Bengang Steel Plates Co. Ltd.
FINANCIAL STATEMENTS
(From January to June 2020)
(Unaudited)
24 August 2020
INDEX
PAGES
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AND STATEMENT OF FINANCIAL
POSITION
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME AND STATEMENT
OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF CASH FLOWS
AND STATEMENT OF CASH FLOWS
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY AND STATEMENT OF CHANGES IN
EQUITY
NOTES TO THE FINANCIAL STATEMENTS
Financial Statements Page 1
BENGANG STEEL PLATES CO. LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
(Expressed in Renminbi unless otherwise indicated)
Assets Notes 5 30 June 2020 31 December 2019
Current assets
Cash at bank and on hand (1) 16788479305.93 18415844397.77
Settlement provisions
Capital lent
Financial assets held for trading
Financial assets at fair value through profit or loss
Derivative financial assets
Notes receivable
Accounts receivable (2) 234795887.35 235696265.66
Accounts receivable financing (3) 4382121949.97 2429542461.88
Prepayments (4) 1283589312.47 1291047458.11
Premium receivable
Reinsurance accounts receivable
Receivable deposit for reinsurance contract
Other receivables (5) 158407131.71 172807036.77
Redemptory financial assets for sale
Inventories (6) 9586039375.52 7700397685.61
Contract assets
Assets held for sale
Non-current assets due within one year
Other current assets (7) 284207048.62 312904824.09
Total current assets 32717640011.57 30558240129.89
Non-current assets
Loan and advances issued
Debt Investments
Available-for-sale financial assets
Other debt investments
Held-to-maturity investment
Long-term receivables
Long-term equity investments (8) 2672302.70 2642998.70
Other equity instrument investments (9) 1042024829.00 1041824829.00
Other non-current financial assets
Investment property
Fixed assets (10) 24952427383.86 26123375492.40
Construction in progress (11) 2569308708.27 1833853572.58
Productive biological assets
Oil and gas assets
Intangible assets (12) 268216337.94 271500023.34
Development expenditure
Goodwill
Long-term deferred expenses
Deferred tax assets (13) 194873971.63 191485595.49
Other non-current assets (14) 963239365.67 708502552.50
Total non-current assets 29992762899.07 30173185064.01
Total assets 62710402910.64 60731425193.90
The notes to the financial statements attached form part of these financial statements.Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 2
BENGANG STEEL PLATES CO. LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Continued)
As at 30 June 2020
(Expressed in Renminbi unless otherwise indicated)
Liabilities and equities Notes 5 30 June 2020 31 December 2019
Current Liabilities
Short-term loans (15) 12506705000.00 13151478000.00
Loan from central bank
Loan from other banks
Financial liability held for trading
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
Notes payable (16) 14234728488.05 11828514676.95
Accounts payable (17) 4076415267.57 4527513030.27
Advance from customers (18) 4429821526.79
Contract liabilities (19) 4658022515.99
Financial assets sold for repurchase
Deposits from customers and interbank
Receipt from vicariously traded securities
Receipt from vicariously underwriting securities
Employee benefits payable (20) 41172677.24 23698174.56
Current tax liabilities (21) 21947711.98 284825814.80
Other payables (22) 644059870.61 662701744.97
Handling charges and commission payable
Reinsurance accounts payable
Liabilities held for sale
Non-current liabilities due within one year (23) 1201524980.80 234474657.99
Other current liabilities
Total current liabilities 37384576512.24 35143027626.33
Non-current liabilities
Provision for insurance contract
Long-term loans (24) 3810463934.18 4849675910.73
Bonds payable
Including: Preferred stock
Perpetual bond
Long-term payables (25) 1050748776.34 516939408.14
Long-term employee benefits payable
Estimated liabilities
Deferred income (26) 172691452.54 208955407.30
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities 5033904163.06 5575570726.17
Total liabilities 42418480675.30 40718598352.50
Shareholders' equity:
Share capital (27) 3875371532.00 3875371532.00
Other equity instruments
Including: Preferred stock
Perpetual bond
Capital reserves (28) 12343209847.29 12343209847.29
Less: treasury shares
Other comprehensive income
Special reserves (29) 22480185.44 212687.41
Surplus reserves (30) 961105529.85 961105529.85
General risk reserve
Undistributed profits (31) 2562409868.95 2307765664.62
Total equity attributable to equity holders of the parent company 19764576963.53 19487665261.17
Non-controlling interests 527345271.81 525161580.23
Total shareholder's equity 20291922235.34 20012826841.40
Total of liabilities and owners’ equity 62710402910.64 60731425193.90
The notes to the financial statements attached form part of these financial statements.Legal Representative： Chief Financial Officer: Chief Accountant:
Financial Statements Page 3
BENGANG STEEL PLATES CO. LTD.
STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
(Expressed in Renminbi unless otherwise indicated)
Assets Notes 15 30 June 2020 31 December 2019
Current assets
Cash at bank and on hand 15366186440.19 16982227928.89
Financial assets held for trading
Financial assets at fair value through profit or loss
Derivative financial assets
Notes receivable
Accounts receivable (1) 373473831.10 388997108.46
Accounts receivable financing (2) 3997787483.35 2193319842.60
Prepayments 1180298578.04 1184632345.13
Other receivables (3) 257932409.77 266663235.81
Inventories 8140296769.10 6114582832.33
Contract assets
Assets held for sale
Non-current assets due within one year
Other current assets 233073377.39 191249460.42
Total current assets 29549048888.94 27321672753.64
Non-current assets
Debt investments
Available-for-sale financial assets
Other debt investments
Held-to-maturity investment
Long-term receivables
Long-term equity investments (4) 2016281902.16 2016281902.16
Other equity instrument investments 1041624829.00 1041624829.00
Other non-current financial assets
Investment property
Fixed assets 23390496921.43 24447763305.12
Construction in progress 2540492204.43 1813889136.42
Productive biological assets
Oil and gas assets
Intangible assets 143816972.04 145470040.68
Development expenditure
Goodwill
Long-term deferred expenses
Deferred tax assets 96728691.51 93555276.54
Other non-current assets 962009985.58 696351867.38
Total non-current assets 30191451506.15 30254936357.30
Total assets 59740500395.09 57576609110.94
The notes to the financial statements attached form part of these financial statements.Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 4
BENGANG STEEL PLATES CO. LTD.
STATEMENT OF FINANCIAL POSITION (Continued)
As at 30 June 2020
(Expressed in Renminbi unless otherwise indicated)
Liabilities and shareholders' equities Notes 15 30 June 2020 31 December 2019
Current liabilities
Short-term loans 11606705000.00 11851478000.00
Financial liability held for trading
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
Notes payable 12332093817.33 10225969445.22
Accounts payable 4685781414.11 4909389629.86
Advance from customers 5597707687.22
Contract liabilities 5736618018.47
Employee benefits payable 39903242.02 21872906.71
Current tax liabilities 4507444.81 274181048.14
Other payables 360650090.66 384125032.59
Liabilities held for sale
Non-current liabilities due within one year 1201524980.80 234474657.99
Other current liabilities
Total current liabilities 35967784008.20 33499198407.73
Non-current liabilities
Long term loans 3810463934.18 4849675910.73
Bonds payable
Including: Preferred stock
Perpetual bond
Long-term payables 1050748776.34 516939408.14
Long-term employee benefits payable
Estimated liabilities
Deferred income 172691452.54 208955407.30
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities 5033904163.06 5575570726.17
Total liabilities 41001688171.26 39074769133.90
Shareholder’s equity:
Share capital 3875371532.00 3875371532.00
Other equity instruments
Including: Preferred stock
Perpetual bond
Capital reserves 11923058165.17 11923058165.17
Less: Treasury shares
Other comprehensive income
Special reserves 19768253.55 53330.99
Surplus reserves 961105529.85 961105529.85
Undistributed Profits 1959508743.26 1742251419.03
Total shareholder's equity 18738812223.83 18501839977.04
Total liabilities and shareholder’s equity 59740500395.09 57576609110.94
The notes to the financial statements attached form part of these financial statements.Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 5
BENGANG STEEL PLATES CO. LTD.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2020
(Expressed in Renminbi unless otherwise indicated)
Items Notes 5 Jan – Jun 2020 Jan – Jun 2019
1. Total operating income 22184537260.05 24102595167.14
Including: Operating income (32) 22184537260.05 24102595167.14
Interest income
Premium earned
Income from handling charges and commission
2. Total operating cost 21927105960.14 23621825282.23
Including: Operating cost (32) 20440246362.67 22067612729.65
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 (33) 88398436.68 114125362.97
Selling and distribution expenses (34) 642393218.78 574445199.14
General and administrative expenses (35) 380828316.41 446767811.77
Research and development expenses (36) 20202985.20 15408472.28
Financial expenses (37) 355036640.40 403465706.42
Including: Interest expense 439861353.93 586490262.69
Interest income 154882284.33 127083779.58
Add: Other income (38) 38587332.40 41695000.00
Income on investment（“-” for loss） (39) 29304.00 25907.49
Including: Income from associates and joint ventures 29304.00 25907.49
Income from derecognition of financial assets measured at amortized cost
Exchange gains（“-” for loss）
Net exposure hedge income（“-” for loss）
Gains from change of fair value （“-” for loss）
Credit impairment loss （“-” for loss） (40) 3487783.42 3751513.83
Asset impairment loss （“-” for loss） (41) -15321598.62 -
Assets disposal gains（“-” for loss） (42) 325651.61 2418704.34
3. Operational profit（“-” for loss） 284539772.72 528661010.57
Add: Non-operating income (43) 1140364.12 8210182.24
Less: Non-operating expenses (44) 20035471.42 57974322.05
4. Total profit (“-” for loss) 265644665.42 478896870.76
Less: Income tax expenses (45) 9237815.08 25962181.73
5. Net profit（“-” for loss） 256406850.34 452934689.03
1.Classification by continuing operating
1.Net profit from continuing operation（“-” for loss）
2.Net profit from discontinued operation（“-” for loss）
2.Classification by ownership
1. Net profit attributable to the owners of parent company （“-” for loss） 254644204.33 453209615.76
2. Net profit attributable to non-controlling shareholders （“-” for loss） 1762646.01 -274926.73
6.Other comprehensive income
Other comprehensive income attributable to owners of the parent company after tax
1.Other comprehensive income items that will not be reclassified into gains/losses
1）Re-measurement of defined benefit plans of changes in net debt or net assets
2）Other comprehensive income under the equity method cannot be reclassified into profit
or loss
3）Changes in fair value of investments in other equity instruments
4）Changes in fair value of company's credit risk
2.Other comprehensive income that will be reclassified into profit or loss.
1）Other comprehensive income under the equity method investee can be reclassified into
profit or loss
2）Changes in fair value of other debt investments
3）Gains and losses from changes in fair value available for sale financial assets
4）Amount of financial assets reclassified into other comprehensive income
5）Held-to-maturity investments reclassified to gains and losses of available for sale
financial assets
6）Credit impairment provision of other debt investments
7）The effective portion of cash flow hedges and losses
8) Translation differences in foreign currency financial statements
9）Other
Other comprehensive income attributable to non-controlling shareholders’ equity after tax
Financial Statements Page 6
Items Notes 5 Jan – Jun 2020 Jan – Jun 2019
7. Total comprehensive income 256406850.34 452934689.03
Total comprehensive income attributable to the owner of the parent company 254644204.33 453209615.76
Total comprehensive income attributable to non-controlling shareholders 1762646.01 -274926.73
8. Earnings per share
1）Basic earnings per share (Yuan/share) (46) 0.07 0.12
2）Diluted earnings per share (Yuan/share) (46) 0.07 0.12
The notes to the financial statements attached form part of these financial statements.Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 7
BENGANG STEEL PLATES CO. LTD.
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2020
(Expressed in Renminbi unless otherwise indicated)
Items Notes 15 Jan – Jun 2020 Jan – Jun 2019
1. Total operating income (5) 21759781682.12 23447215857.93
Less: Operating cost (5) 20379148281.27 21757289997.18
Tax and surcharges 74240782.35 84467404.41
Selling and distribution expenses 386932932.93 335094548.06
General and administrative expenses 354627152.28 419337998.35
Research and development expenses 20202985.20 15408472.28
Financial expenses 337504255.84 388071914.59
Including: Interest expense 410264451.89 558095343.66
Interest income 141297649.84 114189626.94
Add: Other income 38002345.53 41695000.00
Income on investment（“-” for loss）
Including: Income from associates and joint ventures
Income from derecognition of financial assets
measured at amortized cost
Net exposure hedge income（“-” for loss）
Gains from change of fair value （“-” for loss）
Credit impairment loss（“-” for loss） 2627938.73 3751513.83
Assets impairment loss（“-” for loss） -15321598.62 -
Assets disposal gains（“-” for loss） 325651.61 2465706.59
2. Operational profit（“-” for loss） 232759629.50 495457743.48
Add: Non-operating income 811659.87 8138040.75
Less: Non-operating expenses 19487380.11 57935182.17
3. Total profit (“-” for loss) 214083909.26 445660602.06
Less: Income tax expenses -3173414.97 15309062.75
4. Net profit（“-” for loss） 217257324.23 430351539.31
1.Net profit from continuing operation (“-” for loss)
2.Net profit from discontinued operation (“-” for loss)
5.Other comprehensive income
1.Other comprehensive income items that will not be reclassified into
gains/losses
1）Re-measurement of defined benefit plans of changes
2）Other comprehensive income under the equity method cannot be
reclassified into profit or loss
3）Changes in fair value of investments in other equity instruments
4）Changes in fair value of company's credit risk
2.Other comprehensive income that will be reclassified into profit or
loss.
1）Other comprehensive income under the equity method investee
can be reclassified into profit or loss
2）Changes in fair value of other debt investments
3）Gains and losses from changes in fair value available for sale
financial assets
4）Amount of financial assets reclassified into other comprehensive income
5）Held-to-maturity investments reclassified to gains and losses of
available for sale financial assets
6）Credit impairment provision of other debt investments
7）The effective portion of cash flow hedges and losses
8) Translation differences in foreign currency financial statements
9）Other
6. Total comprehensive income 217257324.23 430351539.31
7. Earnings per share
1）Basic earnings per share (Yuan/share)
2）Diluted earnings per share (Yuan/share)
The notes to the financial statements attached 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 CASH FLOWS
For the year ended 30 June 2020
(Expressed in Renminbi unless otherwise indicated)
Items Notes 5 Jan – Jun 2020 Jan – Jun 2019
1.Cash flow from operating activities
Cash received from sale of goods or rendering of services 15423965198.05 16357053782.81
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
Cash from receiving interest handling charge and commission
Net increase of loans from borrowing funds
Net increase of fund for repurchase business
Net cash received from traded securities
Tax rebate received 310509228.43 247667635.74
Other cash received relating to operating activities (47) 174016797.00 144904624.34
Subtotal of cash inflows from operating activities 15908491223.48 16749626042.89
Cash paid for goods and services 14428717102.76 13876838386.74
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
Net increase in capital lent
Cash for payment of interest handling charge and commission
Cash for payment of policy bonus
Cash paid to and on behalf of employees 884844841.18 987603117.25
Cash paid for all types of taxes 520116275.37 653208180.03
Other cash paid relating to operating activities (47) 226288711.25 247189353.20
Subtotal of cash outflows from operating activities 16059966930.56 15764839037.22
Net cash flows from operating activities -151475707.08 984787005.67
2. Cash flows from investing activities
Cash received from disposal of investments
Cash received from return on investments
Net cash received from disposal of fixed assets intangible assets and other long-term
assets
Net cash received from disposal of subsidiary and other operating units
Other cash paid relating to investing activities
Subtotal of cash inflows from investing activities
Cash paid for acquisition of fixed assets intangible assets and other long-term assets 706681059.07 545199197.41
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 706681059.07 545199197.41
Net cash flows from investing activities -706681059.07 -545199197.41
3. Cash flows from financing activities
Proceeds from investment
Including: Proceeds from investment of non-controlling shareholders of subsidiary
Proceeds from borrowings 4987194000.00 5828037190.72
Other proceeds relating to financing activities
Subtotal of cash inflows from financing activities 4987194000.00 5828037190.72
Cash repayments of borrowings 5671544896.99 5653303509.62
Cash payments for distribution of dividends profit or interest expenses 480183996.49 626178049.57
Including: Cash paid to non-controlling shareholders as dividend and profit by
subsidiaries
Other cash payments relating to financing activities
Subtotal of cash outflows from financing activities 6151728893.48 6279481559.19
Net cash flows from financing activities -1164534893.48 -451444368.47
4. Effect of foreign exchange rate changes on cash and cash equivalents -1130665.43 48230507.75
5. Net increase in cash and cash equivalents -2023822325.06 36373947.54
Add: Cash and cash equivalents at the beginning of the period 13441414988.58 11752548621.97
6. Cash and cash equivalents at the ending of the period 11417592663.52 11788922569.51
The notes to the financial statements attached form part of these financial statements.Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 9
BENGANG STEEL PLATES CO. LTD.
STATEMENT OF CASH FLOWS
For the year ended 30 June 2020
(Expressed in Renminbi unless otherwise indicated)
Items Notes 15 Jan – Jun 2020 Jan – Jun 2019
1. Cash flow from operating activities
Cash received from sale of goods or rendering of services 15003373098.45 15970406775.11
Tax rebate received 260246235.34 219614786.86
Other cash received relating to operating activities 163299247.34 140536583.70
Subtotal of cash inflows from operating activities 15426918581.13 16330558145.67
Cash paid for goods and services 14323769183.95 13842821616.84
Cash paid to and on behalf of employees 840886166.89 928568022.64
Cash paid for all types of taxes 465606411.99 576260568.31
Other cash paid relating to operating activities 159126577.28 165446890.35
Subtotal of cash outflows from operating activities 15789388340.11 15513097098.14
Net cash flows from operating activities -362469758.98 817461047.53
2. Cash flows from investing activities
Cash received from disposal of investments
Cash received from return on investments
Net cash received from disposal of fixed assets intangible
assets and other long-term assets
Net cash received from disposal of subsidiary and other
operating units
Other cash received relating to investing activities
Subtotal of cash inflows from investing activities
Cash paid for acquisition of fixed assets intangible assets and
other long-term assets
696005001.44 539451276.57
Cash paid for acquisition of investments
Net cash paid for acquisition of subsidiary and other operating
unit
Other cash paid relating to investing activities
Subtotal of cash outflows paid for investing activities 696005001.44 539451276.57
Net cash flows from investing activities -696005001.44 -539451276.57
3. Cash flows from financing activities
Proceeds from investment
Cash received from borrowings 4747194000.00 4902327190.72
Other cash received relating to financing activities
Subtotal of cash inflows from financing activities 4747194000.00 4902327190.72
Cash repayments of borrowings 5051544896.99 4713373509.62
Cash payments for distribution of dividends profit or interest 433692125.89 589497122.29
Other cash payments relating to financing activities
Subtotal of cash outflows from financing activities 5485237022.88 5302870631.91
Net cash flows from financing activities -738043022.88 -400543441.19
4. Effect of foreign exchange rate changes on cash and cash
equivalents
-1134392.87 48222621.42
5. Net increase in cash and cash equivalents -1797652176.17 -74311048.81
Add: Cash and cash equivalents at the beginning of the period 13029616298.47 10807824843.20
6. Ending balance of cash and cash equivalents 11231964122.30 10733513794.39
The notes to the financial statements attached form part of these financial statements.Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 10
BENGANG STEEL PLATES CO. LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2020
(Expressed in Renminbi unless otherwise indicated)
Items
Jan – Jun 2020
Owner's equity attributable to parent company
Non-controlling
interest
Total of owner's
equity Share capital
Other equity instruments
Capital reserves
Less:
Treasury
shares
Other
comprehensive
income
Special
reserves
Surplus reserves
General
risk
reserve
Undistributed
profit
Subtotal Preferenc
e shares
Perpetual
bond
Others
1. Ending balance of last year 3875371532.00 12343209847.29 212687.41 961105529.85 2307765664.62 19487665261.17 525161580.23 20012826841.40
Add: Change of accounting policies
Correction of errors for last period
Business consolidation under common control
Others
2. Beginning balance of current year 3875371532.00 12343209847.29 212687.41 961105529.85 2307765664.62 19487665261.17 525161580.23 20012826841.40
3. Changes in current year (“-” for decrease) 22267498.03 254644204.33 276911702.36 2183691.58 279095393.94
1) Total comprehensive income 254644204.33 254644204.33 1762646.01 256406850.34
2) Capital increase and decrease by
shareholders
(1) Common share invested by shareholders
(2) Capital input by the holder of other equity
instruments
(3) Share-based payment attributable to
owners' equity
(4) Others
3) Profit distribution
(1) Appropriation to surplus reserves
(2) Appropriation to general risk reserve
(3) Profit distribution to shareholders
(4) Others
4) Transfers within shareholders' equity
(1) Capital reserves transferred into paid-in
capital (or stock)
(2) Surplus reserves transferred into paid-in
capital (or stock)
(3) Surplus reserves to recover loss
(4) Net changes of defined contribution plans
transferred into Retained Earnings
(5) Other comprehensive income transferred
into Retained Earnings
(6) Others
5) Special reserves 22267498.03 22267498.03 421045.57 22688543.60
(1) Provision of special reserves 26575861.58 26575861.58 421045.57 26996907.15
(2) Use of special reserves 4308363.55 4308363.55 4308363.55
6) Others
4. Ending balance of current year 3875371532.00 12343209847.29 22480185.44 961105529.85 2562409868.95 19764576963.53 527345271.81 20291922235.34
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.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued)
For the year ended 30 June 2020
(Expressed in Renminbi unless otherwise indicated)
Items
Jan – Jun 2019
Owner's equity attributable to parent company
Non-controlling
interest
Total of owner's
equity Share capital
Other equity instruments
Capital reserves
Less:
Treasury
shares
Other
comprehensi
ve income
Special
reserves
Surplus reserves
General
risk
reserve
Undistributed profit
Subtotal Preferenc
e shares
Perpetual
bond
Others
1. Ending balance of last year 3875371532.00 12343209847.29 683937.71 961105529.85 1945887269.82 19126258116.67 533146339.49 19659404456.16
Add: Change of accounting policies
Correction of errors for last period
Business consolidation under common control
Others
2. Beginning balance of current year 3875371532.00 12343209847.29 683937.71 961105529.85 1945887269.82 19126258116.67 533146339.49 19659404456.16
3. Changes in current year (“-” for decrease) -471250.30 361878394.80 361407144.50 -7984759.26 353422385.24
1) Total comprehensive income 555646971.40 555646971.40 1213517.58 556860488.98
2) Capital increase and decrease by shareholders
(1) Common share invested by shareholders
(2) Capital input by the holder of other equity instruments
(3) Share-based payment attributable to owners' equity
(4) Others
3) Profit distribution -193768576.60 -193768576.60 -9198305.14 -202966881.74
(1) Appropriation to surplus reserves
(2) Appropriation to general risk reserve
(3) Profit distribution to shareholders -193768576.60 -193768576.60 -9198305.14 -202966881.74
(4) Others
4) Transfers within shareholders' equity
(1) Capital reserves transferred into paid-in capital (or stock)
(2) Surplus reserves transferred into paid-in capital (or stock)
(3) Surplus reserves to recover loss
(4) Net changes of defined contribution plans transferred into Retained Earnings
(5) Others
5) Special reserves -471250.30 -471250.30 28.30 -471222.00
(1) Provision of special reserves 47843133.40 47843133.40 28.30 47843161.70
(2) Use of special reserves 48314383.70 48314383.70 48314383.70
6) Others
4. Ending balance of current year 3875371532.00 12343209847.29 212687.41 961105529.85 2307765664.62 19487665261.17 525161580.23 20012826841.40
The notes to the financial statements attached form part of these financial statements
Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 12
BENGANG STEEL PLATES CO. LTD.
