financial assets measured at fair value through other comprehensive income (debt instruments) include receivables financing, other debt investments, etc. At initial recognition, the Company shall measure a financial asset at its fair value plus transaction costs that are directly attributable to the acquisition or issuance of the financial asset. The financial assets are subsequently measured at fair value. Changes in fair value are included in other comprehensive income except for interest calculated using the effective interest method, impairment losses or gains and exchange gains and losses.
When the financial assets are derecognized, the accumulated gain or loss previously recognized in other comprehensive income is transferred from other comprehensive income and recognized in profit or loss.
(3) Financial assets at fair value through other comprehensive income (equity instruments)
Financial assets at fair value through other comprehensive income (equity instruments) include other equity instrument investments, etc.
Notes to the financial statements Page 9
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
At initial recognition, the Company shall measure a financial asset at its fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset. The financial assets are subsequently measured at fair value. Changes in fair value are included in other comprehensive income. The dividends obtained are recognised in profit and loss.
When the financial assets are derecognized, the accumulated gain or loss previously recognised in other comprehensive income is transferred from other comprehensive income and recognised in retained earnings.
(4) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include transactional financial assets, derivative financial assets, other non-current financial assets, etc.
The Company shall measure the financial assets at fair value at initial recognition. Transaction costs are recognised in profit or loss. Changes in fair value are included in profit or loss.
When the financial assets are derecognized, the difference between the fair value and the initially recorded amount is recognized as investment income, and the gains and losses from changes in fair value are adjusted.
(5) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include current financial liabilities, derivative financial liabilities, etc.
The Company shall measure the financial assets at fair value at initial recognition. Transaction costs are recognised in profit or loss. Changes in fair value are included in profit or loss.
When the financial liabilities are derecognized, the difference between the fair value and the initially recorded amount is recognized as investment income, and the gains and losses from changes in fair value are adjusted.
(6) Financial liabilities measured at amortised cost
Financial liabilities measured at amortised cost include short-term borrowings, notes payables, accounts payables, other payables, long-term borrowings, bonds payables, long-term payables.
At initial recognition, the Company shall measure a financial liability at its fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset.
Interests calculated by using the effective interest method during the holding period shall be recognized in profit or loss.
Notes to the financial statements Page 10
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
When the financial liabilities are derecognized, the difference between the price obtained and the carrying value shall be recognised in profit and loss.
3. Recognition and measurement of financial assets transfer
Where the Company has transferred nearly all of the risks and rewards related to the ownership of the financial asset to the transferee, it shall derecognize the financial asset. If it retained nearly all of the risks and rewards related to the ownership of the financial asset, it shall not derecognize the financial asset.
To judge whether the transfer of a financial asset can satisfy the conditions as prescribed in these Standards for the derecognition 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 derecognition, the difference between the amounts of the following 2 items shall be recorded in the profit or loss of the current period:
(1) The book value of the transferred financial asset; and
(2) The sum of consideration received from the transfer, and the accumulative amount of the changes of the fair 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 be derecognized, the entire book value of the transferred financial asset shall, between the portion derecognized and the portion not derecognized, 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 profit or loss of the current period :
(1) The book value of the portion derecognized; and
(2) The sum of consideration of the portion derecognized, and the portion of the accumulative amount of the changes in the fair value originally recorded in the owner's equities which is corresponding to the portion derecognized (in the case that the financial asset involved in the transfer is a financial asset Available-for-sale).
If the transfer of financial assets does not satisfy the conditions of derecognition, it shall continue to be recognized as financial assets and the consideration received shall be recognized as financial liabilities.
4. Derecognition of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may the financial liability be derecognized 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
Notes to the financial statements Page 11
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
substantially different from that regarding the existing financial liability, it shall derecognize the existing financial liability, and shall at the same time recognize a new financial liability.
Where the Company makes substantial revisions to part or all of the contractual stipulations of the existing financial liability, it shall derecognize 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 a financial liability is totally or partially derecognized, the Company shall recognize in the profit or loss of the current period the difference between the carrying amount derecognized 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 recognized. The gap between the carrying amount which is distributed to the part derecognized and the considerations it has paid (including the noncash assets it has transferred out and the new financial liabilities it has assumed) shall be recognized into profit or loss of the current period.
5. Determination of the fair value of the financial assets (liabilities)
If active markets for the financial instruments exist, the fair value shall be measured by quoted prices in the active markets. If active markets for the financial instruments do not exist, valuation techniques shall be applied for the measurement. The Company uses valuation techniques appropriate in the circumstances and for which sufficient data are available to measure fair value. The Company chooses relevant observable inputs for identical or similar assets or liabilities. Only when relevant observable inputs are unavailable or should the Company use unobservable inputs for the asset or liability.
6. Impairment of the financial assets
The Company shall recognize loss allowance for expected credit losses on financial asset measured at amortised cost, and financial assets measured at fair value through other comprehensive income, such as debt instrument investments, contract assets, financial guarantee contract, etc.
The Company considers reasonable and relevant information on past events, current conditions and forecasts of future economic conditions, and takes the risk of default as a weight, and calculates the difference between the cash flow receivable from the contract and the cash flow expected to be received. The probability-weighted amount of the present value of the current value confirms the expected credit loss.
At each reporting date, the Company shall measure the expected credit losses of financial instruments at different stages. If the credit risk on a financial instrument has not increased significantly since initial recognition, it is in the first stage, the Company shall measure the loss allowance for that financial instrument at an amount equal to 12-month
Notes to the financial statements Page 12
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
expected credit losses. If the credit risk has increased significantly since initial recognition but the credit impairment has not occurred, it is in the second stage, and the company shall measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses. If the credit risk has increased significantly since initial recognition and the credit impairment has occurred, it is in the third stage, and the company shall measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses.
The Company may assume that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date and measure the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses..
The Company shall recognize the amount of expected credit losses or reversal in profit or loss. For debt instruments held at fair value through other comprehensive income, the Company shall recognize the amount of expected credit losses or gains in profit or loss, and adjust other comprehensive income.
For note receivables, account receivables and asset contracts, whether a significant financing component is contained or not, the Company shall always measure the loss allowance at an amount equal to lifetime expected credit losses. The impairment test shall be assessed individually for account receivables if there is evidence indicating that the receivables have been impaired, and for others applicable to individual assessments to recognise the expected credit losses and individual impairment.
For accounts receivable that do not have objective evidence of impairment or when individual financial assets cannot be used to estimate expected credit losses at reasonable cost, the Company shall divide receivables based on the credit risk characteristics into different portfolio and calculate expected credit loss based on portfolios.
The recognition of expected credit losses for the receivables inportfolio：
||||
|-|-|-|
|Items|Criteria for portfolio|Recognition method for expected credit losses|
|Account receivables –Aging analysis method|Similar creditcharacteristics forsimilar aging|The Company shall, based on past events, current conditions and forecastsof future economic conditions, calculate expected credit losses usingcomparison table of accounts receivables aging analysis and lifetimeexpected credit loss ratio.|
|Other receivables –Aging analysis method|Similar creditcharacteristics forsimilar aging|The Company shall, based on past events, current conditions and forecastsof future economic conditions, calculate expected credit losses usingcomparison table of other receivables aging analysis and lifetime expectedcredit loss ratio.|

Account receivables and other receivables - Aging analysis method for lifetime expected credit loss ratio:
Notes to the financial statements Page 13
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Expected credit loss ratio for Expected credit loss ratio for
Aging
accounts receivable(%) other receivables(%)
Within 1 year (inclusive)
1-2 years (inclusive) 5.00 5.00 2-3 years (inclusive) 20.00 20.00 Over 3 years 100.00 100.00 (10) Inventory
1. Inventory classification
Inventories include material in transit, raw material, low-valued consumables, finished goods, work in process, materials for consigned processing, etc.
2. Valuation method for inventory dispatched
The weighted average method is used to confirm the actual cost of the inventories dispatched.
3. The basis for confirming the net realizable value of inventories and the methods to make provision for the inventory 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; 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 the Company 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.
Notes to the financial statements Page 14
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
4. Inventory system
The Company uses perpetual inventory system.
5. Amortization of low-valued consumables and packing materials
(1) Low-valued consumables shall be amortized in full amount on issuance.
(2) Packing materials shall be amortized in full amount on issuance.
(11) Assets hold for sales
The Company classifies non-current assets or disposal asset groups when the assets meet the following criterion into holding categories for sale simultaneously:
(1) According to the practice of selling such assets or disposal asset groups in similar transactions, they can be sold immediately under current conditions;
(2) The sale of assets is highly probable, as the company has already made a resolution on a sale plan and obtained a certain purchase commitment, and the transaction is expected to be completed within one year. The relevant regulations that the assets can be sold have been approved by relevant authorities or regulatory authorities of the Company.
(12) Long-term equity investment
1. Criteria of joint control and significant influence
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. If the Company and other joint venture have joint control of the investee and have rights to the net assets of the investee, the investee is a joint venture of the Company.
Significant influence is the power to participate in the financial and operating policy decisions of the investee but not control or join control of those policies. If the Company 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 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
Notes to the financial statements Page 15
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
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. For a business combination not under common control, the initial investment cost of the long-term equity investment shall be the acquisition cost at the acquisition date. When an investor becomes capable of exercising control over an investee due to additional investment or other reasons, the initial investment cost under the cost method shall be the carrying amount of previously-held equity investment together with the additional investment cost.
(2) The initial cost of the long-term equity investment other than from business acquisition
The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost 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.
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.
Notes to the financial statements Page 16
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
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 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 according to theCompany’s accounting principles and operating period based on the fair values of theinvestee’s identifiable net assets at the acquisition date. During the holding period, if the investee makes consolidated financial statements, the Company shall calculate its share based on theinvestee’s net profit, other comprehensive income and the amount of other owners' equity attribute to the investee in the consolidated financial statements.
The unrealized profits or losses resulting from transactions between the investor and its associate or joint venture 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 3 (5) “The accounting treatment for Business combination under/now under common control” and Note 3 (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
When disposing 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
Notes to the financial statements Page 17
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
profit or loss of current period, other comprehensive income arising from the re-measurement 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 due to decrease of shareholding ratio because of additional investment by other investors, and with the retained interest, still has joint control of, or significant influence over, the investee, when preparing the individual financial statements, the investor shall change to the equity method and adjust the remaining equity investment as if the equity method 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 investment 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 previously recognized shall be transferred to profit or loss in full.
(13) Investment property
Investment property refers to real estate held for the purpose of earning rent or capital appreciation, or both, including leased land use rights, land use rights held and prepared for transfer after appreciation, and leased buildings ( Buildings that are leased after completion of self-construction or development activities and buildings that are being used for rental in the future during construction or development).
Notes to the financial statements Page 18
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
The company uses the cost model to measure the existing investment property. For investment property measured according to the cost model - the rental building adopts the same depreciation policy as the fixed assets of the company, and the land use right for rental is amortized according to the same amortization policy as the intangible assets. (14) Fixed assets
1. Recognition of Fixed assets
The term "fixed assets" refers to the tangible assets held for the sake of producing commodities, rendering labor service, renting or business management and of which useful life is in excess of one fiscal year. No fixed asset may 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 Category Depreciation method
Period (%) (%)
Plants and Buildings straight line method 8-40 years 0.00 2.50-12.50 Machinery straight line method 4-18 years 3.00 5.39-24.25 Transportation and other straight line method
5-18 years 3.00 5.39-19.40 equipment
3. Recognition criteria for fixed asset leased in by financial leasing and its valuation
Where a lease satisfies one or more of the following criteria, it shall be recognized as a financial leasing:
(1) The ownership of the leased asset is transferred to the lessee when the term of lease expires;
(2) The lessee has the option to buy the leased asset at a price which is expected to be far lower than the fair value of the leased asset at the date when the option becomes exercisable;
(3) The lease term covers the major part of the use life of the leased asset; 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.
Notes to the financial statements Page 19
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
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. (15) 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.
(16) Borrowing costs
1. Principle of the recognition of capitalized borrowing costs
The borrowing costs shall include interest on borrowings, amortization of discounts or premiums on borrowings, ancillary expenses, and exchange balance on foreign currency borrowings.
Where the borrowing costs incurred to an enterprise can be directly attributable to the acquisition and construction or production of assets eligible for capitalization, it shall be capitalized and recorded into the costs of relevant assets. Other borrowing costs shall be recognized as expenses on the basis of the actual amount incurred, and shall be recorded into the current profits and losses.
Assets eligible for capitalization 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
Notes to the financial statements Page 20
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
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 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.
(17) Intangible Assets
1. Measurement of Intangible Assets
(1) Initial measurement is based on cost upon acquisition
The cost of an intangible asset on acquisition include the purchase price, relevant taxes and other necessary disbursements which may be directly attributable to bringing the intangible asset to the conditions for the expected
Notes to the financial statements Page 21
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
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.
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.
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 22
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
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. (18) Impairment of long-term assets
For long-term assets under the cost model such as long-term equity investments, Investment property, fixed assets, construction in progress, intangible assets with limited useful lives etc., the Company shall perform impairment tests 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 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.
Notes to the financial statements Page 23
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
(19) 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
(20) Employee benefits
1. Accounting treatment for short employee benefit
The Company shall recognized, in the accounting period in which an employee provides service, actually 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.
3.Accounting treatment of termination benefits
The Company 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: when the Company cannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or a curtailment proposal; or when the Company recognizes costs or expenses related to a restructuring that involves the payment of termination benefits.
(21) 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;
Notes to the financial statements Page 24
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
(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:
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.
(22) Revenue
1.The general principle of revenue recognition and measurement
The Company has transferred to the buyer the significant risks and rewards of ownership of the goods; and 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
Notes to the financial statements Page 25
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
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 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.
(23) 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.
The criteria and accounting treatment of government subsidies pertinent to assets.
Government subsidies related to assets are government subsidies whose primary condition is that an entity qualifying for them should purchase, construct or otherwise acquire long-term assets.
Recognition
Government subsidies related to assets shall be recognized by deducting the subsidies at the caring amount of the assets or recognized as deferred income. Subsidies that recognized as deferred income shall be recognized in profit or loss over the periods during the useful lives of the relevant assets.
Accounting treatment
Government subsidies related to assets shall be recognized by deducting the subsidies at the caring amount of the assets or recognized as deferred income. Subsidies that recognized as deferred income shall be recognized in profit or loss on a systematic basis over the periods during the useful lives of the relevant assets (Subsidies related to daily activities should be recorded in Other Income. Subsidies that unrelated to daily activities should be recorded in Non-operating Income).
The criteria and accounting treatment of government subsidies pertinent to income.
Notes to the financial statements Page 26
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
The government subsidy related to income refers to the government subsidy other than the government subsidy related to the asset.
Recognition
The government subsidies related to incomes to compensate future expenses, shall be recognized as deferred income and transferred to current profit or loss. Government subsidies to compensate expenses or losses already incurred shall be recognized in current profit and loss.
Accounting treatment
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 recorded in Other Income. Subsidies that unrelated to daily activities should be recorded in 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 recorded in Other Income. Subsidies unrelated to daily activities should be recorded in Non-operating Income) or deduct relevant cost or loss.
(24) Deferred tax assets and deferred tax liabilities
An enterprise shall recognize the deferred income tax assets arising from a deductible temporary difference to 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.