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2020
(Expressed in Renminbi unless otherwise indicated)
Items
Jan – Jun 2020
Share capital
Other equity instruments
Capital reserves
Less:
Treasury
shares
Other
comprehens
ive income
Special
reserves
Surplus reserves
Undistributed
profits
Total shareholder’s
equity
Preferenc
e shares
Perpetual
bond
Others
1. Ending balance of last year 3875371532.00 11923058165.17 53330.99 961105529.85 1742251419.03 18501839977.04
Add: Change of accounting policies
Correction of errors for last period
Others
2. Beginning balance of current year 3875371532.00 11923058165.17 53330.99 961105529.85 1742251419.03 18501839977.04
3. Changes in current year (“-” for decrease) 19714922.56 217257324.23 236972246.79
1) Total comprehensive income 217257324.23 217257324.23
2) Capital increase and decrease by shareholders
(1) Common share invested by shareholders
(2) Capital input by the holder of other equity instruments
(3) Share-based payment attributable to shareholders' equity
(4) Others
3) Profit distribution
(1) Appropriation of surplus reserves
(2) Profit distribution to shareholders
(3) Others
4) Transfers within shareholders' equity
(1) Capital reserves transferred into paid-in capital (or stock)
(2) Surplus reserves transferred into paid-in capital (or stock)
(3) Surplus reserves to recover loss
(4) Net changes of defined contribution plans transferred into
Retained Earnings
(5) Other comprehensive income transferred into retained
earnings
(6) Others
5) Special reserves 19714922.56 19714922.56
(1) Provision of special reserves 23963236.11 23963236.11
(2) Use of special reserves 4248313.55 4248313.55
6) Others
4. Ending balance of current year 3875371532.00 11923058165.17 19768253.55 961105529.85 1959508743.26 18738812223.83
The notes to the financial statements attached form part of these financial statements
Legal Representative: Chief Financial Officer: Chief Accountant:
Financial Statements Page 13
BENGANG STEEL PLATES CO. LTD.
STATEMENT OF CHANGES IN EQUITY (Continued)
For the year ended 30 June 2020
(Expressed in Renminbi unless otherwise indicated)
Items
Jan – Jun 2019
Share capital
Other equity instruments
Capital reserves
Less:
Treasury
shares
Other
comprehens
ive income
Special
reserves
Surplus reserves
Undistributed
profits
Total shareholder’s
equity
Preference
shares
Perpetual
bond
Others
1. Ending balance of last year 3875371532.00 11923058165.17 525218.48 961105529.85 1401183955.66 18161244401.16
Add: Change of accounting policies
Correction of errors for last period
Others
2. Beginning balance of current year 3875371532.00 11923058165.17 525218.48 961105529.85 1401183955.66 18161244401.16
3. Changes in current year (“-” for decrease) -471887.49 341067463.37 340595575.88
1) Total comprehensive income 534836039.97 534836039.97
2) Capital increase and decrease by shareholders
(1) Common share invested by shareholders
(2) Capital input by the holder of other equity instruments
(3) Share-based payment attributable to shareholders' equity
(4) Others
3) Profit distribution -193768576.60 -193768576.60
(1) Appropriation of surplus reserves
(2) Profit distribution to shareholders -193768576.60 -193768576.60
(3) Others
4) Transfers within shareholders' equity
(1) Capital reserves transferred into paid-in capital (or stock)
(2) Surplus reserves transferred into paid-in capital (or stock)
(3) Surplus reserves to recover loss
(4) Net changes of defined contribution plans transferred into
Retained Earnings
(5) Others
5) Special reserves -471887.49 -471887.49
(1) Provision of special reserves 45445975.41 45445975.41
(2) Use of special reserves 45917862.90 45917862.90
6) Others
4. Ending balance of current year 3875371532.00 11923058165.17 53330.99 961105529.85 1742251419.03 18501839977.04
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.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 1
Bengang Steel Plates Co. Ltd.
Notes to the financial statements
For the period from Jan. to Jun. 2020
(Expressed in Renminbi unless otherwise indicated)
1. Basic Information of the Company
(1) Company profile
Bengang Steel Plates Co. Ltd. (hereinafter referred to as “the Company”) as approved in Liao-Zheng (1997) No. 57
by Liaoning People’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 the People’s Republic of China
(the “PRC”) on 27 June 1997 by Benxi Steel and Iron (Group) Co. Ltd. (“Bengang Group”) through reorganization of
operations assets and liabilities of its plants namely Steel Smelting Plant Primary Rolling Plant and Continuous Hot
Rolling Plant.
As approved by China Securities Regulatory Commission (hereinafter referred to as “the CSRC”) the Company issued
400000000 B-shares at HKD2.38 each in Shenzhen Stock Exchange on 10 June 1997. On 3 November 1997 the
Company issued another 120000000 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 1136000000 shares.
On 14 March 2006 according to the resolutions of the Shareholders’ Meeting regarding share equity relocation the
Share Equity Relocation Scheme Response to Bengang Steel Plate Co. Ltd. about Share Equity 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 40800000 shares of the total 616000000 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 for 82.12% of the
total capital shares of the Company). On 28 August 2006 as approved by China Securities Depository & Clearing
Corporation Ltd. Shenzhen Office the registration 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.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 2
Approved by the China Securities Regulatory Commission [2017] No. 1476 Bengang Steel Plate Co. Ltd. privately
placed no more than 739371534 RMB ordinary shares (A shares) to no more than 10 issuers. The non-public offering
was completed on 9 February 2018 and 739371532 shares were actually issued. The placing price was RMB5.41 per
share.
As at 30 June 2020 the capital shares were totaled to 3875371532 shares.
The Company’s uniform social credit code: 91210000242690243E.The Company’s registered address: 16th Renmin Road Pingshan District Benxi Liaoning Province.The Company’s legal representative: Gao Lie.The parent company of Bengang Steel Plates Co. Ltd is Benxi Steel and Iron (Group) Co. Ltd. and the 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 24 August
2020.
(2) Consolidation scope
As at 30 June 2020 subsidiaries included in the Company’s consolidated financial statements are as follows:
Name of the subsidiaries
Guangzhou Bengang Steel & Iron Trading Co. Ltd.Shanghai Bengang Metallurgy Science and Technology Co. Ltd.
Bengang Steel Plates Liaoyang Pellet Co. Ltd.
Dalian Benruitong Automobile Material Technology Co. Ltd.
Changchun Bengang Steel & Iron Sales Co. Ltd.
Harbin Bengang Economic and Trading Co. Ltd.Nanjing Bengang Materials Sales Co. Ltd.Wuxi Bengang Steel & Iron Sales Co. Ltd.Xiamen Bengang Steel & Iron Sales Co. Ltd.Yantai Bengang Steel & Iron Sales Co. Ltd.Tianjin Bengang Steel & Iron Trading Co. Ltd.
Bengang Posco Cold-rolled Sheet Co. Ltd.
Benxi Bengang Steel Sales Co. Ltd
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 3
Name of the subsidiaries
Shenyang Bengang Metallurgical Science and Technology Co. Ltd.
Chongqing Liaoben Steel & Iron Trading Co. Ltd.
Bengang Baojin (Shenyang) Automobile New Material Technology Co. Ltd.
The scope of the consolidated financial statements in this period has not changed compared with the previous
period.
2. Basis of preparation
(1) Basis of preparation
The financial statements have been prepared on the going concern basis of actual trading 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”) issuedby the Ministry of Finance and “Information Disclosure Rules for Companies of securities for public issuance No. 15– General Regulations for Financial Statements” issued by the China Securities Regulatory Commission.
(2) Going concern
The Company is operating normally and in a good condition and thus has the capability to continue to operate in the
next twelve months from the end of reporting period.
3. Significant accounting policies and accounting estimates
Notes for specific accounting policies and accounting estimates:
The following disclosed content covers the specific accounting policies and accounting estimates that are adopted by
the Company based on the actual production and operation characteristics. Please see Note (10) Financial instruments
(11) Inventory (16) Fixed assets (19) Intangible assets (25) Revenue under “3. Significant accounting policies andaccounting estimates” for details.
(1) Statement of compliance with China Accounting Standards for Business Enterprises
The financial statements present truly and completely the financial position operation results and cash 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
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 4
The Company’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 of aquiree’s assets liabilities (as well as the goodwill arising from the business combination) in the
consolidated financial statement of the ultimate controller on the combining date. As for the balance between the
carrying amount of the net assets obtained by the Company and the carrying amount of the consideration paid by it (or
the total par value of the shares issued) capital reserve needs to be adjusted. If the capital reserve is not sufficient any
excess shall be adjusted against retained earnings.
Business combination 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
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 5
with those of the Company. If not it is necessary to make the adjustment according to the Company’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.The owners’ interests profit or loss and comprehensive income of the subsidiary attributable to the non-controlling
shareholders shall be presented separately in the shareholders’ 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 the minority’s interests in the beginning equity of a subsidiary
the excess shall be charged against the minority’s interests.
(1) Increasing new subsidiaries and businesses
If the Company has a new subsidiary due to business combination under common control during the reporting period
it shall adjust the beginning balance in the consolidated statement of financial position when preparing 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 Company’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 the Company’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 parent company’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 the Company’s consolidated statement of cash flows.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 6
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 the acquiree’s equity changes shall be transferred to profit or loss for the current period when the
acquisition takes place. Other comprehensive income arising from remeasurement of defined benefit plan is excluded.
(2) Disposing 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 the Company’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 the Company’s consolidated statement of cash flows.When the Company loses control over an investee due to partial disposal or other reasons the acquirer 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 the acquiree’s equity changes
and other equity changes rather than changes from net profit other comprehensive income and profit distribution
shall be transferred to investment income for the current period when the Company loses control over acquiree. 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.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 7
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 the subsidiary’s
net assets in each transaction prior to the loss of control shall be recognized in other comprehensive income and
transferred to the profit or loss when the Company eventually loses control of the subsidiary.If each of the multiple transactions which eventually results in loss of control of the subsidiary do not form part of a
bundled transaction apply the treatment of disposing partial long-term equity investments in a subsidiary without
loss of control prior to the loss of control. After the loss of control apply the treatment of disposing the subsidiary in
common cases.
(3) Acquiring the subsidiaries’ equity interest held by non-controlling shareholders
Where the Company has acquired a subsidiary’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 losing 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) Classification of joint venture arrangements and accounting treatment
Joint venture arrangements are divided into joint operations and joint ventures.When the Company is a joint venture party of a joint venture arrangement and have the assets related to the
arrangement and assumes the liabilities related to the arrangement it is a joint operation.The Company confirms the following items related to the share of interest in the joint operation and performs
accounting treatment in accordance with the relevant enterprise accounting standards:
a. Confirm the assets held by the company separately and confirm the assets held jointly by the Company's share;
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 8
b. Recognize the liabilities assumed by the Company separately and the liabilities jointly assumed by the company's
share;
c. Recognize the income generated by the sale of the Company’s share of common operating output;
d. Recognize the revenue generated from the sale of joint operations based on the Company's share;
e. Confirm the expenses incurred separately and the expenses incurred in the joint operation according to the
Company's share.
For the accounting policy of the Company's investment in joint ventures please refer to Note (13) Long-term Equity
Investment under “3. Significant accounting policies and accounting estimates”
(8) 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.
(9) Foreign currency transaction and translation of foreign currency financial statements
1. Foreign currency transaction
Foreign currency transactions are translated into RMB at the current rate at the day of transactions.
The foreign currency monetary items shall be translated at the spot exchange rate on the balance sheet date. The
balance of exchange arising from the difference between the spot exchange rate on the balance sheet 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
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
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 9
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.
(10) Financial instruments
Financial instruments include financial assets financial liabilities and equity instruments
1. Classification of financial instruments
The Company shall classify financial assets on the basis of both the entity’s business model 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.
At the initial recognition in order to eliminate or significantly reduce accounting mismatches financial assets can be
designated as financial assets measured at fair value through profit or loss. According to the above conditions the
company does not have such designated financial assets.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.The Company may at initial recognition designate a financial liability as measured at fair value through profit or loss
because either:
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 10
(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 the entity’s key management personnel;
(c) the financial liability contains embedded derivatives that need to be separated.
According to the above conditions the Company does not have such designated financial assets.
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)
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 11
Financial assets at fair value through other comprehensive income (equity instruments). include other equity
instrument 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 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.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 12
At initial recognition the Company shall measure a financial liability at its fair value plus. transaction costs that are
directly attributable to the acquisition or issue of the financial asset.Interests calculated by using the effective interest method during the holding period shall be. recognized in profit or
loss.When the financial liabilities are derecognized the difference between the price obtained and. the carrying value shall
be recognised in profit and loss.
3. 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 stop recognizing the financial asset. If it retained nearly all of the risks and rewards related to the
ownership of the financial asset it shall not stop recognizing the financial asset.To judge whether the transfer of a financial asset can satisfy the conditions as prescribed in these Standards for
stopping the recognition of a financial asset the Company shall follow the principle of the substance over form.Transfer of an entire financial asset can be divided into partial financial assets transfer and entire financial asset transfer.If the transfer of an entire financial asset satisfies the conditions for de-recognition the difference between the amounts
of the following 2 items shall be recorded in the profits and losses of the current period:
(1) The book value of the transferred financial asset; and
(2) The sum of consideration received from the transfer and the accumulative amount of the changes of the fair value
originally recorded in the owners' equities (in the event that the financial asset involved in the transfer is a financial
asset Available-for-sale).If the transfer of partial financial asset satisfies the conditions to derecognize the entire book value of the transferred
financial asset shall between the portion whose recognition has been stopped and the portion whose recognition has
not been stopped (under such circumstance the service asset retained shall be deemed as a portion of financial asset
whose recognition has not been stopped) be apportioned according to their respective relative fair value and the
difference between the amounts of the following 2 items shall be included into the profits and losses of the current
period :
(1) The book value of the portion whose recognition has been stopped; and
(2) The sum of consideration of the portion whose recognition has been stopped and the portion of the accumulative
amount of the changes in the fair value originally recorded in the owner's equities which is corresponding to the
portion whose recognition has been stopped (in the event that the financial asset involved in the transfer is a financial
asset Available-for-sale).
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 13
If the transfer of financial assets does not satisfy the conditions to stop the recognition it shall continue to be
recognized as financial assets and the consideration received shall be recognized as financial liabilities.
4. Termination of recognition of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the
financial liability be terminated in all or partly.Where the Company (debtor) enters into an agreement with a creditor so as to substitute the existing financial
liabilities by way of any new financial liability and if the contractual stipulations regarding the new financial liability
is substantially different from that regarding the existing financial liability it shall terminate the recognition of the
existing financial liability and shall at the same time recognize the new financial liability.Where the Company makes substantial revisions to part or all of the contractual stipulations of the existing financial
liability it shall terminated the recognition of the existing financial liability or part of it and at the same time
recognize the financial liability after revising the contractual stipulations as a new financial liability.Where the recognition of a financial liability is totally or partially terminated the Company shall include into the
profits and losses of the current period the difference between the carrying amount which has been terminated from
recognition and the considerations it has paid (including the non-cash assets it has transferred out and the new
financial liabilities it has assumed).Where the Company buys back part of its financial liabilities it shall distribute on the date of repurchase the
carrying amount of the whole financial liabilities in light of the comparatively fair value of the part that continues to
be recognized and the part whose recognition has already been terminated. The gap between the carrying amount
which is distributed to the part whose recognition has terminated and the considerations it has paid (including the
noncash assets it has transferred out and the new financial liabilities it has assumed) shall be recorded into the profits
and losses of the current period.
5. Determination of the fair value 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
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 14
liabilities. Only when relevant observable inputs are unavailable or should the Company use unobservable inputs for
the asset or liability.
6. Impairment provision of the financial assets
The Company considers all reasonable and relevant information including forward-looking information to recognize
the expected credit loss on financial assets measured at amortized cost and financial assets measured at fair value
through other comprehensive income (debt instruments) on the individual or portfolio basis. The measurement of
expected credit loss depends on whether there is a significant increase in credit risk of financial assets since the initial
recognition.If the credit risk of the financial instrument has increased significantly since the initial confirmation 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 on a financial instrument has not increased significantly since initial recognition the Company shall
measure the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. The
increase or reversal amount of loss allowance thus formed shall be included in the current profits and losses as
impairment losses or gains.Generally the Company believes that the credit risk of the financial instrument has significantly increased over 30 days
after the due date unless there is solid evidence that the credit risk of the financial instrument has not increased
significantly since initial recognition.If the credit risk of a financial instrument at the reporting date is relatively low the Company considers that the credit
risk of the financial instrument has not increased significantly since the initial recognition.If there is objective evidence indicating that a certain financial asset has been impaired the Company shall recognise
provision for impairment of the financial asset individually.
For account receivables 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.
For those accounts receivable lease receivables long-term receivables formed by the company through the sale of
goods or rendering of services notes receivable accounts receivable financing and other receivables which contains
significant financing component the Company chooses to use the general financial asset impairment method that is
according to whether the credit risk has increased significantly or not since the initial recognition to measure the
expected credit loss at an amount equal to 12-month expected credit losses (stage one) or at an amount equal to the
lifetime expected credit losses (stage two and stage three).
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 15
(11) Inventory
1. Inventory classification
Inventories include material in transit raw material turnover materials finished goods work in process issue
commodity 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. Specifically
if the inventory held for the execution of the sales contract or labor contract and the sales contract order quantity is
equal to the quantity of inventory held by the enterprise the contract price of the finished product or commodity is
used as the basis for calculating the net realizable value; The quantity of inventory is more than the quantity ordered by
the sales contract and the net realizable value of the excess inventory is based on the general sales price of the finished
product or commodity; if the quantity of inventory held by the enterprise is less than the quantity ordered by the sales
contract the actual Contract-related inventory uses the price specified in the sales contract as the basis for calculating
the net realizable value.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 16
4. Inventory system
The Company uses perpetual inventory system.
5. Amortization of low-valued consumables and packing materials
(1) Low-valued consumables shall be amortized in full amount on issuance.
(2) Packing materials shall be amortized in full amount on issuance.
(12) Contract asset
1. Recognition methods and criteria of contract assets
When either party to a contract has performed the Company shall present the contract in the statement of financial
position as a contract asset or a contract liability depending on the relationship between the Company’s performance
and the customer’s payment. If the Company have the rights to receive consideration (the right is conditioned on
factors other than the passage of time) by transferring goods or services to a customer the entity shall present the
contract as a contract asset. Contract assets and contract liabilities under the same contract are disclosed in net
amount. An entity shall present any unconditional rights to consideration (only the passage of time is required)
separately as a receivable.
2. Expected credit loss of contract assets
For the accounting policy of the expected credit loss of contract assets please refer to Note (10) 6. Impairment
provision of the financial assets under “3. Significant accounting policies and accounting estimates”
(13) 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.
(14) 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
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 17
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 absorbing party’s share of the carrying amount of the owner’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 absorbing party’s share of the carrying amount of
the owner’s equity of the party being absorbed in the consolidated financial statements of the ultimate controlling party
at combination date. The difference between the initial investment cost and the carrying amount of the previously-held
equity investment together with the additional investment cost for new shares at combination date shall be adjusted to
the capital reserve. If the balance of capital reserve is not sufficient any excess shall be adjusted to retained earnings.
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.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 18
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 tan investor’s interest in the fair values of an
investee’s identifiable net assets at the acquisition date no adjustment shall be made to the initial investment cost.Where the initial cost is less than the investor’s interest in the fair values of the investee’s identifiable net assets at the
acquisition date the difference shall be credited to profit or loss for the current period.The Company shall recognize its share of the investee’s net profits or losses as well as its share of the investee’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. The investor’s share of
the investee’s owners’ equity changes other than those arising from the investee’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 the investee’s net profits or losses after making appropriate adjustments
according to the Company’s accounting principles and operating period based on the fair values of the investee’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 the investee’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 the investor’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 andassociate and joint venture and the assets is a business it shall apply the treatment mentioned in Note 3 (5) “Theaccounting treatment for Business combination under/now under common control” and Note 3 (6) “Consolidation of
Financial Statements”.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 19
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
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 financial instruments recognition and measurement standard. 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 financial instruments recognition and measurement standards and the difference
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 20
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 other owner’s interests previously recognized of the previously-held equity
investment under the equity method shall be transferred proportionally. For those remaining equity investments
accounted for in accordance with financial instruments recognition and measurement standard after disposal other
comprehensive income and other owner’s interests previously recognized shall be transferred to profit or loss in full.
(15) 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).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.
(16) 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.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 21
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:
Category Depreciation method
Depreciation
Period
Residual Value Rate
(%)
Depreciation Rate
(%)
Plants and Buildings straight line method 8-40 years 0.00 2.50-12.50
Machinery straight line method 4-18 years 3.00 5.39-24.25
Transportation and other
equipment
straight line method 5-18 years 3.00 5.39-19.40
3. Recognition criteria for fixed asset leased in by financial leasing and its 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.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.
(17) 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 the
Company’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.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 22
(18) 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
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.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 23
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.
(19) Intangible Assets
1. Measurement of Intangible Assets
(1) Initial measurement is based on cost upon acquisition
The cost of an intangible asset on acquisition include the purchase price relevant taxes and other necessary
disbursements which may be directly attributable to bringing the intangible asset to the conditions for the expected
purpose. If the payment for an intangible asset is delayed beyond the normal credit conditions and it is of the financing
nature the cost of the intangible asset shall be determined on the basis of the present value of the purchase price.
For intangible assets obtained from debt restructuring as settlement of liabilities from debtors initial recognition is
based on its fair value and the difference between the debt restructured and the fair value of the intangible assets are
recognized in the current profit and loss.
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
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 24
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.
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 before
commercial manufacturing and use.
(20) Impairment of long-term assets
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 25
For long-term assets such as long-term equity investments Investment property under the cost model 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 assets on the basis of the asset group towhich the asset belongs. The term "assets group” refers to a minimum combination of assets by which the cash flows
could be generated independently
The goodwill intangible assets with uncertain useful life and intangible assets not meeting the expected condition for
use the 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.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 26
(21) 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.
(22) Contract liability
When either party to a contract has performed the Company shall present the contract in the statement of financial
position as a contract asset or a contract liability depending on the relationship between the Company’s performance
and the customer’s payment. If a customer pays consideration or the Company has a right to an amount of
consideration before the Company transfers a good or service to the customer the Company shall present the contract
as a contract liability. Contract assets and contract liabilities under the same contract are disclosed in net amount.
(23) Employee benefits
1. Accounting treatment for short employee benefit
The Company shall recognise in the accounting period in which an employee provides service actually occurred
short-term employee benefits as a liability with a corresponding charge to 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.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 27
In addition to basic pension fund the company has also established an enterprise annuity payment system
(supplementary pension fund) / enterprise annuity plan in accordance with the relevant policies of the national
enterprise annuity system. The company pays a local social insurance institution's contribution / annuity plan according
to a certain percentage of the total wages of employees and the corresponding expenditure is included in the current
profit and loss or related asset costs.
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.
(24) Estimated liabilities
1. Recognition criteria of estimated liabilities
The obligation pertinent to a Contingency (litigation guarantees loss contract restructuring) shall be recognized as an
estimated liability when the following conditions are satisfied simultaneously:
(1) That obligation is a current obligation of the enterprise;
(2) It is likely to cause any economic benefit to flow out of the enterprise as a result of performance of the obligation;
and
(3) The amount of the obligation can be measured in a reliable way.
2. Measurement of estimated liabilities
The estimated debts shall be initially measured in accordance with the best estimate of the necessary expenses for the
performance of the current obligation.To determine the best estimate an enterprise shall take into full consideration of the risks uncertainty time value of
money and other factors pertinent to the Contingencies. If the time value of money is of great significance the best
estimate shall be determined after discounting the relevant future outflow of cash.The best estimate shall be conducted in accordance with the following situations respectively:
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.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 28
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.
(25) Revenue
The company shall recognise revenue when (or as) the company satisfies a performance obligation when (or as) the
customer obtains control of a promised good or service. Control of a promised good or service refers to the ability to
direct the use of and obtain substantially all of the remaining benefits from it.If the contract contains two or more performance obligations the company shall allocate the transaction price to each
individual performance obligation based on the relative proportion of the stand-alone selling price of the goods or
services promised by each individual performance obligation on the date of the contract. The company measures
revenue based on the transaction price allocated to each individual performance obligation.The transaction price is the amount of consideration to which the company expects to be entitled in exchange for
transferring promised goods or services to a customer excluding amounts collected on behalf of third parties or
amounts expected to be returned to customers. The company shall consider the terms of the contract and its customary
business practices to determine the transaction price. When determining the transaction price the company shall
consider the effects of all of the following: variable consideration the existence of a significant financing component
in the contract non-cash consideration and consideration payable to a customer. The company determines the
transaction price that includes variable consideration at an amount that does not exceed the amount of accumulated
recognized revenue that is unlikely to be materially reversed when the relevant uncertainty is eliminated. If there is a
significant financing component in the contract the company shall recognise revenue at an amount that reflects the
price that a customer would have paid for the promised goods or services if the customer had paid cash for those goods
or services when (or as) they transfer to the customer and use the effective interest method to amortize the difference
between the transaction price and the contract consideration during the contract period. If the interval between the
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 29
transfer of control and the payment by the customer does not exceed one year the financing component will not be
considered.The company transfers control of a good or service over time and therefore satisfies a performance obligation and
recognises revenue over time if one of the following criteria is met. Otherwise the company satisfies the performance
obligation at a point in time.(a) the customer simultaneously receives and consumes the benefits provided by the company’s performance as the
company performs;
(b) the company’s performance creates or enhances an asset that the customer controls as the asset is created or
enhanced; or
(c) the company’s performance does not create an asset with an alternative use to the company and the company has an
enforceable right to payment for performance completed to date.The company shall recognise revenue over time by measuring the progress towards complete satisfaction of that
performance obligation except where the performance progress cannot be reasonably determined. The company
considers the nature of the goods or services and adopts the output method or the input method to determine the
progress of performance. Where the performance progress cannot be reasonable determined but the company expects
to recover the costs incurred in satisfying the performance obligation the company shall recognise revenue only to the
extent of the costs incurred until such time that it can reasonably measure the outcome of the performance obligation.
For performance obligations satisfied at a certain point in time the company shall recognises revenue at the point when
the customer obtains control of the relevant goods or services. To determine the point in time at which a customer
obtains control of a promised goods or services the company shall consider requirements as follows:
(a) The company has a present right to payment for the promised goods or services and the customer is presently
obliged to pay for that;
(b) The company has transferred the legal title of the goods to the customer that is the customer has the legal title to
the goods;
(c) The company has transferred physical possession of the goods to the customer that is the customer has taken
possession of the goods;
(d) The company has transferred the significant risks and rewards of ownership of the goods to the customer that is
the customer has the significant risks and rewards of ownership of the goods;
(e) The customer has accepted the promised goods or services.
(26) Contract costs
Contract costs include costs to fulfill a contract and incremental costs of obtaining a contract.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 30
If the costs incurred in fulfilling a contract with a customer are not within the scope of another Standard for example
Inventories Property Plant and Equipment or Intangible Assets the company shall recognise an asset from the costs
incurred to fulfil a contract only if those costs meet all of the following criteria:
(a) the costs relate directly to a contract or to an expected contract;
(b) the costs generate or enhance resources of the Company that will be used in satisfying performance obligations in
the future; and
(c) the costs are expected to be recovered.The company shall recognise as an asset the incremental costs of obtaining a contract with a customer if the company
expects to recover those costs.
An asset recognised in accordance with contract costs shall be amortised in consistent with the transfer to the customer
of the goods or services to which the asset relates. The company may recognise the incremental costs of obtaining a
contract as an expense when incurred if the amortisation period of the asset is one year or less.The company shall recognise an impairment loss in profit or loss to the extent that the carrying amount of an asset
related to contract assets exceeds:
(a) the remaining amount of consideration that the company expects to receive in exchange for the goods or services to
which the asset relates; less
(b) the costs that relate directly to providing those goods or services and that have not been recognised as expenses.The company shall recognise in profit or loss a reversal of some or all of an impairment loss previously recognised
when the impairment conditions no longer exist or have improved. The increased carrying amount of the asset shall not
exceed the carrying amount that if no impairment loss had been recognised previously.
(27) Government Subsidies
1. Types
A government subsidy means the monetary or non-monetary assets obtained free of charge by the Company from the
government. Government subsidies consist of the government subsidies pertinent to assets and government subsidies
pertinent to income.Government subsidies related to assets are government subsidies whose primary condition is that an entity qualifying
for them should purchase construct or otherwise acquire long-term assets. The government subsidies related to
incomes refers to government subsidies other than those related to assets.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 31
The standard of the Company recognizing the government subsidies related to assets is: an entity qualifying for them
should purchase construct or otherwise acquire long-term assets.The standard of the Company recognizing the government subsidies related to income is: In addition to government
subsidies related to assets government subsidies that have been clearly targeted for subsidies.
2. 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.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.
3. Accounting treatment
Government subsidies related to assets shall be recognized by deducting the subsidies at the caring amount of the
assets or recognized as deferred income. Subsidies that recognized as deferred income shall be recognized in profit or
loss on a systematic basis over the periods during the useful lives of the relevant assets (Subsidies related to daily
activities should be recorded in Other Income. Subsidies that unrelated to daily activities should be recorded in
Non-operating Income).The government subsidies related to incomes to compensate future expenses shall be recognized as deferred income
and transferred to current profit or loss (Subsidies related to daily activities should be 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.The policy discount loans obtained by the company are divided into the following two situations and are separately
accounted for:
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 32
(a) The government allocates discounted funds to the loan bank and the loan bank provides loans to the company at a
policy preferential interest rate. The preferential interest rate is used to calculate the relevant borrowing costs.(b) If the government directly allocates the discounted funds to the company the company will offset the relevant
borrowing costs with the corresponding discounts directly accounted for the current profit or loss or recognized as
deferred income.
(28) 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 be obtained 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.
(29) Leases
1. Accounting treatment of operating lease
(1) The rents paid for operating leases shall be recorded in the profits and losses of the current period by using the
straight-line method over each period of the lease term. The initial direct costs paid by the Company shall be recorded
into the profits and losses of the current period
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 33
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.
(30) Discontinuing operation
Discontinuing operation is a component that has been disposed or classified as held for sale by the Company and can
be distinguished separately in operating and preparing financial statements when one of the following conditions is
met:
The component stands for an independent main business or a major business area;
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 34
The component is a part of disposal plan of an independent main business or a major business area;
The component is a subsidiary which is acquired only for sale again.
(31) Major accounting estimates and judgments
When preparing financial statements the Company's management needs to use estimates and assumptions which will
affect the application of accounting policies and the amount of assets liabilities income and expenses. Actual
conditions may differ from these estimates. The management of the company continuously evaluates the judgment of
key assumptions and uncertainties involved in the estimation and the impact of changes in accounting estimates will
be recognized in the current and future periods.The main uncertainties in the estimated amount are as follows:
(1) Measurement of expected credit losses
The company calculates the expected credit loss through the default risk exposure and the expected credit loss rate and
determines the expected credit loss rate based on the default probability and the default loss rate. When determining the
expected credit loss rate the company uses internal historical credit loss experience and other data and adjusts the
historical data in combination with current conditions and forward-looking information. When considering
forward-looking information the indicators used by the Company include the risk of economic downturn the expected
increase in unemployment rate changes in the external market environment technological environment and customer
conditions. The Company regularly monitors and reviews assumptions related to the calculation of expected credit
losses.
(2) Inventory Impairment
As mentioned in note (11) Inventory under “3 Significant accounting policies and accounting estimates” the Company
regularly estimates the net realizable value of the inventory and recognizes the difference in inventory cost higher than
the net realizable value. When estimating the net realizable value of inventory the Company considers the purpose of
holding the inventory and uses the available information as the basis for estimation including the market price of the
inventory and the Company's past operating costs. The actual selling price completion cost sales expenses and taxes
of the inventory may change according to changes in market sales conditions production technology or the actual use
of the inventory. Therefore the amount of inventory depreciation reserve may change according to the above reasons.
Adjustments to the inventory impairment will affect the current profit and loss.
(3) Impairment of other assets except inventory and financial assets
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 35
As mentioned in note (20) Long-term Asset Impairment under “3 Significant accounting policies and accountingestimates” the company performs an impairment assessment on assets other than inventory and financial assets on the
balance sheet date to determine whether the recoverable amount of the asset has fallen to a lower level than its book
value. If the situation shows that the book value of the long-term assets may not be fully recovered the relevant assets
will be deemed to be impaired and the impairment loss will be recognized accordingly.The recoverable amount is the higher of the net value of the fair value of the asset (or asset group) minus the disposal
expenses and the present value of the asset (or asset group) 's expected future cash flow. Because the Company can not
reliably obtain the public market price of assets (or asset groups) and can not reliably and accurately estimate the fair
value of assets. Therefore the Company regards the present value of the expected future cash flow as the recoverable
amount. When estimating the present value of future cash flows it is necessary to make a significant judgment on the
output selling price related operating costs of the products produced by the asset (or asset group) and the discount
rate used in calculating the present value. The Company will use all available relevant information when estimating the
recoverable amount including the prediction of output selling price and related operating costs based on reasonable
and supportable assumptions.
(4) Depreciation and amortization of assets such as fixed assets and intangible assets
As described in note (16) Fixed Assets and note (19) Intangible Assets under “3 Significant accounting policies andaccounting estimates” the company shall accrue depreciation for the fixed assets and amortization for intangible assets
within the useful life after considering their residual value. The company regularly reviews the useful life of related
assets to determine the amount of depreciation and amortization expenses to be included in each reporting period. The
useful life of assets is determined by the company based on past experience with similar assets and in combination
with anticipated technological changes. If the previous estimates change significantly the depreciation and
amortization expenses will be adjusted in the future.
(5) Deferred tax assets
When it is estimated that sufficient taxable income can be obtained in the future to use the unrecovered tax losses and
deductible temporary differences the relevant deferred tax assets are calculated and confirmed on the basis of the
applicable income tax rate during the period when the asset is expected to be recovered and the amount of taxable
income is limited to deductible tax losses and deductible temporary differences likely to be obtained by the Company.The Company needs to use judgment to estimate the time and amount of future taxable income and make reasonable
estimates and judgments on the future applicable income tax rate according to the current tax policy and other related
policies to determine the deferred tax assets that should be recognized. If the time and amount of profits actually
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 36
generated in the future period or the actual applicable income tax rate are different from the management's estimate the
difference will have an impact on the amount of deferred tax assets.
(32) Change of significant accounting policy and accounting estimate
1. Change of major accounting policy during the current reporting period
Implementation of the "Accounting Standards for Business Enterprises No. 14 - Revenue" (revised in 2017)
(hereinafter referred to as the "New Revenue Standards")
The Ministry of Finance revised the "Accounting Standards for Business Enterprises No. 14 - Revenue" in 2017.The revised standard stipulates that the initial implementation of the standard should adjust the amount of retained
earnings and other related items in the financial statements at the beginning of the year based on the cumulative
impact and no adjustments should be made to comparable period information.The company implements the new revenue standard from January 1 2020. According to the standard the company
only adjusts the retained earnings at the beginning of 2020 and the amount of other related items in the financial
statements for the cumulative impact of contracts that have not been completed on the date of first implementation
and the comparative financial statements do not adjust. The major impact of the implementation of the regulation are
as follows:
Change of accounting policy content
and reason
Affected items
January 1 2020
Consolidated Financial
statement
Parent company financial
statement
Reclassify advance from customers to
contract liabilities.
Advance from customers -4429821526.79 -5597707687.22
Contract liabilities 4429821526.79 5597707687.22
Compared with the previous revenue standards the impact of the implementation of the new revenue standards on
the relevant items for the period from January to June in 2020 is as follows:
Affected items
June 30 2020
Consolidated Financial statement Parent company financial statement
Contract liabilities 4658022515.99 5736618018.47
Advance from customers -4658022515.99 -5736618018.47
There is no impact to the items in the comprehensive income statement.
2. Change of accounting estimation
(1) The company’s principle for determining the applicable point of time for changes in accounting estimates:
According to Article 19 of the "Accounting Standards for Business Enterprises No. 4 - Fixed Assets" the enterprise
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 37
should review the useful life estimated net residual value and depreciation method of fixed assets at least at the end
of each year. If the estimated useful life is different from the original estimate the useful life of the fixed asset shall
be adjusted.
(2) Major change of accounting estimate during the current reporting period
Change of accounting estimation
content and reason
Approval procedure
Date of
application
Affected items and amount
Content: The company adjusted the
useful life of some of the fixed assets
since January 1 2020.Reason: At the end of 2019 the
company evaluated the actual
condition and depreciation period of
fixed assets and believed that the
company’s production equipment
had a relatively high level of
equipment and technical content and
maintained good conditions. The
company’s cumulative investment in
equipment maintenance costs from
2010 to 2019 was RMB 11.959
billion. To make the depreciation
period of fixed assets closer to the
actual service life it is necessary to
adjust the useful life of some fixed
assets.On January 31 2020 the eighth
meeting of the company's
eighth board of directors
reviewed and approved the
"Proposal on Adjusting the
Useful Life of Certain Fixed
Assets"
January 1 2020
Accumulative depreciation: RMB
-206452050.12;
Operating cost : RMB
-206452050.12.
3. Adjustments of the beginning balance due to the first implementation of new revenue standards:
Consolidated statement of financial position:
Items
Ending balance of
the previous year
Beginning balance
of the current year
Adjustment
Reclassification Remeasurement Total
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 38
Items
Ending balance of
the previous year
Beginning balance
of the current year
Adjustment
Reclassification Remeasurement Total
Advance from
customers
4429821526.79 -4429821526.79 -4429821526.79
Contract
liabilities
4429821526.79 4429821526.79 4429821526.79
Statement of financial position of the parent company
4. Taxes
(1) Major type of taxes and corresponding tax rates
Tax Taxation Method Tax Rate (%)
Value-added Tax (VAT)
The balance of output VAT calculated based on
product sales and taxable services revenue in
accordance with the tax laws after subtracting the
deductible input VAT of the period
6 9 13
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
Enterprise income tax Based on taxable profit 25
5. Notes to the consolidated financial statements
(1) Cash at bank and on hand
Items 30 June 2020 31 December 2019
Cash on hand 7110.40 5588.98
Cash at bank 11417585553.12 13441409399.60
Items
Ending balance of
the previous year
Beginning balance
of the current year
Adjustment
Reclassification Remeasurement Total
Advance from
customers
5597707687.22 -5597707687.22 -5597707687.22
Contract
liabilities
5597707687.22 5597707687.22 5597707687.22
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 39
Items 30 June 2020 31 December 2019
Other monetary funds 5370886642.41 4974429409.19
Total 16788479305.93 18415844397.77
Total amount deposited abroad
The details of restricted monetary funds resulted from guarantee or pledge or freeze accounts are as follows:
Items 30 June 2020 31 December 2019
Margin for bank acceptance bill 4947574509.41 4803950250.12
Margin for letter of credit 419360000.00 166527026.07
Loan margin 3330000.00 3330000.00
Others 622133.00 622133.00
Total 5370886642.41 4974429409.19
(2) Accounts receivable
1. Accounts receivable disclosed by aging
Items 30 June 2020 31 December 2019
Within 1 year (inclusive) 186365796.17 187728755.63
1-2 years (inclusive) 32428477.61 31659160.02
2-3 years (inclusive) 24358369.27 24710744.49
Over 3 years 174707324.46 177928572.30
Total 417859967.51 422027232.44
Less: Provision for bad debts 183064080.16 186330966.78
Total 234795887.35 235696265.66
2. Accounts receivable disclosed by category
Items
30 June 2020
Gross carrying amount Provision for bad debts
Book value
Amount
Percentage
(%)
Amount
Bad debts
ratio (%)
Tested for impairment
individually
47762337.18 11.43 47762337.18 100.00
Tested for impairment by
portfolio
370097630.33 88.57 135301742.98 36.56 234795887.35
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 40
Items
30 June 2020
Gross carrying amount Provision for bad debts
Book value
Amount
Percentage
(%)
Amount
Bad debts
ratio (%)
Include:
Portfolio 1: Aging portfolio 370097630.33 88.57 135301742.98 36.56 234795887.35
Total 417859967.51 100.00 183064080.16 234795887.35
Items
31 December 2019
Gross carrying amount Provision for bad debts
Book value
Amount
Percentage
(%)
Amount
Bad debts
ratio (%)
Individually significant and
tested for impairment
individually
47762337.18 11.32 47762337.18 100.00
Accounts receivable tested
for impairment by portfolio
374264895.26 88.68 138568629.60 37.01 235696265.66
Other insignificant items but
tested for impairment
individually
Total 422027232.44 100.00 186330966.78 235696265.66
Accounts receivables tested for impairment individually
Company
30 June 2020
Gross carrying
amount
Provision for bad
debts
Bad debts ratio
(%)
Reason
Benxi Nanfen Xinhe
Metallurgical Furnace Material
Co. Ltd
47762337.18 47762337.18 100.00 Halt operation
Total 47762337.18 47762337.18
Accounts receivable tested for impairment by aging portfolio:
Items 30 June 2020
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 41
Gross carrying amount Provision for bad debts Bad debts ratio (%)
Within 1 year (inclusive) 186365796.17 1863657.96 1.00
1-2 years (inclusive) 32428477.61 1621423.88 5.00
2-3 years (inclusive) 24358369.27 4871673.85 20.00
Over 3 years 126944987.28 126944987.28 100.00
Total 370097630.33 135301742.98
3. Information of provision reversal or recovery of bad debts of current period.
The reversal of bad debts of current period is RMB 3266886.60.
4. No accounts receivable has been written off during the current period.
5. Top five debtors at the end of period
Company
30 June 2020
Gross carrying amount
Percentage of total Accounts
receivable (%)
Provision for
bad debts
The first 51186799.05 12.25 589234.48
The second 47762337.18 11.43 47762337.18
The third 14246791.47 3.41
The fourth 13192766.29 3.16
The fifth 11524466.74 2.76 130131.74
Total 137913160.74 33.01 48481703.40
6. Accounts receivable derecognized due to the transfer of financial assets
None
7. The amount of assets and liabilities formed by transferring accounts receivable and continuing to be
involved
None
(3) Accounts receivable financing
1. Accounts receivable financing by category
Item 30 June 2020 31 December 2019
Notes Receivable 4072660868.85 2117763147.67
Including: Bank acceptance bill 4059350868.85 2108970139.40
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 42
Item 30 June 2020 31 December 2019
Commercial acceptance bill 13310000.00 8793008.27
Accounts receivable 309461081.12 311779314.21
Total 4382121949.97 2429542461.88
Note: Accounts receivable financing reflects notes receivable and accounts receivable that are measured at fair
value through other comprehensive income.
2. Provision for impairment of accounts receivable financing
None
3. The pledged acceptance bill at the end of the period
Items 30 June 2020
Bank acceptance bill 759753834.45
Commercial acceptance bill
Total 759753834.45
4. The amount of notes receivable endorsed over but not yet matured at the end of the period
Items Derecognized ending balance Unrecognized ending balance
Bank acceptance bill 4879438530.74
Commercial acceptance bill
Total 4879438530.74
5. No notes receivable has been transferred into accounts receivable due to inability of drawer to meet
acceptance bill at the end of the period
(4) Prepayments
1. Prepayments disclosed by aging
Aging
30 June 2020 31 December 2019
Amount Percentage (%) Amount Percentage (%)
Within 1 year (inclusive) 1277487430.52 99.52 1284678069.97 99.51
1-2 years (inclusive) 6011981.75 0.48 6279487.94 0.49
2-3 years (inclusive) 53900.20 53900.20
Over 3 years 36000.00 36000.00
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 43
Aging
30 June 2020 31 December 2019
Amount Percentage (%) Amount Percentage (%)
Total 1283589312.47 100.00 1291047458.11 100.00
Notes: As of June 30 2020 there were no outstanding prepayments over 1 year.