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.
(25) Leases
Notes to the financial statements Page 27
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
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.
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.
(26) Discontinuing operation
Notes to the financial statements Page 28
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
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.
(27) Change of significant accounting policy and accounting estimate
1. Change of major accounting policy during this reporting period
(1) New Financial Instrument guidelines
Since January 1, 2019, the company has implemented the “Accounting Standards for Business Enterprises No. 22– Recognition and Measurement of Financial Instruments”, “Accounting Standards for Business Enterprises No. 23– Transfer of Financial Assets” and “Accounting Standards for Business Enterprises No. 24 - Hedge Accounting” and “Accounting Standards for Business Enterprises No. 37 - Financial Instruments Disclosure” (hereinafter referred to as "New Financial Instruments Guidelines") revised by the Ministry of Finance in 2017.
In terms of the classification and measurement of financial assets, the new financial instrument standard requires financial assets to be classified as subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss on the basis of both theentity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset and eliminates the classification of loans, receivables, held to maturity investments, and available for sale financial assets in the original financial instruments. An investment in an equity instrument is generally classified as a financial asset at fair value through profit or loss. It also allows a non-tradable equity instrument investment to be designated as a financial asset at fair value through other comprehensive income. The designation is irrevocable and the accumulated fair value changes previously recognised in other comprehensive income are not carried forward to profit or loss. In respect of impairment, the requirements of the new financial instrument standard for impairment are applied to financial assets measured at amortised cost, financial assets measured at fair value through other comprehensive income, lease receivables and financial guarantee contracts. The new financial instrument standard requires the use of an expected credit loss model to confirm credit loss provisions to replace the original credit loss model. The new impairment model adopts a three-stage model. According to the relevant item, whether the credit risk has increased significantly since the initial recognition, the loss allowance is measured at an amount equal to 12-month expected credit losses or an amount equal to the lifetime expected credit losses. For receivables and long-term receivables formed by transactions regulated by the income standard, as well as the receivables of finance leases formed by transactions regulated by the “Accounting Standards for Business Enterprises No. 21– Leases”, the Company shall measure the loss allowance at an amount equal to lifetime expected credit losses.
If the recognition and measurement of financial instruments before January 1, 2019 is inconsistent with the requirements of the new financial instruments, the company shall make retrospective adjustments in accordance
Notes to the financial statements Page 29
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
with the requirements of the new financial instruments guidelines. The company does not make adjustments when it involves inconsistency between the previous comparative financial statement data and the new financial instrument guidelines. The difference between the original book value of the financial instrument and the new book value on the date of the implementation of the new financial instrument's standard is included in retained earnings or other comprehensive income as of January 1, 2019.
(2) The revision of the format for the issuance of the financial statements
Ministry of Finance issued “Notice of the Ministry of Finance on the revision of the format for the issuance of the financial statements of the general enterprise for the year 2019” (Cai Kuai 2019 No.6, hereinafter referred to as “Cai Kuai No. 6 Notice”) on 30 April 2019, which revised the format of financial statement for the general enterprise. The major impact of the implementation of the above regulations are as follows:
The contents and reasons
The items affected and the amount
of accounting policy changes
“Notes receivable and accounts receivable” is separated into "Notes receivable" and "Accounts receivable", amount for current year is 4,518,016,226.76 and (1) In Statement of Financial Position,
614,718,839.21, amount for previous year is 3,580,145,843.38 and
“Notes receivable and accounts receivable” is
639,482,481.45.
separated into "Notes receivable" and
“Notes receivable and accounts receivable” is separated into "Notes receivable" "Accounts receivable"; The comparative
and "Accounts receivable", amount for current year is 4,296,253,321.51 and data is adjusted accordingly.
402,397,751.85, amount for previous year is 3,356,020,598.89 and
409,553,059.27.
Adjust the “asset impairment loss” in the income statement to add the operating (2) Adjust the “credit impairment loss” and
profit, amount for the current year is 0.00, amount for previous year is
“asset impairment loss” in the income
20,917,963.64;
statement to add the operating profit, and the
Adjust the “credit impairment loss” in the income statement to add the operating loss is listed as “-”.
profit, amount for the current year is 3,751,513.83.
2. Change of accounting estimate during this reporting period
None.
4. Taxes
Major type of taxes and corresponding tax rates
Tax Taxation Method Tax Rate The balance of output VAT calculated based on 6%，10%、16%(Jan to Mar in product sales and taxable services revenue in 2019) Value-added Tax(VAT)
accordance with the tax laws after subtracting the 6%,9%,13% (Apr to Jun in deductible input VAT of the period 2019) City maintenance and construction tax Based on VAT and business tax actually paid 7%,5%
Educational surcharges Based on VAT and business tax actually paid 3%,2%
Notes to the financial statements Page 30
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Enterprise income tax Based on taxable profit 25% 5. Notes to the consolidated financial statements
(1) Cash at bank and on hand
Items Ending balance Beginning balance
Cash on hand 5,346.25 4,839.95 Cash at bank 11,788,917,223.26 11,752,543,782.02 Other monetary funds 5,156,849,822.92 4,814,923,133.80 Total 16,945,772,392.43 16,567,471,755.77 Total amount deposited abroad
The details of restricted monetary funds resulted from guarantee or pledge or freeze accounts are as follows: Items Ending balance Beginning balance
Margin for bank acceptance bill 4,538,099,822.92 3,794,647,133.80 Margin for letter of credit 165,270,000.00 105,000,000.00 Time deposit or notice deposit for
453,480,000.00 915,276,000.00 guarantee
Total 5,156,849,822.92 4,814,923,133.80 (2) Notes receivable
1.Notes receivable disclosed by category
Items Ending balance Beginning balance Bank acceptance bill 4,361,187,029.40 3,540,317,759.10 Commercial acceptance bill 156,829,197.36 39,828,084.28 Total 4,518,016,226.76 3,580,145,843.38 2.The pledged acceptance bill at the end of the period
There is no pledged acceptance bill at the end of the period.
3.The amount of Notes receivable endorsed over but not yet matured at the year-end.
Items Derecognized ending balance Unrecognized ending balance Bank acceptance bill 7,280,230,450.89
Commercial acceptance bill
Total 7,280,230,450.89
4.No Notes receivable has been transferred into accounts receivable due to inability of drawer to meet acceptance bill at the year-end.
Notes to the financial statements Page 31
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
(3) Accounts receivable
1.Accounts receivable disclosed by category
Ending balance
Carrying amount Provision for bad debts
Items
Book value Percentage Bad debts
Amount Amount
(%) ratio(%)
Accounts receivable tested for
47,762,337.18 6.02 47,762,337.18 100.00
impairment individually
Accounts receivable tested for
745,278,892.11 93.98 130,560,052.90 17.52 614,718,839.21 impairment by portfolio
Total 793,041,229.29 100.00 178,322,390.08 22.49 614,718,839.21 Beginning balance
Carrying amount Provision for bad debts
Items
Book value Bad debts ratio
Amount Percentage(%) Amount
(%)
Accounts receivable tested for
47,762,337.18 5.82 47,762,337.18 100.00
impairment individually
Accounts receivable tested for
773,432,447.14 94.18 133,949,965.69 17.32 639,482,481.45 impairment by portfolio
Total 821,194,784.32 100.00 181,712,302.87 639,482,481.45 Accounts receivables individually significant and tested for impairment individually
Ending balance
Company Provision for bad
Bad debts ratio
Carrying amount Reason debts (%)
Benxi Nanfen Xinhe Metallurgical
47,762,337.18 47,762,337.18 100.00 Halt operation Furnace Material Co., Ltd
Total 47,762,337.18 47,762,337.18
Accounts receivables disclosed by aging
Ending balance
Items
Carrying amount Provision for bad debts Bad debts ratio(%) Within 1 year (inclusive) 538,645,725.73
1-2 years (inclusive) 56,752,847.90 2,837,642.39 5 2-3 years (inclusive) 27,697,384.96 5,539,476.99 20 Over 3 years 169,945,270.70 169,945,270.70 100
Notes to the financial statements Page 32
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Ending balance
Items
Carrying amount Provision for bad debts Bad debts ratio(%) Total 793,041,229.29 178,322,390.08
2.Information of provision, reversal or recovery of bad debts of current period.
The provision of bad debts of current period is RMB 3,389,912.79.
3.No accounts receivable has been written off this year.
4.Top five debtors at the year-end
Ending balance
Company Percentage of total Accounts receivable Provision for Amount
(%) bad debts The first 296,599,328.97 37.40
The second 106,438,276.12 13.42
The third 62,482,368.63 7.88 6,792,099.51 The fourth 47,762,337.18 6.02 47,762,337.18 The fifth 41,687,479.04 5.26
Total 554,969,789.94 69.98 54,554,436.69 (4) Prepayments
1. Prepayments disclosed by aging
Ending balance Beginning balance
Aging
Amount Percentage(%) Amount Percentage(%) Within 1 year (inclusive) 1,311,404,160.39 99.77 1,318,136,339.11 99.74 1-2 years (inclusive) 2,226,256.90 0.17 2,494,489.34 0.19 2-3 years (inclusive) 833,987.64 0.06 901,900.77 0.07 Over 3 years 4,785.56 0.00 Total 1,314,464,404.93 100.00 1,321,537,514.78 100.00 Notes: As of June 30, 2019, there were no outstanding prepayments of over 1 year.
2. Top five prepaid companies at the year-end
Name of the company Amount Percentage(%)
The First 698,463,245.75 53.14 The Second 98,729,978.44 7.51 The Third 87,022,226.90 6.62 The Fourth 79,143,421.14 6.02 The Fifth 20,957,800.88 1.59 Total 984,316,673.11 74.88
Notes to the financial statements Page 33
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
(5) Other receivables
Items Ending balance Beginning balance
Interest receivables 13,872,107.84 11,608,705.43 Dividend receivables
Other receivables 191,594,542.93 191,155,259.55 Total 205,466,650.77 202,763,964.981．Interest receivable
(1) Interest receivable disclosed by category
Items Ending balance Beginning balance
Deposit interest 13,872,107.84 11,608,705.43 Total 13,872,107.84 11,608,705.432．Other receivables
(1) Other receivables disclosed by category
Ending balance
Carrying amount Provision for bad debts
Items
Bad debts Book value Amount Percentage(%) Amount
ratio(%)
Other receivables tested for
254,437,069.84 99.32 64,582,526.91 25.38 189,854,542.93 impairment by portfolio
Other receivables tested for
1,740,000.00 0.68 1,740,000.00 impairment individually
Total 256,177,069.84 100.00 64,582,526.91 25.21 191,594,542.93 Beginning balance
Carrying amount Provision for bad debts
Items
Book value Bad debts
Amount Percentage(%) Amount
ratio(%)
Other receivables tested for
254,359,387.50 99.32 64,944,127.95 25.53 189,415,259.55 impairment by portfolio
Other receivables tested for
1,740,000.00 0.68 1,740,000.00 impairment individually
Total 256,099,387.50 100.00 64,944,127.95 191,155,259.55 Other receivables disclosed by Aging
Ending balance
Items
Carrying amount Provision for bad debts Bad debts ratio(%)
Within 1 year (inclusive) 158,226,535.01
Notes to the financial statements Page 34
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Ending balance
Items
Carrying amount Provision for bad debts Bad debts ratio(%) 1-2 years (inclusive) 4,278,962.95 213,948.15 5 2-3 years (inclusive) 34,453,741.40 6,890,748.28 20 Over 3 years 59,217,830.48 57,477,830.48 97 Total 256,177,069.84 64,582,526.91
(2) Information of provision, reversal or recovery of bad debts of current period.
The provision of bad debts of current period is RMB 361,601.04.
(3) No other receivables have been written off this year.
(4) Other receivables disclosed by nature
Nature Ending balance Beginning balance Accounts 204,915,146.72 203,695,979.62 Margin and deposit 2,286,886.27 2,238,972.26 Others 48,975,036.85 50,164,435.62 Total 256,177,069.84 256,099,387.50 (5) Top five debtors at the year-end
Percentage of Provision Nature or
Company Amount Aging total other for bad content
receivables(%) debts The First Accounts 7,718,029.34 within 1 year 2.86
The Second Accounts 4,807,446.56 within 1 year 1.78
The Third Accounts 4,514,286.35 2-3 years 1.67 2,138,916.66 The Fourth Accounts 4,341,257.18 2-3 years 1.61 868,251.44 The Fifth Accounts 3,526,146.54 within 1 year 1.31
Total 24,907,165.97 9.23 3,007,168.10 (6) Inventories
1. Inventories disclosed by category
Ending balance Beginning balance
Items
Carrying amount Impairment Book value Carrying amount Impairment Book value Raw material and
6,468,803,309.62 26,986,533.69 6,441,816,775.93 5,509,216,101.37 26,986,533.69 5,482,229,567.68 main material
Work in process and
self-made
1,402,852,181.92 1,402,852,181.92 1,365,365,191.33 29,012,489.61 1,336,352,701.72 semi-finished
product
Finished products 4,123,737,309.00 827,243.38 4,122,910,065.62 3,888,124,260.41 28,959,417.41 3,859,164,843.00
Notes to the financial statements Page 35
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Ending balance Beginning balance
Items
Carrying amount Impairment Book value Carrying amount Impairment Book value Total 11,995,392,800.54 27,813,777.07 11,967,579,023.47 10,762,705,553.11 84,958,440.71 10,677,747,112.40 2. Impairment of inventory
Increase Decrease
Category Beginning balance Write-back or Ending balance Provision Others Others
write-off
Raw material and main
26,986,533.69 26,986,533.69 material
Work in process and 29,012,489.61
self-made semi-finished 29,012,489.61
product
Finished products 28,959,417.41 28,132,174.03 827,243.38 Total 84,958,440.71 57,144,663.64 27,813,777.07 (7) Other current assets
Items Ending balance Beginning balance Prepaid enterprise income tax 184,668,751.64 189,634,393.98 VAT input tax 62,944,230.59 102,485,377.15 Total 247,612,982.23 292,119,771.13
Notes to the financial statements Page 36
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
(8) 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
1,056,239,522.00 14,414,693.00 1,041,824,829.00 equity instruments
Including:
Measured at fair
value
Measured at cost 1,056,239,522.00 14,414,693.00 1,041,824,829.00 Total 1,056,239,522.00 14,414,693.00 1,041,824,829.00
Notes to the financial statements Page 37
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
(9) Long-term equity investment
Increase/decrease
Investment Amount Total Beginning Gains and Ending Provision Impairment Investees Reduce Adjustment Other Declaration of
Balance Add Losses Balance Total Ending Investme Comprehen Equity Cash Dividends Others
Investment Recognized Impairment Balance nt sive Income Changes or Profit
under the
Equity Method
Joint Venture
Zhejiang Bengang
Jingrui Steel 2,455,681.55 25,907.49 2,481,589.04
Processing Co., Ltd.