2. Top five prepaid companies at the end of the period
Name of the company Amount Percentage (%)
The First 813856225.94 63.40
The Second 75732564.05 5.90
The Third 35489495.22 2.76
The Fourth 27512085.89 2.14
The Fifth 22368060.00 1.74
Total 974958431.09 75.96
(5) Other receivables
Items 30 June 2020 31 December 2019
Interest receivables 32395784.72 20504422.47
Dividend receivables
Other receivables 126011346.99 152302614.30
Total 158407131.71 172807036.77
1．Interest receivable
(1) Interest receivable disclosed by category
Items 30 June 2020 31 December 2019
Deposit interest 32395784.72 20504422.47
Subtotal 32395784.72 20504422.47
Less: provision for bad debts
Total 32395784.72 20504422.47
(2) The company has no significant overdue interest and provision for bad debts.
2．Other receivables
(1) Other receivables disclosed by aging
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 44
Items 30 June 2020 31 December 2019
Within 1 year (inclusive) 108817588.26 135162016.85
1-2 years (inclusive) 15087613.32 15306496.22
2-3 years (inclusive) 3530561.08 3479413.70
Over 3 years 65222052.19 65222052.19
Total 192657814.85 219169978.96
Less: Provision for bad debts 66646467.86 66867364.66
Total 126011346.99 152302614.30
(2) Information of provision for bad debts
Provision for bad
debts
Stage one Stage two Stage three
Total
12-month
expected credit
losses
lifetime expected credit
losses
(credit impairment has not
occurred)
lifetime expected credit
losses
(credit impairment has
already occurred)
Beginning balance 9494109.69 57373254.97 66867364.66
Provision transfer
in transfer back
transfer out during
the current period
-220896.80 -220896.80
Write-back during
the current period
Write-off during the
current period
Other changes
Ending balance 9273212.89 57373254.97 66646467.86
Changes in the gross carrying amount of other receivables are as follows:
Provision for bad
debts
Stage one Stage two Stage three
Total 12-month expected
credit losses
lifetime expected
credit losses
(credit impairment has
not occurred)
lifetime expected credit
losses
(credit impairment has
already occurred)
Beginning balance 137511976.11 24284747.88 57373254.97 219169978.96
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 45
Provision for bad
debts
Stage one Stage two Stage three
Total 12-month expected
credit losses
lifetime expected
credit losses
(credit impairment has
not occurred)
lifetime expected credit
losses
(credit impairment has
already occurred)
Increase
Decrease 26291267.31 220896.80 26512164.11
Other changes
Ending balance 111220708.80 24063851.08 57373254.97 192657814.85
(3) Other receivables disclosed by nature
Nature 30 June 2020 31 December 2019
Accounts 183332767.17 209700618.22
Others 9325047.68 9469360.74
Total 192657814.85 219169978.96
(4) Top five debtors at the end of the period
Company Nature or content Amount Aging
Percentage of total other
receivables (%)
Provision for bad
debts
The First Accounts 9648111.00 within 1 year 5.01
The Second Accounts 9505576.53 within 1 year 4.93
The Third Accounts 6804946.27 2-3 years 3.53
The Fourth Accounts 3756448.28 1-2 years 1.95 2000.00
The Fifth Accounts 2661194.04
within 1 year to
over 3 years
1.38 2465166.01
Total 32376276.12 16.81 2467166.01
(5) There is no other receivables relates to government subsidies at the end of the reporting period.
(6) There is no other receivables derecognized due to the transfer of financial assets at the end of the reporting period.
(7) There is no transfer of other receivables and continued involvement in the amount of assets and liabilities formed at
the end of the reporting period.
(6) Inventories
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 46
1. Inventories disclosed by category
Items
30 June 2020 31 December 2019
Gross carrying
amount
Impairment Book value
Gross carrying
amount
Impairment Book value
Raw material
and main
material
3486744568.70 26986533.69 3459758035.01 3737655945.87 26986533.69 3710669412.18
Work in
process and
self-made
semi-finished
product
1455369031.61 32278622.48 1423090409.13 1302249713.48 25995508.16 1276254205.32
Finished
products
4729490890.24 26299958.86 4703190931.38 2730735542.67 17261474.56 2713474068.11
Total 9671604490.55 85565115.03 9586039375.52 7770641202.02 70243516.41 7700397685.61
2. Impairment of inventory
Category 31 December 2019
Increase Decrease
30 June 2020
Provision Others
Write-back or
write-off
Others
Raw material and main
material
26986533.69 26986533.69
Work in process and
self-made semi-finished
product
25995508.16 32278622.48 25995508.16 32278622.48
Finished products 17261474.56 26299958.86 17261474.56 26299958.86
Total 70243516.41 58578581.34 43256982.72 85565115.03
(7) Other current assets
Items 30 June 2020 31 December 2019
Prepaid enterprise income tax 182484352.23 182484616.27
VAT input tax 101722696.39 130420207.82
Total 284207048.62 312904824.09
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 47
(8) Long-term equity investment
Investees
31
December
2019
Increase/decrease
30 June
2020
Total
Impairment
Add
Investment
Reduce
Investment
Income or loss on
investment
recognized under
the equity method
Other
Comprehensive
Income
Adjustment
Other
Equity
Changes
Declaration of
Cash
Dividends or
Profit
Provision
Others
1．Joint Venture
Subtotal
2．Associated Enterprise
Zhejiang Bengang Jingrui
Steel Processing Co. Ltd..
2642998.70 29304.00 2672302.70
Subtotal 2642998.70 29304.00 2672302.70
Total 2642998.70 29304.00 2672302.70
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 48
(9) Other equity instrument investment
Items 30 June 2020 31 December 2019
Suzhou Bengang Industrial Co. Ltd. 3888980.00 3888980.00
Sinosteel Shanghai Steel Processing Co. Ltd.Northeast Special Steel Group Co. Ltd. 1037735849.00 1037735849.00
Guangzhou Benpu Auto Board Sales Co. Ltd. 200000.00 200000.00
Wuhan Bengang Yuanhong Trading Co. Ltd 200000.00
Total 1042024829.00 1041824829.00
Notes:
The item "Other equity instrument investment" reflects the ending book value of the non-trading equity instrument
investment designated by the company as measured at fair value at fair value through other comprehensive income
on the balance sheet date.The company holds 15% equity in Sinosteel Shanghai Steel Processing Co. Ltd.The 10% equity of Northeast Special Steel Group Co. Ltd. held by the company has been pledged to Bank of
Dalian Co. Ltd. Shenyang branch.
(10) Fixed assets
1. Fixed assets and Disposal of fixed assets
Items 30 June 2020 31 December 2019
Fixed assets 24952427383.86 26123375492.40
Disposal of fixed assets
Total 24952427383.86 26123375492.40
2. Details of fixed assets
Items Buildings Machinery
Transportation
equipment and
others
Total
1．Gross carrying amount
(1) 31 December 2019 12321783218.79 47625624131.28 908284781.31 60855692131.38
(2) Increase in current period 8162112.36 22887140.10 19679682.35 50728934.81
Including: Purchase
Transferred
from construction in progress
8162112.36 22887140.10 19679682.35 50728934.81
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 49
Items Buildings Machinery
Transportation
equipment and
others
Total
Merging
Others
(3) Decrease in current period 6057064.23 70745410.85 10856244.37 87658719.45
Including: Disposal 6057064.23 70745410.85 10856244.37 87658719.45
Others
(4) 30 June 2020 12323888266.92 47577765860.53 917108219.29 60818762346.74
2．Total accumulated
depreciation
(1) 31 December 2019 5843160062.67 28243587548.42 604346279.82 34691093890.91
(2) Increase in current period 148749130.68 959941877.91 92572359.88 1201263368.47
Including: Provision 148749130.68 959941877.91 92572359.88 1201263368.47
Others
(3) Decrease in current period 2826190.62 51865091.34 12553762.61 67245044.57
Including: Disposal 2826190.62 51865091.34 12553762.61 67245044.57
Others
(4) 30 June 2020 5989083002.73 29151664334.99 684364877.09 35825112214.81
3．Total impairment
(1) 31 December 2019 38596028.99 2626719.08 41222748.07
(2) Increase in current period
Including: Provision
Others
(3) Decrease in current period
Including: Disposal
Others
(4) 30 June 2020 38596028.99 2626719.08 41222748.07
4．Total net book value of
Fixed assets
(1) 30 June 2020 6296209235.20 18423474806.46 232743342.20 24952427383.86
(2) 31 December 2019 6440027127.13 19379409863.78 303938501.49 26123375492.40
3. Fixed assets idled temporarily
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 50
Items Gross carrying amount Accumulated depreciation Impairment Book value
Buildings 93833538.80 58818849.47 35014689.33
Machinery 1224688.89 1149022.46 75666.43
Transportation
equipment and others
1042125.89 1042125.89
Total 96100353.58 61009997.82 35090355.76
4. Fixed assets leased in through financial leasing
As of the end of the current reporting period the original value of the fixed assets leased in through financial
leasing was RMB 1050748776.34 all of which were leased from the related party Liaoning Hengyi Financial
Leasing Co. Ltd. For details please refer to note (5) 2. Lease under note 10.
5. Fixed assets leased out by operating lease
Items Book value
Buildings 8479821.37
Machinery
Total 8479821.37
6. Fixed assets without property rights certificates at the end of the period
Items Book value Reason
Buildings 1070014263.61 To be handled
(11) Construction in progress
1. Construction in progress and Construction materials
Items 30 June 2020 31 December 2019
Construction in progress 2560710384.30 1820264689.19
Project materials 8598323.97 13588883.39
Total 2569308708.27 1833853572.58
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 51
2. Details of construction in progress
Items
30 June 2020 31 December 2019
Gross carrying amount Total impairment Book value Gross carrying amount Total impairment Book value
Energy-saving renovation project of No. 5 blast furnace in
ironworks
756972673.01 756972673.01 491069345.30 491069345.30
Special steel mill renovation project 135994865.49 135994865.49 126479522.35 126479522.35
1# converter energy saving and environmental protection
transformation
132515955.85 132515955.85 148803402.52 148803402.52
Steelmaking Plant No. 8 Casting Machine Project 193625008.01 193625008.01 100460943.24 100460943.24
Reconstruction project of three power plant workshop 3861154.59 3861154.59
Transformation of No. 2 Casting Machine in Steelmaking
Plant
82682564.04 82682564.04 81419913.88 81419913.88
CCPP power generation project 115133501.01 115133501.01 85320752.59 85320752.59
Environmental protection renovation project of No. 4-6
converter
95177941.15 95177941.15 69541903.74 69541903.74
Special Steel Electric Furnace Upgrade Project 88959809.91 88959809.91 62311284.01 62311284.01
360 square meter sintering machine 73248631.59 73248631.59 60930506.79 60930506.79
360 square meter sintering machine waste heat utilization 56547049.50 56547049.50 55089094.50 55089094.50
No. 7 blast furnace dry dust removal and energy-saving
transformation of TRT power generation
70288456.71 70288456.71 40993916.95 40993916.95
1700 Hot Rolling Improvement 88288386.41 88288386.41 39806201.09 39806201.09
Coking plant gas deamination and sulfur ammonia
maintenance project
48543.69 48543.69
5#-7# Oxygen Generator Nitrogen Increasing and Energy
Saving Renovation
38600796.92 38600796.92 34339392.96 34339392.96
6#Blast furnace environmental protection overhaul project 65177829.19 65177829.19 30937257.41 30937257.41
Two sets of dust collectors for the second sintered finished
product in ironworks
1255783.76 1255783.76 29954354.78 29954354.78
Power plant 4-5# coke oven dry quenching waste heat steam
utilization project
27358.49 27358.49
Plate transfer to Liaoning Coal Chemical Coke Oven Gas
Project
21840791.70 21840791.70 21840791.70 21840791.70
Overall improvement of Benxi Steel's manufacturing
management
22104039.00 22104039.00 20685421.72 20685421.72
8#9# Coke oven wastewater advanced treatment 20335268.74 20335268.74 20335268.74 20335268.74
Others 498023975.54 498023975.54 299945414.92 299945414.92
Total 2560710384.30 2560710384.30 1820264689.19 1820264689.19
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 52
3. Changes in important construction projects in the current period
Items Budget 31 December 2019
Increase during
current period
Transferred
to fixed asset
during
current
period
Other
decrease
during
current
period
30 June 2020
Project
cumulative
investment
accounted for
the proportion
of the budget
(%)
Project
progress
(%)
Accumulated
amount of
interest
capitalization
Including：
Interest
capitalization
amount in
current period
Interest
capitalizatio
n rate in
current
period (%)
Sources
of
funds
Energy-saving
renovation
project of No. 5
blast furnace in
ironworks
1500000000.00 491069345.30 265985896.52 82568.81 756972673.01 50% 50% 22681832.49 4299372.31 4.35
Self-rais
ed&
Other
Special steel
mill renovation
project
596070000.00 126479522.35 9515343.14 135994865.49 24% 25% 2780476.54 798549.83 4.35
Self-rais
ed&
Other
1# converter
energy saving
and
environmental
protection
transformation
218000000.00 148803402.52 -16287446.67 132515955.85 61% 70% 1244218.10 295400.00 4.35
Self-rais
ed&
Other
Steelmaking
Plant No. 8
Casting
Machine Project
643410000.00 100460943.24 93164064.77 193625008.01 30% 40%
Self-rais
ed&
Other
Cold rolled
high-strength
steel renovation
project
6134980000.00 34614140.91 2037588.85 32576552.06 96% 100% 857867059.71
Self-rais
ed&
Other
Reconstruction
project of three
power plant
workshop
593990000.00 3861154.59 3861154.59 99% 98% 34827795.34
Self-rais
ed&
Other
Transformation
of No. 2 Casting
Machine in
Steelmaking
100900000.00 81419913.88 1262650.16 82682564.04 82% 85% 129125.71
Self-rais
ed&
Other
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 53
Items Budget 31 December 2019
Increase during
current period
Transferred
to fixed asset
during
current
period
Other
decrease
during
current
period
30 June 2020
Project
cumulative
investment
accounted for
the proportion
of the budget
(%)
Project
progress
(%)
Accumulated
amount of
interest
capitalization
Including：
Interest
capitalization
amount in
current period
Interest
capitalizatio
n rate in
current
period (%)
Sources
of
funds
Plant
CCPP power
generation
project
1060000000.00 85320752.59 29812748.42 115133501.01 11% 10% 2587646.72 60479.95 4.35
Self-rais
ed&
Other
Environmental
protection
renovation
project of No.
4-6 converter
270000000.00 69541903.74 25636037.41 95177941.15 35% 40% 1800233.51 548620.48 4.35
Self-rais
ed&
Other
Special Steel
Electric Furnace
Upgrade Project
1617610000.00 62311284.01 26648525.90 88959809.91 5% 10%
Self-rais
ed&
Other
360 square
meter sintering
machine
1284032000.00 60930506.79 12318124.80 73248631.59 98% 90%
Self-rais
ed&
Other
Total 14018992000.00 1226337574.42 486531239.95 2120157.66 1710748656.71 923918388.12 6002422.57
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 54
4. There is no impairment of construction in progress during the current period.
5. Construction materials
Items
30 June 2020 31 December 2019
Gross carrying
amount
Impairment Book value
Gross carrying
amount
Impairment Book value
Construction
materials
8598323.97 8598323.97 13588883.39 13588883.39
Total 8598323.97 8598323.97 13588883.39 13588883.39
(12) Intangible assets
1. Details of intangible assets
Items Land use right Software Total
1．Total of original value
(1) 31 December 2019 327028797.84 310401.55 327339199.39
(2) Increase
Including: Purchase
Internal R&D
Increase in Mergers
Others
(3) Decrease
Including: Disposal
Others
(4) 30 June 2020 327028797.84 310401.55 327339199.39
2．Total of Accumulated Amortization
(1) 31 December 2019 55717267.98 121908.07 55839176.05
(2) Increase 3270287.94 13397.46 3283685.40
Including: Provision 3270287.94 13397.46 3283685.40
Others
(3) Decrease
Including: Disposal
Others
(4) 30 June 2020 58987555.92 135305.53 59122861.45
3．Total of Impairment
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 55
Items Land use right Software Total
(1) 31 December 2019
(2) Increase
Including: Provision
Others
(3) Decrease
Including: Disposal
Others
(4) 30 June 2020
4. Total of Net value
(1) 31 December 2019 268041241.92 175096.02 268216337.94
(2) 30 June 2020 271311529.86 188493.48 271500023.34
2. Land use right without Certificate of Land use right at the end of the period.
None.
(13) Deferred tax asset and deferred tax liability
1. Deferred tax assets before taking into consideration of the balance offsetting
Items
30 June 2020 31 December 2019
Deductible temporary
differences
Deferred tax
asset
Deductible temporary
differences
Deferred tax
asset
Impairment 390913104.12 97728276.03 378651125.80 94662781.44
Internal unrealized profit 54603923.36 13650980.84 53312397.14 13328099.29
Differences of depreciation
and amortization
333978859.03 83494714.76 333978859.03 83494714.76
Total 779495886.51 194873971.63 765942381.97 191485595.49
2. There is no deferred tax liabilities before taking into consideration the offsetting of balances at the end of
the period.
3. At the end of the reporting period there are no deferred tax assets or liabilities listed as net value after
offsetting.
4. Unrecognized deferred tax assets
Items 30 June 2020 31 December 2019
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 56
Items 30 June 2020 31 December 2019
Deductible losses 388187521.59 653832187.01
Impairment of assets 410479.98 428163.12
Total 388598001.57 654260350.13
5. The deductible loss of unrecognized deferred tax assets due in the following period
Items 30 June 2020 31 December 2019 Notes
Year 2020 341870529.25 607515194.67
Year 2021 10981383.41 10981383.41
Year 2022 1000766.72 1000766.72
Year 2023 16327268.19 16327268.19
Year 2024 18007574.02 18007574.02
Total 388187521.59 653832187.01
(14) Other non-current assets
Items
30 June 2020 31 December 2019
Gross carrying
amount
Impair
ment
Book value
Gross carrying
amount
Impair
ment
Book value
Prepayment
for long-term
assets
963239365.67 963239365.67 708502552.50 708502552.50
Total 963239365.67 963239365.67 708502552.50 708502552.50
Notes: The prepayment for long-term assets at the end of the period are prepaid for equipment and construction
funds of which RMB 841113071.18 was the financial lease deposit paid to Liaoning Hengyi Financial
Leasing Co. Ltd.
(15) Short-term loans
1. Classification of short-term loans
Items 30 June 2020 31 December 2019
Pledge loans
Mortgage loans
Guaranteed loans 12086705000.00 12731478000.00
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 57
Items 30 June 2020 31 December 2019
Credit loans 420000000.00 420000000.00
Total 12506705000.00 13151478000.00
2. There is no short-term loans that were overdue at the end of the reporting period
(16) Notes payables
Items 30 June 2020 31 December 2019
Bank acceptance bill 752290000.00 8897442732.91
Domestic letter of credit 10603620199.39 1174963839.77
Domestic letter of credit 2878818288.66 1756108104.27
Total 14234728488.05 11828514676.95
Notes: There are no outstanding notes payable at the end of this period.
(17) Accounts payable
1. Accounts payable disclosed by category
Items 30 June 2020 31 December 2019
Accounts payable for goods 3122246744.39 3481176373.75
Accounts payable for labor 49716139.71 56959052.87
Accounts payable for project and equipment 457345653.91 581909120.17
Repair expense 349444971.43 407468483.48
Total 3978753509.44 4527513030.27
2. Significant accounts payable aging over one year
Items Ending balance Amount aging over one year
Company 1 50416440.77 45906440.77
Company 2 93653173.71 27685592.96
Company 3 14200763.99 14200763.99
Company 4 14200000.00 14200000.00
Company 5 32153162.29 11977425.94
Company 6 15810625.07 12040944.48
Total 220434165.83 126011168.14
Notes: The above significant accounts payable aged over one year have not yet reached the settlement conditions.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 58
(18) Advance from customers
Items 30 June 2020 31 December 2019
Advance for goods 4429821526.79
Total 4429821526.79
(19) Contract liabilities
Items 30 June 2020 31 December 2019
Advance for goods 4658022515.99
Total 4658022515.99
(20) Employee benefits payable
1. Employee benefits payable
Items 31 December 2019 Increase Decrease 30 June 2020
(1) Short-term employee
benefits
22208442.94 947883058.17 929828911.45 40262589.66
(2) Post-employment
benefits - defined
contribution plans
62312.32 79852867.66 79517956.70 397223.28
(3) Termination benefits 1427419.30 914555.00 512864.30
(4) Other benefits due within
one year
Total 23698174.56 1027735925.83 1010261423.15 41172677.24
2. Short-term employee benefits
Items 31 December 2019 Increase Decrease 30 June 2020
(1) Salary bonus
allowance and subsidy
12974335.94 682125744.78 667433631.49 27666449.23
(2) Employee welfare 42088821.33 42088821.33
(3) Social Insurance 756616.34 151522095.49 148532398.75 3746313.08
Including: Medical
insurance
106650.30 54080133.64 54133936.64 52847.30
Work injury
insurance
649966.04 15341554.21 12632965.43 3358554.82
Maternity
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 59
Items 31 December 2019 Increase Decrease 30 June 2020
insurance
(4) Housing 6855601.00 56644301.00 56644301.00 6855601.00
(5) Union funds and staff
education fee
1621889.66 15502095.57 15129758.88 1994226.35
(6) Short-term
compensated absences
(7) Short-term profit -
sharing scheme
Total 22208442.94 947883058.17 929828911.45 40262589.66
3. Defined contribution plans
Items 31 December 2019 Increase Decrease 30 June 2020
Basic pension fund 60423.10 77455966.53 77127366.80 389022.83
Unemployment insurance 1889.22 2396901.13 2390589.90 8200.45
Total 62312.32 79852867.66 79517956.70 397223.28
(21) Current tax liabilities
Items 30 June 2020 31 December 2019
Value-added tax 6341821.09 246921117.21
Corporate income tax 5326863.20 6250204.39
City maintenance and construction tax 523353.68 11416274.65
House property tax 3676391.46 3445290.84
Educational surcharges 421669.65 8146826.78
Land use right tax 1128142.41 1128141.09
Environmental tax 251080.35 5264008.42
Others 4278390.14 2253951.42
Total 21947711.98 284825814.80
(22) Other payables
Items 30 June 2020 31 December 2019
Interest payables 20582111.30 10818986.30
Dividends payables
Other payables 623477759.31 651882758.67
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 60
Items 30 June 2020 31 December 2019
Total 644059870.61 662701744.97
1. Interest Payable
Items 30 June 2020 31 December 2019
Loan interests 20582111.30 10818986.30
Total 20582111.30 10818986.30
At the end of the reporting period there is no significant overdue interest
2. Other payables
(1) Other payables disclosed by nature
Items 30 June 2020 31 December 2019
Deposit 1975288.77 1933435.69
Margin 84938221.01 86166961.89
Accounts 431828769.92 454536559.31
Others 104735479.61 109245801.78
Total 623477759.31 651882758.67
(2) There is no significant other payables aged over one year at the end of the reporting period.
(23) Non-current liabilities due within one year
Items 30 June 2020 31 December 2019
Long-term loans due within one year 1201524980.80 234474657.99
Bond payables due within one year
Long-term payables due within one year
Total 1201524980.80 234474657.99
Notes: Among the long-term loans due within one year RMB 1200000000.00 is credit loan and RMB 1524980.80 is
guaranteed loan.
(24) Long-term loans
Items 30 June 2020 31 December 2019
Pledged loans 622600000.00 622600000.00
Mortgage loan
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 61
Items 30 June 2020 31 December 2019
Guaranteed loans 1313560767.82 1106159800.73
Credit loans 1874303166.36 3120916110.00
Total 3810463934.18 4849675910.73
(25) Long-term payables
Items 30 June 2020 31 December 2019
Long-term payables 1050748776.34 516939408.14
Special payables
Total 1050748776.34 516939408.14
Long-term payables
Items 30 June 2020 31 December 2019
Financing lease payments 1050748776.34 516939408.14
Total 1050748776.34 516939408.14
Notes: At the end of the reporting period the amount of unrealized financing expenses payable for financing leases
was RMB 824818755.27.The company needs to pay interest on time the principal is a one-time payment after the lease contract
expires and expiry date of each lease contract that has not been completely executed is more than 3 years.
(26) Deferred income
Items 31 December 2019 Increase Decrease 30 June 2020 Reason
Government
subsidy
208955407.30 1626919.00 37890873.76 172691452.54
Total 208955407.30 1626919.00 37890873.76 172691452.54
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 62
Projects of government subsidies:
Items 31 December 2019 Increase
Transfer to
non-operating
income
Other
decrease
30 June 2020 Related to assets or income
high-pressure service conditions> project national support funds
121000.00 93575.00 27425.00 Related to income
Municipal Skills Master Workstation Expenses in 2018 (Special
Steel Steelmaking and Energy General Plant 80000 each)
187039.34 120423.00 66616.34 Related to income
Carbon Fiber Wastewater Advanced Treatment Project in
Dongfeng Plant Area of Plate Coking Plant
9500000.00 9500000.00 Related to assets
Coal-fired boiler desulfurization and denitrification project in
high-pressure workshop of Bengang Power Plant
4200000.00 300000.00 3900000.00 Related to assets
Bengang Group Co. Ltd. Automotive Sheet Engineering
Laboratory Engineering Construction Fund
1000000.00 1000000.00 Related to assets
Benxi Iron and Steel Automotive Sheet Engineering Laboratory
Project
1000000.00 160206.60 839793.40 Related to assets
Research and development of the third-generation high-strength
steel for automobiles
2900000.00 2900000.00 Related to assets
Flue gas desulfurization project of 7 130-ton combustion boilers
in power plant
14400000.00 2400000.00 12000000.00 Related to assets
Project fund for cogeneration transformation project of power
plant's three-electric workshop
6000000.00 1000000.00 5000000.00 Related to assets
Demonstration project of construction of energy management
center for industrial enterprises
4640000.00 1160000.00 3480000.00 Related to assets
Research and development of anti-oxidation hot forming steel
PHS1500A
250000.00 0.10 249999.90 Related to income
Air quality automatic monitoring system 105000.00 35000.00 70000.00 Related to assets
Cold rolled high-strength steel renovation project 150000000.00 25000000.00 125000000.00 Related to assets
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 63
Items 31 December 2019 Increase
Transfer to
non-operating
income
Other
decrease
30 June 2020 Related to assets or income
Energy saving and environmental protection project of sintering
machine in ironworks
1160000.00 580000.00 580000.00 Related to assets
Liaoning craftsman subsidy 100002.97 14002.80 86000.17 Related to income
Construction of a new platform for professional technology in
the automotive steel industry
1000000.00 300000.00 700000.00 Related to assets
Study on the Effect Mechanism and Control of Rare Earth
Oxysulfide on Plasticity of Automobile Steel
184364.99 -3252.74 187617.73 Related to income
Introduce special funds for overseas advanced applicable
technologies (progress in production technology of high-end
electro-galvanized sheet)
4000000.00 1000000.00 3000000.00 Related to assets
High-grade electro-galvanized sheet production line project for
automobiles
8208000.00 4104000.00 4104000.00 Related to assets
Compensation for closing city construction service center 1626919.00 1626919.00 Related to income
Total 208955407.30 1626919.00 37890873.76 172691452.54
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 64
(27) Share capital
Items
31 December
2019
Increase/decrease (+ - )
30 June 2020
Issuing
of new
share
Bonus
shares
Transferred
from
reserves
Others Subtotal
Capital
shares
3875371532.00 3875371532.00
(28) Capital reserves
Items 31 December 2019 Increase Decrease 30 June 2020
Capital premium over par
value
12227292378.47 12227292378.47
Other capital reserves 115917468.82 115917468.82
Total 12343209847.29 12343209847.29
(29) Special Reserves
Items 31 December 2019 Increase Decrease 30 June 2020
Safety production
cost
212687.41 26575861.58 4308363.55 22480185.44
Total 212687.41 26575861.58 4308363.55 22480185.44
(30) Surplus Reserves
Items 31 December 2019 Increase Decrease 30 June 2020
Statutory surplus
reserves
961105529.85 961105529.85
Total 961105529.85 961105529.85
(31) Undistributed Profits
Items Current period Previous period
Before adjustments: undistributed profits at last
year-end
2307765664.62 1945887269.82
Adjustments of the beginning distributed profits
(increase + / decease -)
After adjustments: undistributed profit at this 2307765664.62 1945887269.82
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 65
Items Current period Previous period
year-beginning
Add: undistributed profit belonging to parent
company
254644204.33 555646971.40
Less: Statutory surplus reserves
Discretionary reserves
General risk reserves
Common shares dividend payable 193768576.60
Common shares dividend transferred to paid-in
capital
Ending balance of undistributed profits 2562409868.95 2307765664.62
(32) Operating income and operating cost
Items
Current period Previous period
Revenue Cost Revenue Cost
Principal business 20470526587.62 18886384469.92 22581458005.55 20807089888.18
Other business 1714010672.43 1553861892.75 1521137161.59 1260522841.47
Total 22184537260.05 20440246362.67 24102595167.14 22067612729.65
Details for operating income:
Items Current period Previous period
Principal business 20470526587.62 22581458005.55
Including：Domestic 17852661337.91 18514105145.87
Abroad 2617865249.71 4067352859.68
Other business 1714010672.43 1521137161.59
Including：Domestic 1714010672.43 1521137161.59
Abroad
Total 22184537260.05 24102595167.14
(33) Tax and surcharges
Items Current period Previous period
City maintenance and construction tax 13467815.13 27561420.89
Educational surcharge 9674693.55 19877089.62
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 66
Items Current period Previous period
Housing property tax 40089186.70 38778891.04
Land use right tax 6457679.78 6538299.88
Stamp duty and others 5619563.86 6387222.58
Environmental tax 12962357.84 14961858.43
others 127139.82 20580.53
Total 88398436.68 114125362.97
(34) Selling and distribution expenses
Items Current period Previous period
Freight 532184917.51 456217341.94
Port surcharges 53812369.10 52405847.32
Import and export agency fee 30678165.54 34174633.61
Salary and benefits 12735597.76 13553533.82
Others 9404066.26 13751821.86
Package fee 3578102.61 4342020.59
Total 642393218.78 574445199.14
(35) General and administrative expenses
Items Current period Previous period
Salary and benefits 110662138.91 122383642.39
Repair expense 102044859.99 142464599.50
Land use right fee 32611483.62 27345714.30
Others 58119763.89 62667766.52
Depreciation 18573834.52 24216703.47
Social insurance fee 18957667.84 23532872.66
Heating fee 18050334.83 22391441.18
Water resources fee 12470097.22 11993951.74
Housing fund 5056476.00 4737351.00
Amortization 2975850.60 2970897.50
Entertainment fee 369545.17 1070316.75
Rental fee 661452.72 643214.78
Shipping fee 274811.10 349339.98
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 67
Items Current period Previous period
Total 380828316.41 446767811.77
(36) Research and development expenses
Items Current period Previous period
Depreciation materials and compensation etc. 20202985.20 15408472.28
Total 20202985.20 15408472.28
(37) Financial expenses
Items Current period Previous period
Interest expenditure 439861353.93 586490262.69
Less: Interest income 154882284.33 127083779.58
Exchange loss 45932418.60 -71095752.13
Others 24125152.20 15154975.44
Total 355036640.40 403465706.42
(38) Other income
Items Current period Previous period
Government subsidy 37894126.40 41695000.00
Others 693206.00
Total 38587332.40 41695000.00
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 68
Government subsidies included in other income:
Items Current period Previous period Related to assets or income
Steel for high-strength pipelines under low-temperature and high-pressure service
conditions>Project State Support Fund
93575.00 52000.00 income
2018 municipal skill master workstation costs 120423.00 income
Coal-fired boiler desulfurization and denitrification project in high-pressure workshop of
Bengang Power Plant
300000.00 300000.00 assets
Benxi Iron and Steel Automotive Sheet Engineering Laboratory Project 160206.60 assets
Flue gas desulfurization project of 7 130-ton combustion boilers in power plant 2400000.00 2400000.00 assets
Project fund for cogeneration transformation project of power plant's three-electric workshop 1000000.00 1000000.00 assets
Demonstration project for the construction of energy management center for industrial
enterprises
1160000.00 1160000.00 assets
Air quality automatic monitoring system 35000.00 35000.00 assets
Cold rolled high-strength steel renovation project 25000000.00 25000000.00 assets
Energy saving and environmental protection project of sintering machine in ironworks 580000.00 580000.00 assets
Liaoning craftsman subsidy 14002.80 income
Construction of a new platform for professional technology in the automotive steel industry 300000.00 income
Special funds for introducing overseas advanced and applicable technologies 1000000.00 1442000.00 assets
High-grade electro-galvanized sheet production line project for automobiles 4104000.00 4104000.00 assets
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 69
Items Current period Previous period Related to assets or income
Compensation for closing city construction service center 1626919.00 income
MES project special funds 860000.00 assets
Environmental pollution control project 1810000.00 assets
Environmental governance project and regional watershed environmental protection
comprehensive prevention and control project
170000.00 assets
Sintering machine waste heat utilization project and desulfurization renovation project 2102000.00 assets
Ironworks 360 Sintering Machine Flue Gas Desulfurization Project 100000.00 assets
Environmental protection special fund 580000.00 assets
Others 693206.00 income
Total 38587332.40 41695000.00
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 70
(39) Income on investment
Items Current period Previous period
Income on disposal of long-term equity investment by equity
method
29304.00 25907.49
Income on bank short-term financial products
Others
Total 29304.00 25907.49
(40) Credit impairment loss
Items Current period Previous period
Loss from bad debts of note receivable
Loss from bad debts of account receivable 3266886.62 3389912.79
Loss from bad debts of receivable financing
Loss from bad debts of other receivables 220896.80 361601.04
Loss from bad debts of debt investment
Loss from bad debts of other debt investment
Loss from bad debts of long-term receivables
Total 3487783.42 3751513.83
(41) Asset impairment loss
Items Current period Previous period
Bad debt loss
Inventory impairment loss -15321598.62
Impairment of fixed assets
Total -15321598.62
(42) Assets disposal gains
Items Current period Previous period
The amount recognized in
non-recurring profit
Disposal gains or losses
arising from disposal of fixed
assets not classified for sale
325651.61 2418704.34 325651.61
Total 325651.61 2418704.34 325651.61
(43) Non-operating income
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 71
Items Current period Previous period
The amount
recognized in
non-recurring
profit
Non-current assets scrapped
gains
302362.80 7955444.40 302362.80
Others 805201.30 204097.84 805201.30
Debt restructuring gain 32800.02 50640.00 32800.02
Total 1140364.12 8210182.24 1140364.12
(44) Non-operating expense
Items Current period Previous period
The amount
recognized in
non-recurring
profit
Non-current assets scrapped
loss
20035471.42 57974322.05 20035471.42
Total 20035471.42 57974322.05 20035471.42
(45) Income tax expense
1. Income tax expense
Items Current period Previous period
Income tax payable for the current year 12626191.22 9415176.70
Adjustment of deferred income tax -3388376.14 16547005.03
Total 9237815.08 25962181.73
2. Accounting profit and income tax expense adjustment process
Items Current period
Total profit 265644665.42
Income tax expense calculate according to the official or applicable tax rate 66411166.35
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
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 72
Items Current period
Effect of use of deductible losses of unrecognized deferred tax asset of prior
period
-54648936.33
Effect of deductible temporary differences or deductible losses of
unrecognized deferred tax asset of current period
Changes in the balance of deferred income tax assets and liabilities at the
beginning of the period due to additional deductible expenses and tax rate
adjustments required by the tax law
Income tax expenses 9237815.08
(46) Earning per share
1. Basic earnings per share
The basic earnings per share is calculated by dividing the consolidated net profit
attributable to the common stock shareholders of the parent company by the weighted
average number of common stocks issued by the company:
Items Current period Previous period
Consolidated net profit attributable to ordinary
shareholders of parent company
254644204.33 453209615.76
The weighted average number of common shares
issued by the company
3875371532.00 3813757237.67
Basic earnings per share 0.07 0.12
Including: basic earnings per share for continuing
operations
0.07 0.12
Basic earnings per share for discontinued
operations
2. Diluted earnings per share
Diluted earnings per share is calculated by dividing the consolidated net profit attributable
to the common shareholders of the parent company (diluted) by the weighted average
number of ordinary shares issued by the company (diluted):
Items Current period Previous period
Consolidated net profit attributable to ordinary
shareholders of parent company (diluted)
254644204.33 453209615.76
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 73
Items Current period Previous period
The weighted average number of common shares
issued by the company (diluted)
3875371532.00 3813757237.67
Basic earnings per share 0.07 0.12
Including: basic earnings per share for continuing
operations
0.07 0.12
Basic earnings per share discontinued
(47) 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 16851204.08 17151876.47
Interest income 154882284.33 127083779.58
Special subsidy income 1626919.00 428000.00
Non-operating income 503009.25 117870.10
Others 153380.34 123098.19
Total 174016797.00 144904624.34
2. Cash paid related to other operating activities
Items Current period Previous period
Current accounts advance for another 199605380.27 221234925.29
Sales expenses 4545479.59 4449939.39
Administrative expenses 18446185.30 17883394.86
Bank charges 3331343.25 3255172.22
Others 360322.84 365921.44
Total 226288711.25 247189353.20
(48) 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 256406850.34 452934689.03
Add: Credit impairment loss 3487783.42 3751513.83
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 74
Items Current period Previous period
Asset impairment loss -15321598.62
Depreciation of fixed assets and so on 1201263368.47 1199864248.72
Amortization of intangible assets 3283685.40 3278732.29
Long-term deferred expenses
Losses proceeds from disposal of PPE intangible
assets and other long-term assets (Earnings
marked“－”)
19733108.62 57974322.05
Scrapped losses from fixed assets (Earnings
marked“－”)
Change in fair value loss (Earnings marked“－”)
Financial expenses (Earnings marked“－”) 355036640.40 403465706.42
Investment losses (Earnings marked“－”)
Deferred tax assets reduction (Addition marked“－”) -3388376.14 15928033.89
Deferred tax liabilities increased (Reduction
marked“－”)
Reduction of inventory (Addition marked“－”) -1885641689.91 -1289831911.07
Operating receivable items reduction (Addition
marked“－”)
-1938821059.08 -908736317.08
Operating payable items increase (Less marked"－") 1852485580.02 1046157987.59
Other
Net cash flows generated from operating activities -151475707.08 984787005.67
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 11417592663.52 11788922569.51
Less: Beginning balance of cash 13441414988.58 11752548621.97
Add: Ending balance of cash equivalents
Less: Opening balance of cash equivalents
The net increase in cash and cash equivalents -2023822325.06 36373947.54
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 75
2. The structure of cash and cash equivalents
Items 30 June 2020 31 December 2019
1. Cash 11417592663.52 13441414988.58
Including: Cash on hand 7110.40 5588.98
Bank deposits available on demand 11417585553.12 13441409399.60
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 11417592663.52 13441414988.58
Including: Cash and cash equivalents limited to use by
the parent company of other subsidiary in the
group
(49) Assets of which ownership or right to use are restricted
Items 30 June 2020 Reason
Cash at bank and on hand 5370886642.41 Deposit for notes and letter of credit
Accounts receivable
financing
759753834.45
Pledged for acceptance bill and short term
loan
Other equity instrument
investments
1037735849.00 Pledged for loans
Total 7168376325.86
(50) Foreign currency monetary items
1. Foreign currency monetary items
Items
Ending balance in
foreign currency
Exchange rate at the
end of the period
Ending balance
translated to RMB
Cash at bank and on hand 62843510.18
Including: USD 8723365.02 7.0795 61757062.66
EUR 105097.02 7.9610 836677.38
HKD 273451.00 0.9134 249770.14
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 76
Items
Ending balance in
foreign currency
Exchange rate at the
end of the period
Ending balance
translated to RMB
Short-term loans 1345105000.00
Including: USD 190000000.00 7.0795 1345105000.00
Non-current liabilities due
within one year
1524980.80
Including: JPY 23176000.00 0.0658 1524980.80
Long-term loans 556295833.99
Including: USD 18900000.00 7.0795 133802550.00
EUR 51825261.75 7.9610 412580908.79
JPY 150644000.00 0.0658 9912375.20
2. The Company has no overseas operating entities.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 77
(51) Government subsidy
1. Related to assets
Items Amount
Balance sheet
presentation items
The amount included in the current profit and loss or offset the loss of
related costs
Current period Previous period Items
Coal-fired boiler desulfurization and
denitrification project in high-pressure
workshop of Bengang Power Plant
3900000.00 Deferred income 300000.00 300000.00 Other income
Benxi Iron and Steel Automotive Sheet
Engineering Laboratory Project
1000000.00 Deferred income 160206.60 Other income
Flue gas desulfurization project of 7
130-ton combustion boilers in power plant
12000000.00 Deferred income 2400000.00 2400000.00 Other income
Project fund for cogeneration
transformation project of power plant's
three-electric workshop
5000000.00 Deferred income 1000000.00 1000000.00 Other income
Demonstration project of construction of
energy management center for industrial
enterprises
3480000.00 Deferred income 1160000.00 1160000.00 Other income
Air quality automatic monitoring system 70000.00 Deferred income 35000.00 35000.00 Other income
Cold rolled high-strength steel renovation 125000000.00 Deferred income 25000000.00 25000000.00 Other income
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 78
Items Amount
Balance sheet
presentation items
The amount included in the current profit and loss or offset the loss of
related costs
Current period Previous period Items
project
Energy saving and environmental
protection project of sintering machine in
ironworks
580000.00 Deferred income 580000.00 580000.00 Other income
Construction of a new platform for
professional technology in the automotive
steel industry
700000.00 Deferred income 300000.00 Other income
Special funds for introducing overseas
advanced and applicable technologies
3000000.00 Deferred income 1000000.00 1442000.00 Other income
High-grade electro-galvanized sheet
production line project for automobiles
4104000.00 Deferred income 4104000.00 4104000.00 Other income
MES project special funds Deferred income 860000.00 Other income
Environmental pollution control project Deferred income 1810000.00 Other income
Environmental governance project and
regional watershed environmental
protection comprehensive prevention and
control project
Deferred income 170000.00 Other income
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 79
Items Amount
Balance sheet
presentation items
The amount included in the current profit and loss or offset the loss of
related costs
Current period Previous period Items
Sintering machine waste heat utilization
project and desulfurization renovation
project
Deferred income 2102000.00 Other income
Ironworks 360 Sintering Machine Flue
Gas Desulfurization Project
Deferred income 100000.00 Other income
Environmental protection special fund Deferred income 580000.00 Other income
Total 158834000.00 36039206.60 41643000.00
2. Related to income
Items Amount
The amount included in the current profit and loss or offset the loss of related costs
Current period Previous period Items
low-temperature and high-pressure service
conditions> project national support funds
27425.00 3575.00 52000.00 Other income
2018 municipal skill master workstation costs 66616.34 120423.00 Other income
Liaoning craftsman subsidy 86000.17 14002.80 Other income
other 693206.00 Other income
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 80
Items Amount
The amount included in the current profit and loss or offset the loss of related costs
Current period Previous period Items
Total 180041.51 921206.80 52000.00
3. Return of government subsidies during the reporting period
None
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 81
6. Changes in the scope of consolidation
There is no changes to the scope of consolidation during the current period.
7. Equity in other entities
(1) Equity in subsidiaries
1. Constitution of enterprise group
Name of the subsidiaries
Principal
place of
business
Registered
address
Notes of
business
Shareholding ratio
Acquiring method
Direct Indirect
Xiamen Bengang Steel & Iron
Sales Co. Ltd.Xiamen Xiamen Sales 100.00
Business combination
under common control
Wuxi Bengang Steel & Iron Sales
Co. Ltd.
Wuxi Wuxi Sales 100.00
Business combination
under common control
Tianjin Bengang Steel & Iron
Trading Co. Ltd.Tianjin Tianjin Sales 100.00
Business combination
under common control
Nanjing Bengang Materials Sales
Co. Ltd.
Nanjing Nanjing Sales 100.00
Business combination
under common control
Yantai Bengang Steel & Iron Sales
Co. Ltd.
Yantai Yantai Sales 100.00
Business combination
under common control
Harbin Bengang Economic and
Trading Co. Ltd.Harbin Harbin Sales 100.00
Business combination
under common control
Changchun Bengang Steel & Iron
Sales Co. Ltd.
Changchun Changchun Sales 100.00
Business combination
under common control
Guangzhou Bengang Steel & Iron
Trading Co. Ltd.Guangzhou Guangzhou Sales 100.00 Establishment
Shanghai Bengang Metallurgy
Science and Technology Co. Ltd.Shanghai Shanghai Sales 100.00 Establishment
Bengang Steel Plates Liaoyang
Pellet Co. Ltd.Liaoyang Liaoyang
Manufactu
ring
100.00 Establishment
Dalian Benruitong Automobile
Material Technology Co. Ltd.