Subtotal 2,455,681.55 25,907.49 2,481,589.04
Total 2,455,681.55 25,907.49 2,481,589.04
Notes to the financial statements Page 38
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
(10) Other equity investment
Items Ending Balance Beginning Balance Suzhou Bengang Industrial Co., Ltd. 3,888,980.00
Sinosteel Shanghai Steel Processing Co., Ltd. 0.00
Northeast Special Steel Group Co., Ltd. 1,037,735,849.00
Guangzhou Benpu Auto Board Sales Co., Ltd. 200,000.00
Total 1,041,824,829.00
(11) Fixed assets
1. Details of fixed assets
Transportation
Items Buildings Machinery equipment and Total others
1．Total original value
(1) Beginning balance 12,174,491,765.86 43,551,735,976.27 902,527,777.12 56,628,755,519.25 (2) Increase in current period 7,596,518.16 7,596,518.16 Including: Purchase
Transferred from
7,596,518.16 7,596,518.16 construction in progress
Merging
Others
(3) Decrease in current period 28,441,077.44 362,164,072.02 1,076,210.06 391,681,359.52 Including: Disposal 28,441,077.44 362,164,072.02 1,076,210.06 391,681,359.52 Others
(4) Ending balance 12,146,050,688.42 43,197,168,422.41 901,451,567.06 56,244,670,677.892．Total accumulated depreciation
(1) Beginning balance 5,576,027,013.36 26,526,053,819.79 560,595,347.69 32,662,676,180.84 (2) Increase in current period 188,520,413.30 932,455,392.69 78,888,442.73 1,199,864,248.72 Including: Provision 188,520,413.30 932,455,392.69 78,888,442.73 1,199,864,248.72 Others - (3) Decrease in current period 20,923,664.12 303,852,548.23 7,296,035.40 332,072,247.75 Including: Disposal 20,923,664.12 303,852,548.23 7,296,035.40 332,072,247.75 Others
(4) Ending balance 5,743,623,762.54 27,154,656,664.25 632,187,755.02 33,530,468,181.813．Total impairment
(1) Beginning balance 38,948,079.36 2,626,719.08 41,574,798.44 (2) Increase in current period
Including: Provision
Others
(3) Decrease in current period 340,073.51 340,073.51 Including: Disposal 340,073.51 340,073.51 Others
Notes to the financial statements Page 39
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Transportation
Items Buildings Machinery equipment and Total others
(4) Ending balance 38,608,005.85 2,626,719.08 - 41,234,724.934．Total net book value of Fixed
assets
(1) Ending book value 6,363,818,920.03 16,039,885,039.08 269,263,812.04 22,672,967,771.15 (2) Beginning book value 6,559,516,673.14 17,023,055,437.40 341,932,429.43 23,924,504,539.97 2. Temporary idle fixed assets
Items Original book value Accumulated depreciation Impairment Book value Buildings 201,165,792.22 118,513,395.96 35,014,689.33 47,637,706.93 Machinery 1,224,688.89 1,149,022.46 75,666.43
Total 202,390,481.11 119,662,418.42 35,090,355.76 47,637,706.93 3. Fixed assets leased out by operating lease
Items Book value
Buildings 9,460,723.71
Machinery 85,459.55
Total 9,546,183.26
4. Fixed assets without property rights certificates at the end of the period
Items Book value Reason
Buildings 1,016,286,114.63 To be handled
(12) Construction in progress
1. Construction in progress and Construction materials
Beginning
Items Ending balance
balance
Construction in progress 1,355,784,359.63 831,693,471.71
Project materials 18,626,600.07 4,900,986.11
Total 1,374,410,959.70 836,594,457.82
2. Details of construction in progress
Notes to the financial statements Page 40
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Ending balance Beginning balance Total net book Items Total Total net book Total
Carrying amount Carrying amount value of Fixed impairment value of Fixed assets impairment
assets High Strength Cold Rolling Steel Renovation
43,856,840.06 43,856,840.06
Project
The Third Cold Rolling Work Hot-Dip
4,575,442.24 4,575,442.24
Galvanizing Production Line Project
The 360 Square Meter Sintering Machine 48,115,730.79 48,115,730.79 39,870,921.39 39,870,921.39 Energy Control Center Project 16,521,792.81 16,521,792.81 16,068,616.55 16,068,616.55 Renovation Project of Power Plant Three - Power
77,265,082.68 77,265,082.68 67,436,716.24 67,436,716.24 Plant.
Energy Saving And Environmental Protection
107,484,022.00 107,484,022.00 81,652,336.52 81,652,336.52 Reconstruction Of No.1 Converter Project
Modifying and Upgrading of No.2 Casting
71,055,463.93 71,055,463.93 67,751,518.71 67,751,518.71 machine in Hot steel plant
No. 5 blast furnace overhaul project (new No. 2
205,247,220.39 205,247,220.39 79,221,161.00 79,221,161.00 blast furnace)
Power plant4-5# coke oven dry quenching waste
30,116,417.01 30,116,417.01 27,607,246.17 27,607,246.17 heat steam utilization project
1700 hot rolling perfect transformation 29,822,575.23 29,822,575.23 25,521,831.89 25,521,831.89 CCPP power generation project 66,004,363.05 66,004,363.05 24,961,721.54 24,961,721.54 Coking plant gas deamination and sulfur ammonia
34,800,566.05 34,800,566.05 34,300,566.05 34,300,566.05 maintenance project
360 square meter sintering machine waste heat
50,994,694.50 50,994,694.50 44,777,158.00 44,777,158.00 utilization
5#-7# Oxygen Generator Nitrogen Increase
28,911,871.30 28,911,871.30 21,715,145.18 21,715,145.18 Energy Saving Reconstruction
Dry dedusting of No. 7 blast furnace and energy
27,673,848.07 27,673,848.07 22,973,276.80 22,973,276.80 saving reform of TRT power generation
No. 6 blast furnace environmental protection
39,093,141.87 39,093,141.87 22,895,777.14 22,895,777.14 overhaul project
Other 474,245,287.65 474,245,287.65 254,939,478.53 254,939,478.53 Total 1,355,784,359.63 1,355,784,359.63 831,693,471.71 831,693,471.71
Notes to the financial statements Page 41
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
3. Changes in important construction projects in the current period
Project
Transferred Decrease cumulative
Accumulated Including：Interest Interest to fixed d by investment
Increase in Project amount of capitalization capitalization Items Budget（10 Beginning balance asset in others in Ending balance accounted for Sources current period progress interest amount in current rate in currentthousand） current current the proportion of funds(%) capitalization period period(%) period period of the budget
(%)
High Strength Cold
Rolling Steel Renovation 613,498.00 43,856,840.06 43,856,840.06 90% 100% 855,901,421.79 Other Project
The Third Cold Rolling
Work Hot-Dip Galvanizing 86,918.00 4,575,442.24 4,575,442.24 72% 100% Other Production Line Project
Energy-saving and
environmental protection
transformation of converter
177,864.40 1,908,118.60 1,908,118.60 87% 100% 127,847,567.31 Other system and 180-ton
dephosphorization
converter project
Renovation Project of
Power Plant Three - Power 59,399.00 67,436,716.24 9,828,366.44 77,265,082.68 80% 90% 34,827,795.34 Other Plant.
Energy Saving and
Environmental Protection
21,800.00 81,652,336.52 25,831,685.48 107,484,022.00 49% 50% 336,061.23 336,061.23 3.48% Other Reconstruction Of No.1
Converter Project
Modifying and Upgrading
of No.2 Casting machine in 10,090.00 67,751,518.71 3,303,945.22 71,055,463.93 70% 80% 40,530.19 40,530.19 3.48% Other Hot steel plant
No. 5 blast furnace
overhaul project (new No. 150,000.00 79,221,161.00 126,026,059.39 205,247,220.39 14% 25% 783,807.97 783,807.97 3.48% Other 2 blast furnace)
Total 1,119,569.40 296,061,732.47 215,330,457.43 511,392,189.90 1,019,737,183.83 1,160,399.39
Notes to the financial statements Page 42
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
4. Construction materials
Ending balance Beginning balance
Items
Carrying amount Impairment Book value Carrying amount Impairment Book value Construction materials 18,626,600.07 18,626,600.07 4,900,986.11 4,900,986.11 Total 18,626,600.07 18,626,600.07 4,900,986.11 4,900,986.11 (13) Intangible assets
1. Details of intangible assets
Items Land use right Software Total
1．Total of original value
(1)Beginning balance 327,028,797.84 310,401.55 327,339,199.39 (2)Increase
Including: Purchase
Including: InternalR&D
Including: Increase in Mergers
Including: Others
(3)Decrease
Including: Disposal
Including: Others
(4)Ending balance 327,028,797.84 310,401.55 327,339,199.392．Total of Accumulated Amortization
(1)Beginning balance 49,176,692.15 100,066.21 49,276,758.36 (2)Increase 3,270,287.92 8,444.37 3,278,732.29 Including: Provision 3,270,287.92 8,444.37 3,278,732.29 Including: Others
(3)Decrease
Including: Disposal
Including: Others
(4)Ending balance 52,446,980.07 108,510.58 52,555,490.653．Total of Impairment
(1)Beginning balance
(2)Increase
Including: Provision
Including: Others
(3)Decrease
Including: Disposal
Including: Others
(4)Ending balance
4．Total of Net value
(1)Ending book value 274,581,817.77 201,890.97 274,783,708.74 (2)Beginning book value 277,852,105.69 210,335.35 278,062,441.04
Notes to the financial statements Page 43
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
2. Land use right without Certificate of Land use right at the end of the period.
None.
(14) Deferred tax asset and deferred tax liability
1. Undedicated deferred tax asset
Ending balance Beginning balance Items Deductible temporary Deductible temporary
Deferred tax asset Deferred tax asset differences differences
Impairment 323,453,331.07 80,863,332.77 384,689,582.05 96,172,395.52 Internal unrealized profit 44,665,863.14 11,166,465.79 47,141,747.73 11,785,436.93 Differences of depreciation and
333,978,859.03 83,494,714.76 333,978,859.03 83,494,714.76 amortization
Total 702,098,053.24 175,524,513.32 765,810,188.81 191,452,547.21 2. Unrecognized deferred tax assets
Items Ending balance Beginning balance Deductible temporary differences 2,914,780.92 2,914,780.92 Deductible losses 667,057,769.20 1,112,718,371.26 Total 669,972,550.12 1,115,633,152.18 3. The deductible loss of unrecognized deferred tax assets due in the following period
Items Ending balance Beginning balance Notes Year 2020 639,818,319.71 1,085,478,921.77
Year 2021 11,436,302.83 11,436,302.83
Year 2022 1,000,766.72 1,000,766.72
Year 2023 14,802,379.94 14,802,379.94
Year 2024
Total 667,057,769.20 1,112,718,371.26
(15) Other non-current assets
Items Ending balance Beginning balance Prepaid of long-term assets 68,303,165.35 76,341,975.35 Total 68,303,165.35 76,341,975.35 Notes: The prepaid long-term assets at the end of the period are prepaid equipment and construction funds. (16) Short-term loans
1. Classification of short-term loans
Items Ending balance Beginning balance
Pledge loans 48,262,375.85
Notes to the financial statements Page 44
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Items Ending balance Beginning balance Guaranteed loans 12,078,193,000.00 10,361,008,000.00 Credit loans 220,000,000.00 1,529,220,000.00 Total 12,298,193,000.00 11,938,490,375.85 2. Overdue short-term loans
(17) Notes payables
Items Ending balance Beginning balance Bank acceptance bill 9,317,222,357.86 8,738,192,014.02 Domestic letter of credit 2,333,060,000.00 1,275,000,000.00 Total 11,650,282,357.86 10,013,192,014.02 Notes: There are no outstanding notes payable at the end of this period.
(18) Accounts payable
1. Accounts payable disclosed by category
Items Ending balance Beginning balance Accounts payable for goods 4,432,010,176.48 4,483,900,163.08 Accounts payable for labor 29,371,271.02 30,829,506.69 Accounts payable for project and equipment 509,540,291.98 424,097,390.68 Repair expense 652,340,212.43 579,971,383.23 Others 3,576,818.36 3,244,367.97 Total 5,626,838,770.27 5,522,042,811.65 2. Significant accounts payable aging over one year
Items Ending balance Reason
Liaoning Shenjiao International Trade Co.,Ltd 72,839,065.27 Not yet settled MCC Southern Engineering Technology Co., Ltd. 51,119,440.77 Not yet settled Hangzhou Tianshen Materials Co., Ltd. 20,145,902.65 Not yet settled MCC Jiao Nai Engineering Technology Co., Ltd. 19,379,163.99 Not yet settled MCC Jiao Nai (Dalian) Engineering Technology Co.,
17,415,300.00 Not yet settled Ltd.
Shenyang Railway Construction Bridge and Tunnel
14,200,000.00 Not yet settled Engineering Co., Ltd.
Jixi Huasheng Fengyuan Coal Preparation Co., Ltd. 6,485,138.18 Not yet settled Total 201,584,010.86
Notes to the financial statements Page 45
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
(19) Advance from customers
1. Advance from customers disclosed by category
Items Ending balance Beginning balance Advance for goods 3,345,451,646.56 3,331,854,098.42 Total 3,345,451,646.56 3,331,854,098.42 2. Significant advance from customers aging over one year.
None
(20) Employee benefits payable
1. Employee benefits payable
Items Beginning balance Increase Decrease Ending balance (1) Short-term employee
47,824,468.42 916,510,872.23 916,669,401.25 47,665,939.40 benefits
(2) Post-employment
benefits - defined 174,373.43 128,070,045.18 128,069,809.64 174,608.97 contribution plans
(3) Termination benefits 3,467,389.87 1,046,552.23 2,420,837.64 (4) Other benefits due
within one year
Total 51,466,231.72 1,044,580,917.41 1,045,785,763.12 50,261,386.01 2. Short-term employee benefits
Beginning
Items Increase Decrease Ending balance balance
(1) Salary, bonus,
38,282,721.78 684,822,157.27 685,422,131.12 37,682,747.93 allowance and subsidy
(2) Employee welfare 47,016,070.43 47,016,070.43
(3) Social Insurance 652,400.36 71,083,855.14 71,083,855.14 652,400.36 Including: Medical
1,598.15 53,654,171.68 53,654,171.68 1,598.15 insurance
Work injury
650,802.21 17,416,640.12 17,416,640.12 650,802.21 insurance
Maternity
13,043.34 13,043.34
insurance
(4) Housing 6,854,689.00 52,823,804.00 52,887,301.00 6,791,192.00 (5) Union funds and staff
2,034,657.28 60,764,985.39 60,260,043.56 2,539,599.11 education fee
(6) Short-term compensated
absences
(7) Short-term profit -
sharing scheme
Notes to the financial statements Page 46
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Beginning
Items Increase Decrease Ending balance balance
Total 47,824,468.42 916,510,872.23 916,669,401.25 47,665,939.40 3. Defined contribution plans
Beginning
Items Increase Decrease Ending balance balance
Basic pension fund 68,338.82 124,734,324.48 124,734,498.12 68,165.18 Unemployment insurance 106,034.61 3,335,720.70 3,335,311.52 106,443.79 Total 174,373.43 128,070,045.18 128,069,809.64 174,608.97 (21) Current tax liabilities
Items Ending balance Beginning balance Value-added tax 35,376,964.97 442,980,368.02 Corporate income tax 4,317,717.53 2,769,293.58 City maintenance and construction tax 9,587,112.00 32,813,368.49 House property tax 3,506,456.37 3,004,878.95 Educational surcharges 4,137,761.43 23,450,632.11 Environmental tax 381,305.56 7,340,495.80 Others 5,581,530.69 3,393,332.73 Total 62,888,848.55 515,752,369.68 (22) Other payables
Items Ending balance Beginning balance Interest payables 9,343,905.54 9,658,681.99 Dividends payables 193,768,576.60
Other payables 696,885,503.92 852,852,496.97 Total 899,997,986.06 862,511,178.96 1. Interest Payable
Items Ending balance Beginning Balance Loan interests 9,343,905.54 9,658,681.99 Total 9,343,905.54 9,658,681.99 2. Dividends payables
Items Ending balance Beginning Balance Common dividend 193,768,576.60
Preferred shares divided into equity
instruments/Sustainable Debt Dividend
Including: Tool 1
Tool 2
Notes to the financial statements Page 47
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Items Ending balance Beginning Balance Total 193,768,576.60
3. Other payables
(1)Other payables disclosed by nature
Items Ending balance Beginning Balance Deposit 6,756,148.49 6,876,696.99 Margin 131,820,736.18 129,911,043.84 Accounts 395,056,845.92 568,285,473.68 Others 163,251,773.33 147,779,282.46 Total 696,885,503.92 852,852,496.97 (2)Significant other payables ageing over one year
Name Ending balance Reason
Benxi Steel& Iron (Group) Co., Ltd. 101,874,612.92 Not yet settled
(23) Non-current liabilities due within one year
Items Ending balance Beginning balance
Long-term loans due within one year 1,036,582,163.28 350,965,576.32 Bond payables due within one year
Total 1,036,582,163.28 350,965,576.32 (24) Long-term loans
Categories Ending balance Beginning balance Pledged loans
Mortgage loan
Guaranteed loans 3,195,042,608.56 3,931,317,094.16 Credit loans 3,018,011,955.59 3,152,323,000.00 Total 6,213,054,564.15 7,083,640,094.16 (25) Long-term payables
Items Ending balance Beginning balance Long-term payables 52,733,529.65 13,686,705.92 Special payables
Total 52,733,529.65 13,686,705.92 1. Long-term payables
Items Ending balance Beginning balance Financing lease payments 52,733,529.65 13,686,705.92
Total 52,733,529.65 13,686,705.92
Notes to the financial statements Page 48
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
(26) Deferred income
Beginning Ending
Items Increase Decrease Reason balance balance
Government
289,499,002.97 428,000.00 41,695,000.00 248,232,002.97
subsidy
Total 289,499,002.97 428,000.00 41,695,000.00 248,232,002.97
Notes to the financial statements Page 49
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Projects of government subsidies:
Beginning Transfer to Other Related to assets or Items Increase Ending balance balance non-operating income decrease income MES Project Special Fund 1,720,000.00 860,000.00 860,000.00 Related to assets Industrial Enterprise Energy Management Center Construction Demonstration
6,960,000.00 1,160,000.00 5,800,000.00 Related to assets Project
Environment Pollution Renovation Project 3,620,000.00 1,810,000.00 1,810,000.00 Related to assets Environment Renovation Project and Regional Basin Environment Protection
340,000.00 170,000.00 170,000.00 Related to assets Project
Cold Rolling Steel High Strength Renovation Project 200,000,000.00 25,000,000.00 175,000,000.00 Related to assets Automobile High-class Electrolytic Zinc Steel Plate Production Line Project 16,416,000.00 4,104,000.00 12,312,000.00 Related to assets Sintering Machine Residue Heat Usage and Desulfurization Project 4,204,000.00 2,102,000.00 2,102,000.00 Related to assets 7 130t Boilers Flue Gas Desulfurization Renovation Project of Power Plant 19,200,000.00 2,400,000.00 16,800,000.00 Related to assets Overseas Advanced Technology Introduction Special Fund 6,884,000.00 1,442,000.00 5,442,000.00 Related to assets Automobile Steel Sheet Engineering Laboratory Project 1,000,000.00 1,000,000.00 Related to assets Third-generation High Strength Steels for AutomobileR&D Project 2,900,000.00 2,900,000.00 Related to assets The 360 Cubic Meter Sintering Machine Flue Gas Desulfurization Renovation
200,000.00 100,000.00 100,000.00 Related to assets Project of Blast Furnace Plant
Environment Protection Project Special Fund 1,160,000.00 580,000.00 580,000.00 Related to assets Advanced Treatment of Carbon Fiber Wastewater Project of Coke Plant Dongfeng
9,500,000.00 9,500,000.00 Related to assets Area
Desulfurization and Denitration Projects for Coal-fired Boiler of Power Plant Related to assets 4,800,000.00 300,000.00 4,500,000.00 High-pressure Workshop
Power Plant No 3 workshop Heat and Power Cogeneration Renovation Project 8,000,000.00 1,000,000.00 7,000,000.00 Related to assets Sintering Machine Energy Saving and Environmental Protection Project of Blast Related to assets 2,320,000.00 580,000.00 1,740,000.00 Furnace Plant
Air Quality Automatic Monitoring System 175,000.00 35,000.00 140,000.00 Related to assets
Notes to the financial statements Page 50
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Beginning Transfer to Other Related to assets or Items Increase Ending balance balance non-operating income decrease income Liaoning Grand Craftsman Subsidy and Skill Master Workstation Grant 100,002.97 240,000.00 340,002.97 Related to income Support fund for the project of high-strength pipeline steel under low temperature
188,000.00 52,000.00 136,000.00 Related to income and high pressure service conditions
Total 289,499,002.97 428,000.00 41,695,000.00 248,232,002.97
Notes to the financial statements Page 51
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
(27) Share capital
Increase/decrease(+ , - )
Issuing
Items Beginning balance Bonus Transferred Ending balance
of new Others Subtotal
shares from reserves
share
Capital
3,875,371,532.00 3,875,371,532.00 shares
(28) Capital reserves
Items Beginning balance Increase Decrease Ending balance
Capital premium over par
12,227,292,378.47 12,227,292,378.47 value
Other capital reserves
115,917,468.82 115,917,468.82 Total
12,343,209,847.29 12,343,209,847.29 (29) Special Reserves
Items Beginning balance Increase Decrease Ending balance
Safety production cost
683,937.71 25,542,658.45 5,212,639.87 21,013,956.29 Total
683,937.71 25,542,658.45 5,212,639.87 21,013,956.29 (30) Surplus Reserves
Items Beginning balance Increase Decrease Ending balance
Statutory surplus
reserves
961,105,529.85 961,105,529.85 Total
961,105,529.85 961,105,529.85 (31) Undistributed Profits
Items Current period Previous period
Before adjustments: undistributed profits at last
1,945,887,269.82 1,103,162,610.35
year-end
Adjustments of the beginning distributed profits
(increase+ / decease -)
After adjustments: undistributed profit at this
1,945,887,269.82 1,103,162,610.35
year-beginning
Add: undistributed profit belonging to parent company
453,209,615.76 756,951,987.59
Less: Statutory surplus reserves
Notes to the financial statements Page 52
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Items Current period Previous period
Discretionary reserves
General risk reserves
Common shares dividend payable
193,768,576.60 193,768,576.60
Common shares dividend transferred to paid-in capital
Ending balance of undistributed profits
2,205,328,308.98 1,666,346,021.34
(32) Operating income and operating cost
Current period Previous period
Items
Revenue Cost Revenue Cost
Principal business
22,581,458,005.55 20,807,089,888.18 21,302,037,073.89 19,140,922,165.53
Other business
1,521,137,161.59 1,260,522,841.47 2,139,210,303.25 1,663,285,255.45
Total
24,102,595,167.14 22,067,612,729.65 23,441,247,377.14 20,804,207,420.98
(33) Tax and surcharges
Items Current period Previous period
City maintenance and construction tax 27,561,420.89 48,666,138.65
Educational surcharge 19,877,089.62 34,952,935.92
Housing property tax 38,778,891.04 36,610,915.20
Land use right tax 6,538,299.88 3,421,519.74 Stamp duty and others 14,961,858.43 15,742,454.27
Environmental tax 6,387,222.58 13,896,524.30
others 20,580.53 16,887.56
Total 114,125,362.97 153,307,375.64
(34) Selling and distribution expenses
Notes to the financial statements Page 53
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Items Current period Previous period
Freight
456,217,341.94 393,290,897.61
Port surcharges
52,405,847.32 56,907,191.59
Import and export agency fee
34,174,633.61 35,649,297.75
Salary and benefits
13,553,533.82 11,993,852.41
Others
13,751,821.86 12,721,174.90
Package fee
4,342,020.59 3,475,594.69
Total
574,445,199.14 514,038,008.95
(35) General and administrative expenses
Items Current period Previous period
Salary and benefits
122,383,642.39 116,352,823.92
Repair expense
142,464,599.50 174,107,156.65
Land use right fee
27,345,714.30 27,345,714.30
Others
62,667,766.52 57,134,166.31
Depreciation
24,216,703.47 26,164,322.31
Social insurance fee
23,532,872.66 23,452,571.91
Heating fee
22,391,441.18 20,783,413.87
Water resources fee
11,993,951.74 6,546,763.90
Housing fund
4,737,351.00 4,445,529.00
Amortization
2,970,897.50 2,982,926.09
Entertainment fee
1,070,316.75 1,527,871.52
Rental fee
643,214.78 543,240.66
Shipping fee
349,339.98 455,924.12
Total
446,767,811.77 461,842,424.56
(36) Research and development expenses
Notes to the financial statements Page 54
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Items Current period Previous period
Depreciation, materials and compensation, etc.
15,408,472.28 2,470,641.53
Total
15,408,472.28 2,470,641.53
(37) Financial expenses
Items Current period Previous period
Interest expenditure
586,490,262.69 575,001,615.20
Less: Interest income
127,083,779.58 61,605,403.34
Exchange loss
-71,095,752.13 286,291,324.68
Others
15,154,975.44 3,350,880.74
Total
403,465,706.42 803,038,417.28
Notes：The financial expenses of this period were 403 million yuan, a decrease of 400 million yuan
from the previous period of 803 million yuan, a decrease of49.76%, mainly due to the increase in
exchange income and interest income during the period.
(38) Other income
Related to
Items Current period Previous period assets or
income
MES Project Special Fund 860,000.00 860,000.00 Assets
Industrial Enterprise Energy Management Center
1,160,000.00 1,160,000.00 Assets
Construction Demonstration Project
Environment Pollution Renovation Project 1,810,000.00 1,810,000.00 Assets
Environment Renovation Project and Regional
170,000.00 170,000.00 Assets
Basin Environment Protection Project
Cold Rolling Steel High Strength Renovation
25,000,000.00 25,000,000.00 Assets
Project
Automobile High-class Electrolytic Zinc Steel
4,104,000.00 4,104,000.00 Assets
Plate Production Line Project
Sintering Machine Residue Heat Usage and
2,102,000.00 2,102,000.00 Assets
Desulfurization Project
7 130t Boilers Flue Gas Desulfurization
2,400,000.00 2,400,000.00 Assets
Renovation Project of Power Plant
Treatment and Salt Extraction Project of
50,000.00 Assets
Desulfurization Waste Liquid of Coke Plant
OverseasR&D Team Introduction Special Fund 1,442,000.00 1,442,000.00 Assets
Notes to the financial statements Page 55
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Related to
Items Current period Previous period assets or
income
The 360 Cubic Meter Sintering Machine Flue
Gas Desulfurization Renovation Project of Blast 100,000.00 100,000.00 Assets
Furnace Plant
Environment Protection Project Special Fund 580,000.00 580,000.00 Assets
Bengang Power plant high pressure workshop
coal burning boiler desulfurization and Assets
denitrification items
Bengang Power plant high pressure workshop
coal burning boiler desulfurization and 300,000.00 300,000.00 Assets
denitrification items
Power Plant No 3 workshop Heat and Power
1,000,000.00 Assets
Cogeneration Renovation Project
Iron and steel plant sintering machine energy
580,000.00 580,000.00 Assets
saving and environmental protection project
Air quality automatic monitoring system 35,000.00 35,000.00 Assets
Xihu source resource management committee
414,300.00 Income
compensation
Liaoning Grand Craftsman Subsidy and Skill
166,938.70 Income
Master Workstation Grant
Support fund for the project of high-strength
pipeline steel under low temperature and high 52,000.00 Income
pressure service conditions
Total 41,695,000.00 41,274,238.70
(39) Income on investment
Items Current period Previous period
Income on disposal of long-term equity investment by equity
25,907.49
method
Income on bank short-term financial products
3,493,150.68
Total
25,907.49 3,493,150.68
(40) Credit impairment loss
Items Current period Previous period
Account receivable bad debt loss
3,389,912.79
Other account receivable bad debt loss
361,601.04
Long-term account receivable bad debt loss
Notes to the financial statements Page 56
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Total
3,751,513.83
(41) Asset impairment loss
Items Current period Previous period
Bad debt loss
14,523,332.71
Inventory impairment loss
6,394,630.93
Total
20,917,963.64
(42) Assets disposal gains
The amount
Items Current period Previous period recognized in
non-recurring profit
Disposal gains or losses arising from disposal
2,418,704.34 825,580.63 2,418,704.34
of fixed assets not classified for sale
Total 2,418,704.34 825,580.63 2,418,704.34
(43) Non-operating income
The amount
Current period Previous period recognized in
Items
non-recurring profit
Debt restructuring gain 50,640.00 945,892.23 50,640.00
Non-current assets scrapped gains 7,955,444.40 7,955,444.40
Others 204,097.84 1,192,505.57 204,097.84
Total 8,210,182.24 2,138,397.80 8,210,182.24
(44) Non-operating expense
The amount
Items Current period Previous period recognized in
non-recurring profit
Non-current assets scrapped loss
57,974,322.05 1,382,402.26 57,974,322.05
Total
57,974,322.05 1,382,402.26 57,974,322.05
(45) Income tax expense
1. Income tax expense
Items Current period Previous period
Income tax payable for the current year
9,415,176.70 5,956,888.87
Notes to the financial statements Page 57
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Adjustment of deferred income tax
16,547,005.03 5,679,337.17
Total
25,962,181.73 11,636,226.04