Dalian Dalian
Manufactu
ring
65.00 Establishment
Bengang Posco Cold-rolled Sheet
Co. Ltd.
Benxi Benxi
Manufactu
ring
75.00
Business combination
under common control
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 82
Name of the subsidiaries
Principal
place of
business
Registered
address
Notes of
business
Shareholding ratio
Acquiring method
Direct Indirect
Benxi Bengang Steel Sales Co.
Ltd
Benxi Benxi Sales 100.00 Establishment
Shenyang Bengang Metallurgical
Science and Technology Co. Ltd.Shenyang Shenyang Sales 100.00 Establishment
Chongqing Liaoben Steel & Iron
Trading Co. Ltd.
Chongqing Chongqing Sales 100.00 Establishment
Bengang Baojin (Shenyang) auto
new material technology Co. Ltd.Shenyang Shenyang
Manufactu
ring
85.00
Business combination
under common control
The proportion of shares held in subsidiaries is different from the proportion of voting rights: the
company does not have such matters.
Basis for holding half or less of the voting rights but still controlling the investee and holding
more than half of the voting rights but not controlling the investee: The company does not have
such matters.
For important structured entities included in the scope of consolidation the basis for control: The
company does not have such matters.
2. Significant but not wholly-owned subsidiaries
Name of the subsidiaries
Proportion of
non-controlling
interests (%)
Profits and losses
attributing to
non-controlling
shareholders
Dividend
declared to
distribute to
non-controlling
shareholders
Ending
balance of
non-controlling
interests
Bengang Posco Cold-rolled Sheet
Co. Ltd.
25.00 3121127.48 499174786.40
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 83
The minority shareholder’s shareholding ratio is different from the voting rights ratio: the
company does not have such matters.
3. Financial information of significant but not wholly-owned subsidiaries
Name of the
subsidiaries
30 June 2020
Current
assets
Non-current
assets
Total assets
Current
liabilities
Non-curre
nt
liabilities
Total liabilities
Bengang Posco
Cold-rolled Sheet
Co. Ltd.
3576435100.80 1409255518.34 4985690619.14 2988991473.55 2988991473.55
Name of the
subsidiaries
31 December 2019
Name of the
subsidiaries
Current
assets
Non-current
assets
Total assets
Current
liabilities
Non-curren
t liabilities
Total liabilities
Bengang Posco
Cold-rolled Sheet
Co. Ltd.
4305831723.982 1509417518.88 5815249242.86 3832718789.47 3832718789.47
Name of the subsidiaries
Current period
Operating
income
Net profit
Total
comprehensive
income
Net cash flows from
operating activities
Bengang Posco Cold-rolled
Sheet Co. Ltd.
3483712504.36 12484509.92 12484509.92 389115477.57
Name of the subsidiaries
Previous period
Operating
income
Net profit
Total
comprehensive
income
Net cash flows from
operating activities
Bengang Posco Cold-rolled
Sheet Co. Ltd.
3720975482.91 7704734.61 7704734.61 1318506299.45
4. Significant restrictions on the use of corporate group assets and the settlement of
corporate group debts
None.
5. Financial support or other support provided to structured entities included in the scope
of consolidated financial statements
None.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 84
(2) The share of owner's equity in the subsidiary changes and the subsidiary still controls
the transaction
None.
(3) Equity in joint venture or associates
1. Summary of financial information of important joint ventures and associates
The company has no important joint ventures or associates.
2. Summary of financial information of unimportant joint ventures and associates
Items 30 June 2020/Current period 31 December 2019/Previous period
Joint ventures:
Total book value of investment: 2672302.70 2642998.70
The total amount of the following items
calculated according to the shareholding
ratio
—Net profit 29304.00 452582.71
—Other comprehensive income
—Total comprehensive income 29304.00 452582.71
3. Explanation of significant restrictions on the ability of joint ventures or associates to
transfer funds to the company
None.
4. Excess losses incurred by joint ventures or associates
None.
5. Unconfirmed commitments related to joint venture investment
None.
6. Contingent liabilities related to investment in joint ventures or associates
None.
(4) Important joint operations
None.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 85
(5) Equity in structured entities not included in the scope of consolidated financial
statements
None.
8. Risks associated with financial instruments
The company faces various financial risks in its operation: credit risk market risk and
liquidity risk. The company's board of directors is fully responsible for the determination of
risk management objectives and policies and assumes ultimate responsibility for the risk
management objectives and policies. However the board of directors has authorized the
company's planning and development department to design and implement procedures that
ensure the effective implementation of risk management objectives and policies. The board of
directors reviews the effectiveness of the implemented procedures and the rationality of risk
management objectives and policies through reports submitted by the planning and
development department. The company's internal auditors also audit risk management
policies and procedures and report relevant findings to the audit committee.The overall goal of the company's risk management is to formulate a risk management policy
that minimizes risks without excessively affecting the company's competitiveness and
resilience.
(1) Credit risk
Credit risk refers to a financial loss to a party due to failure to discharge an obligation by the
counterparties. The Company is exposed to credit risk arising from customers’ failure to
discharge an obligation in sales on credit. Before signing a new contract the company will
evaluate the credit risk of the new customer including the external credit rating and in some
cases the bank credit certificate (when this information is available). The company has set a
credit sales limit for each customer which is the maximum amount without additional
approval.The Company ensures that the company's overall credit risk is within a controllable range
through regular monitoring of existing customer credit ratings and regular review of accounts
receivable aging analysis. 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
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 86
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. The Company’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.
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
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 and Euro. The ending balance of foreign currency financial assets and foreign
currency financial liabilities after converted in RMB is shown as below:
(In 10 Thousand)
Items
30 June 2020
USD Euro HKD Japanese Yen Total
Assets 6175.71 83.67 24.98 6284.35
Liabilities 147890.76 41258.09 1143.74 190292.58
Items
31 December 2019
USD Euro HKD Japanese Yen Total
Assets 8990.85 1109.84 22.90 10123.59
Liabilities 147372.23 45006.35 1188.28 193566.86
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 87
On June 30 2020 with all other variables remaining unchanged if the relevant currency
appreciates or depreciates against the RMB by 5% the company will increase or decrease its
net profit by RMB 92041 (on December 31 2019: RMB 91721600). Management believes
that 5% reasonably reflects a reasonable range of possible changes in the relevant currency
against RMB in the next year.
(3) Liquidity risk
Liquidity risk refers to the risk of shortage of funds which occurs in fulfilling the obligation
of settlement in a manner of delivering cash or other financial assets. The Company’s policy
is to maintain sufficient cash to meet maturing obligations. Liquidity risk is centralized
controlled by the Company’s finance department. Through the monitoring of unrestricted
cash and cash equivalents bank acceptance bills due in short time and the continues
forecasting of cash flow in the next 12 months the finance department ensures that the
Company has sufficient cash to meet obligations in all predicted reasonable circumstances.
The following table details the Company’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)
Items
30 June 2020
Within 1 year 1-2 years 2-5 years
Over 5
years
Total
Trade and other payables 1958097.40 50904.06 2009001.46
Loans and interests 1186571.99 281545.02 144198.26 19401.64 1631716.89
Total 3144669.38 281545.02 144198.26 70305.69 3640718.35
(In 10 Thousand Yuan)
Items
31 December 2019
Within 1 year 1-2 years 2-5 years
Over 5
years
Total
Trade and other payables 1700791.05 51693.94 1752484.99
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 88
Items
31 December 2019
Within 1 year 1-2 years 2-5 years
Over 5
years
Total
Loans and interests 1339677.16 328523.94 133765.16 22678.49 1824644.75
Total 3040468.21 328523.94 133765.16 74372.43 3577129.74
9. Disclosure of fair value
The input value used in fair value measurement is divided into three levels:
The input value of the first level is the unadjusted quotation of the same asset or liability that
can be obtained on the measurement date in an active market.The input value of the second level is the input value of the related assets or liabilities that is
directly or indirectly observable except the input value of the first level.The third level of input value is the unobservable input value of related assets or liabilities.The level to which the fair value measurement result belongs is determined by the lowest
level to which the input value that is important to the fair value measurement as a whole
belongs.
(1) Fair value of assets and liabilities measured at fair value
Item
Fair value at the end of the period
Fair value
measurement in
the first level
Fair value
measurement in the
second level
Fair value
measurement in the
third level
Total
1. Continuous fair value
measurement
◆Financial assets held for
trading
(1) Financial assets measured
at fair value and whose
changes are included in the
current profit and loss
(a) Investment in debt
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 89
Item
Fair value at the end of the period
Fair value
measurement in
the first level
Fair value
measurement in the
second level
Fair value
measurement in the
third level
Total
instruments
(b) Investment in equity
instruments
(c) Derivative financial assets
(d) Others
(2) Designated as a financial
asset measured at fair value
and its changes are included
in the current profit and loss
(1) Investment in debt
instruments
(2) Others
◆ Accounts receivable
financing
4382121949.97 4382121949.97
◆ Other debt investments
◆ Investment in other
equity instruments
1041824829.00 1041824829.00
◆ Other non-current
financial assets
(1) Financial assets measured
at fair value and whose
changes are included in the
current profit and loss
(a) Investment in debt
instruments
(b) Investment in equity
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 90
Item
Fair value at the end of the period
Fair value
measurement in
the first level
Fair value
measurement in the
second level
Fair value
measurement in the
third level
Total
instruments
(c) Derivative financial assets
(d) Others
(2) Designated as a financial
asset measured at fair value
and its changes are included
in the current profit and loss
(a) Investment in debt
instruments
(b) Others
Total assets continuously
measured at fair value
5423946778.97 5423946778.97
◆ Financial liabilites held
for trading
Including:
Issued trading bonds
Derivative financial liabilities
Others
◆Designated as a financial
liability measured at fair
value and its changes
included in the current profit
and loss
Total liabilities continuously
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 91
Item
Fair value at the end of the period
Fair value
measurement in
the first level
Fair value
measurement in the
second level
Fair value
measurement in the
third level
Total
measured at fair value
2. Non-continuous fair
value measurement
(1) Assets held for sale
Total assets not measured
continuously at fair value
For example: Liabilities
held for sale
Total liabilities not
measured continuously at
fair value
(2) The basis for determining the market value of the continuous and non-continuous
first-level fair value measurement projects
The company has no first level fair value measurement project.
(3) Continuous and non-continuous second-level fair value measurement items using
valuation techniques and qualitative and quantitative information on important parameters
The company has no second level fair value measurement items.
(4) Continuous and non-continuous third-level fair value measurement items using
valuation techniques and qualitative and quantitative information on important parameters
The other equity instruments that continue the third level of fair value measurement are mainly
unlisted equity investments held by the company. The company adopted valuation techniques for
fair value measurement mainly using valuation techniques of listed company comparison method
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 92
referring to stock prices of similar securities and considering liquidity discounts.
(5) For continuous fair value measurement projects where conversion between various
levels occurs during the period the reason for the conversion and the policy for determining
the timing of conversion
During the current period there was no conversion between various levels
(6) Changes in valuation techniques and reasons for changes during the period
No changes during the period.
(7) Fair value of financial assets and financial liabilities not measured at fair value
No
10. Related party transactions
(1) Details of parent company
(In 100 Million Yuan)
Name of parent company
Place of
Registry
Notes of
Business
Registered
capital
Share
proportion (%)
Voting
rights (%)
Benxi Steel (Group) Co. Ltd. Benxi Manufacturing 62.92 62.11 62.11
Note: The ultimate controlling party of the Company is the State-owned Assets Supervision and
Administration Commission of Liaoning Province.
(2) Details of the subsidiaries
For details of subsidiaries of the Company please refer to Note 7 “Equity in other entities”.
(3) The company's joint ventures and associates
Name of joint ventures and associates Relationship
Zhejiang Bengang Jingrui Steel Processing Co. Ltd. Associate
(4) Details of other related parties
Name of Other related parties Relationship
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 93
Name of Other related parties Relationship
Bengang Group Co. Ltd. (Hereinafter referred to as
"Bengang Group")
Controlling shareholder of parent company.
Bengang Group International Economic and Trading Co.
Ltd.
Belongs to Bengang Group Co. Ltd.
Bengang Cold-rolled Stainless Steel Dandong Co. Ltd. Same parent company
Benxi Beiying Steel & Iron (Group) Co. Ltd. (Hereinafter
referred to as "Beiying Steel")
Belongs to Bengang Group Co. Ltd.
Bengang Electronics and Gas Co. Ltd. Associate of parent company
Benxi Steel & Iron (Group) Real-estate Development Co.
Ltd.Same parent company
Benxi Steel & Iron (Group) Steel & Iron Process and
Logistics Co. Ltd.Same parent company
Benxi Steel & Iron (Group) Machinery Manufacture Co. Ltd. Same parent company
Benxi Steel & Iron (Group) Construction Co. Ltd. Same parent company
Benxi Steel & Iron (Group) Mining Co. Ltd. Same parent company
Benxi Steel & Iron (Group) Thermal Power Development
Co. Ltd.
Same parent company
Benxi Steel & Iron (Group) Designing Institute Same parent company
Benxi Steel & Iron (Group) Industrial Development Co. Ltd. Same parent company
Benxi Steel & Iron (Group) Information and Automatic Tech
Co. Ltd.
Same parent company
Benxi Steel & Iron (Group) Construction and Repairing Co.
Ltd.Same parent company
Benxi Steel & Iron (Group) Metallurgy Residues Co. Ltd. Same parent company
Benxi Iron and Steel (Group) Engineering Construction
Supervision Co. Ltd.Same parent company
Benxi Steel & Iron (Group) Zhengtai Construction Materials
Co. Ltd.
Same parent company
Benxi High-tech Drilling Tools Manufacture Co. Ltd. Belongs to Bengang Group Co. Ltd.
Benxi New Career Development Co. Ltd. Same parent company
Dalian Boluole Steel Tube Co. Ltd. Belongs to Benxi Steel and Iron (Group) Co. Ltd.
Guangzhou Free Trade Zone Bengang Sales Co. Ltd. Belongs to Benxi Steel and Iron (Group) Co. Ltd.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 94
Name of Other related parties Relationship
Benxi Steel & Iron (Group) General Hospital Belongs to Benxi Steel and Iron (Group) Co. Ltd.
Liaoning Bengang Steel & Iron Trading Co. Ltd. Same parent company
Liaoning Hengtai Heavy Machinery Co. Ltd. Same parent company
Liaoning Hengtong Metallurgical Equipment Manufacture
Co. Ltd.
Same parent company
Liaoning Metallurgy Technician College Same parent company
Liaoning Metallurgy Vocational Technical College Same parent company
Suzhou Bengang Industrial Co. Ltd. Shareholding company
Benxi Steel & Iron (Group) Medical Services Department Associate of parent company
Bengang Group Finance Co. Ltd. Belongs to Bengang Group Co. Ltd.
Liaoning Hengyi Financial Leasing Co. Ltd. Belongs to Bengang Group Co. Ltd.
(5) Related Party Transactions
1. Related party transactions of purchasing goods and services
Company as the purchaser
(In 10 Thousand Yuan)
Name
The content of related
party transactions
Current period Previous period
Benxi Steel & Iron (Group) Co. Ltd. Repair expense 15947.21 14299.69
Benxi Steel & Iron (Group) Co. Ltd. Land lease fee 3261.15 2734.57
Bengang Cold-rolled Stainless Steel
Dandong Co. Ltd.
Products 7.95 82.25
Benxi Steel & Iron (Group) Mining Co.
Ltd.Labor cost 361.10 391.41
Benxi Steel & Iron (Group) Mining Co.
Ltd.Raw material and
supplementary material
280270.14 215655.53
Benxi Steel & Iron (Group) Mining Co.
Ltd.
Freight 87.47 85.36
Benxi Steel & Iron (Group) Metallurgy
Residues Co. Ltd.Raw material and
supplementary material
14869.84 11056.03
Benxi Steel & Iron (Group) Steel & Iron Processing fee 23.81 84.61
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 95
Name
The content of related
party transactions
Current period Previous period
Process and Logistics Co. Ltd.
Benxi Steel & Iron (Group) Real-estate
Development Co. Ltd.
Raw materials 3418.04
Benxi Steel & Iron (Group) Machinery
Manufacture Co. Ltd.Spare parts 2296.73 3341.85
Benxi Steel & Iron (Group) Machinery
Manufacture Co. Ltd.Repair services 330.54 370.37
Benxi Steel & Iron (Group) Construction
Co. Ltd.
Spare parts 19.75 424.68
Benxi Steel & Iron (Group) Construction
Co. Ltd.
Project fee 7490.59 7123.75
Benxi Steel & Iron (Group) Construction
Co. Ltd.
Repair services 3660.09 7085.65
Benxi Steel & Iron (Group) Construction
Co. Ltd.
Raw material and
supplementary material
367.31 332.06
Benxi Steel & Iron (Group) Construction
Co. Ltd.
Freight 87.94 152.48
Benxi Steel & Iron (Group) Industrial
Development Co. Ltd.
Spare parts 2568.90 2896.02
Benxi Steel & Iron (Group) Industrial
Development Co. Ltd.
Raw material and
supplementary material
5906.02 6106.81
Benxi Steel & Iron (Group) Industrial
Development Co. Ltd.
Repair services 790.53 940.92
Benxi Steel & Iron (Group) Industrial
Development Co. Ltd.
Freight 188.69 349.19
Benxi Steel & Iron (Group) Industrial
Development Co. Ltd.
Project fee 332.00 15.80
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 96
Name
The content of related
party transactions
Current period Previous period
Benxi Steel & Iron (Group) Construction
and Repairing Co. Ltd.Raw material &
supplementary materials
& spare parts
128.19 88.60
Benxi Steel & Iron (Group) Construction
and Repairing Co. Ltd.Project fee 2992.87 453.18
Benxi Steel & Iron (Group) Construction
and Repairing Co. Ltd.Repair expense 2673.04 5520.77
Bengang Electronics and Gas Co. Ltd.
Raw material and
supplementary material
6886.40 5873.36
Bengang Electronics and Gas Co. Ltd. Repair services 1168.35 252.09
Benxi High-tech Drilling Tools
Manufacture Co. Ltd.Spare parts 6.22 4.47
Benxi New Career Development Co. Ltd. Labor protection fee 22.45 47.20
Benxi New Career Development Co. Ltd.
Raw material and
supplementary material
and food
107.92 48.42
Liaoning Metallurgy Technician College Spare parts 117.57 699.54
Bengang Group International Economic
and Trading Co. Ltd.
Agency fee 3067.82 3417.46
Bengang Group International Economic
and Trading Co. Ltd.Port surcharges 5381.24 5240.58
Benxi Steel & Iron (Group) Information
and Automatic Tech Co. Ltd.Spare parts 285.13 226.21
Benxi Steel & Iron (Group) Information
and Automatic Tech Co. Ltd.Project fee 1368.24 2191.45
Benxi Steel & Iron (Group) Thermal
Power Development Co. Ltd.Heating costs 18.98 27.20
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 97
Name
The content of related
party transactions
Current period Previous period
Benxi Steel & Iron (Group) Thermal
Power Development Co. Ltd.Raw material and
supplementary material
55.00 2.84
Benxi Steel & Iron (Group) Designing
Institute
Design fees 28.77 29.24
Benxi Beiying Steel & Iron (Group) Co.
Ltd.Raw material and
supplementary material
466858.50 591426.43
Benxi Beiying Steel & Iron (Group) Co.
Ltd.
Energy & Power 21856.41 31906.75
Benxi Beiying Steel & Iron (Group) Co.
Ltd.
Freight 166.79 234.47
Benxi Beiying Steel & Iron (Group) Co.
Ltd.Labor cost 2016.35 4250.18
Benxi Beiying Steel & Iron (Group) Co.
Ltd.Spare parts 897.66 758.28
Liaoning Hengtong Metallurgical
Equipment Manufacture Co. Ltd.
Raw material and spare
parts
5120.05 4493.46
Liaoning Hengtai Heavy Machinery Co.Ltd.Raw material and spare
parts
43.48 171.84
Liaoning Hengtai Heavy Machinery Co.Ltd.Repair and labor cost 509.57 1133.13
Bengang Group Co. Ltd. House renting fee 37.61 37.61
Company as the seller
(In 10 Thousand Yuan)
Name
The content of related
party transactions
Current period Previous period
Bengang Electronics and Gas Co. Ltd. Energy & Power 38.10 50.42
Benxi Beiying Steel & Iron (Group) Co. Raw material & 135340.23 60230.78
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 98
Name
The content of related
party transactions
Current period Previous period
Ltd. supplementary materials
& spare parts
Benxi Beiying Steel & Iron (Group) Co.
Ltd.Products 1271.42 792.19
Benxi Beiying Steel & Iron (Group) Co.
Ltd.
Energy & Power 6882.65 7565.39
Benxi Steel & Iron (Group) Real-estate
Development Co. Ltd.
Energy & Power 6.25 6.20
Benxi Steel & Iron (Group) Steel & Iron
Process and Logistics Co. Ltd.
Energy & Power 20.39 27.47
Benxi Steel & Iron (Group) Machinery
Manufacture Co. Ltd.Products 1014.55 995.77
Benxi Steel & Iron (Group) Machinery
Manufacture Co. Ltd.
Energy & Power 1216.43 716.43
Benxi Steel & Iron (Group) Machinery
Manufacture Co. Ltd.Raw material &
supplementary materials
& spare parts
139.52 605.66
Benxi Steel & Iron (Group) Construction
Co. Ltd.
Energy & Power 335.07 19.45
Benxi Steel & Iron (Group) Construction
Co. Ltd.
Raw material &
supplementary materials
& spare parts
15.12 108.13
Benxi Steel & Iron (Group) Mining Co.
Ltd.
Energy & Power 33585.45 34182.02
Benxi Steel & Iron (Group) Mining Co.
Ltd.Raw material &
supplementary materials
& spare parts
512.75 3156.26
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 99
Name
The content of related
party transactions
Current period Previous period
Benxi Steel & Iron (Group) Mining Co.
Ltd.
Freight revenue 497.33 487.08
Benxi Steel & Iron (Group) Thermal
Power Development Co. Ltd.
Energy & Power 2264.65 2289.99
Benxi Steel & Iron (Group) Thermal
Power Development Co. Ltd.Raw material &
supplementary materials
& spare parts
682.22 994.94
Benxi Steel & Iron (Group) Industrial
Development Co. Ltd.
Energy & Power 409.62 407.66
Benxi Steel & Iron (Group) Industrial
Development Co. Ltd.