2. Accounting profit and income tax expense adjustment process
Items Current period
Total profit
478,870,963.27
Income tax expense calculate according to the official or applicable tax rate
119,717,740.82
Effect of different tax rates applied by subsidiaries
Effect of adjustment of the income tax expense of prior period
Effect of non-taxable income
Effect of undeductible costs, expenses or losses
Effect of use of deductible losses of unrecognized deferred tax asset of prior period
-93,755,559.09
Effect of deductible temporary differences or deductible losses of unrecognized
deferred tax asset of current period
Income tax expenses
25,962,181.73
(46) Notes of statement of cash flows
1. Cash received related to other operating activities
Items Current period Previous period
Withdraw of current accounts, advance for another
17,151,876.47 19,218,434.76
Interest income
127,083,779.58 61,605,403.34
Special subsidy income
428,000.00 694,300.00
Non-operating income
117,870.10 162,619.82
Others
123,098.19 101,722.27
Total
144,904,624.34 81,782,480.19
2. Cash paid related to other operating activities
Items Current period Previous period
Current accounts, advance for another 221,234,925.29 285,018,187.10
Sales expenses 4,449,939.39 4,646,000.62
Administrative expenses 17,883,394.86 18,078,644.22
Bank charges 3,255,172.22 2,896,060.69
Others 365,921.44 358,254.79
Notes to the financial statements Page 58
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Items Current period Previous period
Total 247,189,353.20 310,997,147.42
(47) Supplementary details of statement of cash flows
1. Supplementary details for statement of cash flows
Items Current period Previous period
1. A reconciliation of net profit to cash flows from
operating activities:
Net profit 452,934,689.03 757,973,791.35
Add: Credit impairment loss 3,751,513.83
Asset impairment loss -20,917,963.64
Depreciation of fixed assets and so on 1,199,864,248.72 1,144,984,195.00
Amortization of right use asset
Amortization of intangible assets 3,278,732.29 3,239,455.09
Long-term deferred expenses
Losses proceeds from disposal of PPE, intangible assets
57,974,322.05 556,821.63
and other long-term assets (Earningsmarked“－”)
Scrapped losses from fixed assets (Earnings
marked“－”)
Change in fair value loss (Earningsmarked“－”)
Financial expenses (Earningsmarked“－”) 403,465,706.42 803,038,417.28
Investment losses (Earningsmarked“－”) -3,493,150.68
Deferred tax assets reduction (Additionmarked“－”) 15,928,033.89 5,679,337.17
Deferred tax liabilities increased (Reduction
marked“－”)
Reduction of inventory (Additionmarked“－”) -1,289,831,911.07 -1,683,906,453.31
Operating receivable items reduction (Addition
-908,736,317.08 817,004,548.19
marked“－”)
Operating payable items increase (Lessmarked"－") 1,046,157,987.59 -1,093,639,256.61
Other
Net cash flows generated from operating activities 984,787,005.67 730,519,741.47
2. Payments of investing and financing activities not
- --
involving cash:
Liabilities transferred to capital
Convertible bonds due within one year
Fixed assets financed by leasing
3. The net increase in cash and cash equivalents: -- --
Ending balance of cash 11,788,922,569.51 16,038,506,854.22
Less: Beginning balance of cash 11,752,548,621.97 17,037,713,410.49
Notes to the financial statements Page 59
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Items Current period Previous period
Add: Ending balance of cash equivalents
Less: Opening balance of cash equivalents
The net increase in cash and cash equivalents 36,373,947.54 -999,206,556.27
2. The structure of cash and cash equivalents
Items Ending balance Beginning balance
1. Cash 11,788,922,569.51 11,752,548,621.97
Including: Cash on hand 5,346.25 4,839.95
Bank deposits available on demand 11,788,917,223.26 11,752,543,782.02
Other monetary funds available on demand
Central bank deposits available on demand
Balances with other financial institutions
Loans to other financial institutions
2. Cash equivalents
Including: Investment of securities due within 3 months
3. Ending balance of cash and cash equivalents 11,788,922,569.51 11,752,548,621.97
Including: Cash and cash equivalents limited to use by the
parent company of other subsidiary in the group
(48) Assets of which ownership or right to use are restricted
Items Ending balance Reason
Cash at bank and on hand 5,156,849,822.92 Deposit for notes and letter of credit
Total 5,156,849,822.92
(49) Foreign currency monetary items
Exchange rate at
Ending balance in Ending balance
Items the end of the
foreign currency translated to RMB
period
Cash at bank and on hand 582,105,770.06
Including: USD 83,505,239.72 6.8747 574,073,471.50
EUR 936,843.39 7.8170 7,323,304.78
HKD 805,949.50 0.8797 708,993.78
Short-term loans
1,306,193,000.00
Including: USD 190,000,000.00 6.8747 1,306,193,000.00
Notes to the financial statements Page 60
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Exchange rate at
Ending balance in Ending balance
Items the end of the
foreign currency translated to RMB
period
Non-current liabilities due
within one year
1,036,582,163.28
Including: USD
145,000,000.00 6.8747 996,831,500.00
EUR
4,895,952.88 7.8170 38,271,663.66
JPY
23,176,000.00 0.0638 1,478,999.62
Long-term loans
1,648,495,389.11
Including: USD
168,600,000.00 6.8747 1,159,074,420.00
EUR
61,285,400.00 7.8170 479,067,971.80
JPY
162,232,000.00 0.0638 10,352,997.31
6. Equity in other entities
(1) Equity in subsidiaries
1. Constitution of enterprise group
Notes Shareholding ratio
Principal Register
of
Name of the subsidiaries place of ed Indi Acquiring method busine Direct
business address rect
ss
Business combination Xiamen Bengang Steel& Iron Sales Co., Ltd. Xiamen Xiamen Sales 100.00
under common control Business combination Wuxi Bengang Steel& Iron Sales Co., Ltd. Wuxi Wuxi Sales 100.00
under common control Business combination Tianjin Bengang Steel& Iron Trading Co., Ltd. Tianjin Tianjin Sales 100.00
under common control Business combination Nanjing Bengang Materials Sales Co., Ltd. Nanjing Nanjing Sales 100.00
under common control Business combination Yantai Bengang Steel& Iron Sales Co., Ltd. Yantai Yantai Sales 100.00
under common control Business combination Harbin Bengang Economic and Trading Co., Ltd. Harbin Harbin Sales 100.00
under common control Changchu Business combination Changchun Bengang Steel& Iron Sales Co., Ltd. Changchun Sales 100.00
n under common control
Notes to the financial statements Page 61
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Notes Shareholding ratio
Principal Register
of
Name of the subsidiaries place of ed Indi Acquiring method busine Direct
business address rect
ss
Guangzhou Bengang Steel& Iron Trading Co., Guangzho
Guangzhou Sales 100.00 Establishment Ltd. u
Shanghai Bengang Metallurgy Science and
Shanghai Shanghai Sales 100.00 Establishment Technology Co., Ltd.
Manuf
Bengang Steel Plates Liaoyang Pellet Co., Ltd. Liaoyang Liaoyang acturin 100.00 Establishment g
Manuf
Dalian Benruitong Automobile Material
Dalian Dalian acturin 65.00 Establishment Technology Co., Ltd.
g
Manuf
Business combination Bengang Posco Cold-rolled Sheet Co., Ltd. Benxi Benxi acturin 75.00
under common control g
Benxi Bengang Steel Sales Co., Ltd Benxi Benxi Sales 100.00 Establishment Shenyang Bengang Metallurgical Science and
Shenyang Shenyang Sales 100.00 Establishment Technology Co., Ltd.
Chongqing Liaoben Steel& Iron Trading Co., Chongqin
Chongqing Sales 100.00 Establishment Ltd. g
Manuf
Bengang Baojin (Shenyang) auto new material Business combination Shenyang Shenyang acturin 85.00
technology Co., Ltd. under common control g
2. Significant but not wholly-owned subsidiaries
Profits and losses Dividend declared Ending Proportion of
attributing to to distribute to balance of Name of the subsidiaries non-controlling
non-controlling non-controlling non-controlling interests(%)
shareholders shareholders interests Bengang Posco Cold-rolled Sheet Co.,
25.00% 1,926,183.65 502,422,724.15 Ltd.
3. Financial information of significant but not wholly-owned subsidiaries
Ending balance
Name of the Non-curre
Non-current Current
subsidiaries Current assets Total assets nt Total liabilities assets liabilities
liabilities
Bengang Posco
4,223,695,815.76 1,544,857,225.81 5,768,553,041.57 3,758,862,144.98 3,758,862,144.98 Cold-rolled Sheet
Notes to the financial statements Page 62
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Name of the Ending balance
Co.,s Lutbds. idiaries
Beginning balance
Name of the Current Non-current Current Non-curren
Total assets Total liabilities subsidiaries assets assets liabilities t liabilities
Bengang Posco
Cold-rolled Sheet 2,986,224,229.42 1,692,675,158.81 4,678,899,388.23 2,678,954,080.56 2,678,954,080.56 Co., Ltd.
Current period
Total
Name of the subsidiaries Operating Net cash flows from Net profit comprehensive
income operating activities income
Bengang Posco Cold-rolled Sheet
3,720,975,482.91 7,704,734.61 7,704,734.61 1,318,506,299.45 Co., Ltd.
Previous period
Total
Name of the subsidiaries Operating Net cash flows from Net profit comprehensive
income operating activities income
Bengang Posco Cold-rolled Sheet
3,971,529,847.27 5,511,711.19 5,511,711.19 686,401,003.83 Co., Ltd.
(2) Equity in joint venture or associates
1. Summary of financial information of unimportant joint ventures and associates
Ending balance/Current period Beginning balance/Previous period Joint ventures:
Total book value of investment: 2,481,589.04 2,455,681.55 The total amount of the following items
calculated according to the shareholding ratio
—Net profit 25,907.49 171,488.75—Other comprehensive income
—Total comprehensive income 25,907.49 171,488.75
Notes to the financial statements Page 63
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
7. Risks associated with financial instruments
(1) Credit risk
Credit risk refers to a financial loss to a party due to failure to discharge an obligation by 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 ensure 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. The Company has been constantly working on the adjustment of the organizational
Notes to the financial statements Page 64
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
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, Hongkong 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
Total
USD Euro HKD Japanese Yen
57,407.35 732.33 70.90 58,210.58 Assets
346,209.89 51,733.96 1,183.20 399,127.06 Liabilities
403,617.24 52,466.29 70.90 1,183.20 457,337.63 Total
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) Ending balance
Items Impact on Impact on
Total
Impact on USD Impact on Euro
HKD Japanese Yen
-14,440.13 -2,550.08 3.54 -59.16 -17,045.82 Appreciation by5%
14,440.13 2,550.08 -3.54 59.16 17,045.82 Depreciation by5%
(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.
Notes to the financial statements Page 65
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
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 Company can be required to pay. The table includes both interest and principal cash flows.
(In 10 Thousand Yuan) Ending balance
Items Over 5
Within 1 year 1-2 years 2-5 years Total
years
Trade and other payables 1,797,686.94 31,109.67 135.72 94.60 1,829,026.93 Loans and interests 1,333,477.52 430,629.37 77,769.29 112,906.80 1,954,782.98 Total 3,131,164.46 461,739.04 77,905.01 113,001.40 3,783,809.91 (In 10 Thousand Yuan) Beginning balance
Items Over 5
Within 1 year 1-2 years 2-5 years Total
years
Trade and other payables 1,638,885.92 67.12 130.65 71.79 1,639,155.48 Loans and interests 1,229,911.46 224,083.41 371,055.41 113,225.19 1,938,275.47 Total 2,868,797.38 224,150.53 371,186.06 113,296.98 3,577,430.95 8. Related party transactions
(1) Details of parent company
(In 100 Million Yuan) Place of Notes of Registered Share Voting
Name of parent company
Registry Business capital proportion(%) rights(%) Benxi Steel (Group) Co., Ltd. Benxi Manufacturing 62.92 61.43 61.43
Note:
The parent company of Benxi Steel (Group) Co., Ltd is Bengang Group Co., Ltd.
The ultimate controlling party of the Company is the State-owned Assets Supervision and Administration Commission of Liaoning Province.
(2) Details of the subsidiaries
For details of subsidiaries of the Company please refer to Note 6 “Equity in other entities”.
Notes to the financial statements Page 66
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
(3) Details of other related parties
Name of Other related parties Relationship
Bengang Group International Economic
Both belong to Bengang Group Co., Ltd.
and Trading Co., Ltd.
Bengang Cold-rolled Stainless Steel
Same parent company
Dandong Co., Ltd.
Benxi Beiying Steel& Iron (Group) Co.,
Both belong to Bengang Group Co., Ltd.
Ltd.
Bengang Electronics and Gas Co., Ltd. Both belong to Benxi Steel and Iron (Group) Co., Ltd.
Benxi Steel& Iron (Group) Real-estate
Same parent company
Development Co., Ltd.
Benxi Steel& Iron (Group) Steel& Iron
Same parent company
Process and Logistics Co., Ltd.
Benxi Steel& Iron (Group) Machinery
Same parent company
Manufacture Co., Ltd.
Benxi Steel& Iron (Group) Construction
Same parent company
Co., Ltd.
Benxi Steel& Iron (Group) Mining Co.,
Same parent company
Ltd.
Benxi Steel& Iron (Group) Thermal Power
Same parent company
Development Co., Ltd.
Benxi Steel& Iron (Group) Designing
Same parent company
Institute
Benxi Steel& Iron (Group) Industrial
Same parent company
Development Co., Ltd.
Benxi Steel& Iron (Group) Information
Same parent company
and Automatic Tech Co., Ltd.
Benxi Steel& Iron (Group) Construction Same parent company
Notes to the financial statements Page 67
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Name of Other related parties Relationship
and Repairing Co., Ltd.
Benxi Steel& Iron (Group) Metallurgy
Same parent company
Residues Co., Ltd.
Benxi Iron and Steel (Group) Engineering
Same parent company
Construction Supervision Co., Ltd.
Benxi Steel& Iron (Group) Zhengtai
Same parent company
Construction Materials Co., Ltd.
Benxi High-tech Drilling Tools
Both belong to Bengang Group Co., Ltd.
Manufacture 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
Both belong to Benxi Steel and Iron (Group) Co., Ltd.
Sales Co., Ltd.
Benxi Steel& Iron (Group) General
Both belong to Benxi Steel and Iron (Group) Co., Ltd.
Hospital
Liaoning Bengang Steel& Iron Trading
Same parent company
Co., Ltd.
Liaoning Hengtai Heavy Machinery Co.,
Same parent company
Ltd.
Liaoning Hengtong Metallurgical
Same parent company
Equipment Manufacture Co., Ltd.
Liaoning Metallurgy Technician College Same parent company
Liaoning Metallurgy Vocational Technical
Same parent company
College
Suzhou Bengang Industrial Co., Ltd. Shareholding company
Benxi Steel& Iron (Group) Medical
Related party that the parent company has significant influence on it Services Department;
Bengang Group Finance Co., Ltd. Both belong to Bengang Group Co., Ltd.
Notes to the financial statements Page 68
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Name of Other related parties Relationship
Liaoning Hengyi Financial Leasing Co., Both belong to Bengang Group Co., Ltd.
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 party Current Previous Name
transactions period period Benxi Steel& Iron (Group) Co., Ltd. Repair expense
14,299.69 19,767.05 Benxi Steel& Iron (Group) Co., Ltd. Land lease fee
2,734.57 2,734.57 Bengang Cold-rolled Stainless Steel Dandong Co., Ltd. Products
82.25 64.19 Benxi Steel& Iron (Group) Mining Co., Ltd. Labor cost
391.41 386.75 Raw material and
Benxi Steel& Iron (Group) Mining Co., Ltd.
215,655.53 203,816.33 supplementary material
85.36 - Benxi Steel& Iron (Group) Mining Co., Ltd. Freight
Raw material and
11,056.03 12,852.84 Benxi Steel& Iron (Group) Metallurgy Residues Co., Ltd.
supplementary material
Benxi Steel& Iron (Group) Steel& Iron Process and Logistics
84.61 87.67 Processing fee
Co., Ltd.
3,418.04 3,627.99 Benxi Steel& Iron (Group) Real-estate Development Co., Ltd. Raw materials
3,341.85 4,600.29 Benxi Steel& Iron (Group) Machinery Manufacture Co., Ltd. Spare parts
370.37 495.18 Benxi Steel& Iron (Group) Machinery Manufacture Co., Ltd. Repair services
424.68 191.80 Benxi Steel& Iron (Group) Construction Co., Ltd. Spare parts
7,123.75 2,028.95 Benxi Steel& Iron (Group) Construction Co., Ltd. Project fee
7,085.65 11,481.87 Benxi Steel& Iron (Group) Construction Co., Ltd. Repair services
Raw material and
332.06 109.40 Benxi Steel& Iron (Group) Construction Co., Ltd.
supplementary material
Notes to the financial statements Page 69
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
The content of related party Current Previous Name
transactions period period 152.48 131.35 Benxi Steel& Iron (Group) Construction Co., Ltd. Freight
2,896.02 2,808.40 Benxi Steel& Iron (Group) Industrial Development Co., Ltd. Spare parts
Raw material and
6,106.81 6,730.62 Benxi Steel& Iron (Group) Industrial Development Co., Ltd.
supplementary material
940.92 1,829.45 Benxi Steel& Iron (Group) Industrial Development Co., Ltd. Repair services
349.19 101.81 Benxi Steel& Iron (Group) Industrial Development Co., Ltd. Freight
15.80 91.68 Benxi Steel& Iron (Group) Industrial Development Co., Ltd. Project fee
Raw material&
Benxi Steel& Iron (Group) Construction and Repairing Co.,
88.60 326.39 supplementary materials&
Ltd.
spare parts
Benxi Steel& Iron (Group) Construction and Repairing Co.,
453.18 1,175.38 Project fee
Ltd.
Benxi Steel& Iron (Group) Construction and Repairing Co.,
5,520.77 8,327.40 Repair expense
Ltd.
Raw material and
5,873.36 6,411.95 Bengang Electronics and Gas Co., Ltd.
supplementary material
252.09 1,862.90 Bengang Electronics and Gas Co., Ltd. Repair services
4.47 31.12 Benxi High-tech Drilling Tools Manufacture Co., Ltd. Spare parts
47.20 44.20 Benxi New Career Development Co., Ltd. Labor protection fee
Raw material and
48.42 - Benxi New Career Development Co., Ltd. supplementary material
and food
699.54 317.07 Liaoning Metallurgy Technician College Spare parts
3,417.46 3,564.93 Bengang Group International Economic and Trading Co., Ltd. Agency fee
5,240.58 5,690.72 Bengang Group International Economic and Trading Co., Ltd. Port surcharges
Benxi Steel& Iron (Group) Information and Automatic Tech
226.21 933.25 Spare parts
Co., Ltd.
Notes to the financial statements Page 70
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
The content of related party Current Previous Name
transactions period period Benxi Steel& Iron (Group) Information and Automatic Tech
2,191.45 2,335.89 Project fee
Co., Ltd.
Benxi Steel& Iron (Group) Thermal Power Development Co.,
27.20 37.73 Heating costs
Ltd.
Benxi Steel& Iron (Group) Thermal Power Development Co., Raw material and
2.84
Ltd. supplementary material
29.24 231.58 Benxi Steel& Iron (Group) Designing Institute Design fees
Raw material and
591,426.43 566,834.95 Benxi Beiying Steel& Iron (Group) Co., Ltd.
supplementary material
31,906.75 38,865.84 Benxi Beiying Steel& Iron (Group) Co., Ltd. Energy& Power
234.47 303.15 Benxi Beiying Steel& Iron (Group) Co., Ltd. Freight
4,250.18 3,931.44 Benxi Beiying Steel& Iron (Group) Co., Ltd. Labor cost
758.28 1,064.59 Benxi Beiying Steel& Iron (Group) Co., Ltd. Spare parts
Liaoning Hengtong Metallurgical Equipment Manufacture Co., Raw material and spare
4,493.46 5,398.61 Ltd. parts
Raw material and spare
171.84 124.87 Liaoning Hengtai Heavy Machinery Co., Ltd.
parts
1,133.13 1,477.37 Liaoning Hengtai Heavy Machinery Co., Ltd. Repair and labor cost
37.61
Bengang Group Co., Ltd. House renting fee
3 1 .07 Bengang Group Co., Ltd. Property management fee
935,481.84 923,260.58 Total
Company as the seller
(In 10 Thousand Yuan) The content of related party
Name Current period Previous period transactions
50.42 51.90 Bengang Electronics and Gas Co., Ltd. Energy& Power
Raw material&
60,230.78 116,469.29 Benxi Beiying Steel& Iron (Group) Co., Ltd.
supplementary materials&
Notes to the financial statements Page 71
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
The content of related party
Name Current period Previous period transactions
spare parts
792.19 1,230.13 Benxi Beiying Steel& Iron (Group) Co., Ltd. Products
7,565.39 5,706.89 Benxi Beiying Steel& Iron (Group) Co., Ltd. Energy& Power
Benxi Steel& Iron (Group) Real-estate
6.20 6.94 Energy& Power
Development Co., Ltd.
Benxi Steel& Iron (Group) Steel& Iron Process
27.47 37.52 Energy& Power
and Logistics Co., Ltd.
Benxi Steel& Iron (Group) Machinery
995.77 973.31 Products
Manufacture Co., Ltd.
Benxi Steel& Iron (Group) Machinery
716.43 943.21 Energy& Power
Manufacture Co., Ltd.
Raw material&
Benxi Steel& Iron (Group) Machinery
605.66 113.58 supplementary materials&
Manufacture Co., Ltd.
spare parts
19.45 94.13 Benxi Steel& Iron (Group) Construction Co., Ltd. Energy& Power
Raw material&
108.13 71.24 Benxi Steel& Iron (Group) Construction Co., Ltd. supplementary materials&
spare parts
34,182.02 35,940.67 Benxi Steel& Iron (Group) Mining Co., Ltd. Energy& Power
Raw material&
3,156.26 2,831.52 Benxi Steel& Iron (Group) Mining Co., Ltd. supplementary materials&
spare parts
487.08 402.48 Benxi Steel& Iron (Group) Mining Co., Ltd. Freight revenue
Benxi Steel& Iron (Group) Thermal Power
2,289.99 2,374.96 Energy& Power
Development Co., Ltd.
Benxi Steel& Iron (Group) Thermal Power Raw material&
994.94 801.85 Development Co., Ltd. supplementary materials&
Notes to the financial statements Page 72
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
The content of related party
Name Current period Previous period transactions
spare parts
Benxi Steel& Iron (Group) Thermal Power
8.58 Freight revenue
Development Co., Ltd.
Benxi Steel& Iron (Group) Industrial
407.66 388.54 Energy& Power
Development Co., Ltd.
Benxi Steel& Iron (Group) Industrial
12.46 11.32 Products
Development Co., Ltd.
Raw material&
Benxi Steel& Iron (Group) Industrial
717.36 1,251.78 supplementary materials&
Development Co., Ltd.
spare parts
Benxi Steel& Iron (Group) Information and
7.68 9.01 Energy& Power
Automatic Tech Co., Ltd.
Benxi Steel& Iron (Group) Construction and
79.48 83.99 Energy& Power
Repairing Co., Ltd.
Raw material&
Benxi Steel& Iron (Group) Construction and
248.68 12.26 supplementary materials&
Repairing Co., Ltd.
spare parts
Benxi Steel& Iron (Group) Metallurgy Residues
302.41 260.48 Energy& Power
Co., Ltd.
Raw material&
Benxi Steel& Iron (Group) Metallurgy Residues
9,363.79 9,045.64 supplementary materials&
Co., Ltd.
spare parts
Benxi Steel& Iron (Group) Metallurgy Residues
7 1 1.36 Freight revenue
Co., Ltd.
147.07 702.65 Benxi Steel& Iron (Group) Co., Ltd. Energy& Power
Raw material&
156.10 270.51 Benxi Steel& Iron (Group) Co., Ltd.
supplementary materials&
Notes to the financial statements Page 73
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
The content of related party
Name Current period Previous period transactions
spare parts
15.13 18.10 Benxi New Career Development Co., Ltd. Energy& Power
188.32 175.76 Dalian Boluole Steel Tube Co., Ltd. Products
3.09 3.42 Benxi Steel& Iron (Group) General Hospital Energy& Power
Benxi Steel& Iron (Group) Zhengtai Construction
0.27 - Energy& Power
Materials Co., Ltd.
Raw material&
Liaoning Hengtong Metallurgical Equipment
832.61 1,305.43 supplementary materials&
Manufacture Co., Ltd.
spare parts
Raw material&
Bengang Cold-rolled Stainless Steel Dandong Co.,
24.14
supplementary materials&
Ltd.
spare parts
16,362.43 17,052.85 Suzhou Bengang Industrial Co., Ltd. Products
0.69 0.70 Bengang Group Finance Co., Ltd. Energy& Power
7.79 9.47 Bengang Group Co., Ltd. Energy& Power
141,105.34 199,371.47 Total
2. Lease information of related parties
Company as the lessor
Lessee Lease capital category Lease income of current period Lease income of previous period Benxi Steel& Iron
(Group) Steel& Iron
Warehouse and machinery 250,000.00 250,000.00 Process and
Logistics Co., Ltd.
Benxi Steel& Iron
(Group) Machinery
Plants and machinery 245,000.00 245,000.00 Manufacture Co.,
Ltd.
Company as the lessee
Lessor Lease capital category Lease charges of current period Lease charges of previous period
Notes to the financial statements Page 74
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Benxi Steel& Iron
2300 Hot rolling product line 123,426,656.64 120,000,000.00 (Group) Co., Ltd
Benxi Steel& Iron
Land use right 27,345,714.30 27,345,714.30 (Group) Co., Ltd
Benxi Beiying Steel
& Iron (Group) Co., 1780 Hot rolling product line 59,013,278.16 64,929,604.02 Ltd.
Financial lease matters:
During the reporting period, the company leased machinery and equipment from Liaoning Hengyi Finance Leasing Co., Ltd. in the form of financial leases. As of the end of the reporting period, the long-term accounts payable amounted to RMB 52,733,529.65.
Notes to lease from or to related parties:
1. The Company leases land from Bengang Group Co., Ltd., with a monthly rent of 0.594 yuan per square meter. The leased land is 7,669,068.17 square meters and the annual rent is 54,665.10 thousand yuan.
2. For the 2300mm 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” were adopted on the sixth meeting of the seventh board of directors, 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.
Notes to the financial statements Page 75
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
3. Information of Guarantee among related parties
(1) Company as the guarantor
No.
(2) Company as the warrantee
Guarantee of loans:
Has the
Ending date
Starting date guarantee Warrantor Amount of guarantee of
of Guarantee been
Guarantee
fulfilled
Bengang Group Co., Ltd. and Benxi No
¥200,000,000.00 2018/9/7 2019/9/5
Steel& Iron (Group) Co., Ltd.
Bengang Group Co., Ltd. and Benxi No
¥150,000,000.00 2018/10/17 2019/10/16
Steel& Iron (Group) Co., Ltd.
Bengang Group Co., Ltd. and Benxi No
¥200,000,000.00 2018/10/12 2019/10/10
Steel& Iron (Group) Co., Ltd.
Bengang Group Co., Ltd. and Benxi No
¥90,000,000.00 2016/3/30 2025/3/20
Steel& Iron (Group) Co., Ltd.
Bengang Group Co., Ltd. and Benxi No
¥610,000,000.00 2017/2/27 2025/2/20
Steel& Iron (Group) Co., Ltd.
Bengang Group Co., Ltd. and Benxi No
¥200,000,000.00 2018/11/9 2019/11/7
Steel& Iron (Group) Co., Ltd.
Bengang Group Co., Ltd. and Benxi No
¥200,000,000.00 2018/11/14 2019/11/13
Steel& Iron (Group) Co., Ltd.
Bengang Group Co., Ltd. and Benxi No
¥200,000,000.00 2019/6/13 2020/6/9
Steel& Iron (Group) Co., Ltd.
Bengang Group Co., Ltd. and Benxi No
¥200,000,000.00 2019/6/17 2020/6/17
Steel& Iron (Group) Co., Ltd.
Bengang Group Co., Ltd. and Benxi No
¥100,000,000.00 2019/1/24 2020/1/23
Steel& Iron (Group) Co., Ltd.
Notes to the financial statements Page 76
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Has the
Ending date
Starting date guarantee Warrantor Amount of guarantee of
of Guarantee been
Guarantee
fulfilled
Bengang Group Co., Ltd. and Benxi No
¥178,000,000.00 2018/12/13 2019/12/12
Steel& Iron (Group) Co., Ltd.