Products 912.10 12.46
Benxi Steel & Iron (Group) Industrial
Development Co. Ltd.
Raw material &
supplementary materials
& spare parts
936.70 717.36
Benxi Steel & Iron (Group) Information
and Automatic Tech Co. Ltd.
Energy & Power 11.69 7.68
Benxi Steel & Iron (Group) Construction
and Repairing Co. Ltd.
Energy & Power 66.60 79.48
Benxi Steel & Iron (Group) Construction
and Repairing Co. Ltd.Raw material &
supplementary materials
& spare parts
- 248.68
Benxi Steel & Iron (Group) Metallurgy
Residues Co. Ltd.
Energy & Power 105.91 302.41
Benxi Steel & Iron (Group) Metallurgy
Residues Co. Ltd.Raw material &
supplementary materials
& spare parts
13364.82 9363.79
Benxi Steel & Iron (Group) Co. Ltd. Energy & Power 430.55 147.07
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 100
Name
The content of related
party transactions
Current period Previous period
Benxi Steel & Iron (Group) Co. Ltd.
Raw material &
supplementary materials
& spare parts
308.79 156.10
Benxi New Career Development Co. Ltd. Energy & Power 381.86 15.13
Dalian Boluole Steel Tube Co. Ltd. Products 279.34 188.32
Benxi Steel & Iron (Group) General
Hospital
Energy & Power 1.06 3.09
Benxi Steel & Iron (Group) Zhengtai
Construction Materials Co. Ltd.
Energy & Power 3.20 0.27
Liaoning Hengtong Metallurgical
Equipment Manufacture Co. Ltd.
Raw material &
supplementary materials
& spare parts
493.65 832.61
Bengang Cold-rolled Stainless Steel
Dandong Co. Ltd.
Raw material &
supplementary materials
& spare parts
736.33 24.14
Suzhou Bengang Industrial Co. Ltd. Products 19082.32 16362.43
Bengang Group Finance Co. Ltd. Energy & Power 0.65 0.69
Bengang Group Co. Ltd. Energy & Power 8.82 7.79
Notes:
The pricing policy is based on the transaction content and pricing principles specified in the "Raw
Material and Service Supply Agreement" and "Land Use Right Leasing Contract" and
supplementary agreements entered into between the Company and Bengang Group and Benxi
Steel and Iron (Group) Co. Ltd. The main pricing principle is that if there is a market price the
market price will be used. If there is no market price then the full cost plus the national additional
tax plus a reasonable profit will be used as the pricing standard.
2. Lease information of related parties
Company as the lessor
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 101
Lessee
Lease capital
category
Lease income of
current period
Lease income of previous
period
Benxi Steel & Iron (Group) Steel & Iron
Process and Logistics Co. Ltd.Warehouse and
machinery
250000.00 250000.00
Benxi Steel & Iron (Group) Machinery
Manufacture Co. Ltd.Plants and
machinery
245000.00
Company as the lessee
Lessor Lease capital category
Lease charges of
current period
(Without tax)
Lease charges of
previous period
(Without tax)
Benxi Steel & Iron (Group) Co. Ltd.
Land use right
7669068.17 sq.m.
Land use right
42920.00 sq.m.
8049080.52 123426656.64
Benxi Steel & Iron (Group) Co. Ltd.
2300 Hot rolling product
line related real estate
27638772.06 27345714.30
Benxi Beiying Steel & Iron (Group) Co.
Ltd.
1780 Hot rolling product
line related real estate
5002327.68 59013278.16
Bengang Group Co. Ltd.
Land use right
728282.30 sq.m.
4972711.56
Notes:
1. According to the "Land Use Right Leasing Contract" and subsequent supplementary agreements
signed between the Company and Bengang Steel and Iron (Group) Co. Ltd. on April 7 1997
December 30 2005 the Company leases land from Bengang Group with a monthly rent of 0.594
yuan per square meter. The leased land is 7669068.17 square meters and the annual rent is
54665.10 thousand yuan.
2. On August 14 2019 the company signed the "House Lease Agreement" with Bengang Steel
and Iron (Group) Co. Ltd. and Beiying Iron and Steel Company and leased the houses and
auxiliary facilities occupied by the 2300 hot rolling mill production line and the 1780 hot rolling
mill production line. The lease term of the houses and ancillary facilities is until December 31
2038. For details please refer to note ‘11 – (1) - 1 – (2)’.
3. On July 15 2019 the company signed "Land Lease Agreement" with Bengang Group and
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 102
Bengang Steel and Iron (Group) Co. Ltd. respectively leased and used a total of 8 pieces of land
from Bengang Group and Bengang Steel and Iron (Group) Co. Ltd. with leased areas of
42920.00 square meters and 728282.30 square meters respectively. The lease term is 20 years
the rental price is 1.138 yuan per square meter per month. For details please refer to note ‘11 – (1)
- 1 – (3)’.
Financial leasing:
During the reporting period the company leased machinery and equipment from Liaoning Hengyi
Finance Leasing Co. Ltd. in the form of financial leasing. From January to June 2020 the
purchase amount is RMB 509841317.15 and the amount of interest and commission is RMB
8880409.61 (The aforementioned amounts are all include tax.)
3. Information of Guarantee among related parties
(1) Company as the warrantee
Guarantee of loans:
Warrantor Amount of guarantee
Starting date of
Guarantee
Ending date
of Guarantee
Has the
guarantee
been
fulfilled
Bengang Group Co. Ltd. €183237.83 2015/6/25 2025/9/30 No
Bengang Group Co. Ltd. €6162.48 2015/6/25 2026/4/30 No
Bengang Group Co. Ltd. €444736.12 2015/6/25 2026/4/30 No
Bengang Group Co. Ltd. €372157.59 2015/6/25 2025/6/30 No
Bengang Group Co. Ltd. €10641920.02 2015/6/25 2025/6/30 No
Bengang Group Co. Ltd. €719075.68 2015/6/25 2025/10/31 No
Bengang Group Co. Ltd. €7625460.88 2015/6/25 2025/10/31 No
Bengang Group Co. Ltd. €609296.41 2015/6/25 2025/8/31 No
Bengang Group Co. Ltd. €9290610.97 2015/6/25 2025/8/31 No
Bengang Group Co. Ltd. €6260281.50 2015/8/20 2025/9/30 No
Bengang Group Co. Ltd. €198880.00 2015/12/28 2025/8/31 No
Bengang Group Co. Ltd. €3598451.12 2015/12/28 2025/10/31 No
Bengang Group Co. Ltd. €326681.92 2015/12/28 2025/6/30 No
Bengang Group Co. Ltd. €5438280.80 2015/12/28 2026/4/30 No
Bengang Group Co. Ltd. €4069.11 2015/12/28 2026/4/30 No
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 103
Warrantor Amount of guarantee
Starting date of
Guarantee
Ending date
of Guarantee
Has the
guarantee
been
fulfilled
Bengang Group Co. Ltd. €2981698.20 2016/6/27 2026/4/30 No
Bengang Group Co. Ltd. €2266546.78 2016/12/14 2026/4/30 No
Bengang Group Co. Ltd. €857708.44 2017/6/30 2025/10/31 No
Bengang Group Co. Ltd. $18900000 2016/12/27 2024/6/21 No
Bengang Group Co. Ltd. ￥75990000.00 2015/6/25 2021/9/21 No
Bengang Group Co. Ltd. ￥129750000.00 2016/12/27 2024/6/21 No
Bengang Group Co. Ltd. and
Benxi Steel & Iron (Group)
Co. Ltd.
￥75000000.00 2016/3/30 2025/3/20 No
Bengang Group Co. Ltd. and
Benxi Steel & Iron (Group)
Co. Ltd.
￥475000000.00 2017/2/27 2025/2/20 No
Benxi Steel & Iron (Group)
Co. Ltd.
￥340000000.00 2019/12/17 2020/12/17 No
Benxi Steel & Iron (Group)
Co. Ltd.
￥31000000.00 2020/3/20 2021/3/20 No
Benxi Steel & Iron (Group)
Co. Ltd.
￥500000000.00 2019/11/19 2020/11/19 No
Benxi Steel & Iron (Group)
Co. Ltd.
￥480000000.00 2019/12/13 2020/12/13 No
Benxi Steel & Iron (Group)
Co. Ltd.
￥300000000.00 2019/12/13 2020/12/13 No
Benxi Steel & Iron (Group)
Co. Ltd.
￥147000000.00 2019/12/16 2020/12/16 No
Benxi Steel & Iron (Group)
Co. Ltd.
$90000000.00 2020/3/17 2021/3/17 No
Benxi Steel & Iron (Group)
Co. Ltd.
$100000000.00 2019/12/18 2020/12/18 No
Bengang Group Co. Ltd. and ￥200000000.00 2019/9/9 2020/9/8 No
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 104
Warrantor Amount of guarantee
Starting date of
Guarantee
Ending date
of Guarantee
Has the
guarantee
been
fulfilled
Benxi Steel & Iron (Group)
Co. Ltd.
Bengang Group Co. Ltd. and
Benxi Steel & Iron (Group)
Co. Ltd.
￥150000000.00 2019/10/10 2020/10/8 No
Bengang Group Co. Ltd. and
Benxi Steel & Iron (Group)
Co. Ltd.
￥200000000.00 2019/10/11 2020/10/9 No
Bengang Group Co. Ltd. and
Benxi Steel & Iron (Group)
Co. Ltd.
￥200000000.00 2019/9/19 2020/9/17 No
Bengang Group Co. Ltd. and
Benxi Steel & Iron (Group)
Co. Ltd.
￥200000000.00 2019/9/24 2020/9/23 No
Bengang Group Co. Ltd. and
Benxi Steel & Iron (Group)
Co. Ltd.
￥178000000.00 2019/12/12 2020/12/12 No
Bengang Group Co. Ltd. and
Benxi Steel & Iron (Group)
Co. Ltd.
￥100000000.00 2019/7/8 2020/7/7 No
Bengang Group Co. Ltd. ￥1200000000.00 2020/4/30 2020/12/8 No
Bengang Group Co. Ltd. ￥490000000.00 2019/9/5 2020/9/5 No
Bengang Group Co. Ltd. ￥480000000.00 2020/1/20 2020/10/19 No
Bengang Group Co. Ltd. ￥800000000.00 2020/3/4 2020/9/3 No
Bengang Group Co. Ltd. ￥500000000.00 2020/6/19 2021/6/18 No
Bengang Group Co. Ltd. ￥310000000.00 2020/5/27 2021/5/25 No
Bengang Group Co. Ltd. ￥670000000.00 2020/5/27 2021/5/25 No
Bengang Group Co. Ltd.;
Benxi Beiying Steel & Iron
￥480000000.00 2019/12/12 2020/11/3 No
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 105
Warrantor Amount of guarantee
Starting date of
Guarantee
Ending date
of Guarantee
Has the
guarantee
been
fulfilled
(Group) Co. Ltd.
Bengang Group Co. Ltd.;
Benxi Beiying Steel & Iron
(Group) Co. Ltd.
￥490000000.00 2019/12/12 2020/11/10 No
Bengang Group Co. Ltd.;
Benxi Beiying Steel & Iron
(Group) Co. Ltd.
￥320000000.00 2019/12/13 2020/12/3 No
Bengang Group Co. Ltd.;
Benxi Beiying Steel & Iron
(Group) Co. Ltd.
￥710000000.00 2019/12/16 2020/12/10 No
Bengang Group Co. Ltd. ￥350000000.00 2019/10/11 2020/9/10 No
Bengang Group Co. Ltd. ￥15600000.00 2020/1/16 2020/7/16 No
Benxi Steel & Iron (Group)
Co. Ltd.
JPY 173820000 1997/10/10 2027/9/10 No
Bengang Group Co. Ltd. and
Benxi Steel & Iron (Group)
Co. Ltd.
￥100000000.00 2020/1/9 2020/10/9 No
Bengang Group Co. Ltd. and
Benxi Steel & Iron (Group)
Co. Ltd.
￥100000000.00 2019/10/11 2020/10/9 No
Bengang Group Co. Ltd. ￥220000000.00 2019/9/25 2020/9/25 No
Bengang Group Co. Ltd. ￥340000000.00 2019/9/6 2020/9/6 No
Bengang Group Co. Ltd. ￥140000000.00 2020/1/17 2021/1/17 No
4. Other related party transactions
(1) Loan from and deposits in Bengang Group Finance Co. Ltd.
(In 10 Thousand Yuan)
Item Beginning balance Increase Decrease Ending balance Notes
Deposits 1364312.51 9638807.40 9774864.22 1228255.69
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 106
1. The interests of deposits in Bengang Group Finance Co. Ltd. is RMB 148923
thousand from January to June in 2020. As at 30 June 2020 the interest receivable
from Bengang Group Finance Co. Ltd. is RMB 32395.8 thousand.
2. As at 30 June 2020 the restricted deposits in Bengang Group Finance Co. Ltd. is
RMB 1886440 thousand.
3. From January to June in 2020 the company and its subsidiaries did not borrow
money from financial companies.
4. Bengang Group Finance Co. Ltd. granted the company an unsecured credit line of
RMB 4.5 billion from January to June in 2020. As at 30 June 2020 the amount of
acceptance bill opened by Bengang Group Finance Co. Ltd. was RMB 2.71 billion
and the amount of the acceptance bill that had been opened and unpaid by Bengang
Group Finance Co. Ltd. is RMB 3.099 billion and the proportion of deposit is
98.61%.
5. From January to June in 2020 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
Capital lending 7500.00 7500.00
Total 7500.00 7500.00
Notes: The interest accrued is RMB 1763125.00 during the current period and as at 30 June
2020 the interest that has not been paid is RMB 1763125.00.
(6) Receivables and payables of the related parties
1. Receivables of the Company
(in 10 thousand yuan)
Items Name Name
30 June 2020 31 December 2019
Gross
carrying
amount
Provision
for bad
debts
Gross carrying
amount
Provision
for bad
debts
Accounts receivable
Bengang Group 5118.68 58.92 5892.34 58.92
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 107
Items Name Name
30 June 2020 31 December 2019
Gross
carrying
amount
Provision
for bad
debts
Gross carrying
amount
Provision
for bad
debts
International Economic
and Trading Co. Ltd.
Benxi Steel & Iron
(Group) Thermal Power
Development Co. Ltd.
1152.45 13.01 1301.32 13.01
Bengang Cold-rolled
Stainless Steel Dandong
Co. Ltd.
185.97 1.89 188.8 1.89
Benxi Steel & Iron
(Group) Machinery
Manufacture Co. Ltd.
6.68 0.08 7.7 0.08
Benxi Steel & Iron
(Group) Metallurgy
Residues Co. Ltd.
0.14 0.14
Prepayments
Benxi Beiying Steel &
Iron (Group) Co. Ltd.
81385.62 93762.24
Benxi Steel & Iron
(Group) Machinery
Manufacture Co. Ltd.
3548.95 3559.63
Other receivables
Bengang Group
International Economic
and Trading Co. Ltd.
375.64 0.2 432.77 0.2
Benxi Steel & Iron
(Group) Real-estate
Development Co. Ltd.
266.12 246.52 270.17 246.52
Benxi Steel & Iron
(Group) Medical
Services Department;
94.46 85.27 94.75 85.27
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 108
Items Name Name
30 June 2020 31 December 2019
Gross
carrying
amount
Provision
for bad
debts
Gross carrying
amount
Provision
for bad
debts
Benxi Steel & Iron
(Group) Zhengtai
Construction Materials
Co. Ltd.
18.26 12.3 24.6 12.3
Liaoning Metallurgy
Technician College
14.15 4.58 14.2 4.58
Benxi Steel & Iron
(Group) Industrial
Development Co. Ltd.
0.01 0.02
Other non-current
assets
Liaoning Hengyi
Financial Leasing Co.
Ltd.
84111.31 58419.72
Notes receivable
Benxi Beiying Steel &
Iron (Group) Co. Ltd.
39958.98 41739.59
Benxi Steel (Group) Co.
Ltd.
402.17
Zhejiang Bengang
Jingrui Steel Processing
Co. Ltd.
400
2. Payables of the Company
(in 10 thousand yuan)
Items Name 30 June 2020 31 December 2019
Accounts payables
Bengang Group International Economic and
Trading Co. Ltd.
78932.33 70193.27
Benxi Steel & Iron (Group) Industrial 10768.78 11311.75
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 109
Items Name 30 June 2020 31 December 2019
Development Co. Ltd.
Benxi Steel & Iron (Group) Construction
Co. Ltd.
12253.65 10331.91
Benxi Steel & Iron (Group) Mining Co. Ltd. 9365.32 8524.77
Benxi Steel & Iron (Group) Information and
Automatic Tech Co. Ltd.
7302.57 6567.06
Benxi Steel & Iron (Group) Construction
and Repairing Co. Ltd.
4430.36 4443.69
Liaoning Hengtai Heavy Machinery Co.Ltd.
3213.82 3246.28
Bengang Group Co. Ltd. 3139.46 3148.91
Liaoning Hengtong Metallurgical Equipment
Manufacture Co. Ltd.
1432.13 1487.15
Bengang Electronics and Gas Co. Ltd. 998.36 1149.26
Benxi Steel & Iron (Group) Machinery
Manufacture Co. Ltd.
1012.81 1143.65
Benxi Steel & Iron (Group) Metallurgy
Residues Co. Ltd.
1197.39 1033.48
Liaoning Metallurgy Technician College 629.17 724.86
Liaoning Metallurgy Vocational Technical
College
650.43 671.93
Bengang Cold-rolled Stainless Steel
Dandong Co. Ltd.
520.07 521.64
Benxi New Career Development Co. Ltd. 217.15 292.66
Benxi Steel & Iron (Group) Thermal Power
Development Co. Ltd.
171.46 144.24
Benxi Steel & Iron (Group) Real-estate
Development Co. Ltd.
54.38 62.65
Benxi High-tech Drilling Tools Manufacture
Co. Ltd.
32.15 33.77
Benxi Iron and Steel (Group) Engineering
Construction Supervision Co. Ltd.
15.68 16.28
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 110
Items Name 30 June 2020 31 December 2019
Benxi Steel & Iron (Group) Medical
Services Department;
1.78 2.04
Benxi Steel & Iron (Group) Zhengtai
Construction Materials Co. Ltd.
0.21 0.24
Advance from
customers
Suzhou Bengang Industrial Co. Ltd. 5387.92 1635.62
Benxi Steel & Iron (Group) Steel & Iron
Process and Logistics Co. Ltd.
741.11 1582.14
Benxi Steel & Iron (Group) Metallurgy
Residues Co. Ltd.
126.57
Dalian Boluole Steel Tube Co. Ltd. 99.58 85.93
Liaoning Hengtong Metallurgical Equipment
Manufacture Co. Ltd.
82.00
Benxi Steel & Iron (Group) Industrial
Development Co. Ltd.
23.36 35.79
Other payables
Benxi Steel (Group) Co. Ltd. 16187.24 18278.27
Bengang Group International Economic and
Trading Co. Ltd.
1411.25 1432.74
Benxi Steel & Iron (Group) Construction
Co. Ltd.
456.69 526.14
Benxi Steel & Iron (Group) Thermal Power
Development Co. Ltd.
423.69 437.69
Guangzhou Free Trade Zone Bengang Sales
Co. Ltd.
266.64 267.44
Benxi New Career Development Co. Ltd. 166.09 223.84
Benxi Steel & Iron (Group) Real-estate
Development Co. Ltd.
127.36 143.59
Benxi Steel & Iron (Group) Industrial
Development Co. Ltd.
26.40 30.42
Benxi Beiying Steel & Iron (Group) Co. 4.45 6.00
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 111
Items Name 30 June 2020 31 December 2019
Ltd.Liaoning Metallurgy Technician College 1.19 1.34
Benxi Steel & Iron (Group) Machinery
Manufacture Co. Ltd.
0.97 1.01
Bengang Group Finance Co. Ltd. 0.52 0.60
Liaoning Hengyi Financial Leasing Co. Ltd. 0.35 0.39
Long-term payables
Liaoning Hengyi Financial Leasing Co. Ltd. 105074.88 51693.94
Notes payables
Benxi Beiying Steel & Iron (Group) Co.
Ltd.
625805.90 508775.58
Benxi Steel & Iron (Group) Mining Co. Ltd. 53545.40 69292.59
Benxi Steel & Iron (Group) Industrial
Development Co. Ltd.
691.00 3203.52
Bengang Electronics and Gas Co. Ltd. 6116.16 2285.78
Liaoning Hengyi Financial Leasing Co. Ltd. 6126.45 1758.01
Benxi Steel & Iron (Group) Real-estate
Development Co. Ltd.
684.81
Liaoning Metallurgy Technician College 195.91
Benxi Steel & Iron (Group) Information and
Automatic Tech Co. Ltd.
189.02 189.02
Benxi Steel & Iron (Group) Machinery
Manufacture Co. Ltd.
254.75 186.51
Bengang Cold-rolled Stainless Steel
Dandong Co. Ltd.
71.84 71.84
Liaoning Metallurgy Vocational Technical
College
43.55
Benxi Steel & Iron (Group) Construction
and Repairing Co. Ltd.
22.04 14.82
Benxi Steel & Iron (Group) Construction
Co. Ltd.
13.05
Benxi High-tech Drilling Tools Manufacture 5.71 5.71
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 112
Items Name 30 June 2020 31 December 2019
Co. Ltd.
11. Commitments and Contingencies
(1) Commitments
1. Lease contracts in progress or to be performed and their financial impacts
(1) According to the "Land Use Right Leasing Contract" and subsequent supplementary
agreements signed by the company and Benxi Steel (Group) on April 7 1997 December
30 2005 the Company leased land from Benxi Steel (Group). The monthly rent is 0.594
yuan per square meters the leased land area is 7669068.17 square meters and the
annual rent is 54665100 yuan.
(2) On August 14 2019 the Company signed the "House Lease Agreement" with Benxi
Steel (Group) and Beiying Steel respectively leasing the houses and auxiliary facilities
occupied by 2300 and 1780 hot rolling mill production lines and the lease term ends on
December 31 2038. The rental fee is based on the depreciation of the original rent value
and the national additional tax plus reasonable profit negotiation. The estimated annual
rent is not more than 20 million yuan and 18 million yuan respectively. The rental fee is
settled and paid monthly. This related party transaction has been reviewed and approved
at the fourth meeting of the eighth board of directors of the Company.