¥300,000,000.00 2018/11/15 2019/11/14
Bengang Group Co., Ltd. No
¥140,000,000.00 2019/1/25 2020/1/25
Bengang Group Co., Ltd. No
¥900,000,000.00 2018/11/28 2019/11/27
Bengang Group Co., Ltd. No
¥100,000,000.00 2015/6/25 2021/9/21
Bengang Group Co., Ltd. No
¥340,000,000.00 2019/3/29 2020/3/27
Bengang Group Co., Ltd. No
¥520,000,000.00 2019/1/8 2019/12/14
Bengang Group Co., Ltd. No
¥480,000,000.00 2019/1/28 2020/1/27
Bengang Group Co., Ltd. No
¥310,000,000.00 2019/5/14 2020/5/13
Bengang Group Co., Ltd. No
¥720,000,000.00 2019/5/14 2020/5/13
Bengang Group Co., Ltd. No
¥24,000,000.00 2015/12/9 2022/3/21
Bengang Group Co., Ltd. No
¥36,450,000.00 2016/12/27 2020/6/21
Bengang Group Co., Ltd. No
¥87,280,000.00 2018/3/26 2024/6/21
Bengang Group Co., Ltd. No
¥59,570,000.00 2017/11/15 2021/12/21
Bengang Group Co., Ltd. No
¥622,600,000.00 2017/12/15 2024/8/20
Bengang Group Co., Ltd. No
¥390,000,000.00 2018/11/29 2019/11/28
Bengang Group Co., Ltd. No
¥150,000,000.00 2018/7/13 2019/7/13
Bengang Group Co., Ltd. No
¥150,000,000.00 2018/7/13 2019/7/13
Bengang Group Co., Ltd. No
¥100,000,000.00 2018/7/2 2019/7/1
Bengang Group Co., Ltd. No
¥147,000,000.00 2018/12/19 2019/12/19
Benxi Steel& Iron (Group) Co., Ltd. No
¥330,000,000.00 2019/1/18 2020/1/18
Benxi Steel& Iron (Group) Co., Ltd. No
¥340,000,000.00 2019/1/25 2020/1/25
Benxi Steel& Iron (Group) Co., Ltd. No
¥224,000,000.00 2019/3/25 2020/3/25
Benxi Steel& Iron (Group) Co., Ltd. No
¥300,000,000.00 2018/12/14 2019/12/14
Benxi Steel& Iron (Group) Co., Ltd. No
¥373,000,000.00 2018/12/13 2019/12/13
Benxi Steel& Iron (Group) Co., Ltd. No
Notes to the financial statements Page 77
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Has the
Ending date
Starting date guarantee Warrantor Amount of guarantee of
of Guarantee been
Guarantee
fulfilled
¥480,000,000.00 2018/12/13 2019/12/13
Benxi Steel& Iron (Group) Co., Ltd. No
¥500,000,000.00 2018/12/13 2019/12/13
Benxi Steel& Iron (Group) Co., Ltd. No
EUR 1,813,075.20 2015/6/25 2019/8/31
Bengang Group Co., Ltd. No
EUR 2,311,613.67 2015/6/25 2019/10/31
Bengang Group Co., Ltd. No
EUR 1,948,053.95 2015/6/25 2020/4/30
Bengang Group Co., Ltd. No
EUR 483,803.97 2015/6/25 2025/6/30
Bengang Group Co., Ltd. No
EUR 13,834,496.03 2015/6/25 2025/6/30
Bengang Group Co., Ltd. No
EUR 609,296.41 2015/6/25 2025/8/31
Bengang Group Co., Ltd. No
EUR 11,990,585.71 2015/6/25 2025/8/31
Bengang Group Co., Ltd. No
EUR 233,211.78 2015/6/25 2025/9/30
Bengang Group Co., Ltd. No
EUR 719,075.68 2015/6/25 2025/10/31
Bengang Group Co., Ltd. No
EUR 9,901,243.51 2015/6/25 2025/10/31
Bengang Group Co., Ltd. No
EUR 6,162.48 2015/6/25 2026/4/30
Bengang Group Co., Ltd. No
EUR 557,460.75 2015/6/25 2026/4/30
Bengang Group Co., Ltd. No
EUR 597,187.50 2015/8/20 2019/9/30
Bengang Group Co., Ltd. No
EUR 7,967,631.00 2015/8/20 2025/9/30
Bengang Group Co., Ltd. No
EUR 642,082.50 2015/12/28 2019/7/30
Bengang Group Co., Ltd. No
EUR 239,173.64 2015/12/28 2019/8/31
Bengang Group Co., Ltd. No
EUR 44,356.22 2015/12/28 2019/10/31
Bengang Group Co., Ltd. No
EUR 696,676.50 2015/12/28 2020/4/30
Bengang Group Co., Ltd. No
EUR 424,686.42 2015/12/28 2025/6/30
Bengang Group Co., Ltd. No
EUR 253,120.00 2015/12/28 2025/8/31
Bengang Group Co., Ltd. No
EUR 4,579,846.88 2015/12/28 2025/10/31
Bengang Group Co., Ltd. No
EUR 4,069.11 2015/12/28 2026/4/30
Bengang Group Co., Ltd. No
EUR 6,798,868.28 2015/12/28 2026/4/30
Bengang Group Co., Ltd. No
EUR 410,699.25 2016/6/27 2020/4/30
Bengang Group Co., Ltd. No
Notes to the financial statements Page 78
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Has the
Ending date
Starting date guarantee Warrantor Amount of guarantee of
of Guarantee been
Guarantee
fulfilled
EUR 3,727,122.75 2016/6/27 2020/4/30
Bengang Group Co., Ltd. No
EUR 36,617.16 2016/12/14 2020/4/30
Bengang Group Co., Ltd. No
EUR 2,833,183.48 2016/12/14 2026/4/30
Bengang Group Co., Ltd. No
EUR 21,690.00 2017/6/30 2025/10/31
Bengang Group Co., Ltd. No
EUR 1,091,628.91 2017/6/30 2025/10/31
Bengang Group Co., Ltd. No
Bengang Group Co., Ltd. and Benxi No
US$20,000,000.00 2018/5/8 2020/5/7
Beiying Steel& Iron (Group) Co.,
Ltd.
Bengang Group Co., Ltd. and Benxi No
US$80,000,000.00 2018/5/2 2020/5/21
Beiying Steel& Iron (Group) Co.,
Ltd.
Bengang Group Co., Ltd. and Benxi No
US$45,000,000.00 2018/7/3 2020/7/2
Beiying Steel& Iron (Group) Co.,
Ltd.
Bengang Group Co., Ltd. and Benxi No
US$45,000,000.00 2018/8/17 2020/8/7
Beiying Steel& Iron (Group) Co.,
Ltd.
Bengang Group Co., Ltd. and Benxi No
US$100,000,000.00 2018/8/29 2020/8/28
Beiying Steel& Iron (Group) Co.,
Ltd.
US$90,000,000.00 2019/3/29 2020/3/29
Benxi Steel& Iron (Group) Co., Ltd. No
US$100,000,000.00 2019/1/24 2020/1/24
Benxi Steel& Iron (Group) Co., Ltd. No
JPY185,408,000.00 1997/10/10 2027/9/10
Benxi Steel& Iron (Group) Co., Ltd. No
4. Other related party transactions
(1) Loan from and deposits in Bengang Group Finance Co., Ltd.
Notes to the financial statements Page 79
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
(In 10 Thousand Yuan) Item Beginning balance Increase Decrease Ending balance Notes
Deposits 975,193.08 6,857,385.39 6,793,699.59 1,038,878.89
1. The interests of deposits in Bengang Group Finance Co., Ltd. is RMB 94,469.5 thousand from January to June in 2019. As at 30 June 2019, the interest receivable from Bengang Group Finance Co., Ltd. is RMB 13,872.1 thousand.
2. As at 30 June 2019, the restricted deposits in Bengang Group Finance Co., Ltd. is RMB 1,489,439.90 thousand.
3. From January to June in 2019, the company and its subsidiaries did not borrow money from financial companies.
4. Bengang Group Finance Co., Ltd. granted the company an unsecured credit line of RMB 2.5 billion from January to June in 2019. As at 30 June 2019, the amount of acceptance bill opened by Bengang Group Finance Co., Ltd. was RMB 2.15 billion, and the amount of the acceptance bill that had been opened and unpaid by Bengang Group Finance Co., Ltd. is RMB 1.632 billion, 1.509 billion of which is100% deposit and remaining 0.123 billion exposure.
5. From January to June in 2019, the Company did not apply for bill discounting to the finance company.
(2) The company's loan and interest payment to Benxi Steel and Iron (Group) Co., Ltd.
(In 10 Thousand yuan). Item Beginning balance Increase Decrease Ending balance Entrusted loan through Bengang
1,422.00 0.00 1,422.00 0.00 Group Finance Co., Ltd.
Capital lending 7,770.00 2,140.00 1,400.00 8,770.00 Total 9,192.00 2,140.00 2,822.00 8,770.00 Details of outstanding loans as at 30 June 2019:
Related parties Lease form Lease amount Start date Due date 32,700,000.00 2018/10/25 2019/10/25 Benxi Steel and Iron (Group) Co., Ltd. Entrusted loan
20,000,000.00 2018/12/5 2019/12//5 Benxi Steel and Iron (Group) Co., Ltd. Money lending
10,000,000.00 2019/1/18 2020/1/18 Benxi Steel and Iron (Group) Co., Ltd. Money lending
14,000,000.00 2019/6/14 2020/6/14 Benxi Steel and Iron (Group) Co., Ltd. Money lending
11,000,000.00 2018/7/5 2019/7/5 Benxi Steel and Iron (Group) Co., Ltd. Money lending
Notes to the financial statements Page 80
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Related parties Lease form Lease amount Start date Due date 87,700,000.00
Total
Notes: The interest accrued is RMB 2,028,394.55 during the current period, and as at 30 June 2019, the company has no interest that has not been paid.
(5) Receivables and payables of the related parties
1. Receivables of the Company
(in 10 thousand yuan)
Ending Balance Beginning Balance
Provision Provision Items Name Name Carrying Carrying
for bad for bad amount amount
debts debts
Accounts receivable
Benxi Beiying Steel& Iron
967.76 1,206.26
(Group) Co., Ltd.
Bengang Electronics and
401.11 112.76 408.26 112.76 Gas Co., Ltd.
Benxi Steel& Iron (Group)
52.68
Machinery Manufacture
Co., Ltd.
Benxi Steel& Iron (Group)
85.48
Industrial Development
Co., Ltd.
Benxi Steel& Iron (Group)
803.58 937.22
Thermal Power
Development Co., Ltd.
Bengang Cold-rolled
106.16 19.31 155.04 19.31 Stainless Steel Dandong
Co., Ltd.
Liaoning Hengtong
37.10
Metallurgical Equipment
Notes to the financial statements Page 81
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Ending Balance Beginning Balance
Provision Provision Items Name Name Carrying Carrying
for bad for bad amount amount
debts debts
Manufacture Co., Ltd.
Bengang Group
10.10 12,906.30
International Economic
and Trading Co., Ltd.
Benxi Steel& Iron
113.22
(Group) Metallurgy
Residues Co., Ltd.
Total: 2,463.97 132.08 15,726.31 132.08 Prepayments
Benxi Beiying Steel& Iron
628,463.25 71,312.43
(Group) Co., Ltd.
Benxi Steel& Iron (Group)
2,174.38
Machinery Manufacture
Co., Ltd.
Bengang Cold-rolled
120.12 4.73
Stainless Steel Dandong
Co., Ltd.
Total: 630,757.75 71,317.16
Other receivables
Benxi Steel& Iron (Group)
255.40 72.45 261.61 72.45 Real-estate Development
Co., Ltd.
Liaoning Metallurgy
3.94 - 5.80 - Technician College
Benxi Steel& Iron
136.62 - 259.26 - (Group) Machinery
Manufacture Co., Ltd.
451.43 - 449.20 - Benxi Steel& Iron (Group)
Notes to the financial statements Page 82
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Ending Balance Beginning Balance
Provision Provision Items Name Name Carrying Carrying
for bad for bad amount amount
debts debts
Construction Co., Ltd.
Bengang Group
480.74 - 622.45 - International Economic
and Trading Co., Ltd.
Benxi Steel& Iron
223.55 - 181.50 - (Group) Industrial
Development Co., Ltd.
Benxi Steel& Iron
(Group) Zhengtai
20.11 19.32 20.41 19.32 Construction Materials
Co., Ltd.
Benxi Steel& Iron
95.51 73.32 93.95 73.32 (Group) Medical Co.,
Ltd.
1,667.31 165.09 1,894.19 165.09 Total:
2. Payables of the Company
(in 10 thousand yuan) Items Name Ending balance Beginning balance Notes payable
Benxi Steel& Iron (Group) Industrial Development Co.,
0.00 190.51 Ltd.
Benxi Steel& Iron (Group) Machinery Manufacture Co.,
100.82 22.44 Ltd.
Benxi Iron and Steel (Group) Mining Co., Ltd. 124,323.34 98,047.94 Benxi Beiying Steel& Iron (Group) Co., Ltd. 516,313.71 470,958.00 Benxi Steel& Iron (Group) Metallurgy Residues Co., Ltd. 3,000.00 0.00 Benxi Steel& Iron (Group) Real-estate Development Co.,
0.00 291.70 Ltd.
Total 643,737.87 569,510.58 Accounts payable
Notes to the financial statements Page 83
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Items Name Ending balance Beginning balance Bengang Electronics and Gas Co., Ltd. 507.18 2,038.30 Benxi Steel& Iron (Group) Real-estate Development Co.,
282.90 318.45 Ltd.
Bengang Group International Economic and Trading Co.,
20,040.23 151,974.50 Ltd.
Benxi Steel& Iron (Group) Machinery Manufacture Co.,
2,560.48 3,239.73 Ltd.
Benxi Steel& Iron (Group) Construction Co., Ltd. 7,609.90 9,288.02 Benxi Steel& Iron (Group) Mining Co., Ltd. 25,294.53 46,435.71 Benxi Steel& Iron (Group) Industrial Development Co.,
9,528.57 7,543.14 Ltd.
Benxi New Career Development Co., Ltd. 4.40 356.98 Benxi Steel& Iron (Group) Construction and Repairing
11,268.41 10,736.73 Co., Ltd.
Benxi Steel& Iron (Group) Metallurgy Residues Co., Ltd. 1,245.42 1,473.85 Benxi Steel& Iron (Group) Medical and Health
2.04 2.04 department
Benxi Steel& Iron (Group) Information and Automatic
3,634.35 4,578.45 Tech Co., Ltd.
Benxi High-tech Drilling Tools Manufacture Co., Ltd. 281.78 10.80 Liaoning Metallurgical Technician College 280.76 1,033.31 Benxi Steel& Iron (Group) Thermal Power Development
38.31 20.97 Co., Ltd.
Benxi Steel& Iron (Group) Zhengtai Construction
0.00 0.24 Materials Co., Ltd.
Liaoning Hengtong Metallurgical Equipment Manufacture
1,644.37 529.45 Co., Ltd.
Liaoning Metallurgy Vocational Technical College 341.92 531.92 Bengang Cold-rolled Stainless Steel Dandong Co., Ltd. 325.89 454.96 Liaoning Hengtai Heavy Machinery Co., Ltd. 2,454.64 2,991.38 Benxi Iron and Steel (Group) Engineering Construction
0.00 123.00 Supervision Co., Ltd.
Total: 87,346.09 243,681.91 Advance from customers
Benxi Steel& Iron (Group) Machinery Manufacture Co.,
738.29 0.00 Ltd.
Benxi Steel& Iron (Group) Industrial Development Co.,
948.76 35.80 Ltd.
Benxi Steel& Iron (Group) Metallurgy Residues Co., Ltd. 583.00 0.00 Benxi Steel& Iron (Group) Steel& Iron Process and
741.11 6,069.05 Logistics Co., Ltd.
Dalian Boluole Steel Tube Co., Ltd. 221.80 66.42
Notes to the financial statements Page 84
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Items Name Ending balance Beginning balance Liaoning Bengang Steel& Iron Trading Co., Ltd. 0.00 50.02 Liaoning Hengtong Metallurgical Equipment Manufacture
940.85 12.91 Co., Ltd.
Bengang Group International Economic and Trading Co.,
758.37 786.55 Ltd.
Suzhou Bengang Industrial Co., Ltd. 3,737.35 571.81 Total: 8,669.53 7,592.55 Other payables
Benxi Steel& Iron (Group) Real-estate Development Co.,
143.82 143.59 Ltd.
Bengang Group International Economic and Trading Co.,
3243.65 4948.15 Ltd.
Benxi Steel& Iron (Group) Machinery Manufacture Co.,
64.57 75.09 Ltd.
Benxi Steel& Iron (Group) Construction Co., Ltd. 346.21 590.19 Benxi Steel& Iron (Group) Industrial Development Co.,
85.16 49.15 Ltd.
Benxi New Career Development Co., Ltd. 89.77 97.07 Benxi Steel& Iron (Group) Metallurgy Residues Co., Ltd. 29.00 50.15 Benxi Steel& Iron (Group) Co., Ltd. 10187.46 21832.88 Benxi Steel& Iron (Group) Thermal Power Development
299.13 307.73 Co., Ltd.