(3) On July 15 2019 the Company signed "Land Lease Agreement" with Bengang Group
and Benxi Steel (Group) respectively and leased and used a total of 8 pieces of land of
the two companies. The lease areas are 42920.00 square meters and 728282.30 square
meters respectively with a lease term of 20 years and a rental price of 1.138 yuan per
square meter per month. After the agreement comes into effect considering the national
law and policy adjustments every five years both parties should determine whether the
rent needs to be adjusted according to the pricing basis stipulated in Article 2 of this
agreement. This related party transaction has been reviewed and approved at the third
meeting of the eighth board of directors of the company.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 113
(4) As of June 30 2020 the amount of financial lease contracts that the Company and
Liaoning Hengyi Financial Leasing Co. Ltd. had signed but had not yet started to execute
was 2.108 billion yuan.
2. Irrevocable letter of credit
As at June 30 2020 the amount of irrevocable letter of credit that was not fulfilled is
RMB 2.599 billion.
(2) Contingencies
At the balance sheet date no significant contingencies need to be disclosed.
12. Subsequent events
(1) Important non-adjustment matters
Impact of the COVID-19
Since the outbreak of the COVID-19 the consumption investment and exports in our
country have been affected to a certain extent. The Company pays close attention to the
progress of the epidemic. As of the date of this report the situation of domestic epidemic
prevention and control continues to improve but the situation of overseas epidemic
prevention and control is still grim. Iron ore imports direct and indirect exports of
products have been affected to a certain extent. The Company will continually and
actively evaluate the development situation of the epidemic situation scientifically
respond to the challenges of the epidemic situation and ensure the stability of production
and operation.
(2) Profit distribution
Not applicable.
(3) Sales Return
Not applicable.
(4) Divided into assets held for sale and disposal portfolio
Not applicable.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 114
(5) Other subsequent events
Not applicable.
13. Other significant events
(1) Correction of previous accounting errors
None.
(2) Debt restructuring
None.
(3) Asset replacement
None.
(4) Termination of business
None.
(5) Segment information
Since the Company’s main product is steel with other products accounting for only a
small proportion of sales and the main production base is located in Liaoning area
segmented reporting is not applicable.
(6) Other material issues that will influence investors’ decisions
1. Financing Lease
For prioritizing the capital structure and exploring financing channel the Company signed
the “Financial lease cooperation framework” with Liaoning Hengyi Financial Leasing Co.Ltd. with the amount of financial lease not exceeding RMB 5 billion per year. The Company
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 the People’s bank of China
and the interest rate will be adjusted with the changes of benchmark interest rate of loan
published by the People’s bank of China over the lease term. The lease security ratio is not
higher than 30% of the lease principal amount.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 115
2. Shares pledged by the Controlling Shareholders
As at 30 June 2020 the total 2407002394 shares were held by the controlling shareholder
Benxi Steel & Iron (Group) Co. Ltd. of which 712545000 shares were pledged and
102100000 shares were frozen.
3. The controlling shareholder completes the increase in the company's shares
Benxi Steel (Group) Co. Ltd. the Company's controlling shareholder plans to increase its
shareholding in the Company within 6 months from February 14 2020. The total amount of
this shareholding increasing plan is no more than RMB 100 million. As of August 12 2020
Benxi Steel (Group)'s shareholding increase plan was completed. Benxi Steel (Group) has
accumulatively increased its holdings of 28523000 shares of the Company accounting for
0.66% of the Company's total share capital and the total amount of additional holdings was
RMB 99.98 million.
4. Accounting estimates adjustment
On January 31 2020 the eighth meeting of the eighth session of the company's board of
directors passed a resolution of the "Proposal on Adjusting the Depreciation Period of Certain
Fixed Assets."
Reasons for changes in accounting estimates: According to Article 19 of the "Accounting
Standards for Business Enterprises No. 4 - Fixed Assets" "Enterprises should review the
useful life estimated net residual value and depreciation method of fixed assets at least at the
end of each year. If there is a difference between the estimated amount and the original
estimated amount the useful life of the fixed asset shall be adjusted". In order to fairly reflect
the company's financial status and operating results make the fixed asset depreciation life
closer to its actual useful life and adapt to the company's business development and fixed
asset management needs the company assessed the use and useful life of fixed assets. After
the company’s evaluation of the actual status and depreciation period of fixed assets it is
concluded that the company’s production equipment has a high level of equipment and
technical content and the maintenance is in good condition. During the period from 2010 to
2019 the company’s cumulative investment in equipment maintenance costs was 11.959
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 116
billion yuan. In order to make the depreciation life of fixed assets closer to the actual service
life it is necessary to adjust the depreciation life of some fixed assets of the company.
Accounting estimates used before and after the change:
The company decided to adjust the useful life of some fixed assets from January 1 2020. The
specific adjustment plan is as follows:
Accounting estimates used before and after the change:
Fixed asset category Original depreciation period (years)
Adjusted depreciation period
(years)
1. Mechanical equipment 14 21
2. Power equipment 18 19
3. Conduction equipment 18 28
4. Transportation equipment 6 12
5. Tools and other production
utensils
9 14
6. Non-production equipment and
appliances
(1) Equipment and tools 18 22
(2) Copiers word processors 5 8
7. Houses and buildings
(1) Houses for production 40 40
(2) Corroded production houses 25 25
(3) Production houses subject to
strong corrosion
10 15
(4) Non-production houses 30 45
(5) Simple houses 8 10
(6) Buildings 25 25
5. Issuance of convertible corporate bonds
The Company plans to publicly issue convertible corporate bonds that can be converted into
company’s A shares. The total amount of convertible bonds issued this time will not exceed
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 117
RMB 6.8 billion (inclusive RMB 6.8 billion). The specific amount of funds raised is to be
confirmed determined within the aforementioned quota by the Company's board of directors
or persons authorized by the board of directors under the authorization of the Company's
general meeting of shareholders.
After deducting the issuance expenses the proceeds will be fully invested in the following
projects:
Unit: in 10 thousand yuan
No. Projects Total Investment Proposed investment
1 High grade high magnetic induction
non-oriented silicon steel project
114500.00 105700.00
2 Steelworks No. 8 Casting Machine Project 39500.00 33500.00
3 Energy-saving renovation project of No. 5
blast furnace in ironworks
150000.00 96000.00
4 Special Steel Electric Furnace Upgrading
Project
160000.00 141600.00
5 CCPP power generation project 98826.80 83300.00
6 No. 4-No. 6 converter environmental
protection renovation project
27000.00 19900.00
7 Repayment of bank loan 200000.00 200000.00
Total 789826.80 680000.00
The relevant proposal of the Company's public issuance of A-share convertible corporate
bonds was reviewed and approved by the second meeting of the eighth board of directors of
the Company on May 22 2019 and was resolved by the Company's second extraordinary
general meeting of shareholders on June 10 2019.In June 2019 the State-owned Assets Supervision and Administration Commission of the
People ’s Government of Liaoning Province issued the "Response for the Public Issuance of
Convertible Corporate Bonds of Bengang Steel Plates Co. Ltd." (Liao-Guo-Zi-Chan-Quan
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 118
[2019] No. 110) which approved the Company's application for public offering of no more
than RMB 6.8 billion (inclusive) convertible corporate bonds with a term of 6 years.The "Proposal on the Company's Public Offering of A Share Convertible Corporate Bonds
(Revised Draft) was reviewed and approved by the sixth meeting of the eighth board of
directors on October 8 2019.The "Proposal on the Company's Public Offering of A Share Convertible Corporate Bonds
(Second Revision)" was reviewed and approved by the seventh meeting of the eighth board
of directors on October 28 2019.The "Proposal on the Company's Public Offering of A Share Convertible Corporate Bonds
(Second Revision)" was passed by the resolution made by the fourth extraordinary general
meeting of shareholders in 2019 on November 14 2019.
On December 20 2019 the Issuance Review Committee of the China Securities Regulatory
Commission (hereinafter referred to as the "China Securities Regulatory Commission")
reviewed the company's application for public issuance of A-share convertible corporate
bonds. According to the results of the meeting the Company's public offering for A-share
convertible corporate bonds was approved. On January 22 2020 the Company received the“Response for Approving the Public Issuance of Convertible Corporate Bonds of BengangSteel Plate Co. Ltd.” issued by the China Securities Regulatory Commission (Zhongjian
License [2020] No. 46) (hereinafter referred to as “Response”) which approved Company’s
publicly issuance of convertible corporate bonds with a total face value of RMB 6.8 billion to
the public for a period of 6 years. This approval is valid for 6 months from the date of
approval of the issuance.
RMB 6.8 billion convertible bonds of the Company each with a face value of RMB 100
totaling 68 million in quantity are issued at face value.
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 119
14. Capital management
The main objectives of the company's capital management are as following:
- to ensure the Company's ability to continue to operate in order to provide returns to
shareholders and other stakeholders continuously;
- to price the products and services accordingly according to the risk level so as to
provide sufficient returns to shareholders.The Company has set a capital amount proportional to the risk and manages and adjusts the
capital structure according to changes in the economic environment and the risk
characteristics of the underlying assets. In order to maintain or adjust the capital structure the
Company may adjust the amount of dividends paid to shareholders return capital to
shareholders issue new shares or sell assets to reduce liabilities.The company monitors capital based on the adjusted liability / capital ratio.Liability/capital ratio after adjustment as of the balance sheet date is showed as follows:
Items 30 June 2020 31 December 2019
Shor-term loans 12506705000.00 13151478000.00
Long-term loans due within one
year
1201524980.80 234474657.99
Long-term loans 3810463934.18 4849675910.73
Total amount of loans 17518693914.98 18235628568.72
Minus: cash and cash equivalent 11417592663.52 13441414988.58
Net value of liabilities 6101101251.46 4794213580.14
Shareholder’s equity 20291922235.34 20012826841.40
Liability/capital ratio after
adjustment
30.07% 23.96%
15. Notes to the financial statements of parent company
(1) Accounts receivable
1. Accounts receivable disclosed by aging
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 120
Items 30 June 2020 31 December 2019
Within 1 year (inclusive) 326463297.85 339851051.52
1-2 years (inclusive) 32410975.65 31642073.27
2-3 years (inclusive) 24355924.19 24708264.04
Over 3 years 170785391.75 175744519.91
Sub-total 554015589.45 571945908.74
Less: Provision for bad
debts
180541758.35 182948800.28
Total: 373473831.10 388997108.46
2. Accounts receivable disclosed by category
Items
30 June 2020
Gross carrying amount Provision for bad debts
Book value
Amount
Percentage
(%)
Amount
Bad debts
ratio (%)
Individually
significant and
tested for
impairment
individually
47762337.18 8.62 47762337.18 100.00
Accounts
receivable tested
for impairment by
portfolio
506253252.27 91.38 132779421.17 25.79 373473831.10
Include:
Portfolio 1: Aging 253577229.31 45.77 132779421.17 52.36
Portfolio 2:
Related party
within
consolidation
scope
252676022.96 45.61
Total 554015589.45 100.00 180541758.35 373473831.10
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 121
Items
31 December 2019
Gross carrying amount Provision for bad debts
Book value
Amount
Percenta
ge (%)
Amount
Bad debts
ratio (%)
Individually
significant and tested
for impairment
individually
47762337.18 8.35 47762337.18 100.00
Accounts receivable
tested for impairment
by portfolio
524183571.56 91.65 135186463.10 25.79 388997108.46
Include:
Portfolio 1: Aging 268981818.03 47.03 135186463.10 50.26 133795354.93
Portfolio 2: Related
party within
consolidation scope
255201753.53 44.62 255201753.53
Total 571945908.74 100.00 182948800.28 388997108.46
Receivables individually insignificant but tested for impairment individually:
Items
30 June 2020
Accounts
receivable
Provision for
bad debts
Bad
debts
ratio
（%）
Reason
Benxi Nanfen Xinhe
Metallurgical Co. Ltd.
47762337.18 47762337.18 100.00
Benxi Nanfen
Xinhe has halt
operation.Total 47762337.18 47762337.18
Accounts receivable tested for impairment by portfolio
Portfolio tested by aging
Items
30 June 2020
Gross carrying amount Provision for bad debts Bad debts ratio (%)
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 122
Items
30 June 2020
Gross carrying amount Provision for bad debts Bad debts ratio (%)
Within 1 year 326463297.86 3264632.98 1.00
1-2 years 32410975.65 1620548.78 5.00
2-3 years 24355924.19 4871184.84 20.00
Over 3 years 123023054.57 123023054.57 100.00
Total 506253252.27 132779421.17
3. Information of provision reversal or recovery of bad debts of current period.
The reversal of bad debts of current period is RMB 2407041.93.
4. No accounts receivable has been written off this year.
5. Top five debtors at the end of the period
Company
30 June 2020
Amount
Percentage of total
accounts receivable
(%)
Provision for
bad debts
No.1 51186799.05 12.25 589234.48
No.2 47762337.18 11.43 47762337.18
No.3 14246791.47 3.41
No.4 13192766.29 3.16
No.5 11524466.74 2.76 130131.74
Total 137913160.74 33.00 48481703.40
6. There is no account receivables be derecognized due to the transfer of financial
assets at the end of the period.
7. There is no account receivables be transferred and further involved in assets and
liabilities during the current period.
(2) Accounts receivable financing
1. Details of accounts receivable financing
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 123
Items 30 June 2020 31 December 2019
Notes receivable 3997787483.35 2193319842.60
Include: Bank acceptance bill 3984477483.35 2184526834.33
Commercial acceptance bill 13310000.00 8793008.27
Total 3997787483.35 2193319842.60
Notes: Accounts receivable financing reflects notes receivable and accounts receivable
that are measured at fair value through other comprehensive income.
2. Provision for financing impairment of receivables
None.
3. The pledged acceptance bill at the end of the period
Items Pledged amount
Bank acceptance bill 759753834.45
Commercial acceptance bill
Total 759753834.45
4.The amount of notes receivable endorsed over or discounted but not yet matured
at the end of the period
Items Derecognized amount Not derecognized amount
Bank acceptance bill 4879438530.74
Commercial acceptance bill
Total 4879438530.74
5. There is no notes receivable has been transferred into accounts receivable due to
inability of drawer to meet acceptance bill at the year-end.
(3) Other receivables
Items 30 June 2020 31 December 2019
Interest receivables 31655295.18 19658230.77
Dividend receivables
Other receivables 226277114.59 247005005.04
Total 257932409.77 266663235.81
1. Interest receivable
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 124
(1) Interest receivable disclosed by category
Items 30 June 2020 31 December 2019
Deposit interest 31655295.18 19658230.77
Subtotal 31655295.18 19658230.77
Less: provision for bad debt
Total 31655295.18 19658230.77
(2) There is no significant provision for overdue interest and bad debt provision.
2. Other receivables
(1) Other receivables disclosed by Aging
Items 30 June 2020 31 December 2019
Within 1 year (inclusive) 96502772.71 115480359.05
1-2 years (inclusive) 16100882.51 15711856.93
2-3 years (inclusive) 3394063.57 3479413.59
Over 3 years 175449847.41 177724723.88
Sub-total 291447566.20 312396353.45
Less: Provision for bad
debts
65170451.61 65391348.41
Total 226277114.59 247005005.04
(2) Provision for bad debt provision
Provision for bad
debts
Stage one Stage two Stage three
Total
12-month
expected
credit losses
Lifetime expected
credit losses (no
credit impairment)
Lifetime expected
credit losses (credit
impairment
occurred)
Beginning balance 9179698.89 56211649.52 65391348.41
Current period
provision
write-back
transfer-in.transfer-out
-220896.80
-220896.80
Current period
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 125
Provision for bad
debts
Stage one Stage two Stage three
Total
12-month
expected
credit losses
Lifetime expected
credit losses (no
credit impairment)
Lifetime expected
credit losses (credit
impairment
occurred)
reversal
Current period
write-off
Other changes
Ending balance 8958802.09 56211649.52 65170451.61
Changes in the gross carrying amount of other receivables are as follows
Gross
carrying
amount
Stage one Stage two Stage three
Total 12-month expected
credit losses
Lifetime expected
credit losses (no
credit impairment)
Lifetime expected
credit losses (credit
impairment
occurred)
Beginnin
g
balance
232528777.63 23655926.30 56211649.52 312396353.45
Current
period
increase
-
Current
period
decrease
20727890.45 220896.80 20948787.25
Other
change
Ending
balance
211800887.18 23435029.50 56211649.52 291447566.20
(3) Other receivables disclosed by nature
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 126
Nature 30 June 2020 31 December 2019
Receivable and payable 283339342.69 304483575.55
Other 8108223.51 7912777.90
Total 291447566.20 312396353.45
(4) Top five debtors at the year-end
Company
Nature or
content
Amount Aging
Percentage of
total other
receivables
(%)
Provision for
bad debts
The First
Receivable
and payable
9648111.00
Within 1
year
3.31
The Second
Receivable
and payable
9505576.53
Within 1
year
3.26
The Third
Receivable
and payable
6804946.27
Within 1
year
2.33
The Fourth
Receivable
and payable
3756448.28 1-2 years 1.29 2000.00
The Fifth
Receivable
and payable
2661194.04
Within 1
year and
over 3 years
0.91 2465166.01
Total 32376276.12 11.11 2467166.01
(5) There is no other receivables relates to government subsidies at the end of the
reporting period.
(6) There is no other receivables derecognized due to the transfer of financial assets at
the end of the reporting period.
(7) There is no transfer of other receivables and continued involvement in the amount
of assets and liabilities formed at the end of the reporting period.
(4) Long-term equity investment
Items 30 June 2020 31 December 2019
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 127
Gross carrying
amount
Impairment Book value
Gross carrying
amount
Impairment Book value
Subsidiaries 2016281902.16 2016281902.16 2016281902.16 2016281902.16
Joint ventures
Total 2016281902.16 2016281902.16 2016281902.16 2016281902.16
Details of investment in subsidiaries
Name of entity Beginning balance Increase Decrease
Ending
balance
Impair
ment
of
curren
t
period
Ending
balance
of
impair
ment
Guangzhou Bengang Steel & Iron
Trading Co. Ltd.
30000000.00 30000000.00
Shanghai Bengang Metallurgy
Science and Technology Co. Ltd.
30000000.00 30000000.00
Bengang Steel Plates Liaoyang
Pellet Co. Ltd.
529899801.38 529899801.38
Dalian Benruitong Automobile
Material Technology Co. Ltd.
65000000.00 65000000.00
Bengang Posco Cold-rolled Sheet
Co. Ltd.
1019781571.10 1019781571.10
Changchun Bengang Steel & Iron
Sales Co. Ltd.
28144875.36 28144875.36
Harbin Bengang Economic and
Trading Co. Ltd.
29923398.23 29923398.23
Nanjing Bengang Materials Sales
Co. Ltd.
2081400.65 2081400.65
Wuxi Bengang Steel & Iron Sales
Co. Ltd.
29936718.57 29936718.57
Xiamen Bengang Steel & Iron
Sales Co. Ltd.
1095711.66 1095711.66
Yantai Bengang Steel & Iron Sales
Co. Ltd.
49100329.41 49100329.41
Tianjin Bengang Steel & Iron
Trading Co. Ltd.
60318095.80 60318095.80
Benxi Bengang Steel Sales Co.
Ltd
5000000.00 5000000.00
Shenyang Bengang Metallurgical
Science and Technology Co. Ltd.
30000000.00 30000000.00
Chongqing Liaoben Steel & Iron 30000000.00 30000000.00
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 128
Trade Co. Ltd.
Bengang Baojin (Shenyang)
Automobile New Materials
Technology Co. Ltd.
76000000.00 76000000.00
Total 2016281902.16 2016281902.16
(5) Operating income and operating cost
Items
Current period Previous period
Revenue Cost Revenue Cost
Principal business 19591244860.47 18369564255.82 21327519597.49 19894713843.28
Other business 2168536821.65 2009584025.45 2119696260.44 1862576153.90
Total 21759781682.12 20379148281.27 23447215857.93 21757289997.18
Details of operating income:
Items Current period Previous period
Principal business 19591244860.47 21327519597.49
Including: Domestic 17433565833.49 18051675852.17
Overseas 2157679026.98 3275843745.32
Other business 2168536821.65 2119696260.44
Including: Domestic 2168536821.65 2119696260.44
Overseas
Total 21759781682.12 23447215857.93
16. Supplementary information
(1) Details of non-recurring profit and loss
Items Amount Notes
Profit or loss from disposal of non-current assets -19733108.62
Tax refund reduction or exemption of unauthorized approval or no formal
approval document
Government subsidy attributable to profit and loss of current period (except
such government subsidy closely related to the company's normal business
operation meeting the regulation of national policy and enjoyed constantly
38587332.40
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 129
Items Amount Notes
in certain quota or quantity according to a certain standard)
Fund occupation fee charged to non-financial enterprises included in current
profit and loss
The investment cost of an enterprise acquiring subsidiaries associates and
joint ventures is less than the income from the fair value of the identifiable
net assets of the investee when obtaining the investment
Non-monetary asset exchange gains and losses
Profit or loss from investment or assets entrusted to others
Provision for asset impairment due to unavoidable factors such as natural
disasters
Profit or loss from debt restructuring
Restructuring costs such as the cost of relocating employees integration
costs etc.Profits and losses in excess of fair value from unfair transaction
Subsidiary companies arising from business combinations under the same
control
Profits and losses from contingencies are not related to the company's
normal business operations
Profits excluded effective hedging business related to the company's normal
business operations from holding transactional financial assets derivative
financial assets transactional financial liabilities fair value changes in
derivative financial liabilities and disposal of transactional financial assets
and derivative financial Investment income from assets trading financial
liabilities derivative financial liabilities and other debt investments
Reversal of impairment provision for individually tested impairment of
receivables
Profits and losses from external entrusted loans
Profits and losses from changes in fair value of investment real estate that
use the fair value model for subsequent measurement
Profit and loss affected due to the adjustments of requirements of taxation
accounting and other laws and regulations
Trustee income from trust operations
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 130
Items Amount Notes
Other non-operating revenue and expenditure other than above items 838001.32
Other non-recurring profit and loss
Subtotal 19692225.10
Impact of income tax 4923056.28
Impact of minority interests 10437.03
Total 14758731.79
(2) Net asset yield and earnings per share
Profit in the Reporting Period
Weighted average net
assets yield (%)
Earnings per share (Yuan)
Basic EPS Diluted EPS
Net profit attributable to ordinary shareholders 1.30 0.07 0.12
Net profit attributable to ordinary shareholders
after deducting non-recurring profit and loss
1.22 0.06 0.12
(3) Differences between Domestic and Foreign Accounting Standards
Not applicable.
Bengang Steel Plates Co. Ltd.（Seal）
24 August 2020
Bengang Steel Plates Co. Ltd.
For the half year ended 30 June 2020
Notes to the financial statements
Notes to the financial statements Page 131
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