Guangzhou Free Trade Zone Bengang Sales Co., Ltd. 267.44 267.44 Liaoning Metallurgical Vocational and Technical College 181.67 0.3 Bengang Group Finance Co., Ltd. 0 2.12 Liaoning Metallurgy Technician College 28.95 36.33 Benxi Beiying Steel& Iron (Group) Co., Ltd. 1,404.05 1,824.27 Total: 16,370.88 30,224.46 Long-term payables
Liaoning Hengyi Financial Leasing Co., Ltd. 5,273.35 1,368.67 Total: 5,273.35 1,368.67
Notes to the financial statements Page 85
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
9. Government subsidy
(1) Government subsidy related to assets
Amount recognized in the profit and loss or offset related Item recognized in the Item listed on the
Category Amount costs or expenses profit and loss or offset balance sheet
Current Period Previous Period related costs or expenses MES Project Special Fund 860,000.00 Deferred Income 860,000.00 860,000.00 Other Income Industrial Enterprise Energy Management
5,800,000.00 Deferred Income 1,160,000.00 1,160,000.00 Other Income Center Construction Demonstration Project
Environment Pollution Renovation Project 1,810,000.00 Deferred Income 1,810,000.00 1,810,000.00 Other Income Environment Renovation Project and Regional
170,000.00 Deferred Income 170,000.00 170,000.00 Other Income Basin Environment Protection Project
High Strength Cold Rolling Steel Renovation
175,000,000.00 Deferred Income 25,000,000.00 25,000,000.00 Other Income Project
Automobile High-class Electrolytic Zinc Steel
12,312,000.00 Deferred Income 4,104,000.00 4,104,000.00 Other Income Plate Production Line Project
Sintering Machine Residue Heat Usage and
2,102,000.00 Deferred Income 2,102,000.00 2,102,000.00 Other Income Desulfurization Project
7 130t Boilers Flue Gas Desulfurization
16,800,000.00 Deferred Income 2,400,000.00 2,400,000.00 Other Income Renovation Project of Power Plant
Treatment and Salt Extraction Project of
Deferred Income 50,000.00 Other Income Desulfurization Waste Liquid of Coke Plant
Overseas Advanced Technology Introduction
5,442,000.00 Deferred Income 1,442,000.00 1,442,000.00 Other Income Special Fund
Bengang Group Co., Ltd. Automotive Board 1,000,000.00 Deferred Income Other Income
Notes to the financial statements Page 86
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Item listed on the Amount recognized in the profit and loss or offset related Item recognized in the Category Amount
balance sheet costs or expenses profit and loss or offset Engineering Laboratory Construction Project related costs or expenses Fund
R&D for the Third Generation of
2,900,000.00 Deferred Income Other Income High-strength Steel for Automobile
The 360 Cubic Meter Sintering Machine Flue
Gas Desulfurization Renovation Project of 100,000.00 Deferred Income 100,000.00 100,000.00 Other Income Blast Furnace Plant
Environment Protection Project Special Fund 580,000.00 Deferred Income 580,000.00 580,000.00 Other Income Advanced Treatment of Carbon Fiber
Wastewater Project of Coke Plant Dongfeng 9,500,000.00 Deferred Income Other Income Area
Desulfurization and Denitration Projects for
Coal-fired Boiler of Power Plant 4,500,000.00 Deferred Income 300,000.00 300,000.00 Other Income High-pressure Workshop
Power Plant No 3 workshop Heat and Power
7,000,000.00 Deferred Income 1,000,000.00 Other Income Cogeneration Renovation Project
Sintering Machine Energy Saving and
Environmental Protection Project of Blast 1,740,000.00 Deferred Income 580,000.00 580,000.00 Other Income Furnace Plant
Air Quality Automatic Monitoring System 140,000.00 Deferred Income 35,000.00 35,000.00 Other Income
Notes to the financial statements Page 87
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
(2) Government subsidy related to income
Amount recognized in the profit and Item recognized in loss or offset related costs or expenses the profit and loss Category Amount
or offset related Current Period Previous Period
costs or expenses Xihu Resource Management
414,300.00 Other Income Committee Compensation
Liaoning artisan subsidies and
340,002.97 166,938.70 Other Income skills master workstation subsidies
High-strength pipeline steel
support under low temperature and 136,000.00 52,000.00 Other Income high-pressure service conditions
10. Commitments and Contingencies
(1) Commitments
1. Lease contracts in progress or to be performed and their financial impacts
(1) For the land leased from the Company to the Group, price is RMB 0.594 per Square meter per month, and the area of the land is 7,669,068.17 square meters; hence annual rent is RMB 54,665.10 thousand.
(2) For the 2300mm 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” were adopted on the sixth meeting of the seventh board of directors, 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.
Notes to the financial statements Page 88
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
2. Irrevocable letter of credit
As at June 30, 2019, the amount of irrevocable letter of credit that was not fulfilled is
RMB 2.333 billion.
(2) Contingencies
At the balance sheet date, no significant contingencies need to be disclosed.
11. Subsequent events
(1) Profit distribution after the reporting period
On April 17, 2019, the resolution of the 24th meeting of the 7th Board of Directors passed the 2018 dividend distribution plan. Based on the total share capital of the company's 2018 annual profit distribution equity registration date, a cash dividend of 0.5 yuan (including tax) will be Proposed profit or dividend
distributed to every 10 shares of all registered shareholders. The cash dividend is 193,768,576.60 yuan. The above profit distribution plan has been reviewed and approved by the shareholders meeting and was distributed on July 12, 2019.
12. Other significant events
(1) Segment information
Since 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 material issues that will influenceinvestors’ decisions
1. Financing Lease
For prioritizing the capital structure and exploring financing channel, the Company signed the “Financial lease cooperation framework” with Liaoning Hengyi Financial Leasing Co., Ltd. with the amount of financial lease not exceeding RMB 5 billion per year. The Company obtains the fund through sales and lease back financial lease with interest rate not above the benchmark interest rate of loan over the same period published by thePeople’s bank of China and the
Notes to the financial statements Page 89
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
interest rate will be adjusted with the changes of benchmark interest rate of loan published by thePeople’s bank of China over the lease term. The lease security ratio is not higher than30% of the lease principal amount. The term of financial lease shall not exceed 12 years.
2. Shares pledged by the Controlling Shareholders
As at 30 June 2019, within the total shares held by the controlling shareholder Benxi Steel& Iron (Group) Co., Ltd., 1,652,095,133 shares are pledged and 45,000,000.00 shares are frozen.
13. Notes to the financial statements of parent company
(1) Accounts receivable
1. Accounts receivable disclosed by category
Ending balance
Carrying amount Provision for bad debts
Items
Book value
Percentage Bad debts
Amount Amount
(%) ratio(%)
Accounts receivable tested
for impairment 47,762,337.18 8.26 47,762,337.18 100.00
individually
Accounts receivable tested
for impairment by 530,605,966.90 91.74 128,208,215.05 24.16 402,397,751.85 portfolio
Total 578,368,304.08 100.00 175,970,552.23 402,397,751.85 Beginning balance
Carrying amount Provision for bad debts
Items
Book value
Percentag Bad debts
Amount Amount
e(%) ratio(%)
Accounts receivable tested
for impairment 47,762,337.18 8.11 47,762,337.18 100.00
individually
Accounts receivable tested
for impairment by 541,151,187.11 91.89 131,598,127.84 24.32 409,553,059.27
portfolio
Total 588,913,524.29 100.00 179,360,465.02 409,553,059.27
Receivables individually significant and tested for impairment individually
Notes to the financial statements Page 90
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Ending balance
Items Provision for Bad debts
Accounts receivable Reason
bad debts ratio(%)
Benxi Nanfen Xinhe Metallurgical
47,762,337.18 47,762,337.18 100.00 Halt operation
Co., Ltd.
Total 47,762,337.18 47,762,337.18
Accounts receivable disclosed by aging
Ending balance
Items
Carrying amount Provision for bad debts Bad debts ratio(%)
Within 1 year (inclusive) 326,326,994.80
1-2 years (inclusive) 56,750,367.45 2,837,518.37 5 2-3 years (inclusive) 27,697,384.96 5,539,476.99 20 Over 3 years 167,593,556.87 167,593,556.87 100 Total 578,368,304.08 175,970,552.23
2. Information of provision, reversal or recovery of bad debts of current period.
The provision of bad debts of current period is RMB 3,389,912.79.
3. No accounts receivable has been written off this year.
4. Top five debtors at the year-end
Ending balance
Company Percentage of total Provision for
Amount
accounts receivable(%) bad debts
206,877,478.40 35.77
No.1
62,482,368.63 10.80 6,792,099.51
No.2
47,762,337.18 8.26 47,762,337.18
No.3
41,687,479.04 7.21
No.4
10,140,717.39 1.75 1,150,024.13
No.5
368,950,380.64 63.79 55,704,460.82
Total
(2) Other receivables
Items Ending balance Beginning balance
Notes to the financial statements Page 91
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Interest receivables 9,815,280.04
12,222,112.07
Dividend receivables
Other receivables 225,222,111.42
216,469,271.82
Total 235,037,391.46
228,691,383.89
1．Interest receivable
(1) Interest receivable disclosed by category
Items Ending balance Beginning balance
Deposit interest
12,222,112.07 9,815,280.04
Total
12,222,112.07 9,815,280.04
1. Other receivables disclosed by category
Ending balance
Carrying amount Provision for bad debts
Items
Book value
Percentage Bad debts
Amount Amount
(%) ratio(%)
Other receivables tested
for impairment by 278,939,285.62 99.4 64,210,013.80 23.02 214,729,271.82 portfolio
Other receivables tested
for impairment 1,740,000.00 0.6 1,740,000.00 individually
Total 280,679,285.62 100 64,210,013.80 216,469,271.82 Beginning balance
Carrying amount Provision for bad debts
Items
Book value
Percentage Bad debts
Amount Amount
(%) ratio(%)
Other receivables tested
for impairment by 288,053,726.26 99.4 64,571,614.84 22.42 223,482,111.42 portfolio
Other receivables tested
for impairment 1,740,000.00 0.6 1,740,000.00 individually
Total 289,793,726.26 100 64,571,614.84 225,222,111.42 Other receivables disclosed by Aging
Notes to the financial statements Page 92
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Ending balance
Items
Carrying amount Provision for bad debts Bad debts ratio(%)
Within 1 year (inclusive) 175,866,828.59
1-2 years (inclusive) 3,202,196.37 160,109.82 5
2-3 years (inclusive) 44,775,445.85 8,955,089.17 20
Over 3 years 56,834,814.81 55,094,814.81 97
Total 280,679,285.62 64,210,013.80
2. Information of provision, reversal or recovery of bad debts of current period.
Reversal of bad debts for other receivables in current period is RMB 361,601.04.
3. No other receivables have been written off this year.
4. Other receivables disclosed by Nature
Nature Ending balance Beginning balance
Current Accounts 269,737,685.54 278,547,233.77 Others 10,941,600.08 11,246,492.49 Total 280,679,285.62 289,793,726.26 5. Top five debtors at the year-end
Percentage
of total other Provision for
Company Notes or content Amount Aging
receivables bad debts
(%)
66,559,873.88 23.71
No.1 Accounts Within 1 year
14,664,372.10 5.22 2,932,874.42 No.2 Accounts 2-3 years
7,718,029.34 2.75
No.3 Accounts Within 1 year
5,302,064.54 1.89
No.4 Accounts 2-3 years
4,341,257.18 1.55 868,251.44 No.5 Accounts Within 1 year
98,585,597.04 35.12 3,801,125.86 Total
(3) Long-term equity investment
Ending balance Beginning balance
Items Carrying Impairme Impai
Book value Carrying amount Book value amount nt rment
Notes to the financial statements Page 93
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Subsidiaries 2,016,281,902.16 2,016,281,902.16 2,016,281,902.16 2,016,281,902.16 Joint ventures
Total 2,016,281,902.16 2,016,281,902.16 2,016,281,902.16 2,016,281,902.16 Details of investment in subsidiaries
Impair Ending ment
balance Ending of
Name of entity Beginning balance Increase Decrease of balance curren impair t
ment period
Guangzhou Bengang Steel& Iron Trading
30,000,000.00 30,000,000.00
Co., Ltd.
Shanghai Bengang Metallurgy Science and
Technology Co., Ltd.
30,000,000.00 30,000,000.00
Bengang Steel Plates Liaoyang Pellet Co.,
529,899,801.38 529,899,801.38
Ltd.
Dalian Benruitong Automobile Material
65,000,000.00 65,000,000.00
Technology Co., Ltd.
Bengang Posco Cold-rolled Sheet Co., Ltd. 1,019,781,571.10 1,019,781,571.10
Changchun Bengang Steel& Iron Sales Co.,
28,144,875.36 28,144,875.36
Ltd.
Harbin Bengang Economic and Trading Co.,
29,923,398.23 29,923,398.23
Ltd.
Nanjing Bengang Materials Sales Co., Ltd. 2,081,400.65 2,081,400.65
Wuxi Bengang Steel& Iron Sales Co., Ltd. 29,936,718.57 29,936,718.57
Xiamen Bengang Steel& Iron Sales Co.,
1,095,711.66 1,095,711.66
Ltd.
Yantai Bengang Steel& Iron Sales Co., Ltd. 49,100,329.41 49,100,329.41
Tianjin Bengang Steel& Iron Trading Co.,
60,318,095.80 60,318,095.80
Ltd.
Benxi Bengang Steel Sales Co., Ltd 5,000,000.00 5,000,000.00
Shenyang Bengang Metallurgical Science
30,000,000.00 30,000,000.00
and Technology Co., Ltd.
Chongqing Liaoben Steel& Iron Trade Co.,
30,000,000.00 30,000,000.00
Ltd.
Bengang Baojin (Shenyang) Automobile
76,000,000.00 76,000,000.00
New Materials Technology Co., Ltd.
Total 2,016,281,902.16 2,016,281,902.16
Notes to the financial statements Page 94
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
(4) Operating income and operating cost
Current period Previous period
Items
Revenue Cost Revenue Cost
Principal business 21,327,519,597.49 19,894,713,843.28 21,543,654,805.89 19,737,906,706.75 Other business 2,119,696,260.44 1,862,576,153.90 2,139,210,303.25 1,663,285,255.45 Total 23,447,215,857.93 21,757,289,997.18 23,682,865,109.14 21,401,191,962.20 (5) Income on investment
Items Current period Previous period
Income from long-term equity investment (cost method)
Income from bank short-term financial products 3,493,150.68 Total 3,493,150.68 14. Supplementary information
(1) Details of non-recurring profit and loss
Items Amount Notes
Profit or loss from disposal of non-current assets -49,987,558.33
Government subsidy attributable to profit and loss of current period
(except such government subsidy closely related to the company's normal
41,695,000.00
business operation, meeting the regulation of national policy and 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
50,640.00
Net profit or loss of subsidiary from the beginning to consolidation date
gained from consolidation under same control
Other non-operating revenue and expenditure other than above items
172,778.52
Impact of income tax 55,854.63
Impact of minority interests
3,799.93
Total -8,128,794.37
(2) Net asset yield and earnings per share
Earnings per share (Yuan)
Weighted average
Profit in the Reporting Period
net assets yield
Basic EPS Diluted EPS
Net profit attributable to ordinary shareholders 2.35% 0.12 0.12
Net profit attributable to ordinary shareholders
2.50% 0.12 0.12
after deducting non-recurring profit and loss
Notes to the financial statements Page 95
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2019
Notes to the financial statements
Bengang Steel Plates Co., Ltd.（Seal） 28 August 2019
Notes to the financial statements Page 96